Fungible is not a term used for
people but for liquid assets sometimes found in an oil pipeline. A barrel of oil found
in a New Jersey pipeline is also a barrel of oil found in a company's portfolio for its nation-wide barrels of oil positioned for trading purposes. Has Boeing's workforce become
a commodity where 4,000 to 8,000 employees are released from its system as working units in some sort of fungible manner?
Boeing
needs to reduce its workforce footprint and still make guidance for its
stockholders and achieve lofty goals needed in its airplane ware with Airbus. A
8,000 workforce reduction is a 10% sock in the gut for those whom are loyal to
the cause of airplane building. Next workforce unit up in this case. Trimming
the fat is a Boeing battle cry, and full steam ahead with less. The President
of Boeing did not explain well what all this meant leaving the likes of this
blogger with an attempt at better understanding the nature of it all regarding
business at hand.
The storm
swirls with airplane costs, workforce fat when competing with Airbus pricing in
the market place. Long gone are the statements referring “bang for the
buck" or "added value". Boeing is just dumping its fungible
workforce. Most people don't even know what I'm talking about and that's just
fine, but you need to use the word fungible in a sentence today as if you know
something when impressing your friends with business school like acumen.
Going a
little deeper on this subject requires a further imagination for what is
occurring with Boeing in the workforce reduction announcement. It isn't from a
thin backlog nor is it from a bad sales year coming up. The real cause for
fungible workforce reduction companywide is the buildup problem occurring
several years back. A time was occurring where Boeing was not meeting its
objectives in a timely manner. It was smarting over the three years late
reputation so Boeing hired more people to throw on the fire of progress for its
multi-layered programs. Boeing had bit off more than it could chew in anyone
program.
The KC-46
problems are in the cusps of finding whether it will be allowed its first
initial production run this year. It has problems too, but not insurmountable
by any means it just needs more hours of tinkering.
·Boeing is
building a building for building an Airplane for which is not ready yet, the
777X.
·Boeing is
building an airplane for which contains an X factor in the single aisle Max
realm.
·Boeing
has just started building a perfect 10 machine in Charleston, SC.
·Boeing
has just announced 4,000 people will leave in this perfect industrial storm?
It
doesn't pass the smell test of reducing cost for the purpose of competitive
pricing against Airbus. Fickle customers who buy aircraft at a clip of $100
million a unit, do look at the price factor. The price factor becomes more fickle
if all things are equal in what is purchased. In Boeing's case it claims
superiority over the other, but it has to lower its selling price at the
expense of furloughing workers.
The
answer to all this confusion comes from analogy. In the cruise ship industry
seasons affect the critical assets, the cruise ship itself. Boeing is in such a
season where its workforce needs repositioning from one ocean to another to
capitalize opportunity. Workforce build-ups in one area will reposition to
another. Having this flexibility will cost Boeing employees up to 8,000 jobs in
the next year while other programs will receive just in time human resources in
another part of production cycle, as if it were a fungible matter.
The
prediction forthcoming and concerning lost Boeing manpower:
"it will need
workers sooner rather than later in other projects it even has already started
or made the commitment".
It can make a shift of its "too many workers" in
one area where production costs are affecting the market. The downgrade of
employee numbers is housekeeping which allows future absorption for the day where a further 8,000 workers are required
and repositioned for its various programs. However for the 8,000 today it doesn't pay the rent.
Matt Damon is making a movie in Toronto.
"Downsizing" is the theme and title. Norwegian Airlines is the cargo
holder for the props. A picture is worth a thousand words becomes the cliche.
SoNorwegian Airphotographs the freight event
promoting its cargo service. In doing so, a bystander obtains the scope and
scale of the 787 aircraft unless a traveler has already flown the 787 from the
ground up. The electric cars come from Norway along with electric bicycles
stored onboard.
What I wanted for Christmas came late. An inside scoop Aboard the Zumwalt. Note that Port is on the left side of the ship facing forward and Starboard is right side facing the Bow (Frontward). My navy ends at these position recognition. However, walking the ship in pictures is the feature below. It's all an inside operation. The external deck is as functional as a submarine's exterior deck. It all happens under the Zumwalt's skin.
ABOARD THE DESTROYER ZUMWALT — “All ahead one third on the starboard shaft.” The order was called out by the Bath Iron Works (BIW) conning officer, clearly heard in the hushed atmosphere of the pilot house. The bridge was dark except for the dim glow of flat-panel displays as the 16,000-ton destroyer moved away from the Portland, Maine, pier.
