The intricacies of outsourcing

The globalization of airplane manufacturing that has depressed wages at suppliers here has a surprising twist at local firm Tyee Aircraft: Tyee won its 787 Dreamliner contract largely by outsourcing a crucial piece of the parts production to Mexico.

At a seminar for Washington state aerospace suppliers in Lynnwood last February, Tyee Vice President Jim Mullen plugged outsourcing as a way for smaller aerospace companies to survive.

"Why would you take jobs away from the neighborhood?" Mullen asked rhetorically. He answered: "The reality is you are just creating different jobs."

Tyee, which employs some 130 people in Everett, makes the connecting tie rods that hold in place aircraft interior fixtures such as stowbins, galleys and lavatories.

Before the 787, Tyee made only metal tie rods. But on the Dreamliner, it put in a bid to produce tie rods made of lighter, carbon-fiber-based composite plastic.

The company didn't have the high-pressure ovens, called autoclaves, to cure the composite material into hardness. And it had no experience in producing the material.

Going it alone would have required investing $6 million in new equipment and starting from scratch on a steep learning curve.

Instead, Tyee found a California-based manufacturer of carbon-fiber-composite golf-club shafts, baseball bats and mountain-bike parts. It now supplies Tyee long composite tubes from its plant in Tijuana, Mexico. Tyee builds the 787 tie rods, nearly 300 per plane, from those tubes and titanium end pieces it makes in Everett.

The Mexican workers earn $3 to $4 an hour, Mullen said. But that wasn't the impetus to outsource, he said in an interview at the Everett plant.

"The real issue was how quickly could we get this product developed and could we do it without investing in capital equipment?" Mullen said.

He said the 787 work is new business that Tyee wouldn't have won without the outsourcing.

"We don't expect to lose any people by buying materials offshore," Mullen added.