Wednesday, January 30, 2013

The Dreamliner is grounded

If anyone ever needs a lesson in what happens when Predators take over a Producer company, Boeing will do perfectly.  In it's glory days, Boeing pretty much defined a Producer company.  Engineers ran the show.  The company would occasionally bet the farm on a breakthrough product.  There was a sense of pride you could feel the moment you passed through the plant gates.  And people who knew aircraft were often fanatically loyal to their output (It's Boeing or I'm not going.)  Yes, there were other companies that made large aircraft but sensible people would often ask "Why?"  Boeing was so sure about its products that for decades, it only had one salesman.  One was plenty because everyone knew what buying from Boeing meant.

And then it started to unravel.  In 1997, Boeing merged with McDonnell Douglas, a company that had lost its airplane-making chops and had become just another cost-plus supplier hanging off the big Defense Department teat.  Boeing also had significant ties to the defense industry but were babes in the woods compared to the sharpies from McDonnell Douglas.  Soon the sharpies were ensconced in senior management at Boeing and the rot began to set in.  The open assault on Boeing's engineering culture came out into the open during the SPEEA (Society of Professional Engineering Employees in Aerospace) strike of 2000.  The cordial atmosphere between the engineers that designed Boeing's products and the engineers that managed the company was broken.  Management even moved the headquarters to Chicago from Seattle to show the divorce was final.

Once the Boeing Producer / engineering culture had been trashed, the chance for breakthrough, industry-defining projects was trashed as well.  The Dreamliner, which was not even that revolutionary to start with, became an expensive, ongoing fiasco that demonstrated the truth of the most famous sign carried during the SPEEA strike "No nerds, No Birds."  And so now, after several years of delays and $Billions of cost over-runs, the few Dreamliners that have been delivered are grounded.  The problem isn't even an aerospace problem but rather faulty lithium batteries.  If the Predators of the "new" Boeing management were actually capable of feeling shame, they would be resigning en mass.  Yeah, that's going to happen (NOT)!



The Boeing 787 Dreamliner is a technological marvel. It’s built largely of carbon-fibre composites rather than aluminum, which makes it significantly lighter than other planes. Its braking, pressurization, and air-conditioning systems are run not by hydraulics but by electricity from lithium-ion batteries. It uses twenty per cent less fuel than its peers, and so is cheaper to run, yet it also manages to have higher ceilings and larger windows. It is, in other words, one of the coolest planes in the air. Or, rather, on the ground: regulators around the world have grounded all fifty Dreamliners after battery fires in two planes, and Ray LaHood, the Transportation Secretary, has declared that the Dreamliner will not fly again in the U.S. until regulators are “a thousand per cent sure” of its safety. And this is just the latest in a long series of Dreamliner problems, which delayed the plane’s début for more than three years and cost Boeing billions of dollars in cost overruns. The Dreamliner was supposed to become famous for its revolutionary design. Instead, it’s become an object lesson in how not to build an airplane.

To understand why, you need to go back to 1997, when Boeing merged with McDonnell Douglas. Technically, Boeing bought McDonnell Douglas. But, as Richard Aboulafia, a noted industry analyst with the Teal Group, told me, “McDonnell Douglas in effect acquired Boeing with Boeing’s money.” McDonnell Douglas executives became key players in the new company, and the McDonnell Douglas culture, averse to risk and obsessed with cost-cutting, weakened Boeing’s historical commitment to making big investments in new products. Aboulafia says, “After the merger, there was a real battle over the future of the company, between the engineers and the finance and sales guys.” The nerds may have been running the show in Silicon Valley, but at Boeing they were increasingly marginalized by the bean counters.

Under these conditions, getting the company to commit to a major project like the Dreamliner took some doing. “Some of the board of directors would rather have spent money on a walk-in humidor for shareholders than on a new plane,” Aboulafia says. So the Dreamliner’s advocates came up with a development strategy that was supposed to be cheaper and quicker than the traditional approach: outsourcing. And Boeing didn’t outsource just the manufacturing of parts; it turned over the design, the engineering, and the manufacture of entire sections of the plane to some fifty “strategic partners.” Boeing itself ended up building less than forty per cent of the plane.

This strategy was trumpeted as a reinvention of manufacturing. But while the finance guys loved it—since it meant that Boeing had to put up less money—it was a huge headache for the engineers. In a fascinating study of the process, two U.C.L.A. researchers, Christopher Tang and Joshua Zimmerman, show how challenging it was for Boeing to work with fifty different partners. The more complex a supply chain, the more chances there are for something to go wrong, and Boeing had far less control than it would have if more of the operation had been in-house. Delays became endemic, and, instead of costing less, the project went billions over budget. In 2011, Jim Albaugh, who took over the program in 2009, said, “We spent a lot more money in trying to recover than we ever would have spent if we’d tried to keep the key technologies closer to home.” And the missed deadlines created other issues. Determined to get the Dreamliners to customers quickly, Boeing built many of them while still waiting for the F.A.A. to certify the plane to fly; then it had to go back and retrofit the planes in line with the F.A.A.’s requirements. “If the saying is check twice and build once, this was more like build twice and check once,” Aboulafia said to me. “With all the time and cost pressures, it was an alchemist’s recipe for trouble.”

