As reported by The Seattle Times, in a January appearance at Seattle University, Boeing Commercial Airplanes Chief Jim Albaugh talked about lessons learned from a disastrous three years of delays on the 787 Dreamliner.
In the university talk and a subsequent interview, Albaugh was extremely candid about the 787's global outsourcing strategy -- specifically intended to slash Boeing's costs -- which, essentially, he admitted had backfired. "We spent a lot more money in trying to recover than we ever would have spent if we'd tried to keep the key technologies closer to home," Albaugh told the large audience of students and faculty.
As noted by Seattle Times, "Boeing was forced to compensate, support or buy out the partners it brought in to share the cost of the new jet's development, and now bears the brunt of additional costs due to the delays. Some Wall Street analysts estimate those added costs at between $12 billion and $18 billion, on top of the $5 billion Boeing originally planned to invest."
Albaugh avoided directly criticizing the decisions of his predecessors. The report notes that the 787 outsourcing strategy was put place in 2003 by then-Boeing Chairman Harry Stonecipher, who was ousted in 2005, and Commercial Airplanes Chief Alan Mulally, now chief executive at Ford. "It's easy to look in the rear-view mirror and see things that could have been done differently," Albaugh was quoted as saying. "I wasn't sitting in the room and I don't know what they were facing."
And yet, the report goes on to examine how at least one senior technical engineer within Boeing predicted the outcome of the extensive outsourcing strategy a decade ago, in a paper presented at an internal company symposium -- described as "a biting critique of excessive outsourcing [and] a warning to Boeing not to go down the path that had led Douglas Aircraft to virtual obsolescence by the mid-1990s." The 2001 paper laid out the extreme risks of outsourcing core technology, predicting that it would bring massive additional costs and require Boeing to buy out partners who could not perform.
Albaugh said in the interview that he read the paper, authored by former Boeing Senior Technical Fellow and and world-renowned airplane structures engineer John Hart-Smith, six or seven years ago, and conceded that it had "a lot of good points" and was "pretty prescient."
Full Story: A 'prescient' warning to Boeing on 787 trouble (Seattle Times)
