576 Dreamliner outsourcing transfers Boeing's secret wing-building know-how to (rival) Mitsubishi - Eamonn Fingleton

Dreamliner outsourcing transfers Boeing's secret wing-building know-how
to (rival) Mitsubishi - Eamonn Fingleton

Newsletter published on 26-01-2013

(1) Whistleblower sacked for warning that Dreamliner Li-ion batteries
could ‘Explode’
(2) Donald Sadoway, chemistry professor at MIT, warns on risk of Li-ion
batteries in planes; Cessna went back to Ni-Cd after battery fire in 2011
(3) Li-ion batteries suspected in the crashes of three cargo planes
since 2006
(4) Extra weight of Ni-Cd batteries preferable to fire risk with Li-ion
- Donald Sadoway
(5) Li-ion battery-pack in cabin baggage catches fire; check-in luggage
is not inspected
(6) Timeline of Dreamliner 787 glitches
(7) Investigators: Dreamliner battery fire was severe
(8) Airbus learns from Dreamliner mistakes; A350 safer because less
hi-tech, less outsourcing
(9) Dreamliner inspectors scrutinise third-party suppliers in many countries
(10) Boeing Dreamliner will never fly again; will follow Britain's
ill-fated Comet into oblivion
(11) Boeing's Screamliner
(12) Dreamliner: excess innovation & outsourcing, insufficient
coordination - Steve Denning
(13) Boeing’s secret wing-building know-how transferred to (rival)
Mitsubishi - Eamonn Fingleton
(14) Yuasa boast: Dreamliner the first plane so reliant on Li-ion
batteries (why not experiment small, first?)

(1) Whistleblower sacked for warning that Dreamliner Li-ion batteries
could ‘Explode’

http://www.cnbc.com/id/100406310

Whistleblower Says Dreamliner Batteries Could ‘Explode’

Published: Thursday, 24 Jan 2013 | 7:31 PM ET

By Philip LeBeau

Michael Leon is adamant about his fear about the use of lithium-ion
batteries on the Boeing 787 Dreamliner.

"These lithium-ion batteries are heat intolerant. Too much heat on those
things, they will go into a thermal runaway, they will explode, it will
be a nightmare," he said.

Leon is a former employee of Securaplane Technologies in Tucson,
Arizona. He was fired in 2007 for repeated misconduct. He says it was in
retaliation for voicing concerns about the batteries but when he took
Securaplane to court, he lost. A federal administrative court judge
ruled in favor of Securaplane.

Today, Securaplane manufactures the charging system for lithium-ion
batteries used on 787 Dreamliners. Its plant in Tucson is one of the
locations visited by investigators from the National Transportation
Safety Board as they try to determine what went wrong with two
Dreamliners earlier this month.

This Battery 'Just Decided to Explode'

Michael Leon was a senior engineering technician at Securaplane in 2006
conducting tests for the charging units that work with the lithium-ion
batteries in the Dreamliner. Leon said what happened one day is a scene
he will never forget.

"My BCU wasn't running and this lithium-ion battery just decided to
explode," said Leon. "The magnitude of energy that came out of this
battery, I cannot quantify it. I ran out of there and armed myself with
30 pounds of Halon and I ran back into the inferno. By then all the
walls were on fire."

The fire at Securaplane in 2006 was well documented at the time. Boeing
said it was the result of a test set up improperly, and it was not a
case where a lithium-ion battery simply exploded for no reason.

Securaplane said its charging unit has been successfully tested in the
Dreamliner. It disputes Leon's allegations.

"There was a fire in the facility in 2006 during one test of a prototype
of the battery-charging unit. However, the current Boeing 787
investigation is unrelated to the 2006 fire," said Fiona Greig,
spokeswoman for Securaplane. "There is no connection between the
Dreamliner battery issue and the dismissal of Michael Leon from
Meggitt's US-based subsidiary, Securaplane."

Ever since the FAA grounded Boeing's Dreamliner, there have been renewed
questions about the safety of using lithium-ion batteries to provide
power on the 787. The primary concern is the potential flammability of
the batteries.

Leon fears the worst for the Dreamliner if questions surrounding the
787's lithium-ion batteries are not resolved. "What concerns me is if
this happens on the aircraft and they are flying over the ocean or
something, everybody is going to die," he said.

So you will risk the plane for something that's tantamount to one guy's
suitcase?

(2) Donald Sadoway, chemistry professor at MIT, warns on risk of Li-ion
batteries in planes; Cessna went back to Ni-Cd after battery fire in 2011

http://www.cnbc.com/id/100403510

Boeing Battery Problems Cast Doubt on Technology Appraisals

Published: Thursday, 24 Jan 2013 | 12:00 AM ET

By Jad Mouwad and Christopher Drew

In December 2006, the Federal Aviation Administration allowed Airbus,
the European plane maker, to use 14-ounce lithium-ion batteries to
provide standby power for the emergency lighting system of its new A380
jumbo jet.

Ten months later, the agency allowed Boeing to use the same volatile
type of battery on its new 787 plane. But in Boeing's case, the
batteries weighed 63 pounds each, were to be used in critical flight
systems as well as to provide backup power, and would be charged and
discharged much more often. Yet the agency's ruling used identical
language — it could have been just cut and pasted — in laying out the
broad safeguards for using the batteries that it had given Airbus to follow.

The use of lithium batteries in the 787 is at the center of the
difficulties involving Boeing. The plane maker has staked its reputation
on the success of the 787, an aircraft it nicknamed the Dreamliner. All
50 787s delivered to airlines worldwide were grounded last week until
investigators in the United States and Japan find out why two lithium
batteries failed in recent weeks, causing a fire on one 787 and damage
to another that led to an emergency landing.

It also raises fundamental questions about how federal regulators
certify new technology and how they balance advances in airplane design
and engineering with ensuring safety in commercial flying. In addition
to finding out what went wrong, these issues will be examined in a
federal investigation and at future Senate hearings.

When it approved Boeing's request in 2007, the F.A.A. said it had
limited experience with the use of lithium-ion batteries in commercial
airplanes, though it acknowledged that the batteries themselves were
more prone to fire than traditional nickel-cadmium or lead-acid batteries.

Still, the agency approved the technology on the assumption that Boeing
could make the batteries work and that computer controls could prevent
batteries from overcharging or overheating. The agency also specified
that any fire or toxic leak be contained and not damage any surrounding
electrical systems.

At the same time, the agency brushed off concerns raised in 2006 and
2007 by the Air Line Pilots Association that a fire in flight would be
difficult to extinguish and that flight crews should be given extra
training.

"We have concluded that providing a means for controlling or
extinguishing a fire — such as stopping the flow of fluids, shutting
down equipment, or fireproof equipment" was an "adequate alternative to
requiring the flight or cabin crew to use extinguishing agents," the
agency said in its 2006 decision about the Airbus A380.

Experts said that regardless of the cause of the 787's problems, the
charred remains of the battery that caught fire earlier this month in a
plane in Boston raised the question of whether the safeguards functioned
properly.

On Wednesday, the National Transportation Safety Board, which is
investigating the battery fire in Boston, said that all eight cells in
the battery had sustained "varying degrees of thermal damage." Six of
them have been scanned and disassembled for further examination.

Many battery experts said they viewed Boeing's decision to use
lithium-ion batteries as a reasonable one and pointed out that
lithium-ion batteries had also been used in expensive space satellites
since around 2000 without serious problems. They said that track record
would have added to the confidence Boeing and federal regulators had
about using them in commercial airliners.

Jay F. Whitacre, an associate professor of engineering at Carnegie
Mellon University, said GS Yuasa, the Japanese company that built the
787 batteries, told the National Aeronautics and Space Administration in
a 2008 presentation that it had already supplied batteries for six
satellites and had contracts for 50 more. GS Yuasa also said that its
satellite batteries had never had a shorting incident in more than 10
years of production.

