Will Boeing delay the 787 Dreamliner another two years?

My recent post about Boeing's (BA) leak that it had shut down Alenia, one of its suppliers in Naples, Italy, encouraged several people close to the company to contact me. One of these people, who requested to remain anonymous, told me he spent two years working as a consultant with the 787 program across several of Boeing's systems and manufacturing organizations.

While I have only exchanged emails with him and spoken to him once, his concerns about the 787 program seem plausible. And he estimates that the 787's problems could take at least another two years to solve.

How so? My source told me that there are significant problems with a number of systems for the 787 -- news of which has so far not reached the public. The delays to date have been blamed on a variety of ills -- including suppliers not meeting deadlines, an insufficient number of fasteners, a machinist strike, problems with the 787's wing assembly -- which is causing problems where the wing attaches to the fuselage and most recently, fuselage skin wrinkling.

But I was stunned by his claim that several of the systems -- which are being made by Hamilton Sundstrand (HS) -- a United Technologies (UTX) subsidiary -- are not working. He identified the the 787's Environmental Control System (ECS), which is intended to pressurize the aircraft, as a particular problem. He says he believes there is not a technological solution to the problem.

When I asked Boeing for comment, a spokesperson said, "The 787's systems are working, including the environmental control system that pressurizes the airplane. We are continuing to improve and mature the systems, as is normal for a development program." A Hamilton Sundstrand spokesperson told me that he had no knowledge of such problems.

However, my source told me he spoke just yesterday with an engineer employed by a current Boeing partner who confirmed that this problem has not been solved. In addition to the ECS problems, he says that the 787's electrical system has not lived up to expectations and several redesigns are necessary before the aircraft enters into service.

I don't know what my source's motivations would be for providing this information, but given all the delays and leaks, I thought it worth reporting.

There is a deeper problem with the 787 and that has to do with Boeing's management style. As I wrote in my book, Boeing has a long history of command-and-control leadership -- where top executives tell everyone else what to do. Under its new CEO, Jim McNerney, Boeing had adopted a so-called Transformational Leadership (TL) approach which empowered workers to make decisions, have ownership, and to take responsibility for success and/or failure.

TL was behind Boeing's radical decision to outsource 60 percent of the 787 design and manufacturing to its suppliers. In the past, Boeing had given its suppliers very detailed specifications. But with the 787, Boeing let the suppliers do the design and manufacturing. The first manager of the 787, Mike Bair, was a transformational leader.

Bair took the blame for the 787's delays and Boeing replaced Bair with Pat Shanahan from Boeing's defense unit. As such, Boeing reverted back to its old command-and-control style of leadership. My source claims that when Boeing spent three days in the spring of 2008 with HS, the supplier of the 787's electrical systems, Boeing issued orders to its supplier about how it wanted HS to fix the problems.

Rather than listen to what HS thought would work, Shanahan's team issued orders. And according to my source, HS agreed to what Shanahan wanted even though it did not believed that his ideas or time-line would work.

This story, if true, is deeply troubling because it suggests that Boeing could be panicking and reverting back to its old style of working -- but this time without sufficient technical know-how to make the right decisions. If Boeing is suffering from this deeper management problem, delivering the 850 787 Dreamliners that the airlines have ordered is going to be an even bigger nightmare than I had previously thought.

Peter Cohan is amanagement consultant, Babson professor and author of eight books including, You Can't Order Change. Follow him on Twitter. He has no financial interest in the securities mentioned.

Read Full Story
  • DJI27677.7928.010.10%
  • NIKKEI 22523354.4054.310.23%
    Hang Seng26498.37281.331.07%
  • USD (PER EUR)1.11-0.0012-0.11%
    USD (PER CHF)1.01-0.0015-0.14%
    JPY (PER USD)108.59-0.1520-0.14%
    GBP (PER USD)1.31-0.0028-0.21%