LIFO and FIFO Run On The Factory

No matter how you slice this time of year the "Bean Counters" get  their crack at making money at the big airline manufacturers. Whether its first in first out or last in first out, the production team  looks at the order book in a forever stretching big back up kind of way, and a lengthen line of parts from its work orders. Bean counters argue the merits of LIFO over FIFO, and the Boeing Tax accountants weigh-in with preservation of cash attitude for Boeing and making less available for the government(s), who is standing in for various taxation wind falls. Below is a production minded chart, where I would rather discuss production strategy with the marketing team hanging near the delivery center listening in.

    
If I were a stock holder, I would be interested in the the growing production back log since the start of the 787 first delivery in 2011. Not whether the accountants use a FIFO or LIFO Inventory valuation system. The fact that over three years the deliveries have reached 101 787 placed in customers hands while increasing the standing backlog of undelivered aircraft by 129, as of November 12, 2013, demonstrates production must expand by a significant number in 2014. Take into account that after the Dubai airshow there remains a possibility of significant 787 orders added to the order book going directly  on top  of its 129 backlog increase since 2011. This would propel Boeing forward with a production increase greater than ten per month with a sooner mode rather than increasing productivity using the later option. Backlog saturation will hog tie the marketing effort as customers will lament if they had ordered several years ago, they might be only 700 units away from its own delivery.  Now the 787 steady growth backlog will be hard to impress perspective buyers to sign on with a minimum wait of 8 years out from today, unless they jump into the 787-10 line hoping to by-pass the 787-9 crowd.

The Dubai airshow will make for interesting customer strategy and Boeing conversations with its customers will be an interesting  listened-in. I would imagine that Boeing will tell its customers about the new production rates, and how well they will push, pull and shove out 14 units a month by 2015. When they hit producing 150 787's a year, the backlog will be down enough to make everyone "Happy", right????. Next year at this time, the backlog should change depending on marketing's effort in its attempt for holding off Airbus. Production will have a Christmas party and celebrate the new year. However they may have a backlog expanding past 150 since tallying  a first delivery benchmark in 2011 of a 752 backlog at the start, and inspite of delivering another 15-18 aircraft before the end of this year. Numbers will be crunched, sales stories will be told, and the backlog will grow like the turkey before Thanksgiving. Boeing  needs more square footage and trained personnel over the next five years, as a solution for selling more 787's, otherwise its a hollow sales victory selling one  more 787 unless production can deliver in a reasonable window of time.

If  that marketing arm captures everyone's attention in Dubai with the 777X, then a whole new requests will be made tasking production, and it won't be "would you Like LIFO with that Order".

Bird On The Wing The Vote Is For Wednesday

Japan eagerly awaits the IAM machinist vote this upcoming Wednesday on November 13th. If the IAM rejects Boeing's offering, the Puget Sound machinist will need to rethinks its collective resume with Boeing. Wings may go to Japan, and the Body may go to Long Beach. Either way, Boeing is prepared to invest in the Northwest further if the Union agrees to reduced retirement plans and new income structure offered by Boeing. The gauntlet has dropped for the NW airplane Machinist Union, and on Wednesday, Boeing will see if they will pick it up. A post union vote of No, will send Boeing into a reconfiguration for the Northwest. Japan will benefit, no doubt. Plant facilities are available elsewhere. The message was sent from Charleston that Boeing can build on any swamp at any time. Or on any desert at any time and do it in two years or less.

Boeing may covet that opportunity to do just that, and would like the IAM to accommodate Boeing by a no vote on Boeing's offer, making it a clean bulldozer move onto some 2500+ acres in the US or overseas. Boeing would then write its own ticket without the IAM. However, members who are 10-15 years from retirement would say do I really don't want to move at this time, while my son or daughter is planning college? I see that vote picking up the gauntlet with attitude and voting yes for some. The new workers, who have a small dog in the fight don't know how to play this and people are ready for retirement will vote with its collective single finger pointed at Boeing. The vote will be varied and Boeing has positioned itself as wanting to move on sooner rather than later. Boeing has a vote passage team on stand-by ready to implement the 777X program, and a vote no team ready for a carved up renovated and rebuilt program spread out over the globe.

