lightsaber wrote:

Agreed, the -9 shouldn't have been produced. But it has been. To maintain production is cheap. With already with nine of the -9 delivered, it is too late to take them back.

So now it is time to sell it. It becomes the discount -10 MAX. clinch an order buy upgauging a -8 MAX order for cheap (cost or so).

Lightsaber

Agree, now that they have it they will sell it, however, I think the 9 will go the way of the 900 when the 900ER became available, Boeing simply ceased producing the 900.

Revelation wrote:

https://leehamnews.com/2018/08/15/some-suppliers-consider-sitting-out-boeings-nma-program/ suggests some suppliers may walk away from the 797 program rather than accept Boeing's demands for low initial price and little/no life time revenue stream.

I kind of feel the piece is all over the place. It tries to make the above argument, but in the end it says vendors simply don't have a choice because this is the only clean sheet program likely to emerge for a few years and if they want the work they need to find a way on to the program.

I tend to agree with the later. There still are enough vendors competing to be on the project that Boeing can still get them to compete with each other, and in some cases Boeing could still choose to pull the work in house.

Lots of things about the industry are changing. It might be a hard transition for many vendors but they don't have many options.

This is a very important conversations. This is the type of discussion (not cabin width) that is critical to closing the business case. The after market, spares and services market is getting more and more competitive. Suppliers have been successful in bidding low to get parts on airplanes and then earning their money on design changes and spare parts. Airlines cried foul that suppliers designed a lousy part that earns them constant repair and replacement revenue. Boeing and Airbus have reacted and are tightening contracts to block suppliers from gouging the airlines. It is a fascinating game that is being played. The strategy previously used of bidding low and earning money on aftermarket mods, repairs and spare parts is not as lucrative as it used to be.

I am not surprised to see UTAS complaining. They are one of the worst companies for the airlines to deal with since they gouge the airlines anywhere they possibly can. They keep buying up companies and rolling out these aggressive policies.

par13del wrote:

WIederling wrote:

First ruin your partner and then acquire the train wreck cheaply.
One could view that as strategy.

...which makes little sense since they were not obligated to use partners. I believe that the largest gain Boeing wanted from the 787 was all domestic, that was the creation of another production facility outside of the control of the unions in the North West. So far other than an initial quality control issue it appears to be working out and based on their plans, bodes well for Boeing's future beyond the 787. Any bets that the south will also play a huge role in the 737 replacement and whatever new frame they produce?

The South you speak of is likely to be South America playing a huge role in the 737 replacement. It is pretty likely to be designed and built by the JV with Embraer assuming it closes.

Newbiepilot wrote:

This is a very important conversations. This is the type of discussion (not cabin width) that is critical to closing the business case. The after market, spares and services market is getting more and more competitive. Suppliers have been successful in bidding low to get parts on airplanes and then earning their money on design changes and spare parts. Airlines cried foul that suppliers designed a lousy part that earns them constant repair and replacement revenue. Boeing and Airbus have reacted and are tightening contracts to block suppliers from gouging the airlines. It is a fascinating game that is being played. The strategy previously used of bidding low and earning money on aftermarket mods, repairs and spare parts is not as lucrative as it used to be.

I am not surprised to see UTAS complaining. They are one of the worst companies for the airlines to deal with since they gouge the airlines anywhere they possibly can. They keep buying up companies and rolling out these aggressive policies.

That angle ( vendors nickeling and diming airline customers ) hasn't been brought forth much if at all. Thanks for sharing the interesting perspective.

Revelation wrote:

Newbiepilot wrote:

This is a very important conversations. This is the type of discussion (not cabin width) that is critical to closing the business case. The after market, spares and services market is getting more and more competitive. Suppliers have been successful in bidding low to get parts on airplanes and then earning their money on design changes and spare parts. Airlines cried foul that suppliers designed a lousy part that earns them constant repair and replacement revenue. Boeing and Airbus have reacted and are tightening contracts to block suppliers from gouging the airlines. It is a fascinating game that is being played. The strategy previously used of bidding low and earning money on aftermarket mods, repairs and spare parts is not as lucrative as it used to be.

I am not surprised to see UTAS complaining. They are one of the worst companies for the airlines to deal with since they gouge the airlines anywhere they possibly can. They keep buying up companies and rolling out these aggressive policies.

That angle ( vendors nickeling and diming airline customers ) hasn't been brought forth much if at all. Thanks for sharing the interesting perspective.

Suppliers also get very aggressive with intellectual property. Decades ago when much more of the airplane was designed in house by Boeing, Rotable spares were the issue. Boeing got around this by competing multiple suppliers and giving choices (for example Airlines could choose between two brands of engines, generators, hydraulic pumps, brakes, tires, etc). As certification and design requirements have been getting more complicated, fewer parts have competing supplier designs approved. This has allowed vendors to get aggressive with IP and restrict access to parts and repair options. The vendors want to force airlines to buy new OEM (original equipment manufacturer) parts, which brings in revenue rather than let parts get repaired. They also want to protect details of the design from being released so that piece parts can not be fabricated by third party repair shops. Component Maintenance Manuals are supposed to go down to the lowest level so that further disassembly would destroy the part, but vendors are getting creative to block repair shops or airlines from repairing parts.

More recently, more and more parts are designed by suppliers. Engineering drawing access is limited for airlines and they are forced to buy parts from the OEM. Vendors like UTAS like to be sneaky and charge $ thousands per repair whenever possible under the contracts when the airlines use an overhaul shop or MRO. Boeing on the other hand provides repair designs for free under most circumstances as long as the airline purchased the plane from Boeing.

Again it is a fascinating game where airlines, manufacturers and vendors are all competing for revenue. Deciding what suppliers get to build what parts, what the contract language is and what parts are done in house are critical to the cost and revenue stream of the NMA. The NMA is going further into the supplier selection and contracts phase than other airplanes before launch. This will help solidify the actual manufacturing costs and the operating costs of the airplane. This is all a part of the business case. Airlines also want much more sophisticated guarantees on price and operating costs including details on the supplier contracts. I think most people on this forum think Boeing is dragging their feet on the business case and not aware of the actual work going on in the program office before launching and having to commit pricing and schedules to airlines.

Newbiepilot wrote:

This has allowed vendors to get aggressive with IP and restrict access to parts and repair options. The vendors want to force airlines to buy new OEM (original equipment manufacturer) parts, which brings in revenue rather than let parts get repaired. They also want to protect details of the design from being released so that piece parts can not be fabricated by third party repair shops. Component Maintenance Manuals are supposed to go down to the lowest level so that further disassembly would destroy the part, but vendors are getting creative to block repair shops or airlines from repairing parts.

Same thing is happening with car parts. I had the gears inside an electric window fail. You couldn't just buy the gears, you couldn't just buy the motor plus the gears, you basically had to buy all the door's innards, everything to do with raising the window except the window itself. In the end, it was cheaper in both labor and parts to just go to a breaker's yard and get a used door! All this for a few cents of plastic gears that should have been easily obtainable!

Thing is, we don't know if this is reasonable recovery of expenses, or if it's just a huge cash grab on the part of the OEM. Guess which one I suspect?

Boeing can try to claim they really need all the revenue streams to make the 797 business case close, but I can imagine the vendors and the customers might wonder if they're better off without setting the kind of precedent this would set.

Boeing might be trying to say they're here to save the customer from the greedy vendors, but how clean are their hands?

Revelation wrote:

Newbiepilot wrote:

This has allowed vendors to get aggressive with IP and restrict access to parts and repair options. The vendors want to force airlines to buy new OEM (original equipment manufacturer) parts, which brings in revenue rather than let parts get repaired. They also want to protect details of the design from being released so that piece parts can not be fabricated by third party repair shops. Component Maintenance Manuals are supposed to go down to the lowest level so that further disassembly would destroy the part, but vendors are getting creative to block repair shops or airlines from repairing parts.