Perhaps 30 people were crowded into space. The navigating team was led by Captain Earl Walker, the shipyard’s longtime chief pilot, and all the controls were manned by civilian engineers and shipbuilders working for BIW, which owns the Zumwalt until it is formally handed over this spring to the US Navy. Other engineers — from the shipyard, Raytheon, and other manufacturers — looked over the operators’ shoulders.
Unusually for a ship on builder’s trials, the civilians were joined by about 130 members of the destroyer’s US Navy crew, on board to get their first chance to sit down and operate the ship that later this year they will call home.
This was the third night out for the Zumwalt on its second series of builder’s sea trials, the first “alpha” trials having been carried out in early December. The ship, which will eventually go to sea with a crew of 147, was carrying 388 souls, one of the highest numbers Zumwalt likely will ever carry during a planned service life of about 40 years.
The 610-foot-long destroyer moved out slowly from the pier, making a sharp left turn, then a right to come into the channel. As it moved out of Casco Bay into the Atlantic, a slight sea was running, enough to throw spray from its sharp, wave-piercing prow and occasionally spit on the bridge. A slight glow in the darkness ahead belied the white running light on the Zumwalt’s bow — a change from the mast position required on other ships because the destroyer’s stealthy design leaves nowhere else to put it.
Accompanying the Zumwalt was the small US Coast Guard cutter Moray. Coasties regularly escort warships in US coastal waters for security, but the Moray also carried a team from the Naval Sea Systems Command using a variety of instruments to measure the Zumwalt’s signatures. Checking out the ship’s stealth qualities is as much a factor as making sure the ship’s engines work properly. The stealth features are effective — the Zumwalt is very difficult to detect on radar. For safety, reflectors are temporarily rigged in the halyards so other ships can see the destroyer.
The Zumwalt’s stark, angular profile is unlike any other ship on the seas, the epitome of stealth design that seeks to minimize radar cross-sections (RCS) and heat and emissions signatures across visual, physical and electronic spectra. The decks are not designed for people to be out and about, and all the usual topside ephemera is either recessed or moved inside the ship.
The only objects protruding above the flat foredeck are the huge enclosures for the two 155mm guns of the advanced gun system (AGS), the largest naval guns installed as standard equipment to go to sea in decades. Ranged along the sides of the ship on the foredeck and along the flight deck aft are 80 missile cells in a new arrangement intended to use the blast shields of the cells to protect the ship, and keep the centerline free for the gun system. No railings or lifelines are visible, although stanchions can be rigged manually when in port. Those venturing out on deck must latch on to a safety line.
The ship moved out of the harbor with an SPS-73 navigation radar rotating atop a mast on the foredeck, but as it began to sway with the sea the mast was retracted, periscope-fashion, into the hull.
Shipyards use builder’s sea trials to check out all the ship’s features and identify fixes. The Zumwalt is filled with so many new technologies — 10 major groupings and dozens of smaller items — that BIW is running a nonstandard second trial. In April, the ship will go to sea again for acceptance trials, when members of the Navy’s Board of Inspection and Survey comes aboard to conduct their own assessment. If those trials are successful, the board recommends the Navy accept the ship, and a subsequent delivery ceremony marks the stage where ownership is transferred to the government and the ship enters naval service.
“The first trial we were out about a week, this time Monday to Thursday,” said Capt. James Downey, program manager for NAVSEA’s PMS 500 office which oversees the DDG 1000 program. He spoke March 23, the ship’s third night out. “The real point is to demonstrate those systems the same way we will do it for acceptance trials. This is a dress rehearsal for that, and to grade ourselves. We’ll collect all the data and go back and debrief and see how we did.”
Downey felt good about the Zumwalt’s stealth qualities. “I’m not worried about the RCS whatsoever,” he declared. “It’s looking good. It’s looking too good.”
Despite his engineer’s caution, Downey was upbeat about the trials. “So far we haven’t had any failures — no equipment failures, no demonstration failures.”
Those on board reported the first two days of the trials were held in relatively rough weather, but the Zumwalt’s unusual, tumblehome hull performed as expected.
“The ship handled well. It’s been an exceptionally stable platform. It handled very well,” said US Navy Capt. James Kirk, who will become the Zumwalt’s first commanding officer.
During the trials, the twin rudders were put hard over at 30 knots. Kirk was impressed. “I would have thought the ship would have significantly more heel” during such a turn, he said. “It was only about a 7- to 8-degree heel.”
