United was certainly promoting the Boeing 787 Dreamliner as the greatest thing since the Lockheed Electra - ooops - check that - sliced bread. As I'd sit back in my economy-plus seat awaiting the safety video, Jeff 'Slick' Smisek, dapper CEO of United Airlines, would appear and start yammering about the amazing 787. He would be followed by 'regular people', a chorus line of smarmy UA employees trumpeting the features of the all-plastic...I mean carbon-fiber...airliner.
I suspect those ads have been pulled and I'm sure flyers are now checking what type of plane they will be flying before buying a ticket. After all those delays, it seems like the Dreamliner acquired a flaw that those of us with laptop computers worried about a few years ago: lithium-ion batteries and their proclivity to spontaneously combust.
No worries, right? Boeing can fix that problem, just like they did with the engines of the 747. All new planes have 'teething problems', right? Well, yeah, but not like this.
In the current (4 February) issue of The New Yorker, James Surowiecki explains it all in his article, 'Requiem for a Dreamliner?'. In it, he describes Boeing's plan to save money by outsourcing to a degree they never had before:
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.
So we had the triumph of been-counting over sound engineering and project management, at least until things started going wrong.
I call what Boeing did 'extreme outsourcing'. Boeing had outsourced some manufacturing on previous planes - no big deal - but not like with this one. Let the French do the electrical system and the Japanese build the tempermental Li-ion batteries. Cheaper that way, you know.
Here is an article from The Seattle Times.
And a PDF of the Tang and Zimmerman article: Download Boeing 787 Case
Based on my limited experience, I will nevertheless propose a law: Campana's Corollary:
"Companies that actually manufacture things, especially those involving public safety, should not be headed by finance, sales, or marketing people."
I imagine the Dreamliner will fly again, but I suspect it'll be a cold day in Hell before Slick Smisek and his employees gush over the 787.
"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." - James Surowiecki (from the article) [Note: cartoon by Christoph Niemann from the article.]