Same thing is happening with car parts. I had the gears inside an electric window fail. You couldn't just buy the gears, you couldn't just buy the motor plus the gears, you basically had to buy all the door's innards, everything to do with raising the window except the window itself. In the end, it was cheaper in both labor and parts to just go to a breaker's yard and get a used door! All this for a few cents of plastic gears that should have been easily obtainable!

Thing is, we don't know if this is reasonable recovery of expenses, or if it's just a huge cash grab on the part of the OEM. Guess which one I suspect?

Boeing can try to claim they really need all the revenue streams to make the 797 business case close, but I can imagine the vendors and the customers might wonder if they're better off without setting the kind of precedent this would set.

Boeing might be trying to say they're here to save the customer from the greedy vendors, but how clean are their hands?

I don’t know any actual details about what is going on with the NMA, so I have no idea who has clean hands. I am just reading the various articles and sharing what I know about the industry. The suppliers, sub tier suppliers and Airbus/ Boeing have quite complex relationships

Newbiepilot wrote:

Revelation wrote:

https://leehamnews.com/2018/08/15/some-suppliers-consider-sitting-out-boeings-nma-program/ suggests some suppliers may walk away from the 797 program rather than accept Boeing's demands for low initial price and little/no life time revenue stream.

I kind of feel the piece is all over the place. It tries to make the above argument, but in the end it says vendors simply don't have a choice because this is the only clean sheet program likely to emerge for a few years and if they want the work they need to find a way on to the program.

I tend to agree with the later. There still are enough vendors competing to be on the project that Boeing can still get them to compete with each other, and in some cases Boeing could still choose to pull the work in house.

Lots of things about the industry are changing. It might be a hard transition for many vendors but they don't have many options.

This is a very important conversations. This is the type of discussion (not cabin width) that is critical to closing the business case. The after market, spares and services market is getting more and more competitive. Suppliers have been successful in bidding low to get parts on airplanes and then earning their money on design changes and spare parts. Airlines cried foul that suppliers designed a lousy part that earns them constant repair and replacement revenue. Boeing and Airbus have reacted and are tightening contracts to block suppliers from gouging the airlines. It is a fascinating game that is being played. The strategy previously used of bidding low and earning money on aftermarket mods, repairs and spare parts is not as lucrative as it used to be.

I am not surprised to see UTAS complaining. They are one of the worst companies for the airlines to deal with since they gouge the airlines anywhere they possibly can. They keep buying up companies and rolling out these aggressive policies.

However there is another angle to it. Boeing itself wants to get a much larger slice of the pie and after sales revenue has moved into focus at Boeing. So at the moment it looks as if Boeing wants low prices, control of the after sales revenue but also wants the major partner to risk share.

And worse it seems like Boeing demands to own the IP for the parts, so that it can easily switch suppliers in the future.

Newbiepilot wrote:

Revelation wrote:

Newbiepilot wrote:

This is a very important conversations. This is the type of discussion (not cabin width) that is critical to closing the business case. The after market, spares and services market is getting more and more competitive. Suppliers have been successful in bidding low to get parts on airplanes and then earning their money on design changes and spare parts. Airlines cried foul that suppliers designed a lousy part that earns them constant repair and replacement revenue. Boeing and Airbus have reacted and are tightening contracts to block suppliers from gouging the airlines. It is a fascinating game that is being played. The strategy previously used of bidding low and earning money on aftermarket mods, repairs and spare parts is not as lucrative as it used to be.

I am not surprised to see UTAS complaining. They are one of the worst companies for the airlines to deal with since they gouge the airlines anywhere they possibly can. They keep buying up companies and rolling out these aggressive policies.

That angle ( vendors nickeling and diming airline customers ) hasn't been brought forth much if at all. Thanks for sharing the interesting perspective.

Suppliers also get very aggressive with intellectual property. Decades ago when much more of the airplane was designed in house by Boeing, Rotable spares were the issue. Boeing got around this by competing multiple suppliers and giving choices (for example Airlines could choose between two brands of engines, generators, hydraulic pumps, brakes, tires, etc). As certification and design requirements have been getting more complicated, fewer parts have competing supplier designs approved. This has allowed vendors to get aggressive with IP and restrict access to parts and repair options. The vendors want to force airlines to buy new OEM (original equipment manufacturer) parts, which brings in revenue rather than let parts get repaired. They also want to protect details of the design from being released so that piece parts can not be fabricated by third party repair shops. Component Maintenance Manuals are supposed to go down to the lowest level so that further disassembly would destroy the part, but vendors are getting creative to block repair shops or airlines from repairing parts.

More recently, more and more parts are designed by suppliers. Engineering drawing access is limited for airlines and they are forced to buy parts from the OEM. Vendors like UTAS like to be sneaky and charge $ thousands per repair whenever possible under the contracts when the airlines use an overhaul shop or MRO. Boeing on the other hand provides repair designs for free under most circumstances as long as the airline purchased the plane from Boeing.

Again it is a fascinating game where airlines, manufacturers and vendors are all competing for revenue. Deciding what suppliers get to build what parts, what the contract language is and what parts are done in house are critical to the cost and revenue stream of the NMA. The NMA is going further into the supplier selection and contracts phase than other airplanes before launch. This will help solidify the actual manufacturing costs and the operating costs of the airplane. This is all a part of the business case. Airlines also want much more sophisticated guarantees on price and operating costs including details on the supplier contracts. I think most people on this forum think Boeing is dragging their feet on the business case and not aware of the actual work going on in the program office before launching and having to commit pricing and schedules to airlines.

I see a lot of aquisations towards suppliers (lousy parts, constant repair and replacement revenue, gouging the airlines, worst companies for the airlines to deal with, vendors nickeling and diming airline customers, very aggressive with intellectual property, restrict access to parts and repair options, force airlines to buy new OEM, to block repair shops or airlines from repairing part, forced to buy parts from the OEM).

Some if it might be true in many cases, and Boeing / Airbus aren't above that. They have been playing exactly the same game & want a bigger part of the pie, improve profits, finance share buy backs to further boost corporate bonusses. Venting out IP (R&D) that the supply chain paid for is one of the options.

The NMA is interesting because Boeing are now sitting round the table with the same guys they are fighting in the aftermarket. And they somehow some of those comapnies do not see Partnering for Success (PFS) as a seperately topic. The roles are a bit reverse now, Boeing needs them to invest..

Maybe a supplier big enough to say "no" to Boeing (like UTC) is a bit of an unwelcome shock, but it could be healthy. And I wonder if Héroux-Devtek will ever make money on the 777X..

seahawk wrote:

Newbiepilot wrote:

Revelation wrote:

https://leehamnews.com/2018/08/15/some-suppliers-consider-sitting-out-boeings-nma-program/ suggests some suppliers may walk away from the 797 program rather than accept Boeing's demands for low initial price and little/no life time revenue stream.

I kind of feel the piece is all over the place. It tries to make the above argument, but in the end it says vendors simply don't have a choice because this is the only clean sheet program likely to emerge for a few years and if they want the work they need to find a way on to the program.

I tend to agree with the later. There still are enough vendors competing to be on the project that Boeing can still get them to compete with each other, and in some cases Boeing could still choose to pull the work in house.

Lots of things about the industry are changing. It might be a hard transition for many vendors but they don't have many options.

This is a very important conversations. This is the type of discussion (not cabin width) that is critical to closing the business case. The after market, spares and services market is getting more and more competitive. Suppliers have been successful in bidding low to get parts on airplanes and then earning their money on design changes and spare parts. Airlines cried foul that suppliers designed a lousy part that earns them constant repair and replacement revenue. Boeing and Airbus have reacted and are tightening contracts to block suppliers from gouging the airlines. It is a fascinating game that is being played. The strategy previously used of bidding low and earning money on aftermarket mods, repairs and spare parts is not as lucrative as it used to be.

I am not surprised to see UTAS complaining. They are one of the worst companies for the airlines to deal with since they gouge the airlines anywhere they possibly can. They keep buying up companies and rolling out these aggressive policies.

However there is another angle to it. Boeing itself wants to get a much larger slice of the pie and after sales revenue has moved into focus at Boeing. So at the moment it looks as if Boeing wants low prices, control of the after sales revenue but also wants the major partner to risk share.

