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Dreamliner is causing nightmares for Boeing

The innovative plane is two years behind schedule and $4 billion over budget.

October 15, 2009|W.J. Hennigan

When Boeing Co. unveiled plans to build the 787 Dreamliner, the aircraft was touted as revolutionary, a major technological shift in the way a plane is made and in the way it operates.

But revolutions rarely come without a struggle.

The 787 is now more than two years behind schedule and by some estimates is costing Boeing $4 billion more to develop than planned. The troubled jetliner has also set back other Boeing projects, analysts say, and has left some suppliers financially strapped.

One major supplier, Vought Aircraft Industries Inc., initially projected it would spend $250 million for tools and machinery to make parts for the aircraft. By July, costs had ballooned to $600 million. The company this summer sold the 787 fuselage assembly operations to Boeing.

"Financial demands of the 787 program were beyond what the company's balance sheet could support," said Lynne Warne, a Vought spokeswoman.

Boeing's acquisition of Vought's factory -- completed so Boeing could have more control over a key aircraft part -- marked a major reversal in the company's strategy and highlighted the pitfalls of making planes that not only use new materials but also are assembled in a radically different way.

The 787 is the first large passenger jet to have more than half its structure made of composite materials (carbon fibers meshed together with epoxy) instead of aluminum sheets. Major parts for the plane would also be pre-assembled elsewhere and then shipped to Everett, Wash., where they would be "snapped together" in three days, compared with a month in the traditional way.

"Any time you're dealing with new material and new techniques, there's bound to be disruptions in development," said Richard Aboulafia, an aerospace analyst with Teal Group Corp., a Virginia-based research firm.

Boeing declined to comment for this article but has said that the delays are the inevitable result of developing an aircraft with a new manufacturing method. Once they work out the kinks, Boeing officials said, they have no doubt it would go down in history as one of the most successful airplanes.

But for now it appears that travelers won't be flying in the plane any time soon. Initially scheduled to fly passengers in May 2008, Boeing has said that won't happen until late next year.

The effect of the delay has been far-reaching, hurting 787 suppliers stretching from Southern California to Russia, Japan and Italy. There are about 50 suppliers in California alone.

"These companies haven't been paid, because Boeing has yet to deliver a plane," said Scott Hamilton, an aviation industry consultant and managing director of Leeham Co. in Issaquah, Wash.

Suppliers refused to talk about their predicament out of fear of hurting their relations with Boeing, but analysts said some parts makers that signed on for the project took on more risk than for any other aircraft's development.

In an unusual arrangement, major suppliers agreed to pay upfront costs for things such as labor and tooling. The risk was considered worth taking because the 787 was billed as the plane of the future, an aircraft that would be in service for the better part of the century. But some suppliers are facing escalating costs that have more than doubled in some cases.

Few disagree that when the 787 gets off the ground, it's a game changer for the aviation industry.

The plane's newly developed engine promises to burn 20% less fuel than jetliners of a similar size. It will seat about 250 passengers, compared with about 150 for Boeing's most popular 737 jet, and Boeing says it will require less maintenance than the current generation of aircraft because it has fewer parts and will sustain less corrosion. Boeing says the 787, which costs about $160 million each, will save airlines about 30% in maintenance expenses.

But the 787 has been delayed five times since October 2007. Many of the hitches have come because of a new production method.

Instead of workers fastening parts together and wiring the plane at Boeing's Everett factory, the bulk of the large components will arrive pre-assembled.

Before the 787, Boeing designed and assembled the bulk of its planes at its facilities. Suppliers made parts from blueprints handed to them by Boeing. For the 787, suppliers have been responsible for their designs and getting those designs approved by safety regulators.

In addition to growing pains from the new responsibilities, suppliers have struggled with dealing with various languages and cultures. Wings are made in Japan and center fuselage sections are made in Italy.

Boeing has tried to simplify the process.

The company bought Vought's 787 fuselage assembly operations in South Carolina after work at the facility continued to have problems. It also acquired Vought's 50% stake in Global Aeronautica, a joint venture with Alenia North America, which is a unit of Italy's Finmeccanica.

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