"That's pretty compelling," Professor Whitacre said. "If I had all that
data and saw that they were making batteries for 50 more satellites, I'd
say that was a reasonable risk to take. My sense is that Boeing did a
fairly decent job of picking the right company."

But another battery expert, Donald Sadoway, a materials chemistry
professor at M.I.T., disagreed. He said that sticking with an older type
of battery instead of the lighter lithium battery would not have made a
huge difference to the 787, adding about 40 pounds, or the equivalent of
an extra suitcase per battery.

"So you will risk the plane for something that's tantamount to one guy's
suitcase?" Mr. Sadoway said. "Who's making the calculation here? It's
absurd. It doesn't add up."

With plane makers pushing the envelope on new technology, safety experts
have questioned whether federal regulators had the expertise or the
manpower to properly oversee those developments.

Michael P. Huerta, the F.A.A.'s administrator, on Wednesday defended his
agency's handling of the process as well as its expertise to assess new
technology in airplanes. The agency, he said, also has the ability to
call in outside experts, if needed. He added that federal regulators
would not lift the 787's grounding order until they had fully reviewed
its critical systems and understood why the batteries had failed.

"Aviation from its very beginning has stretched technological
boundaries," Mr. Huerta told reporters. "For more than five decades, the
F.A.A. has compiled a proven track record of safely introducing new
technology and new aircraft."

He added, "We have the ability to establish rigorous safety standards
and to make sure that aircraft meet them."

Lithium-ion batteries have many advantages over traditional batteries.
They are lighter, can be recharged faster and more often, and provide
substantially more power than other batteries of the same size.

For that reason, lithium-ion cells have become the norm in rechargeable
consumer electronics. But in 2006, manufacturing defects in some
batteries that caused them to catch fire led computer makers to recall
nearly 10 million laptops

Safety regulators, however, were more worried about the instances when
the batteries caught fire in the cargo hold of an aircraft, or while
being carried by passengers. Federal authorities in 2004 prohibited
nonrechargeable lithium-ion batteries from being transported aboard
passenger planes as cargo. That ruling was reinforced in August 2007,
just two months before the Boeing request was approved.

There were 132 safety problems involving batteries carried by passengers
or in cargo holds from March 1991 to October 2012, according to the F.A.A.

Professor Whitacre of Carnegie Mellon said that even though laptop
battery packs were banned as loose cargo, that did not mean that
lithium-ion batteries could not be used safely when integrated into the
plane's electrical system with computerized controls and other measures.

F.A.A. officials said they oversaw Boeing's laboratory tests of the new
batteries. Boeing has said that its military business had begun a
program to select lithium-ion batteries for its satellites in 2003 and
that its engineers felt they understood the potential hazards.

Mike Sinnett, Boeing's top engineer on the 787 program, said recently
that the company had built a system with multiple layers of protection
that it thought would keep the batteries from overheating and contain
any problem.

The computerized controls are supposed to shut down the battery if it
develops a problem, and the battery is supposed to keep a short in any
one of its eight cells from spreading to the others. If any fumes or
flames escape, Boeing said, the pressurized air system will help keep
smoke out of the cabin and vent it outside.

But neither the F.A.A. nor Boeing made any changes with the 787 when
Cessna replaced the lithium-ion batteries on its CJ4 business jet with
nickel-cadmium ones after a battery fire in October 2011, three weeks
before the first 787 made its inaugural airline flight.

"It is reasonable to understand their risk and put in engineering design
to make up for these risks," said Jeffrey P. Chamberlain, a battery
expert at the Argonne National Laboratory. "I will remind you that the
wings are full of jet fuel. And the same thing for the car you drive all
day. In general, when you adopt a new technology, is it good to account
for risk. The reverse would be terrifying."

(3) Li-ion batteries suspected in the crashes of three cargo planes
since 2006

http://www.usatoday.com/story/travel/flights/2013/01/17/dreamliner-batteries/1842871/

Questions focus on Boeing's 787 Dreamliner's batteries

Bart Jansen4:37p.m. EST January 17, 2013

The Dreamliner will remain grounded until the batteries are determined
not to catch fire.

* Batteries have been suspected in the crashes of three cargo planes
since 2006
* Boeing says multiple levels of safeguards are built into the
Dreamliner's batteries
* The manufacturing of the batteries will likely come under scrutiny

WASHINGTON -- Airlines around the world grounded their Boeing 787
Dreamliners on Thursday after the Federal Aviation Administration
ordered U.S. airlines to stop flying them.

The safety of the lithium-ion batteries on the jetliner were at the
heart of the FAA decision. The innovative plane runs more on batteries
than typical planes and got special FAA permission in 2007 for their use.

But lithium batteries have long been known as a risk to overheat and
spontaneously combust. A battery pack caught fire in an empty Dreamliner
at Boston's Logan airport on Jan. 7, and another smoldering battery
forced an emergency landing of one Wednesday in Japan.

Why are lithium batteries used?

Lithium-ion batteries pack more power in a smaller area than other
batteries. They replaced larger batteries developed for laptops and
other electronics during the 1990s that are called nickel-metal hydride
or nickel-cadmium batteries.

George Kerchner, executive director of the industry group PRBA-The
Rechargeable Battery Association, says 4.2 billion lithium cells were
manufactured worldwide last year.

"It's a fundamentally safe technology that is used in cellphones,
airplanes, electric vehicles – you name it," Kerchner says. "From an
environmental standpoint, you don't have any heavy metals like cadmium
or lead."

What are the risks of lithium batteries?

Three cargo-plane crashes are suspected of fires stemming from packages
of batteries:

* On July 28, 2011, an Asiana Airlines Boeing 747-400 carrying
electronics crashed in the East China Sea, killing both pilots.
* On Sept. 3, 2010, a UPS Boeing 747-400 carrying more than 81,000
lithium batteries caught fire after leaving Dubai and crashed, killing
both pilots.
* On Feb. 7, 2006, fire broke out aboard a UPS McDonnell Douglas DC-8
as it approached Philadelphia. The three pilots escaped after landing,
but the plane and most of the cargo were destroyed. The plane contained
numerous lithium batteries, but the National Transportation Safety Board
wasn't able to pinpoint which cargo caused the fire.

What causes the fires?

Because more power is packed more tightly together, lithium batteries
can overheat.

From March 1991 to Oct. 9, 2012, the FAA counted 132 air incidents
involving travelers' batteries burning through luggage, catching fire
and occasionally hurting people.

The FAA says the battery failures on the Dreamliner resulted in release
of flammable electrolytes, heat damage and smoke in the planes. As part
of its comprehensive study of the plane, FAA is trying to validate that
the batteries are safe.

What will be studied?

Donald Sadoway, a battery expert and chemistry professor at
Massachusetts Institute of Technology, suggests studying how the
Dreamliner batteries are cooled and whether they were manufactured
defectively.

The auxiliary-power battery from the Boston fire weighed 63 pounds and
measured 19 inches by 13.2 inches by 10.2 inches, according to the
National Transportation Safety Board.

"The batteries in the center of that have a long way to go to dissipate
that heat," says Sadoway, in contrast to laptops or cellphones.

A manufacturing defect could also be to blame. Sadoway says problems
with Dell laptop lithium battery fires in 2006 were traced to
microscopic shavings of metal getting into the battery during
manufacture, turning it into "a toaster oven."

Sadoway says Boeing's battery-maker, GS Yuasa in Japan, is reputable,
but that there could have been a problem at the plant.

"Give them a stress test that exceeds the demands of the normal use on
an airplane," Sadoway says.

What are the options?

Mike Sinnett, a Boeing vice president and 787 chief project engineer,
has said the company installed multiple levels of protection to prevent
the batteries from overheating and wasn't considering switching to
another type.

Sadoway suggests Boeing could use a nickel-metal hydride battery, which
offers about two-thirds the power in the same space as a lithium-ion
battery.