And worse it seems like Boeing demands to own the IP for the parts, so that it can easily switch suppliers in the future.

The day will come when decisions for make or buy have to be made. The suppliers have their own owners, Shares and have to satisfy their shareholders. When I am a supplier and Boeing demands a larger slice of my profitable parts of my component business (let’s say the aftermarket piece, while my original sale is only so so profitable), then I either agree with Boeing about another acceptable fair share satisfying both shareholders, or I have to reject the business or offer this business to Boeing to buy and finally take on all responsibility.
A number of decisions are ahead of us and I believe that Boeing will partner with some suppliers or simply buy some.

My feeling is that currently Boeing is challenging a bit too much with the result that some suppliers see no chance then to ‘obey’ whatever Boeing requests, but others may not follow this path.

However one thing is for sure: The 797 business case ‘stands on shaky ground’, extremely shaky ground I would say. Like a juggler with not just 3, not even 5, but rather 8-10 balls in air. And there is a chance that if one of the balls drops, all others will drop as well >> 797 dead and move on to NSA.

Ok just one prediction.

Flyglobal

PS: I would prefer that the 797 is built, but it needs some more risk acceptance at Boeing.

planecane wrote:

The South you speak of is likely to be South America playing a huge role in the 737 replacement. It is pretty likely to be designed and built by the JV with Embraer assuming it closes.

It may well be designed, but if the NSA is to be a replacement for the 737 averaging 40+ units per month, there is no way all the state's in the USA will allow such production to be moved overseas, as it will mostly be domestic, the incentives they can offer cannot be stopped by any WTO regulations. Try to imagine Spirit not being involved, try to imagine the states where Spirit has facilities seeing all that production go off-shore at once.
The replacement will be a product that has to start off with a high production rate, yes some can and may be built by Embraer, but the bulk will be in the USA.

Flyglobal wrote:

PS: I would prefer that the 797 is built, but it needs some more risk acceptance at Boeing.

...which I think is the big issue, they screwed up the 787 program so much that they do not trust themselves to do something, anything. One can even imagine them waiting to see how the 777X turns about before pulling the trigger, they need a confidence booster shot.

par13del wrote:

WIederling wrote:

First ruin your partner and then acquire the train wreck cheaply.
One could view that as strategy.

...which makes little sense since they were not obligated to use partners. I believe that the largest gain Boeing wanted from the 787 was all domestic, that was the creation of another production facility outside of the control of the unions in the North West. So far other than an initial quality control issue it appears to be working out and based on their plans, bodes well for Boeing's future beyond the 787. Any bets that the south will also play a huge role in the 737 replacement and whatever new frame they produce?

The South (of USA) ... and Brasil!



cheers

( I regard the JV with EMB as a HUGE development.)

Revelation wrote:

par13del wrote:

If UA had pulled the plug on the -9 order the -10 would have appeared much sooner, the -10 is a direct result of poor -9 sales, the -10 is a much better product for Boeing and it should have been the original 9MAX with the initial higher production / modification cost. The current version of the 9MAX should never have been produced.

Boeing deliberately chose to only build -7, -8 and -9 MAX initially, to avoid churning the production lines that were and still are building the NG versions of these three while introducing the MAX equivalents. The issue was not poor -9 MAX sales, since they could not even build the ones they had on order in a timely fashion. If no -9 MAX was produced they'd be abandoning that market segment for too long.

Your theory is cute, but the time lines do not line up.

Quite.

I have regularly observed comments from the BA production folks that they were just NOT about to contemplate further (sales=driven) additions to the portfolio whereby the production-system was likely to be critically compromised.

It must have taken some pit-bull like ferocity to EG defer the MAX10 to 2020 rather than 2019 - as IMO seems to have happened!

Whew! Glad I missed that one!

cheers

(sorry keesje - glad you contribute, but sometimes you are not even in the same ballpark.)

Newbiepilot wrote:

Revelation wrote:

Newbiepilot wrote:

This is a very important conversations. This is the type of discussion (not cabin width) that is critical to closing the business case. The after market, spares and services market is getting more and more competitive. Suppliers have been successful in bidding low to get parts on airplanes and then earning their money on design changes and spare parts. Airlines cried foul that suppliers designed a lousy part that earns them constant repair and replacement revenue. Boeing and Airbus have reacted and are tightening contracts to block suppliers from gouging the airlines. It is a fascinating game that is being played. The strategy previously used of bidding low and earning money on aftermarket mods, repairs and spare parts is not as lucrative as it used to be.

I am not surprised to see UTAS complaining. They are one of the worst companies for the airlines to deal with since they gouge the airlines anywhere they possibly can. They keep buying up companies and rolling out these aggressive policies.

That angle ( vendors nickeling and diming airline customers ) hasn't been brought forth much if at all. Thanks for sharing the interesting perspective.

Suppliers also get very aggressive with intellectual property. Decades ago when much more of the airplane was designed in house by Boeing, Rotable spares were the issue. Boeing got around this by competing multiple suppliers and giving choices (for example Airlines could choose between two brands of engines, generators, hydraulic pumps, brakes, tires, etc). As certification and design requirements have been getting more complicated, fewer parts have competing supplier designs approved. This has allowed vendors to get aggressive with IP and restrict access to parts and repair options. The vendors want to force airlines to buy new OEM (original equipment manufacturer) parts, which brings in revenue rather than let parts get repaired. They also want to protect details of the design from being released so that piece parts can not be fabricated by third party repair shops. Component Maintenance Manuals are supposed to go down to the lowest level so that further disassembly would destroy the part, but vendors are getting creative to block repair shops or airlines from repairing parts.

More recently, more and more parts are designed by suppliers. Engineering drawing access is limited for airlines and they are forced to buy parts from the OEM. Vendors like UTAS like to be sneaky and charge $ thousands per repair whenever possible under the contracts when the airlines use an overhaul shop or MRO. Boeing on the other hand provides repair designs for free under most circumstances as long as the airline purchased the plane from Boeing.

Again it is a fascinating game where airlines, manufacturers and vendors are all competing for revenue. Deciding what suppliers get to build what parts, what the contract language is and what parts are done in house are critical to the cost and revenue stream of the NMA. The NMA is going further into the supplier selection and contracts phase than other airplanes before launch. This will help solidify the actual manufacturing costs and the operating costs of the airplane. This is all a part of the business case. Airlines also want much more sophisticated guarantees on price and operating costs including details on the supplier contracts. I think most people on this forum think Boeing is dragging their feet on the business case and not aware of the actual work going on in the program office before launching and having to commit pricing and schedules to airlines.

Great post as is the one by Rev following.

Muilenberg is gung-ho on BGS getting to $50Bill in a decade.

The more I observe sage insiders talk, the more it is clear that BGS will have to be VERY careful just where it takes aim!

cheers

par13del wrote:

planecane wrote:

The South you speak of is likely to be South America playing a huge role in the 737 replacement. It is pretty likely to be designed and built by the JV with Embraer assuming it closes.

It may well be designed, but if the NSA is to be a replacement for the 737 averaging 40+ units per month, there is no way all the state's in the USA will allow such production to be moved overseas, as it will mostly be domestic, the incentives they can offer cannot be stopped by any WTO regulations. Try to imagine Spirit not being involved, try to imagine the states where Spirit has facilities seeing all that production go off-shore at once.
The replacement will be a product that has to start off with a high production rate, yes some can and may be built by Embraer, but the bulk will be in the USA.

They get it right, there will be plenty of production to go around.

More particularly, with the EMB JV it seems clear that BA is looking to give a very talented group of design & production engineers a MUCH larger canvas upon which to work.

Take it as read that there will be substantial production in Brasil.

- and quite right, IMO.

cheers

The thing I see is that Boeing is bringing in aftermarket sales. That removes a revenue stream for suppliers. That means suppliers need to raise their initial bids to make up for the lost revenue stream. Raising the cost of the base price of the MMA. But Boeing keeps saying they need to bring in aftermarket sales to make the business case for the MMA. It’s circular logic. Basically just pushing the beans around and trying to figure out where to put it all.

