in

How production pressures plunged Boeing into yet another crisis

SEATTLE (Reuters) – In October, Boeing (NYSE:BA) CEO Dave Calhoun was asked how fast Boeing could raise output of its best-selling 737 MAX after a spate of quality snags. He was upbeat: Boeing would get back to 38 jets a month and was “anxious to build from there as fast as we can.”

As he sought to reassure investors about the recovery of Boeing’s cash cow after another quarterly loss, one of the narrow-bodied jets was waiting at Boeing Field in Seattle for final tests and delivery to Alaska Airlines just six days later.

Four critical bolts were missing.

How a modern jetliner left Boeing’s nearby Renton factory with a loose door panel, setting the clock ticking on a terrifying mid-air blowout on Jan. 5, has triggered soul-searching about quality controls and plunged Boeing into its second safety crisis in five years.

Regulators have suspended Boeing’s plans to ramp up 737 output and Calhoun now says it’s time to “go slow to go fast”, casting doubt on the shape of its recovery from back-to-back crises – first over two MAX crashes that killed 346 people and then the pandemic – which left it $38 billion in debt.

Interviews with a dozen current and former industry executives suggest it was the pressure to produce coupled with an exodus of experienced workers that contributed to a slow-rolling industrial train wreck, ending with 171 passengers staring out of a gaping hole at 16,000 feet.

“It looks like Boeing has been more focused on investing in ramping up into higher production rates than taking its quality system to the next level,” said manufacturing expert Kevin Michaels, managing director of aerospace consulting firm AeroDynamic Advisory in Michigan.

Two sources familiar with Boeing’s quality division told Reuters that controls had atrophied in recent years after many experienced inspectors left during the pandemic and amid the pressure to stick to the production recovery schedule.

While Boeing says it has added more inspectors since COVID, many were inexperienced and checking work done by mechanics who themselves had only recently been hired, the sources said, speaking on condition they were not identified.

Asked for comment, Boeing referred Reuters to Calhoun’s remarks last month that it had “taken close care not to push the system too fast” and had never hesitated to slow or halt production, nor stop deliveries, to get things right.

The company says new manufacturing employees attend courses for 10 to 14 weeks then get 6 to 8 weeks of hands-on training. They are also required to win certifications as they progress.

‘WHO SIGNED OFF?’

Since the Alaska Airlines blowout, Boeing has also said it is implementing plans to improve quality in its 737 system including more inspections and has commissioned an independent study of quality management.

The National Transportation Safety Board (NTSB) said on Tuesday the door plug, which replaces an unused emergency exit in some planes, appeared to be missing four key bolts.

U.S. Senator Tammy Duckworth, who chairs an aviation subcommittee, told Reuters the NTSB’s interim report raised serious questions about Boeing’s quality inspection processes.

“Why is it that nobody caught it? … Who signed off on this work?” she said.

The seeds of the problems that have beset Boeing were sown many years before but accelerated after the crisis caused by the MAX crashes in 2018 and 2019 and the industry chaos during the pandemic that followed, the industry executives said.

The fuel-saving Airbus A320neo and 737 MAX were launched in 2010 and 2011 into a hot aviation market fuelled by low interest rates, high oil prices and the rise of low-cost Asian airlines.

For much of the last decade, orders to serve a global middle-class have rained down on the two biggest planemakers, leading to a war for market share and the long wait-times that executives say still underpin today’s pressure to produce.

To feed the surge in demand for the workhorse jets, Boeing and Airbus have increasingly turned to the car industry for help in making their factories and supply chains more efficient.

Both extracted a price from suppliers for joining the speeding train of aerospace production: cheaper parts in exchange for high volume. Boeing dropped a widely criticized supplier cost-cutting project during COVID after years of what one former manager called an efficiency rallying cry.

In his first public speech since the accident, Boeing’s supply chain chief Ihssane Mounir struck a collaborative note and urged suppliers to speak up and join a forum of more than 30 companies set up to help untangle supply chains.

MANUFACTURING DEFECTS

Airbus and others have also wrestled with quality and staff shortages as the pandemic snapped an already stretched supply chain. Europe’s regulator last week called for inspections for microscopic gaps on the A380 after a manufacturing flaw.