In general terms, he says lithium provides 150 watt-hours per kilogram,
nickel-metal hydride 100 and lead-acid like a standard car battery 50.

"The chances of a nickel-metal hydride battery bursting into flame are
way, way, way, way lower than something like this happening with
lithium-ion," Sadoway says.

But switching batteries for the same power would make them larger and
heavier, factors that are important in plane design.

"It's a much smaller package and it's taking up less space," Kerchner
says of lithium batteries. "That's what the Dreamliner is all about."

(4) Extra weight of Ni-Cd batteries preferable to fire risk with Li-ion
- Donald Sadoway

http://www.forbes.com/sites/petercohan/2013/01/24/is-787s-lithium-ion-battery-hazardous-to-boeings-health/

1/24/2013 @ 8:52AM

Are 787's Lithium-Ion Batteries Hazardous to Boeing's Health?

One of the more popular corporate public relations strategies is to
describe frightening new product glitches as normal teething problems.
If you hear that phrase enough, you might be tempted to assume the
company is right and you should move on with the rest of your life.

But the image of a self-immolated lithium-ion battery from a Boeing (BA)
787 Dreamliner in Thursday’s New York Times makes it hard to buy the
teething problems line.

For example, lithium-ion batteries have great advantages over
traditional batteries when it comes to consumer electronics. There’s
just one little problem with them — they are considered hazardous material.

The benefits of lithium-ion batteries are legion — they are “lighter,
can be recharged faster and more often, and provide substantially more
power than other batteries of the same size,” reports the Times.

But in 2006, manufacturing defects in some batteries caused them to
catch fire — leading computer makers like Dell (DELL) to recall nearly
10 million laptops. Gizmodo reported on the spontaneous explosion in
flames of a Dell laptop at a conference in Japan in 2006. And in August
2006, Dell recalled 4.1 million of its products containing the
lithium-ion batteries.

Those auto-de-feing laptops in 2006 were not the first signal of
problems with lithium-ion batteries. In 2004 safety regulators
“prohibited nonrechargeable lithium-ion batteries from being transported
aboard passenger planes as cargo,” according to the Times.

Why do lithium-ion batteries burn up? According to the University of
California, they consist of positive and negative electrode layers
separated by a plastic separator — a thin piece of plastic with little
holes in it. If the plastic separator is damaged in manufacturing or
handling, the negative and positive layers come in contact – generating
heat that can cause the battery to burst into flames.

But regulators have not been doing a terrific job of enforcing those
regulations. For example, the FAA reported 132 safety problems involving
batteries carried by passengers or in cargo holds from March 1991 to
October 2012.

Sure lithium-ion batteries have a habit of setting themselves on fire.
But Boeing persuaded regulators that it had a fix — computerized
controls. According to the Times, Mike Sinnett, the lead 787 engineer,
said Boeing’s system had “multiple layers of protection that it thought
would keep the batteries from overheating and contain any problem.”

Those computerized controls offered tremendous promise. They would shut
down the battery if it developed a problem and operate as a firewall
that would stop a short in one of the battery’s eight cells from
spreading to the other seven. What’s more, Boeing claimed, the 787¢s
pressurized air system would keep flames or smoke from the burning
battery from getting into the passenger cabin.

But it looks like the computerized controls about which Sinnett bragged
did not work too well.

And the worst part of this is that a safer battery was available for the
787 all along. That safer battery would have come at a cost, however —
adding 40 pounds — .01% to the 787¢s 502,500 pound maximum takeoff weight.

That’s the view of MIT professor, Donald Sadoway, who told the Times
that a nickel-cadmium battery would have worked just as well without the
little self-immolation problem that afflicts lithium-ion batteries. And
the tiny additional weight of nickel-cadmium batteries — which would
make the 787 a bit more costly to operate — hardly justified the fire
risk of the lithium-ion ones.

A few weeks before the 787 made its inaugural flight, another aircraft
maker decided to swap out its lithium-ion battery for a nickel-cadmium
one. The Times reports that ”Cessna replaced the lithium-ion batteries
on its CJ4 business jet with nickel-cadmium ones after a battery fire in
October 2011.”

A colleague who served in the Air Force and earned a doctorate from
Harvard Business School believes that Boeing’s financial health would be
threatened by replacing the lithium-ion batteries in 787.

He argued, “It is illegal to move lithium-ion batteries by air. It is
too dangerous. How then did Boeing end up with a plane full of them?
They provide power for all sorts of things, both in the air and on the
ground. If Boeing has to reconfigure the 787 to something other than
lithium-ion batteries, the costs will make the 787 a permanent loser.”

My colleague may be right, but it is worth investigating whether
replacing the lithium-ion battery with nickel-cadmium would help Boeing
salvage the 787¢s profitability.

Unfortunately, if the battery issue is the tip of the iceberg of
problems flowing from Boeing’s decision to outsource 60% of the 787¢s
design and manufacture, my colleague’s conclusion will likely prove
prescient.

(5) Li-ion battery-pack in cabin baggage catches fire; check-in luggage
is not inspected

http://blogs.crikey.com.au/planetalking/2011/05/30/another-reminder-not-to-leave-lithium-batteries-in-your-checked-luggage/

Another reminder not to leave lithium batteries in your checked luggage

Ben Sandilands | May 30, 2011 11:29AM

A potentially serious incident on an Air China flight on the weekend is
a reminder to never pack the lithium batteries commonly found in
computers and ‘smart’ phones in your checked luggage.

It is also a reminder that the Qantas and Virgin Australia rules that
permit lithium battery carriage in checked luggage ought to be abolished
and replaced with a ban, because at present no inspections to enforce
them take place, with the airlines relying instead on a tick the box
declaration in the dangerous goods section of the check-in processes,
something which is totally useless.

In the China incident a lithium-ion battery-pack in a passenger’s camera
caught fire in an overhead bin in the Airbus A330 while it was flying
between Beijing and Shanghai.

The incident ended well, in that the cabin crew searched for the source
of a smell of burning, and found the camera just as it burst into flames
said in media reports to have been 20 cms high, and bundled it into a
toilet where the risk of ALL of the cells in battery pack burning or
exploding was removed by following the procedures airlines have for
extinguishing lithium fires.

But it might have been a very different and tragic story had the camera
batteries experienced what is known as a thermal runaway inside checked
luggage stowed in the hold.

Both types of lithium batteries, the li-ion packs that are rechargeable,
and the non-rechargeable straight lithium type, pose fire hazards that
can be readily handled in a cabin rather than under it.

In this video the US Federal Aviation Administration deals with the
lithium-ion battery hazards and the very specific ways in which the
risks of igniting the other batteries typically found in such power
sources can be reduced by prompt action.

Now, ask yourself. Have you ever had your luggage on a flight in
Australia examined for compliance with the lithium battery carriage
rules as shown below on the Qantas and Virgin Australia websites? Of
course not.

And also ask yourself. Do you ever read the dangerous goods declarations
in details? Do you have any idea what the current Qantas and Virgin
Australia restrictions on packed and checked lithium batteries mean, or
how you would determine if your batteries complied?

The risk of a lithium battery fire in a passenger jet hold is almost
entirely avoidable if their carriage in personal luggage is banned. It’s
such a simple thing to do, especially if it is done before rather than
after a disaster.
Uncategorized , air safety, airline safety, dangerous checked luggage,
lithium batteries, lithium battery fires, lithium-ion batteries.

(6) Timeline of Dreamliner 787 glitches

http://www.telegraph.co.uk/finance/newsbysector/transport/9804908/Boeings-Dreamliner-787-glitches-timeline.html

Boeing's Dreamliner 787 glitches - timeline

Japan's two biggest airlines have grounded all their Dreamliner 787s
after an All Nippon Airways flight was forced into an emergency landing.
It is the latest in a series of glitches to hit the next-generation
aircraft.