A no-way Boeing vote would also promote labor strife in the NW, causing disruptions and other harming slowdowns. The part of this business has been explored as everyone hopes a labor issue doesn't erupt at any time. All involved dare speak of it unless into the late hours of night. Boeing would prefer peace and status quot for transitioning to the 777X project. The two cards in play are Boeing's contract indifference, and the other, a labor dispute from the union. These two cards can be avoided by both committing to the greater purpose. The 777X is a critical tactic in stopping Airbus. Boeing don't biff it up! Boeing has options around the world, but don't use those options unless it’s part of an over-arching plan for super seeding Airbus' answer to Boeing family of aircraft. Don't use clout against unions just because Boeing has created an opportunity to deal with unions.

Each move should be a competitive move to win the airplane wars. Your best (the unions) should be assured of its part in Boeing's success. Even though I am not a Union proponent and spent my life guarding against any union partnership, I would examine the advantages Boeing's relationship with Unions in achieving its goals. You (unions) have paid more through organized workmanship, and it has brought the company to this point. Because the union existed, it has placed its own accountability on itself as a Boeing partner. If something failed on the floor, the workforce is accountable for those faults. I am not in favor of a union workshop for other reasons. Boeing would ultimately cause itself unrepairable harm. If it continues to seek relief from being encumbered by Unions, during a time of moving forward, then it unnecessarily risks the bigger picture of beating its competitor. All involved should wait, a union will self-destruct like many other organized governing bodies have done throughout history, and in time that paradigm will shift.

Boeing needs to keep its eye on the ball, period. I realize it has hedged its bet with the labor uncertainties by going after other plan B's. Those plan B's should be for its competitor's not for its labor voice. If labor wants too much as is often tempted to do, then it needs to re-examine its relationship with Boeing. Too many irons are in the fire and one faction does not build any aircraft. However, they the craftsmen and women, need proportionality for the whole idea, and its conception into reality.

 

Sense And Sensibility To The MAX

Two words define the 737 and the airline world, as a whole. Picture the airline market with many moving cogs and gears, emulating movement much like a composite aircraft. Sense has one definition and sensibility another view. The market place is caught in that vice of two words with different results. In 1910 you build a magnificent hotel  hoping to become the premier place in which to go in the world. The building is built to last 100 years. The beds get changed out every three years. The paint is applied every ten years and so forth. In all that you must keep guest entertained and updated with the latest trends into the 1920's. Just maintain relevancy. A very expensive need, is the cost of relevancy. If this magnificent hotel becomes a classic then the builders and business acumen have succeeded. By the year 2000, that hotel must have the latest appointments in service and technology (wifi) and maintain the sentimental flavor of a Victorian age hotel. However, the hotel market has shifted to a modern phase of many options and gadgets, bringing customers into the 21st century. Only people with a Victorian sensibility check-in to the overly renovated 90 year old hotel. Its market has shrunk into a refined niche for that old hotel, no matter how much renovation is conducted.

The scenario is true for auto makers, theatres, and cruise lines. The old Chevy Malibu is an example of re-invention in the 21st century. The Hilton has stepped up to a new era.  What does this has to do with aviation and Boeing? Everything, for the production of  new models and retiring old models, while keeping the customer relevant.  The NG was the next best thing just about a dozen years ago. It had all Boeing could throw at the 737 and make it relevant as a brand new model. Competing with the A-320 it had to offer more and more advanced features with its design. The   main selling point is that the NG would replace the follow-on Classic, which came from the original generation of 737's. Billions of dollars where poured at the 737 NG for its 25 year life cycle single isle jet. Those 25 years in service would make a customer buckets of money because of its longevity in service.

The 737 Max is on board in 2013. Promising the same kind of sensibility of having a long lasting modern single aisle airplane for the next 25 years. So, some airlines begin the retirement process on its 11 year old NG's fourteen years early, trying to make sense out of it. These airlines across the board would like to sell thousands of older NG's to down the line, to 3rd world airline companies just like the old days with the DC-3. "Wait a minute", someone says. "The 3rd world has grown up and are buying the latest and greatest from both Airbus and Boeing. That doesn't make sense!". What's a salesman of Boeing to do. Its sensibility says build it to the Max and a rate of 47 a month taking away Airbus' ability to shorten the wait on single aisle aircraft. Boeing is walking a tight rope of selling NG's and Max's at the same time. Ryan Air Bought 175 NG's this year and will leverage its capitalization with the after market Advance Engineered wiglets, as an ad-on, and install advanced engines making its investment fly cheaper from lower purchase price (lower loan interest payouts), and reasonable fuel efficiency. As a matter of speaking, Ryan  Air bought new beds for its hotel and added a world class spa and new fixtures, et al. The other airlines are going for the latest designs and features as a brand new Hilton.  Ryan Air is a good or great seat buy depending on your sensibilities. The sensibilities market shrinks with age. The Sense market widens with newness.

