For Boeing, the 787 Dreamliner Nightmare Just Won't Stop

Boeing 787 Dreamliner
Boeing 787 Dreamliner

Boeing's Dreamliner is the nightmare that won't let up. Based on a Seattle Times report, it looks likely that the 787 -- already three years late -- is saddled with enormous technical problems that could delay it two more years and cost Boeing (BA) $12 billion, 120% more than its original budget.

I've written about the litany of problems -- too much outsourcing, inability to predict how composite materials would behave in the real world, problems with the electrical and environmental control systems and labor issues. But the latest news suggests that the entire thing is much worse than previously known.

The 787 still has 865 orders (although it had 120 more prior to cancellations). And it costs anywhere from $161 million to $205 million a copy -- yielding a backlog of at least $139 billion. Using interviews from anonymous Boeing employees, the Seattle Times uncovered big problems. Here are the most significant:

  • Cost overruns. The 787 was originally expected to cost $5 billion to develop, but now analysts think it will cost $12 billion or perhaps $18 billion to complete.

  • Inability to fly long distances. The Federal Aviation Administration (FAA) is threatening to withhold certifying the 787 to fly the intercontinental routes that airlines expect it to serve.

  • Rain in the plane. This is the humorous term for heavy condensation dripping inside the jet's composite plastic fuselage. Boeing claims to be working on a solution, but who knows whether it will work.

  • Management problems. I have heard about big communications problems where management will fire people who give bad news. Employees working on the 787 complain about poor supplier oversight and a management system that a senior engineer told the Seattle Times is "totally broken. This program is not like anything we've seen. It's a screwed-up mess."

  • Supplier problems. Boeing has had well-documented problems with the Rolls-Royce engines shredding their mini-blades, horizontal tails being poorly built by Italy's Alenia and electrical system problems that caused a fire in a test flight in Laredo, Texas.

  • Unfinished aircraft in inventory. To deliver the 20 787s built since the six flight-test planes, mechanics will have to complete "more than 100,500 tasks," according to the Seattle Times.

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What I find most striking is how Boeing seems to have strayed so far from what made it great. It has confronted delays with new aircraft in the past, but its management used to be very focused on getting people to identify problems on the shop floor, bring ideas for solutions to management and move forward to fix them.

But with the 787, that approach seems to be out the door. Boeing decided to outsource 60% of the design and manufacturing of the 787 so it could shift the risk onto its suppliers and speed up development. Boeing was too trusting of these suppliers, which continue to disappoint.

Combine that extreme outsourcing with the use of a new technology -- composite plastics instead of aluminum -- and you get an engineering nightmare that just doesn't seem to end.

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