6:48AM GMT 16 Jan 2013

January 16: An ANA Dreamliner passenger plane makes an emergency landing
in Japan after smoke is reportedly seen inside the cockpit. ANA said a
battery problem triggered a cockpit error message.

Transport Minister Akihiro Ota announces an investigation and dispatches
aviation bureau officials.

January 14: Japan's transport ministry says it has begun examining the
Dreamliner that suffered two fuel leakages in less than a week.

January 13: A Japan Airlines (JAL) 787 suffers a fuel spill for the
second time in a week.

January 11: US regulators announce an in-depth safety review of the
Dreamliner after a spate of incidents involving the aircraft.

A crack in a cockpit windshield grounds an ANA Dreamliner after a
domestic flight in Japan.

An ANA Dreamliner, also on a domestic Japanese flight, experiences a
delay due to an oil leak.

January 9: ANA cancels a Dreamliner flight because of a brake problem.

January 8: A Japan Airlines 787 flight to Tokyo is grounded in Boston
following a fuel spill.

January 7: A fire breaks out aboard an empty Japan Airlines 787
Dreamliner in Boston.

2012

December 5: The US Federal Aviation Administration orders inspections of
all Boeing 787 Dreamliners in service worldwide following reports of
fuel leaks.

October 4: General Electric (GE) recommends new inspections of its GEnx
engines, used on some Boeing 747 and 787 aircraft, following the failure
of an engine on a 747 operated by Air Bridge Cargo in Shanghai on
September 11.

September 5: ANA aborts the take-off of a Dreamliner after what appears
to be white smoke is seen billowing from the plane's left engine,
believed to be due to a glitch with the hydraulic system.

July 31: US safety regulators announce an investigation into a GE engine
failure on a Dreamliner during testing in South Carolina.

July 28: A 787 suffers engine failure during testing in South Carolina.

July 23: ANA says it is having five Dreamliner jets repaired for a
defect in their Rolls-Royce engines.

February 6: Boeing says it has discovered a manufacturing error that
requires repairs in the fuselage section of some 787 Dreamliners.

Source: AFP

(7) Investigators: Dreamliner battery fire was severe

http://www.usatoday.com/story/travel/flights/2013/01/24/ntsb-dreamliner/1861179/

Bart Jansen, USA TODAY

5:22p.m. EST January 24, 2013

Federal safety investigators described damage to the battery from a
Boeing 787 Dreamliner that caught fire in Boston as severe and finding
the cause of the problem won't happen overnight.

WASHINGTON -- Federal safety investigators on Thursday described damage
to the battery from a Boeing 787 Dreamliner that caught fire in Boston
as severe and said finding the cause of the problem won't happen overnight.

Deborah Hersman, chairman of the National Transportation Safety Board,
said Thursday that the significance "cannot be overstated" of the fire
Jan. 7 on a Japan Airlines plane and a smoldering battery on Jan. 16
that forced the emergency landing of an All Nippon Airways flight in Japan.

"The expectation in aviation is to never experience a fire aboard an
aircraft," Hersman said.

Hersman said the fire damaged the plane's structure and its components
within 20 inches of the battery called an auxiliary power unit (APU).
Pictures showed a battery with eight adjacent cells packed in two rows
of four cells charred black from the fire, as well as damage by the hot
liquid, called electrolyte, inside the battery.

"The APU battery was spewing molten electrolyte – very hot material
around the APU battery," Hersman says.

The lithium-ion battery from the Boston plane has signs of short
circuits and a "thermal runaway," which is a chemical reaction that
overheats the battery and cannot be controlled. But Hersman couldn't say
yet which event came first or why they occurred.

“There is a lot of technical work and a lot of complex work to
understand.”— Deborah Hersman, NTSB chairman

"It is answering the 'why' question that will ensure that the
appropriate corrective actions are taken," Hersman said.

Besides Boeing, NTSB officials are working with: Securaplane
Technologies in Tucson, which made the charger; United Technologies
Aerospace Systems for a battery controller in Phoenix; and Kanto
Aircraft instrument for battery monitoring in Japan. NTSB officials are
also learning about lithium batteries from the Naval Surface Warfare
Center's Carderock Division.

Investigators have X-rayed, CT-scanned and taken apart the Boston
battery. So far, Hersman said, the damage reflects the symptoms of the
problems rather than what caused them.

"We are looking for contaminants or defects," she said. "We are working
very hard to determine what happened and why it happened."

Joseph Kolly, director of NTSB's office of research and engineering,
says a thermal runaway could be caused by a short-circuit or damage from
a neighboring cell that overheated or short-circuited.

"It just cascades down the row of neighboring cells," Kolly says. ...

(8) Airbus learns from Dreamliner mistakes; A350 safer because less
hi-tech, less outsourcing

http://www.smh.com.au/travel/travel-news/dreamliner-problems-may-also-delay-airbus-new-a350-20130123-2d66f.html

Dreamliner problems may also delay Airbus' new A350

January 23, 2013

European aircraft maker Airbus is wary that problems which have grounded
rival Boeing's 787 Dreamliner could also delay the commercial launch of
the A350 airliner that Airbus hopes will get it back into the long-haul
game.

"Certification authorities, the FAA and its European equivalent, the
European Aviation Safety Agency, are going to become very nervous," an
EADS executive said in reference to the US Federal Aviation
Administration, which is probing electrical problems with the 787.

The manager expects air safety officials to strengthen tests for new
aircraft, which would likely mean potentially costly delivery delays for
the A350.

Although its A320 plane is very competitive in the short- and
medium-haul markets, Airbus has found it hard to challenge Boeing's 747s
and 777s in the segment for long-distance airliners.

Like the Dreamliner, the Airbus A350, which is to enter service in the
second half of 2014, uses lots of composite materials and shifts some of
the mechanics from hydraulic systems to electrical ones, which is where
Boeing has run into trouble.

Last week, Airbus head Fabrice Berger refused to gloat after the 787 was
grounded owing to a problem with its lithium-ion batteries, and said:
"If the FAA issued some directives and recommendations, we will study
them very carefully and see if they might apply to the A350."

But Airbus executives also underscore differences between the rival
planes, which represent the cutting edge of civilian aerospace
technology aimed at substantial fuel savings for airlines.

"They maxed out on the technology, they maxed out on outsourcing," one
Airbus exec said. "We were more conservative."

Boeing built the 787 with a fully composite fuselage to save weight,
whereas the A350 wraps composite panels around a metal frame, for
example, and relies less on electronic systems for flight controls.

Boeing also had around 70 per cent of the 787 built by strategic
partners that were tasked with managing relations with sub-contractors,
according to US aerospace specialist Steve Denning.

He wrote in the US magazine Forbes that Boeing realized over time that
not all its partners had the require expertise.

EADS execs acknowledge the A350 will also experience teething problems,
but as one said: "We were lucky to come after Boeing and learn from what
they have come up against," and Airbus will also now avoid suppliers who
have not made the grade.

AFP

(9) Dreamliner inspectors scrutinise third-party suppliers in many countries

http://www.telegraph.co.uk/finance/newsbysector/transport/9820984/UK-factory-dragged-into-Dreamliner-investigation.html

UK factory dragged into Dreamliner investigation

A Hampshire factory has become the latest focus in an international
investigation over safety fears surrounding Boeing's embattled 787
Dreamliner, it has been reported.

All eight airlines who few Boeing Dreamliners have taken the aircraft
out of service Photo: Getty Images

By Denise Roland

6:16PM GMT 23 Jan 2013

The Eaton Aerospace plant in Titchfield, which supplies valves linked to
fuel flow through sections of the Dreamliner aircraft, will be subject
to a three-day inspection by Japanese safety officials starting on
Wednesday, according to The Times.

The team of inspectors will scrutinise the internal inspection process
for the valves in connection with a Japan Airlines craft that suffered
two fuel leaks in close succession, a Japanese transport ministry
official told the newspaper.

