ANALYSIS: Boeing spools-up bicoastal 787 lines to boost bottom line

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Two final assembly lines on two different US coasts are poised to give Boeing the production power it needs to take the 787 Dreamliner bottom line from red to black by decade's end - or so the theory goes.

From a financial standpoint, a rapid rise in production is a necessity for the 787 programme, which came to market 3.5 years later than promised, in order to convert the 850-order pipeline into revenue as well as to get aircraft to customers without further delay.

With a steady production rate of 10 aircraft per month before 2014, Boeing is expecting an inflection point in 2015 where costs to build a 787 dip below the average sales price, beginning the process of recouping the more than $20 billion in deferred production costs it will have taken to get that far. Boeing has predicted that it will begin making a profit on the 787 after approximately 1,100 aircraft are delivered, a benchmark it has said will occur before 2020. As of 6 June, Boeing had delivered a total of 11 787s.

"We think we're going to have plenty of opportunity to make this a very profitable programme as we go forward," said Boeing Commercial Airplanes (BCA) chief executive Jim Albaugh during the company's annual investor conference in May, alluding to Boeing's predicted market potential of 3,300 787s.

Seattle is currently building 3.5 aircraft per month at the Everett final assembly line, a number slated to increase to five per month by the end of the year and seven per month by the end of 2013. At the final assembly line in North Charleston, South Carolina, which completed its first assembled aircraft (airplane 46 for Air India) in April, the rate is set to increase from essentially zero now to three aircraft per month by the end of 2013, bringing the company-wide total to 10 per month. The North Charleston final assembly line plans to deliver four aircraft in total this year from its new delivery centre there, all to Air India.

The production ramp-up microscope is focused on North Charleston, where 6,000 non-unionised Boeing and contract workers build all 787 aft-body sections and assemble mid-body sections built elsewhere and brought to Charleston using the Boeing 747-400 large cargo freighter (LCF).

IN CONTROL

"To go to 10, I really believe that the real issues are going to be in our control, and that's good," says Albaugh. "It's going to be the aft- and also the mid-body assembly that we do down in Charleston. And we have a plan in place to get to 10, and that's a two-day flow."

Albaugh says Boeing is looking at even higher rates, possibly up to 14 per month: "And I think the good thing about the team is just last week, they finally put a number of higher than 10 on the chart. Don't write down that we're going to higher than 10, but we're trying to understand what it would take to get higher than 10. And once we get to 10, we'll look at where we want to go from there."

In North Charleston, officials are working towards building 10 mid-body and 10 aft-body sections and three completed aircraft per month by the end of 2013, up from 3.5 mid- and aft-body sections and less than one assembled aircraft per month now. Completed components either stay at Charleston for final assembly or go to Everett on the LCF for assembly there.

Airplane 46, the first from North Charleston, achieved a successful 5h post-production test flight on 23 May, and one week later was flown to Boeing's painting contractor, Leading Edge Aviation Services in Fort Worth, Texas, for painting in Air India colours. Delivery was slated to occur some time in June.

JOINING UP

The aft-body portion of the 787 is composed of two composite sections, 47 and 48, which are wound, baked, broached and joined together in North Charleston. In the mid-body building, workers assemble sections 43, 11 and 45, flown in on the LCF from Nagoya, and sections 44 and 46, flown in from Italy. The mid-body line also installs certain environment, electrical and other systems into the section, and performs testing.

Development in Charleston is also underway for the 787-9, which is slated to enter service later in 2014 with Air New Zealand. Boeing South Carolina will this summer build a pre-production verification (PPV) prototype of the aft-section of the stretched, longer-range variant, which is to hold as many as 290 passengers, up from 250 for the 787-8.

The 6m (20ft) fuselage extension will be accomplished by lengthening the rear of mid-body section 43 and lengthening the front of mid-body section 46.

Building of the first production 787-9 aft fuselage components will commence at the facility in the fourth quarter, and assembly of the first aft-body structure will start in 2013. Assembly of the first 787-9 mid-body is to begin circa the second quarter of 2013. The first production 787-9 will be airplane 126.

Boeing has not yet decided whether to launch the 787-10, which would hold between 290-310 passengers.

U-TURN

Dreamliner components that stay in North Charleston enter a U-shaped final assembly line with eight positions, two of which (positions 6 and 7) are reserved for an "inclement weather protection plan" and for "future production requirements" (see graphic). Boeing is currently using a five-position straight-line final assembly line in Everett, with a second "surge" line in operation, separated from the primary line by the Boeing 777 assembly line.

Boeing chief financial officer Greg Smith says the company has more than 600 employees dedicated to the 787 supply chain, monitoring its health via metrics that include capacity, performance, skill mix and tooling. "We track this on an ongoing basis and we are seeing improvements", he says, adding that "travelled work and the condition of assembly coming in from our supply chain are nearing 100% complete, which really does validate the production system as we've designed it, and gives us the confidence as we move forward and continue to increase rates on the programme".

Albaugh says Boeing has a team of 600 employees whose responsibility it is to "really understand what's going on in the supply chain", which for the 787 includes 500 suppliers that Boeing is actively tracking. "We rate them, you know, red, yellow, green," he says. "We've got a lot of data on all of them, and there are only two right now that we are actively managing."

Smith says the team has "about 350 projects underway" focused on improving the efficiency and operation of the supply chain, and is studying as many as 400 new projects.

Eliminating travelled work (unfinished tasks that are completed later in an assembly) and post-production engineering changes is key to rate increases and unit cost decreases. In mid-June Boeing was nearing completion of its first 787 in Everett that did not require "change incorporation" after final assembly. This first so-called "right to pre-flight" aircraft went into flight test directly from the factory floor. While airplane 66 did not require post-production changes, it did require a number of "travelled" items to be completed.

During a first-quarter earnings report on 25 April, Boeing chief executive Jim McNerney said the "engineering changes", many based on flight-test discoveries, have now "largely stopped". Boeing says unit costs of those 787s not needing post-production modifications will be down by 50% compared with the first delivered aircraft; however, a large number of aircraft will still need the changes.

"We will still have planes in modification this summer, but it will be worked down on plan," says McNerney. "By the second half of the year, you should notice a significant decline in the number of those planes hanging around." Of the expected 37-40 787s to be completed this year, Boeing says more than half will still need change incorporations at Boeing's Everett Modification Center. The number is expected to trail off in 2014.

Once in the air, the product appears to be largely free of production problems. Albaugh says delivered aircraft flying with All Nippon Airways and Japan Airlines have a dispatch reliability of "about 98%", "maybe a little ahead" of the Boeing 777 initially.

"There are some parts failures that we're having," says Albaugh. "We've got about half of those fixed. We also have some issues relative to the flight management computer.

"When we start up the airplane on the morning, you get some spurious readings. We [have] a new software drop that's coming, which will fix that problem. We think sometime this summer, we can get north of 99% [dispatch reliability]."

As a relatively late-comer to final assembly, North Charleston was able to avoid Everett's learning curve to some extent, producing its first 787 with no change incorporations necessary. It does, however, continue to have a certain number of travellers. Boeing South Carolina manager Jack Jones says airplane 46, the first 787 completed at North Charleston, left the factory with 96 travellers. "A couple of hundred is not unusual," he says.