Then you throw in the fact that Boeing is also wanting to keep IP in house but also wants their suppliers to be risk sharing. What supplier would want to be a risk sharer when Boeing could simply walk away and find another supplier to start building those parts at any point? This is also a big concern for the Tier 1 suppliers who typically provide a lot of engineering support. Spirit / GKN / UTC for example. They need to keep their engineers busy too.

Again, we keep hearing that Boeing isn't looking to do anything new technology wise. Just production capability improvements and clearly supply chain revamping. With this in mind, it should come as no surprise that the supply chain is balking at a big shakeup. Especially considering we just had the complete opposite in the 787 program.

Revelation wrote:

Boeing might be trying to say they're here to save the customer from the greedy vendors, but how clean are their hands?

Bingo.

keesje wrote:

And I wonder if Héroux-Devtek will ever make money on the 777X..

Almost guaranteed that they are losing money on it. Often small-up-and-coming suppliers will under bid to get a foot into the market. Not uncommon to solicit bids from various companies for some part just so you could squeeze the supplier you really wanted to use into lowering their bid. Other times you get a bid so low that you just can't pass it up. They tell you they wanted to get their foot in the door and are willing to accept the loss. A terrible negotiating strategy because nobody cares years later on some other program. And then they'll just squeeze you again.

Of course there are drawbacks to that. Inevitably the new suppliers will have issues that you have to resolve. But that's what you get for accepting the lower bid.

Revelation wrote:

There still are enough vendors competing to be on the project that Boeing can still get them to compete with each other, and in some cases Boeing could still choose to pull the work in house.

And even if they feel the terms on NMA might not be the best, if NMA suppliers get preference for NSA, is that a market they want to risk not being part of?

Stitch wrote:

Revelation wrote:

There still are enough vendors competing to be on the project that Boeing can still get them to compete with each other, and in some cases Boeing could still choose to pull the work in house.

And even if they feel the terms on NMA might not be the best, if NMA suppliers get preference for NSA, is that a market they want to risk not being part of?

But how would you do it. As an OEM you would want something that is actually worth more than a promise, so in the end Boeing would be very limited with the suppliers for the NSA and would see high prices there. And with the NMA being the lesser volume of the 2. who would believe that Boeing will not squeeze the suppliers even harder with the NSA?

There are similar rumours coming from the engine OEMs as well. Boeing seems to want to pay the price of the derivate of an existing engines but also wants the performance of an absolute cutting edge engine.

brindabella wrote:

I have regularly observed comments from the BA production folks that they were just NOT about to contemplate further (sales=driven) additions to the portfolio whereby the production-system was likely to be critically compromised.

It must have taken some pit-bull like ferocity to EG defer the MAX10 to 2020 rather than 2019 - as IMO seems to have happened!

It's a big challenge to pull off.

Consider that even after protecting the production line, the guy running it was just made to walk the plank because the rate increase was going poorly:

https://www.bloomberg.com/news/articles ... ory-logjam

https://www.bloomberg.com/news/articles ... tory-snarl

trpmb6 wrote:

The thing I see is that Boeing is bringing in aftermarket sales. That removes a revenue stream for suppliers. That means suppliers need to raise their initial bids to make up for the lost revenue stream. Raising the cost of the base price of the MMA. But Boeing keeps saying they need to bring in aftermarket sales to make the business case for the MMA. It’s circular logic. Basically just pushing the beans around and trying to figure out where to put it all.

Then you throw in the fact that Boeing is also wanting to keep IP in house but also wants their suppliers to be risk sharing. What supplier would want to be a risk sharer when Boeing could simply walk away and find another supplier to start building those parts at any point? This is also a big concern for the Tier 1 suppliers who typically provide a lot of engineering support. Spirit / GKN / UTC for example. They need to keep their engineers busy too.

Again, we keep hearing that Boeing isn't looking to do anything new technology wise. Just production capability improvements and clearly supply chain revamping. With this in mind, it should come as no surprise that the supply chain is balking at a big shakeup. Especially considering we just had the complete opposite in the 787 program.

Boeing's strategy becomes obvious: tell the vendors that they gave them too much rope on 787 and they hung themselves.

trpmb6 wrote:

keesje wrote:

And I wonder if Héroux-Devtek will ever make money on the 777X..

Almost guaranteed that they are losing money on it. Often small-up-and-coming suppliers will under bid to get a foot into the market. Not uncommon to solicit bids from various companies for some part just so you could squeeze the supplier you really wanted to use into lowering their bid. Other times you get a bid so low that you just can't pass it up. They tell you they wanted to get their foot in the door and are willing to accept the loss. A terrible negotiating strategy because nobody cares years later on some other program. And then they'll just squeeze you again.

Of course there are drawbacks to that. Inevitably the new suppliers will have issues that you have to resolve. But that's what you get for accepting the lower bid.

As gets pointed out here many times many ways Boeing itself is still writing down the costs from the early days of the 787 so Boeing can claim they're still feeling the pain too.

Stitch wrote:

Revelation wrote:

There still are enough vendors competing to be on the project that Boeing can still get them to compete with each other, and in some cases Boeing could still choose to pull the work in house.

And even if they feel the terms on NMA might not be the best, if NMA suppliers get preference for NSA, is that a market they want to risk not being part of?

Surely part of the equation. But also consider, these suppliers are privy to much more information than is public at this time and are probably quite capable of recognizing where there may be commonality. I'm sure it's part of the discussions. Boeing may even throw the carrot in front and openly tell them that if you give us favorable pricing now it will only make sense for us to use you on NSA. (As I noted in a previous post this is a fool's gold philosophy but when boxed into a corner you have no choice)

seahawk wrote:

But how would you do it. As an OEM you would want something that is actually worth more than a promise, so in the end Boeing would be very limited with the suppliers for the NSA and would see high prices there. And with the NMA being the lesser volume of the 2. who would believe that Boeing will not squeeze the suppliers even harder with the NSA?

Many of us believe that one of the goals of NMA is to "de-risk" NSA and that would include both "supplier risk" and "systems risk". It would be counter-productive to do that with NMA and then switch to new untested suppliers and technologies on NSA just to save a buck.

seahawk wrote:

There are similar rumours coming from the engine OEMs as well. Boeing seems to want to pay the price of the derivate of an existing engines but also wants the performance of an absolute cutting edge engine.

The engine OEMs help make my point. GE and Rolls both stuffed the GEnx and Trent 1000, respectively, but the "lessons learned" significantly reduced the "unknown unknowns" for the next family from each OEM and the Trent XWB had a very smooth EIS with the GE9X looks to be sailing smoothly towards EIS, as well.

Stitch wrote:

seahawk wrote:

But how would you do it. As an OEM you would want something that is actually worth more than a promise, so in the end Boeing would be very limited with the suppliers for the NSA and would see high prices there. And with the NMA being the lesser volume of the 2. who would believe that Boeing will not squeeze the suppliers even harder with the NSA?

Many of us believe that one of the goals of NMA is to "de-risk" NSA and that would include both "supplier risk" and "systems risk". It would be counter-productive to do that with NMA and then switch to new untested suppliers and technologies on NSA just to save a buck.

seahawk wrote:

There are similar rumours coming from the engine OEMs as well. Boeing seems to want to pay the price of the derivate of an existing engines but also wants the performance of an absolute cutting edge engine.

The engine OEMs help make my point. GE and Rolls both stuffed the GEnx and Trent 1000, respectively, but the "lessons learned" significantly reduced the "unknown unknowns" for the next family from each OEM and the Trent XWB had a very smooth EIS with the GE9X looks to be sailing smoothly towards EIS, as well.

I agree with you, but what guarantee would an OEM have? With the desire to own the IP, it is obvious that Boeing wants the ability to change OEMs easily.Wit the 777X they have already shown to be willing to kick out reliable and trusted OEMs for cheaper newcomers and now they are squeezing the OEMs even harder, as an OEM I would not bet my money on seeing any bonus in the NSA tender process for being selected in the NMA process. In fact I would expect Boeing to request even bigger concessions for the NSA.