US-based Eaton Aerospace joins a growing list of Boeing suppliers,
including British engineer Meggitt, who have been asked to cooperate
with investigations into concerns over the safety of the Dreamliner,
after various glitches forced the entire 50-strong fleet to be grounded.

All eight airlines using the Boeing Dreamliner took the aircraft out of
service while Boeing and US and Japanese authorities work to identify
and solve the problems, involving battery malfunctions in addition to
fuel leaks.

Eaton's Hampshire plant has been heralded as a "key strategic partner"
by Boeing in developing the technology which made it possible for the
Dreamliner to use around 20pc less fuel than comparable aircraft.

Speaking at a ceremony to mark the Dreamliner's first commercial
delivery flight in 2011, Frank Dubey, vice president and general manager
of Eaton's fuel systems division, said: "With the launch of an iconic
aircraft such as the 787, our employees can take pleasure in knowing
that their expertise plays a crucial part in the future of flight."

A spokeswoman from Eaton confirmed the company supplies pumps and valves
to Dreamliner aircraft and was supporting the investigation.

Due the ongoing investigation, Boeing is unable to comment.

(10) Boeing Dreamliner will never fly again; will follow Britain's
ill-fated Comet into oblivion

http://online.wsj.com/article/SB10001424127887323301104578257862879948292.html?mod=WSJAsia_hpp_MIDDLE_Video_Third

Innovation Is Messy Business

Boeing's Dreamliner Shows How Problems Often Mar Technological Advances

By DANIEL MICHAELS

Wall St Journal, January 23, 2013

Nine years ago, Boeing Co. executives decided to take the biggest leap
in airliner technology in a generation and develop the 787 Dreamliner.
They promised it would burn less fuel while flying farther and offering
more passenger comfort than existing models.

The plane would be "a true game-changer for the industry and traveling
public," said Boeing's then-chief executive, Harry Stonecipher. The 787
also showed Boeing's "commitment to innovation."

Airlines, eager to save money and woo fliers, ordered a record numbers
of Dreamliners, now totaling 848 planes. Rival Airbus remade its product
line in response.

Today, Boeing is struggling to master its innovations. The Dreamliner's
body and wings, made of plastic reinforced with carbon fiber, have
proven unexpectedly hard to produce and attach. Power-distribution
panels running the plane's advanced electrical systems have overheated
and ignited in flight. Most recently, lithium-ion batteries that provide
auxiliary power—and were themselves a first in commercial aviation—have
caught fire, prompting regulators world-wide to ground all 50
Dreamliners in service.

Companies, governments and academics have made "innovation" a buzzword
for competing in the global economy. Boeing's experience offers a
reminder that innovation—for all its value—doesn't come as easily as a
catchphrase. It can get messy.

Boeing, an icon of American ingenuity, has reshaped travel over the past
half-century with bold technological leaps such as the 747. The original
jumbo jet in 1970 opened air travel to the masses and connected cities
as distant as Seattle and Tokyo.

The plane cemented Boeing's position as the world's premier jetliner
producer for three decades. But it first nearly bankrupted the company
due to technical problems and slow orders.

Boeing's backers say the Dreamliner will prove just as revolutionary.
But its problems again show the traumas that innovation can bring. The
Airbus unit of European Aeronautic Defence & Space Co. and smaller plane
makers have also recently faced similar, if less dramatic, crises with
some of their most promising advances.

"As a CEO of a high-tech company, you have mixed feelings about
innovation," said EADS Chief Executive Tom Enders last spring, as the
company grappled with cracks inside the wings of its newest plane in the
skies, the A380 superjumbo.

Mr. Enders, who then ran Airbus, noted that every innovation carries
risk. "But if you're too risk-averse, the competition will kill you," he
added. "Either way, you're walking a tightrope."

Boeing declined to comment for this article.

The history of innovation, of course, is littered with failures. Even
Thomas Edison bet badly, as in his development of direct-current
electricity that proved inferior to alternating current.

Aviation innovation is especially risky because the stakes are so high.
A crashed laptop might lose data, but a crashed plane kills people.

Entirely new jetliners get developed only about once a decade, costing
billions of dollars. Jetliners sell on average for about $100 million
apiece, roughly the price of an office building—or approximately 200,000
iPads. Airliner systems are so integrated that changes to one element
can ripple through the entire design.

Boeing for years stressed innovation and technology. "For a young
aeronautical engineer, Boeing was definitely the most exciting place to
be," 747 chief engineer Joe Sutter recalled, in his autobiography, of
joining the company in 1946.

Over the following half-century, Boeing dominated jetliners thanks to
its "willingness to invest whatever it took to be the technological
leader," Mr. Sutter recalled.

Profits would come from superior products, top executives reckoned
correctly.

Rivals' innovations didn't fare as well. The British-made Comet, the
world's first passenger jet, flew in 1952, before designers at de
Havilland Aircraft Ltd. fully understood metal fatigue. Two midair Comet
disintegrations killed almost 100 people. By the time de Havilland
redesigned the plane, Boeing and Douglas Aircraft had overtaken it.

The British government forced de Havilland to merge with competitors
during the 1960s as the nation's aircraft industry declined.

Boeing in the late 1990s throttled back on innovation amid internal
upheaval. The Dreamliner program, approved in 2004, marked a resurgence.
Boeing said the plane, built largely of composite materials, would
leapfrog advanced technologies at Airbus. It would rely more on
electricity to run its systems than existing planes, which used
hydraulic and pneumatic power. The advances meant it would burn 20% less
fuel and cost 30% less to maintain than current models, Boeing promised.

To convince wary airline executives that carbon-fiber body material was
strong, Boeing sales teams carried samples and hammers, letting airline
executives whack the composite with all their might.

Airlines signed on, knowing the risk. "You can't introduce an airplane
so radically different without there being issues," says Robert Milton,
who in 2005 ordered as many as 60 Dreamliners as chief executive of Air
Canada parent Ace Aviation Holdings Inc. "We ordered big, early, but
were never in the first year of deliveries."

As orders rolled in, Chicago-based Boeing grappled with the challenges
of its new technologies, such as protecting 787s from lightning.
Traditional aluminum planes conduct the frequent electric jolts and
dissipate the charge, but the Dreamliner's lightweight composite skin
wouldn't, exposing it to potential damage. As a defense against
lightning, Boeing engineers had to add shielding and metal structures,
putting back more than 2,000 pounds—roughly the weight of 10 passengers.

As the first planes came together, other problems emerged. In early
2007, Boeing abandoned plans for wireless entertainment systems onboard.
The technology wasn't mature enough yet, Boeing executives said.

That year, as Boeing assembled the first prototype 787, it became clear
suppliers were struggling to make their components. Specialized metal
fasteners couldn't be produced quickly enough. Composite fuselage
sections had imperfections that required extensive repairs.

Armies of Boeing engineers fought mounting delays, but new problems
emerged. Excessive moisture trapped by the composite skin, for example,
created condensation dubbed "rain on the plane" that Boeing countered
with wicking material.

In 2009 Boeing Chief Executive Jim McNerney, who had assumed the post in
2005, conceded that "the initial plan outran our ability to execute it."
In retrospect, Mr. McNerney said during an earnings call, "there is no
doubt that the baseline was too ambitious."

—Jon Ostrower contributed to this article.

Write to Daniel Michaels at daniel.michaels@wsj.com


(11) Boeing's Screamliner

http://online.wsj.com/article/SB10001424127887324468104578248122241895526.html

January 20, 2013

By AL LEWIS

Globalization has led to globule-ization for Boeing.

Lithium-ion batteries in its new 787 Dreamliners have been smoking and
spewing corrosive liquids. Aviation authorities around the globe
grounded the planes last week until Boeing can prove its melting
batteries safe.