If you want to experience practicality and reliability you go for the tried and true product of your  youth. If you are adventurous you would want to to fly on all new concept airplane that may reach its perfection in ten years after delivery. However, the NG exercises your sensibility, for value, comfort and reliability of that NG. What is your sense? Adventure, excitement and  lower perceived cost? If you have a cost sense it is for a better efficiency, which is wiped out by its higher cost of purchase for the newest designed airplane like the MAX. It would be like buying a 100 mpg car for $100,000. How much fuel could you buy for $80,000, the amount saved by by buying  a $20,000 eco car. Even though the Max will burn 14% less fuel it is a more expensive airplane, and maybe could be replaced in 15 years after its first delivery, where the airline is buying the next slice of bread. By then many NG's will still be flying. The Max is for companies that will charge maybe an extra $20 dollars to fly on the MAX or a NEO. My sense and Sensibility collide on this point. I will pay for the ticket out of town no matter the model, regardless if the sense says go Max or your sensibility says go NG. It comes down to preference for the customers and the bottom line for the airline. The steeper capital investment on for the MAX could be paid back at  a quicker rate depending on the word of mouth promotion or an airline marketing for its new equipment. The real battle is for both sense and sensibility over its competitor, Airbus. It is Ryan Air Sense that the NG purpose will maintain its sensibility for 15 more years, and then it will have the sense to buy the next best slice of bread in 2030.

Predictive Nature of 787 Sells The 777X

Boeing, a few years back had the 787 on the CAD screen at various locations throughout the world. Engineers from all over weighed in on the physics of this aircraft. What can the 787 do with its make-up and new engines configurations. The vote came in at least 15% fuel improvement. "Now lets go build it", said Boeing. "Our computer models tell us we can fly for 15% less fuel than our own best comparable model now flying. Its a winner!".  Since that Eureka moment, even Leonardo da Vinci would be proud of, Boeing proceeded to build the 787 off the screen, testings, models and wind tunnel concepts. It took about 7 years to to get it off the ground. "Viola" it gained 21% fuel improvement in some cases but no lower than 15% in worst cases for fuel sipping improvement. Even though its been plague by the press reported with every little and big glitch, its an extremely safe aircraft because of its overbuilt glitch reporting systems. Glitches are not accidentally found by maintenance checks, but are more often found by purpose built system checking and reporting.

No other aircraft built to date has the the information about every little function working on board and how its performing. The detail of performance is so refined it becomes annoying with failed indicator reports, lights and bells.  All the bells and whistles sound off whenever something isn't quite right, even if it turns out its a false indication of something not right. However, the other side of the two edge sward is the performance indication proves the the Boeing engineers were too cautious by saying a 15% percent fuel savings.  It ranges from about 18%-22% depending on aircraft configuration and conditions. No too shabby of a prospect for airline customers on long legged routes. An aircraft taking off expends a lot of fuel compared to the rest of the trip. The longer the trip, the greater the fuel load weight it must burn and carry to go further. But the Average of 20% improvement in real time operations is phenomenal over the CAD idea of 15%.

This speaks well for the 777X program, and excites the customers if Boeing can replicate this lesson learned from all of Boeing's empirical data from the 787 project. Boeing has earned a place in the sales world of delivering on reliable information from the drawing board to the flight line. Boeing is claiming a 20% fuel improvement for fuel burn over similar current generation models with the 777X. How this compares with the A-350-1000 is a mystery, since that aircraft has not flown yet. That remains to be seen during the 777X development phase. The development phase will have continuous evolving engines from GE. The engine evolution will go forward right up until the first test model. Then go through a second evolution after test flights, and then have a PIP for new customer models.  I get the picture the engines are in a continuous evolutionary mode. The body design can be refined on the CAD and with wind tunnel testing. Lessons learned come forward from the 787 wing building. The 777X's heavier aluminum body over the A350-1000 plastics will not be such a penalty as the flight surface efficiency nullifies a slightly heavier aircraft than the plastic A-350 version of similar size. Boeing will increase airplane volume for that slightly increased weight, maximizing aero dynamics and canceling heavier drag features. This will enhance fuel burn upward to 20% over current existing aircraft in operation today.

