Boeing’s Optimism Belied 747-8 Problems

 - October 30, 2009, 6:21 AM

Boeing Commercial Airplanes faced some familiar scrutiny over the fidelity of its program timelines again this month, when, no more than six weeks after 747-8 program head Mo Yahyavi portrayed the project as a virtual model of efficiency during an interview with AIN, the company announced that it would take a pre-tax charge against third-quarter results of approximately $1 billion “due to increased production costs and the difficult market conditions” associated with the program. In fact, rather than flying three prototypes of the model’s cargo version by the end of this year, as Yahyavi had predicted in late August, the company now says it won’t fly the first airplane until early next year. Schedules now call for first delivery in the fourth quarter of next year, rather than the third, as last anticipated, although first delivery of the passenger version remains slated for the fourth quarter of 2011.

Notwithstanding Boeing’s official explanation, the October 6 announcement left many wondering what had changed in the month and a half since Yahyavi issued glowing reviews of the program’s progress. “At the time we really thought we were on track,” said a Boeing spokesman. “It’s just that once you get into production…you find out about late engineering issues.”

In fact, a lack of engineering maturity and insufficient engineering resources prompted Boeing to delay the program by six to nine months last November, according to CEO James McNerney. But like a cancer that has gone into temporary remission, the same dysfunction didn’t fully show its ravages until the middle of this year’s third quarter, once actual production began on the first airplane.

“When we began assembling the first 747-8 Freighter in the third quarter, we encountered significantly more rework and disruption than we expected, both in our Everett factory and our supplier factories,” said the chief executive during the company’s third-quarter earnings call. “The root cause is something we talked about in the past. The engineering on this program was late to mature, and that was compounded by the limited availability of engineering resources.”

Earlier in the month a Boeing spokesman added yet another dimension to the explanation when he revealed that “build-up of tolerances between structure designed with older tools and the new design tools caused fit-up issues that have been discovered and are being resolved in the final assembly process.”

Not coincidentally, almost two months earlier Yahyavi talked of design changes that proved more radical than originally expected, a factor that relates directly to the “fit up” issues.

“I think when the program started the size of the changes was much smaller than it ended up being,” he said. “We ended up deciding to push the envelope and get better performance out of the airplanes. So we decided to go with a new wing design, and that was not really originally in the plan.”