Such a grounding hasn't happened since 1979, when engines came loose
from McDonnell Douglas DC-10s.

The 787 Dreamliner represents Boeing's future, but now it's stranded on
the tarmac.

Boeing CEO Jim McNerney promised to return the plane to service: "We
stand behind its overall integrity."

He has been in charge since 2005. Before him, an ethics-preaching Phil
Condit was forced to resign after a corruption scandal involving
inflated government contracts. Before Mr. Condit, a married Harry
Stoncipher was forced to resign after a tryst with a female underling.

This is costing untold millions of dollars a day. Did you hear the one
about the Polish airline? On Wednesday, the same day authorities
grounded the Dreamliner, LOT Polish Airlines was planning to inaugurate
Dreamliner service between Chicago and Warsaw.

Tomasz Balcerzak, vice president at the state-controlled airline, wasn't
laughing. He said LOT would seek a lot of compensation from Boeing.

No one knows whether Boeing has a little bug to address or a major flaw
that could take months to correct.

The Dreamliner is a Toyota Prius in the sky. It's made of carbon
composite parts so it's lighter and uses 20% less fuel. Its electrical
system replaces heavier mechanical and hydraulic systems of typical
jets. Lighter, faster-charging, lithium batteries are essential. Boeing
must find a way to keep them from burning and forcing emergency landings
like one All Nippon Airways made in Japan last week. If the batteries
must be replaced with heavier ones, the switch could force a costly
redesign.

The Dreamliner is already years late to market. It's been plagued with
cost overruns and other glitches such as fuel leaks. Its parts are
outsourced from suppliers around the world and assembled by a company
that's grown too-big-to-fail.

U.S. taxpayers supply billions to foreign airlines buying Boeing planes
through the Export-Import Bank. And when Boeing isn't gorging on federal
pork, it's shaking down cities for economic-development plums.

"Boeing is a poster child for corporate tax incentives," Kansas state
Rep. Jim Ward, a Wichita Democrat, complained to Bloomberg News in
January 2012—after Boeing decided to shut down its 80-year-old Wichita
plant. Kansas officials had helped Boeing land a fat U.S. Air Force
contract and had lavished the company with billions in municipal-bond
funding and tax incentives.

In 2001, Boeing pitted Chicago, Dallas and Denver against each other in
a contest to see which city would cough up the most loot for its
corporate headquarters. The company had been based beside its workers in
Seattle since 1917. Now Chicago is stuck with it.

In 2011, the National Labor Relations Board accused Boeing of opening a
plant in South Carolina as an illegal retaliatory strike against its
union workers in Washington. This highly politicized spat was resolved,
but it was no morale builder.

Boeing's melting batteries may be a sign the company has grown too big
since its megamerger with McDonnell Douglas in 1997. Globule-ization is
what happens when a bloated, corporate bureaucracy tries to innovate.

(12) Dreamliner: excess innovation & outsourcing, insufficient
coordination - Steve Denning

http://www.forbes.com/sites/stevedenning/2013/01/21/what-went-wrong-at-boeing/

Steve Denning, Contributor

1/21/2013 @ 2:28AM

What Went Wrong At Boeing?

My article, The Boeing Debacle: Seven Lessons That Every CEO Must Learn,
elicited spirited conversation. Several commentators noted that, in
addition to the general lessons, Boeing made specific errors in the way
it handled outsourcing and offshoring. Let’s take a closer look at those
specifics.

Boeing enthusiastically embraced outsourcing, both locally and
internationally, as a way of lowering costs and accelerating
development. The approach was intended to“reduce the 787's development
time from six to four years and development cost from $10 to $6 billion.”

The end result was the opposite. The project is billions of dollars over
budget and three years behind schedule. “We spent a lot more money,” Jim
Albaugh, Chief of Commercial Airplanes at Boeing, explained in January
2011, “in trying to recover than we ever would have spent if we’d tried
to keep the key technologies closer to home.”

The right goal: add value for customers

Let’s start with what Boeing did right. After losing market share to
Airbus (owned by EADS) in the late 1990s, Boeing could have decided to
focus on reducing the costs (and the selling prices) of its existing
aircraft. That would have led inexorably to corporate death. Instead
Boeing decided—commendably—to innovate with a new aircraft that would
generate revenues by creating value for customers.

First, Boeing aimed to improve their travel experience for the ultimate
customers, the passengers. As compared to the traditional material
(aluminum) used in airplane manufacturing, the composite material to be
used in the 787 (carbon fiber, aluminum and titanium) would allow for
increased humidity and pressure to be maintained in the passenger cabin,
offering substantial improvement to the flying experience. The
lightweight composite materials would enable the 787 to fly nonstop
between any pair of cities without layovers.

Second, Boeing aimed to improve value for its immediate customers (the
airlines) by improved efficiency by using composite materials and an
electrical system using lithium-ion batteries. This would result 20
percent less fuel for comparable flights and cost-per-seat mile 10
percent lower than for any other aircraft. Moreover, unlike the
traditional aluminum fuselages that tend to fatigue, the 787's fuselages
based on composite materials would reduce airlines’ maintenance and
replacement costs.

All good stuff, if Boeing could deliver. Boeing’s customers apparently
thought they could. And the 787 became the fastest selling plane in
aviation history. The stock price popped and the C-suite received their
bonuses. But reality has since set in.

Overheating batteries

We have no way of knowing whether the cause of the current grounding of
all 787s—lithium-ion batteries that overheat alarmingly—is a narrow,
fixable manufacturing glitch or a serious design flaw that will put the
whole enterprise in peril.

It’s true, as CEO James McNerny pointed out in a letter to Boeing staff
on Friday, that “Since entering service 15 months ago, the 787 fleet has
completed 18,000 flights and 50,000 flight hours with eight airlines,
carrying more than 1,000,000 passengers safely to destinations around
the world.” But all that will mean nothing unless and until Boeing can
get to the root cause of those overheating Lithium-ion batteries.

What we do know is that the cost-cutting way that Boeing went about
outsourcing both in the US and beyond did not include steps to mitigate
or eliminate the predicted costs and risks that have already materialized.

The coordination risk

Even with proven technology, there are major risks in outsourcing that
components won’t fit together when the plane is being assembled. “In
order to minimize these potential problems,” wrote Dr. L. J. Hart-Smith,
a Boeing aerospace engineer, in a brilliant paper presented at a 2001
conference, “it is necessary for the prime contractor to provide on-site
quality, supplier-management, and sometimes technical support. If this
is not done, the performance of the prime manufacturer can never exceed
the capabilities of the least proficient of the suppliers. These costs
do not vanish merely because the work itself is out-of-sight.”

Boeing did not plan to provide for such on-site support for its
suppliers. In fact, it explicitly delegated this responsibility to
sub-contractors. When the subcontractors didn’t perform the necessary
coordination, Boeing had to provide the support anyway. “Boeing sent
hundreds of its engineers to the sites of various Tier-1, Tier-2, or
Tier-3 suppliers worldwide to solve various technical problems that
appeared to be the root cause of the delay in the 787's development.
Ultimately, Boeing had to redesign the entire aircraft sub-assembly
process.” The result? Huge additional expense, that should have been
planned for and included in the project’s costs from the outset.

The innovation risk

The 787 involved not merely the outsourcing of a known technology. It
involved major technological innovations unproven in any airplane. Would
the carbon fiber composite survive the rigors of international flying?
Could lithium-ion batteries, which are notorious for overheating and
causing fires that are difficult to put out, be safely used? No one knew
for sure. The 787 also contains multiple new electrical systems, power
and distribution panels. The interactions among these novel
technologies, introduced simultaneously, also exponentially increased
the risk of innovation.

The innovation risk implied a greater involvement by Boeing in the
development and manufacture of the aircraft. Astonishingly, Boeing opted
for lesser involvement, delegating much of the detailed engineering and
procurement to sub-contractors. The result? Unexpected problems have
kept occurring that have delayed the project and increased its cost.