The 787 lesson for customers did not go unnoticed. Boeing said, from the drafting board they could get 15% better fuel efficiency on the 787, and then they got 20% better efficiency in real time operations. The 777 X is aiming for 20% better efficiency over existing 777 like models, and Boeing may get more by the time it actually delivers, when using the 787 example as a predictive confidence builder for its customers. That is what is stirring the aviation world at this time, is that Boeing proposes an aircraft that Airbus can't touch in the current building and development cycle. Boeing's computer modeling is slightly understated from the building learning curve and evolution of technology during the build phase. By the time 2020 comes along, the 777X will have squeezed a few more percentage points out of its current 20% model everybody is getting excited about. Japan Airlines has missed the development high ground that Boeing is perched on, While Airbus is stuck building an airplane it never believed in, when it announced it is going to copy Boeing by building an Airplane where Airbus stated, Boeing couldn't succeed with a plastic airplane in the first place. I hope this confuses somebody. ;<)

Boeing Needs Two "Fish On" Call Outs

When you are trying catch your limit when fishing you need luck, skill and the right time for a catch. Boeing needs two fish before calling out "fish on". One is the Washington State legislature who has to come to terms with Boeing incentives this next week early, before the second fish can come on, The IAM union vote is scheduled later next week. If the Washington Legislature can't offer what Boeing wants, it becomes an non incentivize plan B move for Boeing using its paid facilities elsewhere, and then the second IAM fish becomes less attractive. Boeing needs to hook both fish this next week.  In 2003, the legislative incentives where laid down on Boeing's financial keel. However, wiggle room "rewarded" Washington State with a Charleston, SC plant, and extensive parts making in Japan when it came to the 787 project. The wings flew the Washington coop for Japan. Washington State got schooled by Boeing's lessons learned committee of expressway deed doers from corporate offices.

Japan has now schooled  Boeing by attracting all Boeing's business to its country and then Japan Airlines commits the unpardonable sin of ordering 31 Airbus A350. Having  dug a deep  hole of lost trust in Japan, Boeing is going to Dubai to make a statement next week at the Airshow, pointed  directly at JAL The 777X better be all that! Otherwise, things will get nasty at Boeing for awhile. I image some Corporate Change Management will occur, if the next X doesn't run smoothly off the flight line. Therefore, since I drank the Boeing cool-aide a long time ago, I think the 777X program  will stimulate the world thirst with a fuel sipping  777X, and view the A-350 as a clunker next in line to the Edsel.

Back to the Washington Legislature: The debate will continue on Friday November 8 and into early next week. How do we incentivize Boeing and not have them build plan B in like Long Beach, California of all places. Washington State can build wings too! :(  Not only that, didn't we already give Boeing the keys to land west of the Cascades and beyond? :) If the state can extend the 2003 May-Flower-like compact through 2025 with fewer loop holes, as in no new 777X plants elsewhere outside the NW.  With a previso that all major assemblies remain within Washinton's tax base, This exchange and consent with agreements of a tax benefit for Boeing, in the manor "pleasing" Boeing's Board in Chicago. The statement using the word "pleased" is a common verbage Boeing uses in PR bullets when announcing a deal with another  airline, and should be included when making a deal with Washinton State or The union. "Boeing is pleased to announce , yada yada, yada, that both the Unions and State of Washington have offered its services in building the world's best aircraft, the 777-X, somewhere North of Olympia and so forth.  At least I got Boeing's PR words in, "is pleased", in the approprate spot of this paragraph.

More pleasing thoughts on this matter. What do you do with the 5,000 folks in SoCal who are now working on the last C-17 on this run? I have an Idea! How about moving the 767 tanker project south, once flight testing starts on the 767 KC145 project.  The 5,000 would continue with military projects like the tanker, and the space opened in Everett would give the 777X a slick new production center. Its then roomier in Everett and Boeing could build the remaining order book on the 777-200/300 standing orders when expanding into the old 767 space for the 777X. Good thing Boeing doesn't have me working for them, I have many more ideas like that which could ruin a company, just sayin! The two fish to land for Boeing are, the envelope please:

• the IAM contract vote, yes, with Boeing and...
• Incentivization for Boeing from the Washington State Legislator

JAL Has The Rest Of The Story Opting For Airbus.