Is there any indication the GE9X is sailing smoothly towards EIS? Maybe there is. It seems entirely new engine to me, entering service in 2 yrs.

keesje wrote:

Is there any indication the GE9X is sailing smoothly towards EIS?

Aerospace media reports I have been following indicate it is.

trpmb6 wrote:

But also consider, these suppliers are privy to much more information than is public at this time and are probably quite capable of recognizing where there may be commonality. I'm sure it's part of the discussions.

Interestingly enough (or perhaps not) in our non-av Tesla thread ( viewtopic.php?f=11&t=1400911&p=20638833#p20638833 ) we have a discussion about the lengths the OEMs will go to to learn about what its vendors cost structure is, and what vendors will do to learn about what their competitors costs are, etc. It was in the context of the automobile industry whose production runs are in the millions so the need to know is perhaps more urgent, but still we do know about the infamous Airbus 787 dossier (see link above).

I wonder if the aviation industry has specialist tear-down firms such as the automotive one (Monro) mentioned in the post linked above?

there are ways the OEMs 'spy' on each other one simple one is taking the others product in as trade. Another is field service personnel 'assisting' in airline maintenance shops. One not so brilliant one was an interiors engineer flying on a competitors product who 'accidentally' detached an entire sidewall section in flight.

Revelation wrote:

Interestingly enough (or perhaps not) in our non-av Tesla thread ( viewtopic.php?f=11&t=1400911&p=20638833#p20638833 ) we have a discussion about the lengths the OEMs will go to to learn about what its vendors cost structure is, and what vendors will do to learn about what their competitors costs are, etc. It was in the context of the automobile industry whose production runs are in the millions so the need to know is perhaps more urgent, but still we do know about the infamous Airbus 787 dossier (see link above).

I wonder if the aviation industry has specialist tear-down firms such as the automotive one (Monro) mentioned in the post linked above?

That's a great point and question. I know there have been tear downs of military equipment, for instance. And I know in general aviation companies will often get a hold of a competitor's plane somehow to see how they do things. (I was once told a story of how an undisclosed leasing company would bring an OEM's engineers on board and tell them to include some feature a different OEM has on their existing craft on OEM1's new aircraft)

Boeing and Airbus go to quite a bit of length to ensure their suppliers aren't crossing wires. Of course it's hard to simply ignore what you've learned from one side and apply it to a different product you're developing for the other.

I'm sure Boeing has their hands on Airbus products and vice versa. But really there isn't a whole lot to learn either. Forward section of the A350 is metal. Perhaps Airbus didn't want to deal with the contours? Didn't want to deviate from previous designs due to hail strike and bird strike? Maybe they'd be interested in a composite forward section like Spirit produces for Boeing. Spirit would have to re-develop methods and specs to do it of course. Wouldn't be able to use anything they use now for 787 forward section. Quite tricky to think about actually, where you draw the line on the IP there.

Revelation wrote:

trpmb6 wrote:

But also consider, these suppliers are privy to much more information than is public at this time and are probably quite capable of recognizing where there may be commonality. I'm sure it's part of the discussions.

Interestingly enough (or perhaps not) in our non-av Tesla thread ( viewtopic.php?f=11&t=1400911&p=20638833#p20638833 ) we have a discussion about the lengths the OEMs will go to to learn about what its vendors cost structure is, and what vendors will do to learn about what their competitors costs are, etc. It was in the context of the automobile industry whose production runs are in the millions so the need to know is perhaps more urgent, but still we do know about the infamous Airbus 787 dossier (see link above).

I wonder if the aviation industry has specialist tear-down firms such as the automotive one (Monro) mentioned in the post linked above?

We don't need tear down firms. We know estimated costs to build and because of people transferring company to company, we know quite a bit. More than half of an aircraft is derived leagacy derivatives which are easy to estimate costs.

What shifts is automation, barrel stuffing, and more monolithic parts. Replacing forgings with 3D printing is something I swore would never happen until... Parts were already certified (I was late to the game).

I had an ex-Electric boat engineer working with me and he sold me on the economic benefits of barrel stuffing as you can have 3x to 3x the people working in an area and end access is so much faster than through a door.

Automated wing production will be key. Design for manufacturing is tough, but needed.

Since the last aircraft we're designed, 3D printing, casting, and CFRP production has all become far more automatable.

Boeing bids and bids again. They were unusually agressive in the last 2 years on the 787. That will carry over to the MoM.

Boeing is expensive. I believe they learned it was a mistake to outsource wing production. But Barrel stuffing has gone to the 737. The 797 will be optimized for automated barrel stuffing (shorter barrels?). I see Spirit having this part to loose.

Lightsaber

trpmb6 wrote:

Revelation wrote:

Interestingly enough (or perhaps not) in our non-av Tesla thread ( viewtopic.php?f=11&t=1400911&p=20638833#p20638833 ) we have a discussion about the lengths the OEMs will go to to learn about what its vendors cost structure is, and what vendors will do to learn about what their competitors costs are, etc. It was in the context of the automobile industry whose production runs are in the millions so the need to know is perhaps more urgent, but still we do know about the infamous Airbus 787 dossier (see link above).

I wonder if the aviation industry has specialist tear-down firms such as the automotive one (Monro) mentioned in the post linked above?

That's a great point and question. I know there have been tear downs of military equipment, for instance. And I know in general aviation companies will often get a hold of a competitor's plane somehow to see how they do things. (I was once told a story of how an undisclosed leasing company would bring an OEM's engineers on board and tell them to include some feature a different OEM has on their existing craft on OEM1's new aircraft)

Boeing and Airbus go to quite a bit of length to ensure their suppliers aren't crossing wires. Of course it's hard to simply ignore what you've learned from one side and apply it to a different product you're developing for the other.

I'm sure Boeing has their hands on Airbus products and vice versa. But really there isn't a whole lot to learn either. Forward section of the A350 is metal. Perhaps Airbus didn't want to deal with the contours? Didn't want to deviate from previous designs due to hail strike and bird strike? Maybe they'd be interested in a composite forward section like Spirit produces for Boeing. Spirit would have to re-develop methods and specs to do it of course. Wouldn't be able to use anything they use now for 787 forward section. Quite tricky to think about actually, where you draw the line on the IP there.

Bird strike requirements were a big reason Airbus went for the metal nose/cockpit section. Apparently the reenforcment that the area needed for bird strike protection in the original composite design considered made it cost ineffective versus just using metal.

lightsaber wrote:

Boeing is expensive. I believe they learned it was a mistake to outsource wing production. But Barrel stuffing has gone to the 737. The 797 will be optimized for automated barrel stuffing (shorter barrels?). I see Spirit having this part to loose.

Lightsaber

Spirit does all the stuff you listed though. They stuff the 787 section 41. Probably the hardest section to stuff.

Or do you mean, it's spirit's work to lose? In that, "they have it in the bag, unless they really screw up?"

At any rate, I think we'll know at the end of this quarter some more info. Been hearing some rumblings but nothing concrete either.

lightsaber wrote:

Revelation wrote:

trpmb6 wrote:

But also consider, these suppliers are privy to much more information than is public at this time and are probably quite capable of recognizing where there may be commonality. I'm sure it's part of the discussions.

Interestingly enough (or perhaps not) in our non-av Tesla thread ( viewtopic.php?f=11&t=1400911&p=20638833#p20638833 ) we have a discussion about the lengths the OEMs will go to to learn about what its vendors cost structure is, and what vendors will do to learn about what their competitors costs are, etc. It was in the context of the automobile industry whose production runs are in the millions so the need to know is perhaps more urgent, but still we do know about the infamous Airbus 787 dossier (see link above).

I wonder if the aviation industry has specialist tear-down firms such as the automotive one (Monro) mentioned in the post linked above?

We don't need tear down firms. We know estimated costs to build and because of people transferring company to company, we know quite a bit. More than half of an aircraft is derived leagacy derivatives which are easy to estimate costs.