The outsourcing risk

Complicated products like aircraft involve a necessary degree of
outsourcing, simply because the firm lacks the necessary expertise in
some areas, e.g. engines and avionics. However Boeing significantly
increased the amount of outsourcing for the 787 over earlier planes. For
the 737 and 747 it had been at around 35-50 percent. For the 787, Boeing
planned to increase outsourcing to 70 percent.

Boeing didn’t approach outsourcing as a troublesome necessity. Instead,
like many US firms, it enthusiastically embraced outsourcing in the 787
as a means of reducing costs and the time of development. “The 787's
supply chain was envisioned to keep manufacturing and assembly costs
low, while spreading the financial risks of development to Boeing’s
suppliers.”

In his 2001 paper, Hart-Smith had warned of the additional costs and
risks of large-scale outsourcing. Outsourcing didn’t cut costs and
increase profits, he wrote; instead, it drove profits and knowledge to
suppliers while increasing costs for the mother company. “Not only is
the work out-sourced; all of the profits associated with the work are
out-sourced, too.”

Hart-Smith argued that make-buy decisions should be based on complete
assessments of all of the costs: “make-buy decisions should not be made
until after the product has been defined and the relative costs
established.” Outsourcing requires considerable additional up-front
effort in planning to avoid the situation whereby major sub-assemblies
do not fit together at final assembly, increasing the cost by orders of
magnitude more than was saved by designing in isolation from the
work-allocation activities.

Boeing didn’t follow Hart-Smith’s advice and outsourced the engineering
and construction of the plane long before the product was defined and
the relative costs established. The results have been disastrous.
Boeing’s 787 project is many billions of dollars over budget. The
delivery schedule has been pushed back at least 7 times. The first
planes were delivered over three years late.

The risk of tiered outsourcing

Boeing further aggravated these risks by adopting a new outsourcing
model, along with the new technology. Unlike Boeing’s earlier aircraft,
in which Boeing played the traditional role of integrating and
assembling different parts and subsystems produced by its suppliers, the
787's supply chain is based on a tiered structure that would allow
Boeing to foster partnerships with around fifty Tier-1 strategic
partners. These strategic partners were to serve as “integrators” who
assemble different parts and subsystems produced by Tier-2 and Tier-3
suppliers.

In due course, Boeing discovered, as Hart-Smith had predicted, that some
Tier-1 strategic partners did not have the know-how to develop different
sections of the aircraft or the experience to manage their Tier-2
suppliers. To regain control of the development process, Boeing was
forced to buy one of the key Tier-1 suppliers (Vought Aircraft
Industries) and supply expertise to other suppliers. Boeing also had to
pay strategic partners compensation for potential profit losses stemming
from the delays in production.

The risk of partially implementing the Toyota model

Boeing’s outsourcing was modeled in part on Toyota’s supply chain, which
has enabled Toyota to develop new cars with shorter development cycle
times. Toyota successfully outsources around 70 percent of its vehicles
to a trusted group of partner firms.

However key elements of the Toyota outsourcing model were not
implemented at Boeing. Toyota maintains tight control over the overall
design and engineering of its vehicles and only outsources to suppliers
who have proven their ability to deliver with the required timeliness,
quality, cost reduction and continuous innovation. As Toyota works
closely with its suppliers and responds to supplier concerns with
integrity and mutual respect, it has established an impressive level of
professional trust and an overriding preoccupation with product quality.

By contrast, Boeing adopted the superficial structure of Toyota’s tiered
outsourcing model without the values and practices on which it rests.
Instead, Boeing relied on poorly designed contractual arrangements,
which created perverse incentives to work at the speed of the slowest
supplier, by providing penalties for delay but no rewards for timely
delivery.

The offshoring risk

Some degree of outsourcing in other countries—i.e. offshoring—is an
inevitable aspect of manufacturing a complex product like an airplane,
because some expertise exists only in foreign countries. For example,
the capacity to manufacture Lithium-ion batteries lies outside the US.
Boeing had no choice but to have the batteries made in another country.
More than 30 percent of the 787’s components came from overseas. By
contrast, just 5 percent of the parts of the 747, were foreign-made.

While there is nothing in principle wrong with necessary offshoring, the
cultural and language differences and the physical distances involved in
a lengthy supply chain create additional risks. Mitigating them requires
substantial and continuing communications with the suppliers and on-site
involvement, thereby generating additional cost. Boeing didn’t plan for
such communications or involvement, and so incurred additional risk that
materialized.

The risk of communications by computer

Rather than plan for face-to-face communications and on-site
communcations, Boeing introduced a web-based communications tool called
Exostar in which suppliers were supposed to input up-to-date information
about the progress of their work. The tool was meant to provide supply
chain visibility, improve control and integration of critical business
processes, and reduce development time and cost. Instead of people
communicating with people face-to-face, the computer itself was supposed
to flag problems in real time.

Not surprisingly, the tool failed. Suppliers did not input accurate and
timely information, in part due to cultural differences and lack of
trust. As a result, neither Tier-1 suppliers nor Boeing became aware of
problems in a timely fashion. Boeing’s reliance on computer
communications contrasts sharply with Agile practices of continuous
face-to-face communications to ensure that everyone is on the same page.

The labor relations risk

We do not know to what extent Boeing’s enthusiasm for outsourcing and
offshoring stemmed from a desire to circumvent difficult labor relations
in Seattle. We do know that instead of involving the employees in the
decision-making about outsourcing and offshoring, Boeing’s management
approached decision-making pre-emptively. The approach backfired, as
labor relations worsened as a result of the outsourcing decisions and a
costly strike ensued.

The project management skills risk

Given the extraordinary risks of the 787 project, one would have
expected Boeing to assemble a leadership team with a proven record in
supply chain management and diverse expertise to anticipate and mitigate
wide array of risks. Amazingly, this was not the case.

“Boeing’s original leadership team for the 787 program,” write Tang and
Zimmerman in an important case study, “did not include members with
expertise on supply chain risk management. Without the requisite skills
to manage an unconventional supply chain, Boeing was undertaking a huge
managerial risk in uncharted waters.”

The risk of a disengaged C-suite

The combination of the above risks constituted an existential threat to
Boeing as a going concern. Where then was the C-suite while these risks
were being incurred? An interview in 2011 with Philip Condit, who was
the richly compensated CEO of Boeing when the initial 787 decisions were
being made, is revealing.

In 2001, under Condit’s leadership, Boeing moved its headquarters from
Seattle to Chicago, a decision continued by Condit’s successor, James
McNerney. The ostensible reason for the move was to be neutral among the
various divisions of Boeing, which were scattered around the US. In the
interview, Condit makes no secret of another factor: as CEO, he didn’t
want to be bothered with tiresome “how-do-you-design-an-airplane stuff,”
or boring meetings with Boeing’s key customers (airlines) who came to
Seattle.

After the move, Condit says that he spent much of his time in the
Chicago business community, where he “encountered CEOs frequently
gathering to nail down civic goals ranging from landing new companies to
building world-class parks. ‘I was surprised by how much that happened,’
Condit said. ‘A meeting in which Starbucks, Microsoft, Costco, Boeing
and Weyerhaeuser and a bunch of small businesses are all in the same
place — rarely happens in Seattle,” he added. ‘It happened all the time
in Chicago.’”

So while Boeing’s CEO was in Chicago, strategizing about the future of
Boeing and discussing civic goals with CEOs from other companies, the
managers back in Seattle were making business decisions about tiresome
“how-do-you-design-an-airplane stuff” that would determine whether there
would be a firm to strategize about.

