Boeing, Supplier Wrestle to Produce Key Component
August 20 2015 - 06:00PM
Dow Jones News
Boeing Co. and a key supplier are wrestling to produce a
crucial, innovative component for the updated version of its
workhorse 737 jet, amid concerns that a shortage could derail
ambitious plans to boost production.
Difficulties consistently manufacturing part of the engine
thrust reverser that slows jets on landing have been flagged by
Boeing as the biggest development challenge at the plane maker's
commercial unit, according to senior industry officials.
While Boeing executives have recently played down the potential
impact, there remain significant concerns among industry executives
and engineers familiar with the issues that supplier GKN PLC won't
be able to produce enough of the component to support the rapid
production transition to Boeing's 737 Max jetliner.
"It is by far the gorilla in the room," said one person familiar
with Boeing's concerns.
Boeing plans to boost monthly output of the single-aisle Max
from less than one to 52 before the end of the decade, the
steepest-ever increase in jetliner production. Investors are
monitoring any problems that could weigh down its expansion plan
and weaken Boeing's closely watched cash-flow projections.
Boeing executives acknowledged the challenges, but the company
said it has "every confidence that our production processes" will
hit output targets, and is working to demonstrate the component can
be produced as quickly as it is needed.
The problems stem from the inner wall of the thrust reverser,
which is made from an exotic titanium honeycomb to save weight, fit
the available space and withstand the high temperatures of the
engine, which is made by CFM International, a joint venture between
General Electric Co. and Safran SA.
"We are really having to muscle through that one…but as with a
lot of new technology we're finding that we're having to really
stabilize the process," Keith Leverkuhn, vice president and general
manager of the 737 Max program, said in a recent interview.
"Nothing's happening as fast as I would like in general," he
said, adding that GKN is "applying all the necessary expertise from
across their enterprise" to make it work.
One senior supplier executive said the availability of enough
inner walls is at the top of Boeing's development concerns. "It's a
[production] rate question," the person said. Boeing is asking "I'm
having this issue today, what does it tell you about my rate
readiness?"
Job listings seeking engineers to work on the inner wall project
said GKN will need to produce enough to supply 50 aircraft a month
by 2018.
Signs of trouble with the inner wall structure have been brewing
for some time. According to a September 2014 regulatory filing,
Spirit AeroSystems Holdings Inc., which makes the 737 engine thrust
reverser, transferred responsibility for working with GKN on the
inner wall back to Boeing.
"We've got a lot of attention on it," said Scott Fancher,
Boeing's vice president of airplane development, adding that
increased oversight is needed for new technology. "Titanium is
famous for being challenging from a producibility standpoint."
Boeing said the component doesn't threaten its ability to fly in
early 2016 and certify the jet with regulators in 2017. Mr.
Leverkuhn said the company has done a "done tremendous amount of
work" to be ready for its production ramp-up.
The senior supplier executive noted the first walls produced for
testing the new CFM International engines were "able to make it to
the specification, but it was very time-consuming."
Both Boeing and rival Airbus Group SE are pursuing record
production increases to quickly deliver leaps in efficiency to
cost-conscious airlines. The jet makers have invested heavily to
monitor their global supply chains to introduce new engine
technology on their cash cow single-aisle jets.
"The ramifications are massive when you're talking about
something that is providing such a large portion of Boeing's
profits," said Kevin Michaels, vice president with ICF
International's aerospace consulting practice. He estimated the
existing 737 model contributes 40% to 45% of the earnings from
operations at Boeing's commercial arm, which totaled $6.4 billion
in 2014.
A GKN spokeswoman declined to comment, referring question to
Boeing.
To be sure, Boeing and GKN have as much as two years to resolve
the engine wall issues before its first deliveries, starting with
Southwest Airlines Co. in the third quarter of 2017.
However, the ramping up production of 737 Max parts is already
well under way. Boeing in late May began preparing the first wings
in its Washington state factories, and Spirit plans to to deliver
the first fuselage to Boeing ahead of the September start of final
assembly on a new dedicated line.
Boeing has orders for 2,839 of the 125- to 200-seat Max jets,
and plans to raise overall production of all 737 models to 47 each
month in 2017 and again to 52 in 2018, from 42 today.
Write to Jon Ostrower at jon.ostrower@wsj.com
Subscribe to WSJ: http://online.wsj.com?mod=djnwires
(END) Dow Jones Newswires
August 20, 2015 17:45 ET (21:45 GMT)
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