The Rest of the story Link for full read

JAL abandon Boeing 787 ship late in the delivery of its relationship with Boeing. Not only did it raise eyebrows in Chicago but caught the Japanese government flat footed its administering aviation giants ANA and JAL  Since JAL went bankrupt the government went in a bailed them out. Also giving JAL premium landing slots over ANA. It special relationship pretty much froze JAL out of taking on an Airbus a giveaway order of its aircraft, where it had over the last 60 years purchased with Boeing.

Now comes the caveat, with ANA now stationed at second fiddle in the airport line up, JAL received special considerations for new slots as part of the recovery plan and then spends its money on Airbus after having a "special launch" reltionship with Boeing and Governental support in recovery of its financial failure. So JAL turns around and takes the Airbus Giveaway order of 31 A-350 right before its governments eyes and sends them an e-mail about it. Boeing not complaining, (rightly so) stands back and says whoah, what just happened hear with our feature launch customer, JAL? Launch customers treat its partners better than that assuming they had crossed all T's and dotted all the I's with JAL. Cold is the word used and cold is what happened. What is Boeing going to do when ANA takes a shot with Airbus in a few months, another 30 A350''s. What wrong with the 787, or is it a quick swing to diversify while no one is looking?  I believe JAL has taken a calculated move at many levels in the Boeing relationship. I also believe they are cold and becoming independent and want act like the Arab nations asw a purchasing cartel, and have and make choices. Message is received by all participants.

They will now go the twisted trail forward without launch customer privileges or government bailouts. They want to play hard ball, and now they will get fast balls, curves and a few knuckle-balls along the way from this point forward. The Boeing pitching squad will treat them kindly, but no special deals await Japan Airlines from this time forward. The trust has been broken as Boeing did not see it coming from a launch partner JAL, who threw them under the Orient Express Bus.

Please read the entire linked article above and form your own opinion

787 Glitch Statistics By Press AI Leads the Pack

It dawned on me awhile back that Air India has an inordinate

amount of glitching. You see them as false lights blinking, Panels dropping off on final approach, and faulty parts. So I looked at where AI Inventory came from in the 787 line of craft

Below are AI first 10 units and where they are built.

Everett                Charleston

# 1                            #3
#2                             #4
#8                             #5
#10                           #6
                                 #7
                                 #9

Totals  4                   6

Step one is to isolate a problem containing two factors. Customer proficiency and source of build. AI has reach a statistical number most people can relate to and come up with a broad assumption without tying any one glitch to a source. This is dangerous ground in sampling.

• 98 aircraft built by  Boeing and delivered
• 10 in sample size
• 10% Sample Size From Boeing is The AI Fleet
• 60% of all AI 787's are built in Charleston
• 50% of Charleston's builds have delivered to Air India
• 40% of all AI are built in Everett

More detail in stats:

• 98- 787 are delivered representing 100% of the population tested.
• 4- 787's from Everett = 4.1 % of Boeing population and 40% of AI 787 fleet
• 6- 787's  from Charleston = 6.1 % of Boeing population and a 60%  0f AI Fleet

Now for some more number crunching without any empirical or actual glitch data.

The probability of glitches in Air India fleet should have 60% assigned to Charleston built aircraft and 40% assigned to Everett built aircraft. What becomes curious is that Charleston does not build 60% of Boeing's aircraft but some number ssouth of that, causing a weighted skewing in this example.

Charleston has delivered 12 out of the 98 787's in customers hands of which AI now owns 6 or half of the Charleston production. AI has the highest glitch rate publicized for awhile now. The main thing about statistic is to develop a trend or a predictive picture of outcomes in an manufacturing process.

Having had a lifetime effort wrapping my mind around statistics during performance auditing or error statistics you could develop conclusions based on the tests and raw outcomes. AI is a good case for this type of work. Several things need to happen at both ends of the test.. One is a Boeing Everett to Boeing Charleston comparison of delivered  Aircraft for its completeness and fault expectation, the second is Air India's ability to manage this new technology.