(13) Boeing’s secret wing-building know-how transferred to (rival)
Mitsubishi - Eamonn Fingleton

http://www.forbes.com/sites/eamonnfingleton/2013/01/21/what-went-wrong-at-boeing-my-two-cents/

Eamonn Fingleton, Contributor

1/21/2013 @ 6:01AM

What Went Wrong at Boeing: My Two Cents

My colleague Steve Denning’s commentary today on Boeing’s 787 problems
is on the money in identifying a key managerial wrong turning a decade
ago. Boeing decided at the outset to rely on outsourcing for 70 percent
of the plane’s manufactured content. As Steve shows at length, this
greatly increased the managerial complexity of the project and almost
certainly helps explain why the project ended up three years late (with
consequent damage not only to Boeing’s reputation but, thanks to
contractual penalties, to its immediate bottom line).

Even more troubling, however, has been the long-term cost in weakening
Boeing’s competitiveness. This is something I identified in “Boeing,
Boeing….Gone,” a cover story for The American Conservative, as far back
as 2005. The point is that among the things Boeing has outsourced have
been the wings and the wing-box. These are by far the most
technologically advanced elements of an airframe and they were
outsourced to a Japanese consortium led by Mitsubishi Heavy Industries.
Part of the deal was that much of Boeing’s secret wing-building know-how
had to be transferred to Japan. The decision was highly controversial
with Boeing workers who saw it as a direct threat to their jobs.
Outraged at the prone position they were asked to adopt towards their
information-gathering Japanese counterparts, they were quoted by author
Karl Sabbagh as vulgarly referring to Boeing’s technology-transfer deal
as the “open kimono” policy.

Of course, you might think that what was outsourced yesterday can be
insourced today. Actually this rarely happens in the real world, at
least not where seriously advanced manufacturing is concerned. In this
case a key problem is that the 787's are made of carbon fiber. The
learning curve in putting this tricky new material to work has been
climbed by Tokyo-based Toray and Mitsubishi, not by Boeing.
Unfortunately Boeing seems to have negotiated no effective access to the
industrial secrets the Japanese have acquired. In effect Boeing has been
left behind by its suppliers and cannot catch up without major costs
that, given the relentless pressure for short-term profits in corporate
America, will never seem to be worth incurring.

As a practical matter, the Airbus subsidiary of Netherlands-based EADS,
will use Japanese-made carbon-fiber for the wings of its next major
plane. The net effect is that the Japanese have suddenly bootstrapped
themselves to leadership in the jetliner industry. (It should be noted
that Japan’s aggregate contribution to the 787 comes to 30 percent, the
same as that of the United States.) All this is the more piquant because
Mitsubishi seems to be planning in the long run to enter the fray as a
direct competitor to Boeing and Airbus in building full-size commercial
jetliners. Already Mitsubishi is working with Toyota Motor to launch a
90-seat regional jetliner in 2017.

As for the immediate problem of getting the 787 back into the air, the
news this morning is that overcharging seems to have been ruled out as
the cause of the battery problems at the center of the crisis. Meanwhile
Securaplane, a subsidiary of Britain’s Meggitt, which makes chargers for
the 787, has announced it is cooperating in the effort to find the
source of the problem.

Comments

m k 1 day ago

This issue is pervasive throughout American industry, both large and small.

Kai Thorsten 11 hours ago

Agreed.

I will just add two things:

1) A late Forbes auto industry columnist, Jerry Flint, got it right I
think by fingering U.S. business schools as the root cause of this
mindset. The rise of the MBA has been bad news for the U.S. There is a
some MBA disease in Europe too but not nearly as bad.

2) The other root cause for U.S. problems I think is a very, VERY
selfish mindset (ie, me, and -only- me matters). This is I think how
many executives in the U.S. justify short term gains that have appalling
long term costs. If one cares literally only about one’s own hide and
fortunes, then whatever happens in two generations’ time is irrelevant.

I would say that comparatively speaking — not absolutely but
comparatively — there is somewhat more of a sense of connection and
responsibility toward future generations in Europe and Asia. I think
that generally if one were to propose a scheme that had excellent
profits for 2 years, but would hallow out a company of global stature,
that scheme would be declined if proposed in (for example) Germany or
Sweden. And it would definitely not stand a chance in China. Alas, in
the U.S. such a scheme would often have a receptive audience. Over time
this creates a problem for a country.

David French 1 day ago

Well Eamonn…you can blame outsourcing but actually you are pretty wrong.
The main problem is Boeing pushed though very high weight saving Lithium
Ion batteries and charging systems. Lithium has a tendency to catch on
fire….same batteries that have been in Notebook computer fires and at
least one Tesla car flame out. You can blame outsourcing all you want
but that has almost nothing to do with what is happening. Ask an aero
systems or electrical engineer about lithium Ion batteries. I remember
when some Japan Telecom guys blew a hole in a wall when then purposely
overcharged early genereation lithium batteries.

Rick Generick 1 day ago

Actually, he’s right on the money (which is what the issue is,
ultimately). Had Boeing used the engineers they already had in house (as
well as other experts), they would likely have been aware of the battery
issue — or it would never have been used in the first place. Since they
decided to save costs by outsourcing virtually everything, they have no
working 787's, a net monetary loss (I would guess), a lot of P-O’d
customers and significant damage to their previously stellar reputation.
This is the practical result of the boardroom mentality poisoning the
entire company. Sometimes, how much you’re making in any one given
quarter is not the most important consideration.

Eamonn Fingleton, Contributor 22 hours ago

A reply to David French:

You see the issue in too narrow a focus. The fact remains that Boeing’s
decision to outsource 70 percent of the 787 (up from 2 percent of the
747 in the 1960s) opens the way for Mitsubishi and its partners to seize
the lead in commercial jets. Already the Japanese contractors provide
most of the 787's most advanced manufacturing and their contribution
accounts for 30 percent of the plane’s total manufacturing costs.

Marvin McConoughey 1 day ago

Reference: “You might think that what was outsourced yesterday can be
insourced today. Actually this rarely happens in the real world.”
Actually, it is happening more and more in the real world. The story
behind this development, and why it is occurring is in the current The
Economist newspaper.

Eamonn Fingleton, Contributor 22 hours ago

A reply to Marvin McConoughey:

Yes, of course, I am fully aware that the Economist has been talking
about a sudden insourcing boom but its information is not always
reliable. It does not print corrections and when well-informed readers —
such as senior diplomats — challenge the accuracy of its reports their
letters are sometimes consigned to the garbage. As a practical matter
for more than two decades the Economist has had a policy of putting a
“don’t worry, be happy” spin on all American concerns about declining
U.S. competitiveness. The Economist’s reports on insourcing lack a
certain something: overall statistics on America’s trade performance in
the last twenty years. A couple of anecdotes do not change one of the
most important trends in economic history and that trend is, of course,
the collapse of American manufacturing. The cutting edge work that
American corporations now rely on the Japanese and German for cannot be
insourced because US corporations no longer have the production knowhow.

Marvin McConoughey 17 hours ago

I agree, Eamonn, that The Economist is far from perfect. I have
additional reservations about it in several areas. That said, there is
at least a belief expressed that some firms are insourcing, and the
article gave specific instances. In a year or so better data may become
available to show if the trend is robust, and if so, how meaningful.

alex 1 day ago

There is problem with outsourcing. Problem comes mostly due to China low
quality products.

David French 1 day ago

Right …like the ipod, ipad, iphone, samsung plasma TV’s etc….sure
suggest you check what is actually made in China these days.

John Kirkpatrick 1 day ago

So, it comes down to basic executive decisions on outsourcing the
majority of manufacturing. That says alot about US manufacturing over
the last 20 years, and that of course says alot about the US economy, as
well. Having worked in quality for over 30 years, I certainly can see
that relationship, but it is the executive decisions that seem most
relevant here to me. Those factors often go unreported, even though they
are so basic to some of our current problems.

bill thomas 1 day ago

Exactly right. Simple isn’t it.

General Motors and Schwinn bicycles same same.

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batteries (why not experiment small, first?)

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