Saturday, May 13, 2017

Will The 797 Build At Boeing Japan?

Seattle Times offering by Dominic Gates is worth the read and offers fuel for Boeing contemplation and mental thoughts. Gates ponders whether the 797 could be or will be built in Japan. After-all they are significant contributors to the 787 and 777X programs at Mitsubishi Heavy Industry. It is important to consider if Everett, Renton or Charleston would be an efficient and profitable location for Boeing's 797's launch site. Questions need to be solved for what location would best fit a 797 campaign, therefore starting with Mitsubishi then Washington and followed by Charleston directs this: “what's next” conversation.

Japan and followed by other locations talking points:

·      A proven ability to build a flying aircraft from scratch.
·      Engineering and production capability for sustaining aircraft making for program duration.
·      Boeing oversight from ground up remains intact for a foreign enterprise.
·      Profitability margin exceeds its counterpart locations when delivering aircraft to customers.

·      Future sales enhancements exists by location placement.

Mitsubishi Heavy Industry (MHI) can do the job as it has already handled building significant parts for the 787 program. It has built a successful regional jet (MRJ), a smaller frame than the 797 to its completion from 2015. 
  
Boeing would have to swarm MHI with engineers and production workers during its ramp up for completing a 797. Mirroring a similar experience Boeing had with its Charleston facility when the first copies of the 787 were completed.

The Effective and Efficient (EE) standard exceed all options of where a 797 could be built. Would MHI make the 797 production location a winner for Boeing over Washington State and Charleston SC? If MHI exceeds an EE test anywhere, then it would become the place of choice for Boeing.

Finally, Japan buys the 797 in copious quantity since it would be a Japanese based product. An over flow of orders comes from regional partners, because of that Boeing would tip the hat for a Japanese location building the 797. A win-win condition for Boeing exist when lower costing from MHI wins over Boeing's own manufacturing and developmental locations in the States.  

Washington State:

Yes, Washington State is Boeing's core engine for building airplanes from its development and production. The delimiting factor is finding space for building a 797. Boeing may already have a plan for finding space in the State of Washington west of Mt Rainier. Only the union chases it away from the Washington 797 placement.

The cradle of modern American aviation has a 981 zip code in its numbering. Colleges, Tech, and University schooling is built in the Seattle area for making engineers, machinist, and production personnel. Boeing in Washington builds everything with wings and is highly successful making heavy objects fly and fly. The whole function of Renton, Seattle, and Everett is duration of its aircraft industry.

Aircraft making oversight is a redundancy and part of its corporate mission. 

Boeing Mission Strategy Statement:

"Run healthy core businesses

Leverage strengths into new products and services

Open new frontiers
People working together as a global enterprise for aerospace leadership" 

Does Washington State footprint beat the competition on enough levels?

This is a hotly debated topic with its Charleston's counterpart capability whom is not Union at this point in time. It is the most efficient airplane center in the world as it beats the Charleston, SC production and development capability. The sum of its whole capability beats Airbus' own manufacturing. Boeing has become the world's largest airplane manufacturer because the Washington state foot print is the guide on for all of Boeing's enterprises.

Future sales are built on Boeing's reputation from the Northwest location. However, some analyst believe Boeing must expand from that location to remain a viable leading builder of new flying technology thus a consideration is on the table for building the 797 elsewhere, as it expands its world footprint.   

Charleston SC:


Charleston has proven over and over again it can build the world's most advanced airplane in the 787. It also builds ancillary parts for the 787 program. Charleston is equipped for absorbing Boeing growth from its own growing aerospace functions in the area. Therefore, Charleston is a serious contender for developing and building a 797.

However, its recently produced a flying 787-10 and it moved to Seattle for its test campaign even though Charleston already had a vast experience for making the 787 family from its first two model types. The inference suggests Boeing Northwest maintains the lead testing center for all future air-frames because of its human Resource, Experience and Corporate controls.

Charleston is here to stay until notified otherwise. The duration of a project campaign is unlimited as it has matured to the level of having the highest confidence for producing new airplane types. It is positioned well for the next step of making a whole new air-frame such as a 797 middle of the market aircraft.

Charleston is not a foreign enterprise and beats any foreign competition in this category. Only Northwest Boeing is the head of the class for this consideration. In Fact the Boeing Northwest swarm of engineers and airplane builders made the initial Charleston 787 product. But much to its credit, Charleston has followed on, by relentlessly succeeding in every challenge given by the corporate mandate.

Profitability from Charleston is from several factors such as a Non-union environment and flexibility of space consideration. It has enough space or land to enhance Boeing efficiency. It can make it cheaper because of its favorable production environments.

There is no future benefit for sales from a Charleston location. It is only convenient for some of its European customers and going eastward. A location condition is only effective when it benefits the customer over a long period of time or it mutually benefits both Boeing marketing and the hosting nation at the same time such as MHI deal would make for making a Boeing decision. The Boeing reputation comes from the Seattle area not Charleston.

A summary conclusion would make this a horse race at the end of it all. MHI for orders, Seattle for reputation and expertise, and Charleston for flexibility and lower costs. The Japan option is awkward for Boeing's corporate involvement, but it can be done if Japan makes it worth it. The Charleston option is limited by over-all program experience such as MHI has where Charleston has limited program experience, but cost controls are attractive to Boeing stockholders.

The always faithful Northwest Boeing centers are most attractive but for its rising costs plaguing corporate investors thinking. In this horse race sales will drive the decision process. 

MHI will get the nod if the Japan region goes for buying 500 of the 797, otherwise, it may only order 200 initially as Boeing goes elsewhere with a decision. 

The Northwest is in the middle, having reputation, know how, and a proven track record. It would get the initial production nod where Boeing then would branch out once the program is set in a delivery stream. Japan will get a promise for production participation if it will wait five years allowing time to prove out this type as it would get the Asian market share for production.  

Depending on sales quantity, Charleston could conceivably get a substantial production share depending on sales of all Boeing types during the next ten years forward. The sales would require a rising Max and 777X order book, then Charleston could take on about 20 797 a month pace where Boeing would have an equal portion for delivery. If sales are soft across the board then the Northwest R&D wins the horse race.