What shifts is automation, barrel stuffing, and more monolithic parts. Replacing forgings with 3D printing is something I swore would never happen until... Parts were already certified (I was late to the game).

I had an ex-Electric boat engineer working with me and he sold me on the economic benefits of barrel stuffing as you can have 3x to 3x the people working in an area and end access is so much faster than through a door.

Automated wing production will be key. Design for manufacturing is tough, but needed.

Since the last aircraft we're designed, 3D printing, casting, and CFRP production has all become far more automatable.

Boeing bids and bids again. They were unusually agressive in the last 2 years on the 787. That will carry over to the MoM.

Boeing is expensive. I believe they learned it was a mistake to outsource wing production. But Barrel stuffing has gone to the 737. The 797 will be optimized for automated barrel stuffing (shorter barrels?). I see Spirit having this part to loose.

Lightsaber

But that is the problem, if Boeing wants the IP to the parts. They probably also want the IP on how to make them.

lightsaber wrote:

We don't need tear down firms. We know estimated costs to build and because of people transferring company to company, we know quite a bit.

Yep, tribal knowledge gets passed from one tribe to another pretty readily, yet that too must happen in the auto industry and they still have specialist tear down firms. My guess is that the auto industry can justify chasing after pennies per part because they make millions of cars a year, aviation, not so much. But we know from the dossier that Airbus has in-house competitive intelligence staff, and I presume everyone else does too. It'd be interesting to see how far they go.

lightsaber wrote:

I had an ex-Electric boat engineer working with me and he sold me on the economic benefits of barrel stuffing as you can have 3x to 3x the people working in an area and end access is so much faster than through a door.

That brought a smile to my face. A lot of my UConn engineering classmates cut their teeth at "The Boat" and went on to do other interesting things too. I doubt many here know what we're talking about, except of course for our friend Astuteman.

trpmb6 wrote:

Or do you mean, it's spirit's work to lose? In that, "they have it in the bag, unless they really screw up?"

Yes, it means they would be strong favorites to get the work.

Revelation wrote:

Yes, it means they would be strong favorites to get the work.

Gotcha. I agree. No doubt they will get some work. I know everything we've discussed in this thread already, risk sharing, after-market, IP etc is all in play there. It will come down to how much Boeing wants to keep in house. Charlotte is no doubt wanting the whole airplane. But they don't have the staff or the infrastructure capability yet. I've heard rumors that charlotte's campus is beginning to look a lot like what Spirit looked like at one time under Boeing's banner.

So, almost 3000 replies later are we any closer to Boeing announcing the 757MAX?

trpmb6 wrote:

Charlotte is no doubt wanting the whole airplane. But they don't have the staff or the infrastructure capability yet. I've heard rumors that charlotte's campus is beginning to look a lot like what Spirit looked like at one time under Boeing's banner.

So, what did Spirit look like at one time under Boeing's banner?

Revelation wrote:

trpmb6 wrote:

Charlotte is no doubt wanting the whole airplane. But they don't have the staff or the infrastructure capability yet. I've heard rumors that charlotte's campus is beginning to look a lot like what Spirit looked like at one time under Boeing's banner.

So, what did Spirit look like at one time under Boeing's banner?

A glorified cost-center

Composite center of excellence with specific end-items. Struts/Nacelles Section 41.

Charlotte has been growing it's Nacelle capabilities for some time now. They haven't dabbled in struts much. I think some there think they can do a whole fuselage at this point. But I don't believe they've done much composites wise beyond nacelle structures. What would be telling is if Boeing was buying up more land and building new factory space. They would need to be doing that ... basically now.. if they wanted to meet EIS targets. I don't know of any major moves in the area personally. Someone closer to the area may know more.

If Boeing intends to bring whole fuselage work back in house for NSA, it would make a lot of sense to bring NMA in house now to prime the line.. so to speak.. in charlotte.

Just thought I'd mention, a lot of people still think it was a huge mistake to sell the ICT operations. Nobody will openly admit it. but to me, looking at Charlotte. The similarities are way too obvious.

trpmb6 wrote:

Charlotte Charleston has been growing it's Nacelle capabilities for some time now. They haven't dabbled in struts much. I think some there think they can do a whole fuselage at this point. But I don't believe they've done much composites wise beyond nacelle structures. What would be telling is if Boeing was buying up more land and building new factory space. They would need to be doing that ... basically now.. if they wanted to meet EIS targets. I don't know of any major moves in the area personally. Someone closer to the area may know more.

https://www.postandcourier.com/business ... 4fdf9.html told us in Dec 2017 that:

Boeing is leasing more than 450 acres of land adjacent to its North Charleston campus with an eye toward future expansion. Analysts have speculated that Boeing might one day move all of its 787 production to the site, freeing up the Dreamliner’s other assembly plant in Everett, Wash., for other projects. North Charleston also could be the production site for a new plane Boeing is considering that would fill a niche between current single-aisle and wide-body offerings. For now, the property will remain vacant, VanOss said.

Seems pretty obvious what the plan is.

oh my goodness, I wonder why I latched on to Charlotte so many times that post.

I knew there was something out there about land acquisition. Didn't realize it was that large.

TheDBCooper wrote:

So, almost 3000 replies later are we any closer to Boeing announcing the 757MAX?

Ha, funny... but according to Bloomberg, and as many posters here have noted, Boeing is taking it's sweet time on purpose.

It sounds like even a planned 2019 decision might be not totally official. Personally, I'd love see a 2-2-2 or 2-3-2 design... here's hoping.

Boeing Explains Why It’s Taking Its Time on ‘797’ Business Case
https://www.bloomberg.com/news/articles ... iness-case

par13del wrote:

One of the initial items was also how much modification they were going to do with the MAX design to accommodate the larger engines, the changes that they are doing for the 10 are more extensive and therefore more expensive than what was done for the 9, my thought is that they should have bitten that bullet first and put those changes in the 9. If the 9 was designed with the modified main gear they may not have needed to do the 10.

The modified MLG is driven by the MAX 10 length, not the other way around. The 900ER and MAX 9 are hurt to some degree by field performance, but their biggest problem is simply a capacity deficit to the A321. The 10 closes most of the capacity deficit, bringing CASM to a more competitive point.

It would be interesting to see how much the 10 MLG would improve 9 field performance. If it could get the 9 close to 8-style field performance, there might be a market for a 9 with the 10 MLG. But I don't think that would be the case. It would be improved, but still bad. As a result I think once the 10 is in full production Boeing will quietly (perhaps after a delay of a few years) discontinue the 9.

ORDfan wrote:

TheDBCooper wrote:

So, almost 3000 replies later are we any closer to Boeing announcing the 757MAX?

Ha, funny... but according to Bloomberg, and as many posters here have noted, Boeing is taking it's sweet time on purpose.

It sounds like even a planned 2019 decision might be not totally official. Personally, I'd love see a 2-2-2 or 2-3-2 design... here's hoping.

Boeing Explains Why It’s Taking Its Time on ‘797’ Business Case
https://www.bloomberg.com/news/articles ... iness-case

Yep, and it maps on to what we're talking about above:

“We’re looking at it both from an airplane and downstream services standpoint, so an integrated life-cycle view,” Muilenburg said during the company’s quarterly earnings call Wednesday. “It’s important that we get it right, and we’re going to take the time to get it right.”

He’s referring to initiatives to ensure the plane can reap more revenue over its 30-year commercial life, while also lowering factory expense so that Boeing can make the twin-aisle jets at a cost closer to that of highly standardized narrow-bodies. Boeing thinks it can broaden the 797’s sales appeal -- and lifetime revenue -- by combining an all-new airplane with a design that encourages airlines to keep buying data analytics, maintenance and spare parts from the planemaker.

The author is far less cynical than us, as above, she doesn't frame this as Boeing putting the squeeze on its supply chain like we do here.

The interesting thing to me is this effort to investigate things like how to make the plane cheaper and how to maximize revenue over the aircraft's lifetime is valuable if they build NMA or if they skip it and go directly to NSA.