In a different time, none of this might have mattered much. As plenty of people have pointed out, “teething problems” have, historically, been common in new planes. The 747’s engines were notoriously temperamental, the DC-10’s cargo doors were a major safety issue, and a number of Lockheed L-188s had wings shear off in flight. By those standards, you might think the Dreamliner’s battery issues are minor. The problem for Boeing is that those standards don’t apply anymore. The expectations of both customers and regulators are much higher, because, these days, so many products work well from the start. Automobiles, major appliances, televisions: a quality revolution in the past few decades has made products more reliable and durable than ever before. So our tolerance for failure is lower.

The same is true when it comes to airline safety. In the past, the F.A.A. was remarkably hesitant to take planes out of service. The problems with the DC-10 were well known to regulators for years before a 1979 crash forced them to ground the plane. But, again, those standards no longer apply. In the nineteen-seventies, after all, airplane crashes occurred with disturbing regularity. Today, they are extraordinarily rare; there hasn’t been a fatal airliner crash in the United States in almost four years. The safer we get, the safer we expect to be, so the performance bar keeps rising. And this, ultimately, is why the decision to give other companies responsibility for the Dreamliner now looks misguided. Boeing is in a business where the margin of error is small. It shouldn’t have chosen a business model where the chance of making a serious mistake was so large.  more

ELON MUSK: Those 787 Dreamliner Batteries Are Fundamentally Dangerous

Henry Blodget | Jan. 30, 2013

Tesla and SpaceX founder Elon Musk says the batteries that have burst into flame on Boeing's new Dreamliners are "fundamentally unsafe."

Musk's electric car company, Tesla, specifically designed its batteries to prevent this problem.

In an email to the aviation publication Flightglobal, Musk said the following:
"Unfortunately, the pack architecture supplied to Boeing is inherently unsafe. Large cells without enough space between them to isolate against the cell-to-cell thermal domino effect means it is simply a matter of time before there are more incidents of this nature."
Flightglobal's Zach Rosenberg explains this in more detail:
Both Boeing and Tesla use batteries fueled by lithium cobalt oxide, which is among the most energy-dense and flammable chemistries of lithium-ion batteries on the market. While Boeing elected to use a battery with a grouping of eight large cells, Tesla's batteries contain thousands of smaller cells that are independently separated to prevent fire in a single cell from harming the surrounding ones.

"Moreover, when thermal runaway occurs with a big cell, a proportionately larger amount of energy is released and it is very difficult to prevent that energy from then heating up the neighboring cells and causing a domino effect that results in the entire pack catching fire," says Musk.

"They [Boeing] believe they have this under control, although I think there is a fundamental safety issue with the architecture of a pack with large cells. It is much harder to maintain an even temperature in a large cell, as the distance from the center of the cell to the edge is much greater, which increases the risk of thermal runaway."
Musk has offered to help Boeing fix the battery problem, and his offer has been rebuffed.

A professor of electrical engineering at MIT confirmed to Flightglobal that Musk's assessment of Boeing's batteries is sound.

Meanwhile, 787s remain grounded, and there's no word on when they may be allowed to fly again. more
And from the perspective of an engineer who was there when Boeing decided that being cheap would save money.  It never does.
February 9, 2011
Sunday Buzz

A 'prescient' warning to Boeing on 787 trouble

Boeing commercial airplanes chief Jim Albaugh had some unusually candid comments about the 787's global outsourcing strategy at a recent Seattle University talk.

In a late January appearance at Seattle University, Boeing Commercial Airplanes Chief Jim Albaugh talked about the lessons learned from the disastrous three years of delays on the 787 Dreamliner.

One bracing lesson that Albaugh was unusually candid about: the 787's global outsourcing strategy — specifically intended to slash Boeing's costs — backfired completely.

"We spent a lot more money in trying to recover than we ever would have spent if we'd tried to keep the key technologies closer to home," Albaugh told his large audience of students and faculty.

Boeing was forced to compensate, support or buy out the partners it brought in to share the cost of the new jet's development, and now bears the brunt of additional costs due to the delays.

Some Wall Street analysts estimate those added costs at between $12 billion and $18 billion, on top of the $5 billion Boeing originally planned to invest.

Interviewed after the Seattle U. talk, Albaugh avoided directly criticizing the decisions of his predecessors.