Speed alone was not the problem, experts say. Boeing had reached a peak of 57 jets a month with fewer quality problems before the second of two MAX crashes interrupted output in 2019.

But as Boeing gradually rebuilt production in the wake of the pandemic, it grappled with a series of high-profile manufacturing defects which slowed or, in the case of the 787 Dreamliner, even stopped airplane deliveries.

In December, U.S. regulators said a foreign airline had found a bolt with a missing nut in a MAX 737 rudder system and Boeing discovered a case of a nut not properly tightened.

It was not until last month’s blowout that financial and output targets took a back seat and Boeing acknowledged errors, citing a quality issue as carriers found yet more loose bolts.

Boeing will now be under pressure to connect the dots more quickly. “There are signals but also a lot of noise,” a person familiar with internal briefings said, using the statistical jargon for separating out meaningful information.

But the industry executives said there was no substitute for human inspections and raised questions about the lingering effect of previous cost cuts and Boeing’s culture, which is already the subject of a separate investigation by the U.S. Federal Aviation Administration (FAA).

Ed Pierson, a former Boeing senior manager who was a whistleblower during the 2018-2019 MAX crisis, said Boeing began cutting quality inspections during his final years there, which ended in August 2018.

“The logic is, if you can remove those inspections, you can accelerate production,” he told Reuters.

THE CORRECT TORQUE

After the pandemic struck in 2020, Boeing, already reeling from the MAX crisis, announced 30,000 layoffs in two stages.

Boeing and others are now trying to woo back workers but face a brain drain just as output speeds up. This time, the well-worn cyclical pattern of rehiring workers has been tough.

Boeing Commercial Airplanes CEO Stan Deal told staff last month it had added 20% more inspectors since 2019 and would increase 737 inspections.

Labor headaches do not end there. According to the classic manufacturing playbook, as production speeds up it must stay in sync with the capacity of suppliers to provide parts and the familiarity that workers develop as they repeat new tasks.

Getting this so-called learning curve wrong risks mistakes, waste and cost – or in the worst case, safety.

“If I’m sitting there riveting something onto an airplane or an airframe, or I’m bolting something into an airplane, there’s got to be at least one person coming after to me to inspect my work,” said Louis Gialloreto, associate professor and aerospace expert at Montreal’s McGill Executive Institute business school.

The torquing of bolts appears to be a case in point.

It has been at the center of past disputes between Boeing and unions over efforts to be more efficient by reducing inspections and the company issued a bulletin last week to suppliers laying out practices to ensure bolts are tightened.

In 2019, during a visit by Reuters to a 787 plant in South Carolina, Boeing demonstrated “smart” wrenches that tell machinists if they are applying the correct torque. Boeing said this would allow some secondary checks to be safely removed.

Boeing’s machinist union warned at the time that the “Quality Transformation” initiative would push defects down the production line or delay deliveries and drive up work injuries.

Boeing’s Deal said on Sunday it would speed up purchases of tools so that all 737 workers have the right equipment.

TRAVELLED WORK

Getting the manufacturing balance right is all the more challenging as jets and especially their increasingly customised cabins end up in the wrong order because of missing parts.

A 737 moves one position down the production line every day regardless of whether all work is performed. When parts are unavailable, employees are forced to conduct out-of-sequence or “travelled” work, meaning they have to bring tools to another part of the line and finish work there, industry experts say.

Airbus has faced similar problems as it struggles to meet output goals, according to a 2023 memo seen by Reuters.

On top of that, Boeing is wrestling with dozens of jets that weren’t delivered during MAX groundings, or as a result of U.S.-China tensions, and must now be reworked.

On Sunday, Boeing called time on travelled work, though many industry experts say that will be no easy task. “We need to perform jobs at their assigned position,” Boeing’s Deal said.

Representative Rick Larsen, the top Democrat on the House Transportation Committee, backs the FAA’s unusual cap on Boeing production even though it affects his Washington State district.

“That’s the way it’s going to have to be because Boeing has earned this attention for all the wrong reasons,” he said.


Source: Economy - investing.com

Thai PM: will keep urging central bank to cut rates

Analysis-SoftBank sees new-found caution as secret weapon in AI arms race