If a performance audit would determine AI is doing everything required operating its aircraft, then the shoe drops on the production source. If a majority of the glitches occur on the Charleston built aircraft where AI owns 60% of its fleet from Charleston, then Charleston has some serious maturing before its ready for prime time.. Boeing owns that data in the far reaches of its relational data base and is not public information. Completeness tests in auditing should be conducted on the process of building the 787. Something appears to be out of skew.

Summary:

• 12.25% of all 787''s comes from Charleston
• 60% of Air India is From Charleston, representing half of the Charleston 787 ever built and delivered.
• Air India is a Leader in frequent Glitching

Now here comes the "Nail Biter":

Both Norwegian Aircraft come from Everett and have had a recent rejection inspection on its aircraft where Boeing came and fixed it, Anomaly?

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

Boeing Eyes Long Beach C-17 Plant For 777X Airliner Production

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.

The Boeing Light Comes On and The Max Will Run out Renton's Door

Boeing to Increase 737 production  "Airwise"

Boeing is to increase production of its workhorse 737 aircraft to 47 planes per month by 2017 from 38 now, a surprise move that analysts said boded well for the company, its suppliers and airlines.

Boeing had already announced plans to increase production to 42 per month in the first half of 2014, matching current output by rival Airbus of its competing A320 jet family.

With the new target, Boeing would enter territory that Airbus isn't attempting. The output, from the same footprint at Boeing's 737 factory in Renton, Washington, will not only boost Boeing's cash pile, it will give the company more delivery slots to sell to airlines who want new, fuel-efficient planes sooner.

"This is a big, bold, but very strategic move by Boeing," that follows recent competitive wins by Airbus that likely have been "more heavily price-driven than in the past," said Russell Solomon, an analyst at Moody's in New York.

He said Boeing can also be aggressive on price and now can talk to customers about new orders "with the very pointed message that they won't have to wait as long to get their greatly desired new equipment if they buy Boeing vs. the other guy."

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A bold move is part of a larger strategy of parry and thrust sward play with Airbus. Airbus is dimishing its customer A320 back orders at an alarming 42 a month pace, beating Boeing's thrust of 38 a month as of this current moment. Boeing would like the high ground in the single aisle market of 47 units per month, as stated in this article. What more could Boeing do by making this production disadvantage  on Airbus? Airbus stole the march on Boeing by adding 2400 Neo orders to its book. When Boeing only has taken 1500 MAX orders since its offering of the Max. Having started over a year later, it lags the Airbus Back Log. So its waging that a 47 unit output will sell more single aisle, because you will get them sooner into customers arms in this race.  Yeah, I'll call it the "Arms Race"
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Because of the high volume and relatively low production costs, the 737 and A320 are often seen as cash cows, and play a big role in funding development of larger and technically more challenging aircraft like the Boeing 787 Dreamliner or the Airbus A350.

Boeing's rate increase was more ambitious than some forecasts. Carter Copeland, analyst at Barclays in New York, said he had penciled in Boeing building 46 737s a month around 2018. "I definitely didn't expect an announcement on it so soon," he said.

Just last week, Boeing said it would lift production of its 787 wide-body jet to 12 per month by 2016 and 14 per month by 2020, up from a target of 10 a month by the end of 2013.

While Copeland said he didn't have major concerns about the 737 supply chain keeping up with higher rates, he said producing so many of the current 737s and the 737 MAX "would seem somewhat challenging on the surface."

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Challenging but necessary, the output of single aisle runs concurrently with these points of interest maintaining a shorter backlog in Boeing Just In Time (JIT)approach.

• Increase cash flows
• Increased investment performance
• Customer delivery within a 5 year planning window
• Greater Customer opportunity to maintain a shorter wait when first ordering.
• 5 a month increase ='s 60 unit  a year closer to delivery

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He added, "I'm sure the supply chain is quite pleased as the 737 is a profit leader for essentially everyone who's on it."

Boeing commercial planes vice president Beverly Wyse said in a statement that the higher rate would "lay a solid foundation as we bridge into production on the 737 MAX."

The company has 3,400 orders for 737 aircraft, including about 1,500 next-generation MAX models.

The 737 MAX will have new engines and other changes to make it about 14 percent more fuel efficient than current models.

Boeing said the first delivery of the 737 MAX is on track for the third quarter of 2017.

In contrast to the Boeing target, the chief executive of Airbus this week reiterated plans to hold its production rate of competing A320-family aircraft steady at 42 per month, saying the European company had some concerns about the fragility of the supply chain.