Newbiepilot wrote:

Revelation wrote:

https://leehamnews.com/2018/08/15/some-suppliers-consider-sitting-out-boeings-nma-program/ suggests some suppliers may walk away from the 797 program rather than accept Boeing's demands for low initial price and little/no life time revenue stream.

I kind of feel the piece is all over the place. It tries to make the above argument, but in the end it says vendors simply don't have a choice because this is the only clean sheet program likely to emerge for a few years and if they want the work they need to find a way on to the program.

I tend to agree with the later. There still are enough vendors competing to be on the project that Boeing can still get them to compete with each other, and in some cases Boeing could still choose to pull the work in house.

Lots of things about the industry are changing. It might be a hard transition for many vendors but they don't have many options.

This is a very important conversations. This is the type of discussion (not cabin width) that is critical to closing the business case. The after market, spares and services market is getting more and more competitive. Suppliers have been successful in bidding low to get parts on airplanes and then earning their money on design changes and spare parts. Airlines cried foul that suppliers designed a lousy part that earns them constant repair and replacement revenue. Boeing and Airbus have reacted and are tightening contracts to block suppliers from gouging the airlines. It is a fascinating game that is being played. The strategy previously used of bidding low and earning money on aftermarket mods, repairs and spare parts is not as lucrative as it used to be.

I am not surprised to see UTAS complaining. They are one of the worst companies for the airlines to deal with since they gouge the airlines anywhere they possibly can. They keep buying up companies and rolling out these aggressive policies.

Contracts for the NEO were onto this game. Vendors had to warrantee performance or pay for the redesign. Statistics on part reliability are much more tracked and are part of the bid. This isn't the E-190 where that game was played. The E2 contracts are the leading examples on how to stop this. The interfaces were incredibly well done. The required testing was upfront with margin to operating conditions.

This is a moving game. Because of the tightening contracts, only Moog, Meggitt, Woodward, Honeywell,
Safran, and United technologies can bid on packages that used to be 50+ vendors. GE even downselected to one motor vendor.

Lightsaber

Flyglobal wrote:

The day will come when decisions for make or buy have to be made. The suppliers have their own owners, Shares and have to satisfy their shareholders. When I am a supplier and Boeing demands a larger slice of my profitable parts of my component business (let’s say the aftermarket piece, while my original sale is only so so profitable), then I either agree with Boeing about another acceptable fair share satisfying both shareholders, or I have to reject the business or offer this business to Boeing to buy and finally take on all responsibility.
A number of decisions are ahead of us and I believe that Boeing will partner with some suppliers or simply buy some.

My feeling is that currently Boeing is challenging a bit too much with the result that some suppliers see no chance then to ‘obey’ whatever Boeing requests, but others may not follow this path.

However one thing is for sure: The 797 business case ‘stands on shaky ground’, extremely shaky ground I would say. Like a juggler with not just 3, not even 5, but rather 8-10 balls in air. And there is a chance that if one of the balls drops, all others will drop as well >> 797 dead and move on to NSA.

Ok just one prediction.

Flyglobal

PS: I would prefer that the 797 is built, but it needs some more risk acceptance at Boeing.

Revelation wrote:

ORDfan wrote:

TheDBCooper wrote:

So, almost 3000 replies later are we any closer to Boeing announcing the 757MAX?

Ha, funny... but according to Bloomberg, and as many posters here have noted, Boeing is taking it's sweet time on purpose.

It sounds like even a planned 2019 decision might be not totally official. Personally, I'd love see a 2-2-2 or 2-3-2 design... here's hoping.

Boeing Explains Why It’s Taking Its Time on ‘797’ Business Case
https://www.bloomberg.com/news/articles ... iness-case

Yep, and it maps on to what we're talking about above:

“We’re looking at it both from an airplane and downstream services standpoint, so an integrated life-cycle view,” Muilenburg said during the company’s quarterly earnings call Wednesday. “It’s important that we get it right, and we’re going to take the time to get it right.”

He’s referring to initiatives to ensure the plane can reap more revenue over its 30-year commercial life, while also lowering factory expense so that Boeing can make the twin-aisle jets at a cost closer to that of highly standardized narrow-bodies. Boeing thinks it can broaden the 797’s sales appeal -- and lifetime revenue -- by combining an all-new airplane with a design that encourages airlines to keep buying data analytics, maintenance and spare parts from the planemaker.

The author is far less cynical than us, as above, she doesn't frame this as Boeing putting the squeeze on its supply chain like we do here.

The interesting thing to me is this effort to investigate things like how to make the plane cheaper and how to maximize revenue over the aircraft's lifetime is valuable if they build NMA or if they skip it and go directly to NSA.

Folks: Here is what is really going on. First off to Flyglobal. The 797 is on good ground for its business case... as good as it currently can be. The problem is that the standards and profit margins have changed. A 2nd minor issue is that the engine suppliers quote terms caught Boeing largely by surprise.

My % numbers may be off a bit in the following analysis: But, the example tells a very real financial story.

The biggest issue is that if you go back decades the aircraft, and other, material goods manufacturers could rough out a business plan with an estimated 10-20% profit (depending on the industry); and it was acceptable if your production cost estimate was off 1/3 of that in the end. My personal guess is that Boeing in the 60's was in the 15-20% expected profit margin range, and in the 10% range by the mid 2000's (I suspect that the 787 was at 10% expected profit margin for the life of the program).

Now the allowed profit margins are 1/3 to 1/2 of that depending on the industry due to competition and changes in the industry. My personal guess is that Boeing is now looking at a likely maximum of 5% profit margin on a new multi-decade aircraft program (i.e. 797, also NSA). They can no longer afford to have a 3.3% variation (cost over-run) in their estimates (which would reduce their profit to 1.6% - as it would not be worth doing).

Boeing is also looking for ways to make up that lost 5% they used to count on - and they are looking at aftermarket support and parts for that. A reality is that the next major Airbus frame will face the same margin issues, and also will look for the same place for extra earnings/profit for the program. My personal guess is that they will get half of it (about 2.5%); and end up with an estimated life of program profit of about 7.5%.

Thus, it takes a lot more planning to make sure things are going to work (like they want a 1 or 1.5% possible variation in cost, not the historical 3.3%), and they really are looking to make extra profit to ensure the program is a good investment to the company from the parts and aftermarket service (why invest $10 Billion - or so - unless you can make a reasonable return on the investment).

If you look at recent aircraft programs from almost all manufactures you see the same problems (I'm not sure about Embracer) for all new from scratch aircraft.

In the end the 787 will make a profit. But, not by much. My estimate of their planed 10% life of program profit.. a pipe-dream now. If they do really really well (sell another couple thousand) they might approach 5%.

The 748 took a modest write-down of a few $billion as the apparent viable Program Accounting Block was not large enough. Interestingly, it now appears plausible that it might actually make enough to break even with further Freighter sales. 5% return on investment... Not a chance.

777X. Will it even break even - as a major modification? Possibly. 5% profit margin - I believe unlikely.

A380, A400M mega mega losses - no chance of ever breaking even.

A350. Likely will break even... but I don't see at this time a 5% profit margin from aircraft in the end. 10% (the likely old standard) would be a total pipe dream.

Bombardier CS series - virtually bankrupted the company and a large investment and turnover of product to Airbus was required. Positive return on program investment. Unlikely. 5% not a chance.

Boeing is just really addressing the realities of the market place - and that takes time and looking for other sources of income.

The old ways of building business plans are now history. It's a good way to figuratively loose your shirt (if not ultimately your company).

So lets stop talking about how things were done in the good old days... They be long gone...

Have a great day,

2175301 wrote:

Flyglobal wrote:

The day will come when decisions for make or buy have to be made. The suppliers have their own owners, Shares and have to satisfy their shareholders. When I am a supplier and Boeing demands a larger slice of my profitable parts of my component business (let’s say the aftermarket piece, while my original sale is only so so profitable), then I either agree with Boeing about another acceptable fair share satisfying both shareholders, or I have to reject the business or offer this business to Boeing to buy and finally take on all responsibility.
A number of decisions are ahead of us and I believe that Boeing will partner with some suppliers or simply buy some.

