SPEEA: Boeing's decision to add second line in S.C. bad for everyone

BOEING'S decision to build the second 787 assembly line in South Carolina is bad for the company and employees and will ultimately be bad for shareholders. In point of fact, employees own 10 percent of the Boeing stock, making them arguably the company's largest stockholder group.

The 787 is now more than two years behind schedule. This is largely due to Boeing's abandoning of a long-standing, successful design and production method. Corporate leaders bet the company's future on a new business model based on a far-flung chain of suppliers from around the world.

The concept was to hire other people to do much of the engineering and production work. Boeing employees would perform final assembly, and the company would keep the lion's share of the profit. This is the business model used for consumer goods such as tennis shoes and cellphones. It had never been tried for something as complex as a commercial aircraft. To compound the challenge, Boeing adopted this new "global integration" business model to build the world's first completely composite aircraft.

While Boeing raced to implement this new way to build aircraft, members of the Society of Professional Engineering Employees in Aerospace (SPEEA), IFPTE Local 2001, (which represents engineering, technical and scientific employees) explained in excruciating detail how it would not work for highly complex products like commercial airplanes. Further, SPEEA members told management it would clearly not work to develop a new aircraft based on developing technology.

SPEEA released a formal study in 2002 accurately predicting each and every major problem the 787 program has experienced.

Nonetheless, our message to Boeing is not: "SPEEA told you so." Rather, the message from engineers and technical workers is: "Boeing, you are about to make the same mistake again by spreading limited resources to build a second assembly line."

The 787 program is in trouble for a variety of reasons but the most obvious are quality control and coordination problems arising from Boeing's fragmented supply chain. Separating the production lines by 2,400 miles will only compound these problems and push the point of profitability on the 787 program out years beyond where it should be. Moreover, these added delays are a double-hit on Boeing. The company will be striving to financially "break even" on the 787 while it builds a new plant, trains a new work force and pays penalties — now estimated at $5 billion — to customers waiting for new aircraft.

Instead of generating profits, the 787 is a money pit, siphoning manpower and cash from the 747-8, Air Force tanker and other critical programs. Boeing Chicago's decision to outsource design, engineering and manufacturing failed. Instead of concentrating efforts to get the 787 back on track and in the air, Boeing leaders decided money is better spent setting up a new production line. This will further delay the profitability point of the 787 by nearly doubling capital investment.

The cost of labor for a project like the 787 is between 8 and 9 percent of the billions being spent on development. Increasing productivity is a much larger factor in driving profitability. Labor controls productivity. Experienced workers can drive a program along the learning curve and toward profitability much faster. An inexperienced labor force comes down the learning curve slower. Therefore, beating down labor costs is little help to Boeing's bottom line.

Thousands of dedicated Boeing employees continue to sacrifice family life to work long hours fixing the problems created by a far-flung supply chain and Boeing's disconnected leadership.

This latest shortsighted decision shows that despite what Boeing leaders say, the company is not yet ready to admit "global integration" failed. Until they do, Boeing employees everywhere will worry about their future and shareholders will wonder if the 787 will ever turn a profit.