The 787 outsourcing strategy was put place in 2003 by then-Boeing Chairman Harry Stonecipher, who was ousted in 2005, and Commercial Airplanes Chief Alan Mulally, now chief executive at Ford.

"It's easy to look in the rear-view mirror and see things that could have been done differently," Albaugh said. "I wasn't sitting in the room and I don't know what they were facing."

And yet, at least one senior technical engineer within Boeing predicted the outcome of the extensive outsourcing strategy with remarkable foresight a decade ago.

Albaugh and other senior leaders within Boeing may be belatedly paying attention to a paper presented at an internal company symposium in 2001 by John Hart-Smith, a world-renowned airplane structures engineer.

Hart-Smith, who had worked for Douglas Aircraft and joined Boeing when it merged in 1997 with McDonnell Douglas, was one of the elite engineers designated within the company as Senior Technical Fellows.

His paper was a biting critique of excessive outsourcing, a warning to Boeing not to go down the path that had led Douglas Aircraft to virtual obsolescence by the mid-1990s.

The paper laid out the extreme risks of outsourcing core technology and predicted it would bring massive additional costs and require Boeing to buy out partners who could not perform.

Albaugh said in the interview that he read the paper six or seven years ago, and conceded that it had "a lot of good points" and was "pretty prescient."

In his talk at Seattle U., the first specific lesson Albaugh cited as learned from the 787 debacle seemed to echo Hart-Smith's paper.

Albaugh said that part of what had led Boeing astray was the chasing of a financial measure called RONA, for Return on Net Assets.

This is essentially a ratio of income to assets and one way to make that ratio bigger is to reduce your assets. The drive to increase RONA thus spurred a push within Boeing to do less work in-house — hence reducing assets in the form of facilities and employees — and have others do the work.

Hart-Smith argued that it was wrong to use that financial measure as a gauge of performance and that outsourcing would only slash profits and hollow out the company.

Reached by phone in his native Australia, where at 70 he is now retired, Hart-Smith said he'd heard in recent months on the grapevine from former colleagues that senior executives at Boeing Commercial Airplanes have been reading his paper.

"I'm glad they got the message," Hart-Smith said. "It took far too long."

After he presented his paper at a company symposium in 2001, he received hundreds of supportive e-mails from engineers and lower-level managers, he said.

But a senior executive present at the symposium spent a half-hour after his presentation attacking the paper, and afterward Boeing leadership ignored Hart-Smith.

He had hoped to join the 787 program but wasn't permitted to do so. He felt sidelined, he said.

In Hart-Smith's analysis, the seeds of Boeing's outsourcing ideas grew out of the McDonnell aircraft business, which focused on military-airplane programs. On the military side of the business, the U.S. government was the major, often the only, customer and it funded development costs in full.

"The military approach didn't require you to risk your own money," Hart-Smith said. "That was the McDonnell Douglas mentality."

He blamed that attitude for the major outsourcing on the MD-95 and proposed MD-12 programs, the failure of which led to the decline of Douglas' commercial-airplane business in California.

The same ideas were transferred to Boeing with the McDonnell Douglas merger and led directly to the 787 outsourcing strategy, he said.

Taken to its extreme conclusion, Hart-Smith said mockingly, the strategy of maximizing return on net assets could lead Boeing to outsource everything except a little Boeing decal to slap on the nose of the finished airplane.

Though most of the profits would be outsourced to suppliers along with all the work, and all the company's expertise would wither away, the return on investment in a 25-cent decal could be 5,000 percent.

Has Boeing belatedly seen the light and embraced Hart-Smith's analysis?

Clearly the 787 has brought a serious rethink at the top.

"We went too much with outsourcing," Albaugh said in the interview. "Now we need to bring it back to a more prudent level."

That likely includes building the horizontal tails of the next version of the Dreamliner, the 787-9, in the Seattle area. And for the next all-new airplane that Boeing will build, Albaugh vows that "we can do things differently and better."
"Doing the new airplane the way we did this one is not what we want to do."

But the rethink may not be as radical as Hart-Smith would like.

In his paper he wrote that while some selective outsourcing is necessary, Boeing should keep most of the work it has traditionally done in-house.

Albaugh balked at going that far.

"I haven't said keep most of the work in-house," Albaugh said. "I still believe we need to make sure we try to access the best technologies and capabilities that are available around the world."

And despite what Hart-Smith has heard on the grapevine, no one from Boeing's leadership has actually called him up to talk about his analysis.

Hart-Smith retired from Boeing in 2008. He still presents engineering papers at academic conferences around the world.

Yet that startlingly prescient 2001 paper focused on business economics. Where did a structures engineer get that kind of expertise?

"It's common sense," Hart-Smith said. more

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