Rob Stallard, an analyst at RBC Capital Markets, said Boeing's move "might give Airbus reason to accelerate" its production beyond the 42 a month.

Airbus' output for narrow-body jets is based on an 11.5-month production calendar, implying average capacity for 483 aircraft like the single-aisle A320 a year.

Boeing is based on a 12 month production schedule, though the company traditionally closes for the week between Christmas and New Year.

Stallard said the new Boeing target was "incrementally positive" because speculation about rate increases in the latter half of the decade may had have "fully baked in the ramp, and suggests that the current up-cycle continues to have legs."

He added that any rate ramp carries risk.

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The JIT Arms Race has started and Boeing aims to win this race. Its new engines and news designs are placed on a winner, should propel it beyond its order books, as all empediments are removed. The backlog does have risks as well as having a thin order book at the front end. In all JIT formulates a production build up number, and this is where the magic occurs for the bottom line. That build-up works hand in hand with marketing. The sales teams needs to know a year in advance, what are its stated goals, and can it achieve the goals on time, in order to keep the Arms Race on target. Get those units in the customers arms when the sales team makes that pitch of "on time delivery in quanity". 

The, "when do you want it question?", is just as important as the "how many do you want or need questions". Its hard to sell someone with a company five year plan in the vest pocket talking to Boeing marketing team about deliveries will start in 2021. Boeing hopes, that my friend is a NEO issue. Boeing would like to tune is sales program with customer knowledge. Where they will be ready to delivery on a customer's five year plan in numbers, and advancements, beyond its competitor whom is building the NEO.

The  NEO is backed into a full order book Jam with this type of strategy as it has 2400 NEO at rest and not going anywhere soon. Boeing too, is trying to break out of that strangle hold by targeting production to solve the problem. 

Having a 47 a month single aisle production capacity or delivery rate at peak periods, allows the marketing team more flexibilty for delivering promises it makes. Room that it requires, without it would box them into a... "well I don't know just yet, if we can get you your 20 Max's in the year 2020. Have you looked at our Gold care program Yet?" :>)

The build-up number for the order book, as an example: should have a two year production backlog which delivers a Just in time pace meeting customer planning goals for financing and route management, and it aalso migates risk from lack of back log for Boeing. This example would allow sales and demand some flexibilty with a 47 per month break neck production speed.  

They have publically recoginized this arms race and are actively employing the troops to get single aisle NG's and Max's into the Boeing customer's arms from Renton, Washington's lakeside doors .

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Airbus and Boeing both see demand for over USD$2 trillion worth of such aircraft over the next 20 years.

(Reuters)

When You Wake Up November 1. You May Read 87 Boeing Billions

"Say whaaaat, 87 $Billion in orders scooped in Dubai for Boeing. I know its post Halloween and you may still be dubious of claims after Halloween, especially from the walking dead before morning coffee. But this one may have legs that walk through boardrooms around the world. Emirates and even Qatar orders for the 777X may  scare the the Beelzebub's out of you. No matter how cryptic this news message is from all of all places Hispanic Business it made me look and read on! I thought they sound as crazy as I was about Boeing in my Order prognostications last year when I said it would take 150 orders for the type to launch it. Well, this stellar publication only second to WSJ (:)has come forward with this terrific endorsement of my Boeing musing in a perfect world. Keep the applause quiet some people are trying to either work or sleep.

Must  read for effective coffee spewing:

Boeing Lines up $87 Billion in Mideast Orders for 777X

"The 255 planes under discussion included as many as 100 to 150 for Dubai-based Emirates, about 50 for Qatar Airways and as many as 30 for Etihad Airways, said the people, who asked not to be identified as the negotiations were private.

Cathay Pacific Airways was weighing a purchase of as many as 25 of the aircraft in a transaction that would probably come before the Dubai event, one of the people added. The expo runs from November 17 to 21 and is often a showcase for long-haul jets like the 777."

The above tease was copied first for your news pleasure before the morning arrives. Just sleep on it and if you are already at work in daylight, "put that in your pipe and smoke it" before a hundred links appear before your eyes and confuse the sensibility further. Boeing will launch way above my imaginary prediction from last year. Sleep well airline exec East of  Staten island. Everyplace is east of  New york even New Jersey if you travel far enough on the 777X.