Monday, November 4, 2013

Boeing's Orthopedic Foot Print In The NW SoCal

Boeing is reconfiguring its cabin of industry in the Pudget Sound area. It has reached its maximum change management configuration for its rapidly evolving aerospace industry and indicates it doesn't currently have key parts that will work effectively in the Puget Sound, or has a better option existing outside the region. Even though its best most experienced labor force resides near Everett, Wa, Boeing is seeking a diverse manufacturing game board in which to draw answers for every contingency it may encounter. With the Charleston, SC facility barely making 1.5 787 a month its not a confidence builder for betting all in Charleston, SC for Boeing's plan. Have those strong unions in the NW, Boeing is slowly reigning in that historical commitment to the North West. After hearing the many arguments and speculations for sinking everything into the NW as a bad idea.

It becomes apparent Boeing thinks its best bet on a changing aircraft design is found from multiple contributions of engineering, wherever they are found. From the Southern part of California to Russia Boeing seeks talent specific engineering from five  potential key partners for the 777X design motifs. Use of titanium in an aircraft would come from Russia and California arenas.  That impetus to the 777X design, would rapidly propel this aircraft forward. With that in mind, Boeing is hiring specialist best suited, as the hired guns to do the job.  A Boeing Local Posse of engineers would take too long to ramp up on the 777X project. The locals will be used where they are best applied. Puget Sound is in the game only to the extent of bringing the aircraft together in an efficient common effort . 5,000 workers from the C-17 project would like to know if they can work on the 777X or just burn ttheir motgages and move.

The second question is offered by aircraft aficionados around the world. Where will the 777X come together? If its not Everett where the delivery center resides, and the world largest building has it own zip code, then where? This whole diverse scheme of engineering and design suggests a diverse scheme of assembly where all roads lead to where? Charleston, Alabama Long Beach(see below), or Everett. Segmented parts are assembled in a multi-locale operation and shipped to a central assembly point. Could St Louis be that central locale having assembles coming from all directions? Thinking about Charleston is like thinking about Everett,  only Everett is an assets best suited with its labour force needing the call of duty. Boeing does have a plan pending on early orders and has five years lead time to configure a build site (s). Making an early prognostication is similar to making a prophecy. I'm not a aviation prophet. However, something with Boeing is in a state of moving three cups around the table while trying to guess, where the 777X pea lies under what cup? Its best to start with what three cups are on the table.  My own three cups are logical for the most part:

777X work is focus of secret talks by Boeing, Machinists

Seatlle Times (NOW November 4):
"The national and local leadership of the Machinists union is in secret talks with Boeing’s top executives, trying to reach a deal that will see the 777X built in the Puget Sound area in exchange for a long-term labor contract, according to sources with knowledge of the negotiations.
If a deal is reached, it’s likely to be decisive in securing both final assembly of the forthcoming 777X jet in Everett and the fabrication of its giant composite wing somewhere nearby.
One source with direct knowledge said that while the outcome is uncertain, a decision is imminent because the talks would not be extended much longer.
  • Everett, 24oz cup
  • Charleston 12 oz cup
  • St Louis  Bourban shot glass (cup)
  • Long Beach Dark Horse coming in from Santa Anita Race Track
Forbes Revelations:
Only weeks after announcing that it expects to complete production of the highly-regarded C-17 airlifter at Long Beach, California in 2015, theBoeing BA -0.18% Company is eyeing a new role for the 5,000 workers at the site: assembly of its planned 777X widebody airliner.  Boeing says the 777X will be “the largest and most-efficient twin engine jet in the world,” offering 20% better fuel efficiency than the existing 777 as it flies 350-400 passengers to ranges of over 9,000 nautical miles.  In combination with the new 787 Dreamliner, 777X is expected to dominate the high end of the commercial transport market after it debuts around 2020.
(Disclosure: Boeing and other big aerospace companies contribute to my think tank."

Now the west coast dark horse becomes California at Long Beach ( interesting port city)
Everett is logical because the talent and infrastructure are in place for the 777X.
Charleston is second, because it has space and a non union inexperience work force.
St Louis comes up third, Long Beach has over 5,000 plant experts from the c--17 project awairting orders in its massive space. because it has proven parts shipping through the 737 project duration.  Alabama is a dark horse in this thought but has interesting potential. The 777X could be built in two places simultaneously where the dash eight is built in Charleston  Long Beach area and the dash nine in Everett.

A diversification of attention towards a new model balances risks and spreads talent in an apportioned manner into the future. A west coast- east coast spreads labor risks proportionately between Boeing's own investment at the two locations without investing an additional and extraordinary amount of capital at a third location. This type of strategy would eliminate St Louis to a supporting role it now holds as 737 supplier of major parts for the 787 and 737. 

An unmentioned third source of labour has greatly emerged in the tech industry. That is of contracted labor. The contractor bids a sum based on required work offered by a company. The contractor supplies the skilled work for for the job. The contracting company provides training and supervision for the task. In the contracted agreement all benefits are provided to its employees under the contract. Competition is between  competing contractors for winning the bid. It has not become a part of Boeing's play book as of yet but could become par of that type scenario in the future. If contracting elevates its game with qualified skill sets for a specific technological requirement. The engineering union for Boeing maybe a target from its recent announcement of putting out to bid, engineering on the 777X to five different firms. 

This move makes contracting a step closer for all future projects. Contracting may occur on the factory floor with routine and repetitious jobs. Specialized jobs may have a longer shelf life as a Union contract, but will dissolve over time as a contracted temporary work force arises with the same skill set. Competition on the factory floor is a reality in the next 20 years for contracted labor in the production phase. Charleston  is that future the North West is looking at. State Tax breaks can only go so far for saving jobs. Automated systems gives unions less leverage for maintaining an ownership over Boeing's labor force.

Back to the new model type, the 777X. Boeing is making a proportioned effort towards the future with each model type. The 787 was the Charleston moment. The 777X is the engineering move and possibly a new build site. A new model  is a circumvention opportunity for the old problems with the unions and other monopolies from supply chain issues. Boeing wants to keep choices on the board and not lock into a strangle hold over its own destiny building newer aircraft. A new model (777X) means a new opportunity to shake the shackles of the status quot. What Boeing sees in the future is control of its own destiny. If the cost of moving is the right price, then it will move and leave behind that status quot it opposes. The JAL/Airbus order could be a reaction as Boeing seeks to build 777X in the states. All parts of the Boeing story are moving from some event we are not aware of, or of contemplating as a reason for why Boeing does what it does. The orthopedic footprint in the NW is about to get adjusted.