My feeling is that currently Boeing is challenging a bit too much with the result that some suppliers see no chance then to ‘obey’ whatever Boeing requests, but others may not follow this path.

However one thing is for sure: The 797 business case ‘stands on shaky ground’, extremely shaky ground I would say. Like a juggler with not just 3, not even 5, but rather 8-10 balls in air. And there is a chance that if one of the balls drops, all others will drop as well >> 797 dead and move on to NSA.

Ok just one prediction.

Flyglobal

PS: I would prefer that the 797 is built, but it needs some more risk acceptance at Boeing.

Revelation wrote:

ORDfan wrote:

Ha, funny... but according to Bloomberg, and as many posters here have noted, Boeing is taking it's sweet time on purpose.

It sounds like even a planned 2019 decision might be not totally official. Personally, I'd love see a 2-2-2 or 2-3-2 design... here's hoping.

Boeing Explains Why It’s Taking Its Time on ‘797’ Business Case
https://www.bloomberg.com/news/articles ... iness-case

Yep, and it maps on to what we're talking about above:

“We’re looking at it both from an airplane and downstream services standpoint, so an integrated life-cycle view,” Muilenburg said during the company’s quarterly earnings call Wednesday. “It’s important that we get it right, and we’re going to take the time to get it right.”

He’s referring to initiatives to ensure the plane can reap more revenue over its 30-year commercial life, while also lowering factory expense so that Boeing can make the twin-aisle jets at a cost closer to that of highly standardized narrow-bodies. Boeing thinks it can broaden the 797’s sales appeal -- and lifetime revenue -- by combining an all-new airplane with a design that encourages airlines to keep buying data analytics, maintenance and spare parts from the planemaker.

The author is far less cynical than us, as above, she doesn't frame this as Boeing putting the squeeze on its supply chain like we do here.

The interesting thing to me is this effort to investigate things like how to make the plane cheaper and how to maximize revenue over the aircraft's lifetime is valuable if they build NMA or if they skip it and go directly to NSA.

Folks: Here is what is really going on. First off to Flyglobal. The 797 is on good ground for its business case... as good as it currently can be. The problem is that the standards and profit margins have changed. A 2nd minor issue is that the engine suppliers quote terms caught Boeing largely by surprise.

My % numbers may be off a bit in the following analysis: But, the example tells a very real financial story.

The biggest issue is that if you go back decades the aircraft, and other, material goods manufacturers could rough out a business plan with an estimated 10-20% profit (depending on the industry); and it was acceptable if your production cost estimate was off 1/3 of that in the end. My personal guess is that Boeing in the 60's was in the 15-20% expected profit margin range, and in the 10% range by the mid 2000's (I suspect that the 787 was at 10% expected profit margin for the life of the program).

Now the allowed profit margins are 1/3 to 1/2 of that depending on the industry due to competition and changes in the industry. My personal guess is that Boeing is now looking at a likely maximum of 5% profit margin on a new multi-decade aircraft program (i.e. 797, also NSA). They can no longer afford to have a 3.3% variation (cost over-run) in their estimates (which would reduce their profit to 1.6% - as it would not be worth doing).

Boeing is also looking for ways to make up that lost 5% they used to count on - and they are looking at aftermarket support and parts for that. A reality is that the next major Airbus frame will face the same margin issues, and also will look for the same place for extra earnings/profit for the program. My personal guess is that they will get half of it (about 2.5%); and end up with an estimated life of program profit of about 7.5%.

Thus, it takes a lot more planning to make sure things are going to work (like they want a 1 or 1.5% possible variation in cost, not the historical 3.3%), and they really are looking to make extra profit to ensure the program is a good investment to the company from the parts and aftermarket service (why invest $10 Billion - or so - unless you can make a reasonable return on the investment).

If you look at recent aircraft programs from almost all manufactures you see the same problems (I'm not sure about Embracer) for all new from scratch aircraft.

In the end the 787 will make a profit. But, not by much. My estimate of their planed 10% life of program profit.. a pipe-dream now. If they do really really well (sell another couple thousand) they might approach 5%.

The 748 took a modest write-down of a few $billion as the apparent viable Program Accounting Block was not large enough. Interestingly, it now appears plausible that it might actually make enough to break even with further Freighter sales. 5% return on investment... Not a chance.

777X. Will it even break even - as a major modification? Possibly. 5% profit margin - I believe unlikely.

A380, A400M mega mega losses - no chance of ever breaking even.

A350. Likely will break even... but I don't see at this time a 5% profit margin from aircraft in the end. 10% (the likely old standard) would be a total pipe dream.

Bombardier CS series - virtually bankrupted the company and a large investment and turnover of product to Airbus was required. Positive return on program investment. Unlikely. 5% not a chance.

Boeing is just really addressing the realities of the market place - and that takes time and looking for other sources of income.

The old ways of building business plans are now history. It's a good way to figuratively loose your shirt (if not ultimately your company).

So lets stop talking about how things were done in the good old days... They be long gone...

Have a great day,

Superb post! We should expect margins to be squeezed in a mature industry, everything since the 60's has been marginal gains in performance and this is where the commercial airliner business finds itself, unless there is something truly revolutionary this is how it will remain.

Fred

lightsaber wrote:

Boeing is expensive. I believe they learned it was a mistake to outsource wing production.

Well, from what I have heard, Kawasaki was given just the specs to deliver "a box", all technology regarding the leading- and trailing edge was kept in-house.

Overall around this "delay", perhaps Boeing has really learned from the 787, that was pushed by marketing too much. Normal development cycle should give some room to maneuver and be flexible, to do things right. In this case a date was given without considering the impact any further. This time they want to get it right from the start?

This talk of margins on projects got me thinking....

Does this mean that in the future we will be seeing mostly MAX/NEOs of existing products spun out, i stwad of all new airplanes. So the advantage will go to who ever has the existing product in that market segment. Unless some compelling advantage comes along that creates a step change, in manufacturing cost, fuel efficiency or something similar that forces a reset. Otherwise it is just incremental improvements over time with occasional more significant changes to the existing designs.

That would see to suggest that we would continue to see a lot of certain current models in to the future from both manufacturers, and if a product does not make significant headway will drop out not be replaced.

Carlos01 wrote:

lightsaber wrote:

Boeing is expensive. I believe they learned it was a mistake to outsource wing production.

Well, from what I have heard, Kawasaki was given just the specs to deliver "a box", all technology regarding the leading- and trailing edge was kept in-house.

Overall around this "delay", perhaps Boeing has really learned from the 787, that was pushed by marketing too much. Normal development cycle should give some room to maneuver and be flexible, to do things right. In this case a date was given without considering the impact any further. This time they want to get it right from the start?

I wouldn't blame marketing, I'd blame management. It was a MBA fad at the time to outsource as much as possible. I think we many industries now recognize that while we can't put the genie back into the bottle with regard to globalization, the outsourcing fad went too far.

trpmb6 wrote:

A lot of arm chair engineers here who obviously know nothing about the material system, the extensive testing done and the extensive fleet history.

Let me put your concerns to rest. You can safely fly on the 787. It is way beyond over designed. As has been noted here in many cases it isnt even flight loads that size things.

There is really only one major disadvantage to cfrp construction. It isnt cold temperatures as someone posted earlier. It's actually heat. We will sometimes restrict the paint color on cfrp panels (specifically anything exposed to the sun regularly). Wont let you paint it black due to temperature.

Again, have no fear. It irritates me when people fear monger when I can tell from their post they clearly don't know what they are talking about.

Wait, what? I thought some of ANZ's 787's are painted in the All Black/Black Fern Livery?

jakubz wrote:

Wait, what? I thought some of ANZ's 787's are painted in the All Black/Black Fern Livery?

As I said, *sometimes.*

787 had the thermal profile to allow for all liveries. Some GA aircraft may have restrictions on livery.

There's also some considerations in color for control surfaces. You have to understand the thermal growth and manage your gaps so you don't produce a situation where you are jamming a control surface due to said thermal expansion.