Kirk was enthusiastic about the ship’s performance and about having his crew on board to learn to operate the ship.
“The Alpha trials demonstrated about 20 basic tasks and functions on the ship. During Bravo trials, we carried out more than 100 tasks,” Kirk reported.
The crew, he said, “got to integrate with the ship and operate under the supervision of BIW. You can’t beat that. The actual hands-on operation of the actual vessel is irreplaceable. On a class of ship that’s this different, where we have a lot of new technology, there is an exceptional benefit for having this opportunity.”
This was also the first time the Zumwalt had been to sea with a reporter on board, providing an opportunity to get a look at some of the unique spaces and features on this highly classified ship.
The Bridge
Situated on the O-2 level, or the second level of the superstructure, the bridge is a large space that will have only three regular watchstanders. Two positions are adjacent at the center, one for the junior officer of the watch (JOOW) and another for the junior officer of the deck (JOOD). The officer of the deck (OOD) has no seat but is expected to stand and move about. The three positions will be filled by officers, not enlisted sailors. Manual machinery controls are between the two seated watchstanders, while control and computer panels are provided for each position. The ship can be steered by autopilot, keyboard or mouse instructions or by rotating a small black knob that serves as the ship’s wheel.
The positions are nearly enclosed by a circular installation of consoles. From their seats, the JOOD and JOOW look past their engineering and navigational displays out to the bridge windows, while a fairly wide walkway is between the consoles and the windows. Overhead, the positions are nearly surrounded by eight large flat-panel screens, creating one of the most comprehensive bridge information displays afloat. Any display desired — a variety of sensors, intelligence inputs, cameras focusing on multiple areas around the ship — can be dialed in.
Flanking the JOOD/JOOW consoles are separate seats for the commanding officer, to starboard, and a commodore or the executive officer, to port. Those seats each have three large flat-panel displays overhead.
To the rear, two positions are provided for intelligence or mission planning purposes.
At the rear of each side of the pilothouse are “alcoves” where the captain or OOD can conn the ship as it conducts an underway replenishment or docks and undocks. Two large, opening windows are provided, each big enough for two good-sized men to poke outside the skin of the ship to see down to the waterline.
Ship Mission Center
The ship’s nerve center is a huge command and control space two decks high, projecting from the steel-enclosed O-2 level into the O-3 level at the base of the composite superstructure that surmounts the ship. Three large flat-panel displays dominate the front of the room where 19 watch standers man console stations in four rows. The general layout of the consoles is somewhat similar to the latest Aegis Baseline 9 with similar user stations and common displays, although in a much larger space. The first and second rows handle weapons, including missiles, guns and anti-submarine and electronic warfare. Command and control positions occupy the third row, including seats for the commanding officer, tactical action officer, and the engineering officer of the watch. Propulsion, engineering and information technology support personnel man the fourth-row consoles.
Above and at the back of the SMC is a large, glassed-in second deck provided for mission planners, intelligence personnel or command staffs. There, they can function without disturbing the watchstanders below while viewing the same common displays. Port and starboard of the SMC are additional enclosed spaces with more consoles and large panels to allow for specific mission planning or operations.
Below Decks
Down in the hull, a prominent feature is “Broadway,” a very large main-deck passageway running along the starboard side allowing ammunition and supplies to easily be moved to storage areas and magazines. The P-way, big enough for forklifts to drive through, is similar to those on the last generation of US battleships, which used the same descriptive term.
Broadway runs as far forward as the magazines for the two AGS guns. Just aft of the guns the open space is large enough for a number of workout machines to be placed for the crew, near a lounge where sailors can relax.
Amidships on the second deck are the mess areas. The wardroom for officers, goat locker for the chief petty officers, and mess for the crew are all served by the same, all-electric galley.
The two main machinery spaces each feature a power plant consisting of an advanced induction motor (AIM) and an MT-30 Rolls-Royce gas turbine together producing 39 megawatts, for a total output of 78 megawatts. Each AIM is directly connected to one of the ship’s two propeller shafts, eliminating the need for reduction gear. The machinery spaces are designed to be remotely operated.
Aft, a secondary ship’s mission center (SSMC) is installed on the port side. On a smaller scale than the large ship mission center, the SSMC is able to handle the same ship control functions as the SMC or the bridge and will function as the ship’s damage control center.
All the way aft is a large boat bay, big enough to store two 11-meter rigid-hull inflatable boats (RHIBs) one in front of the other. The RHIBs are on rails and launch and recover on a titanium cradle that rises and tilts to connect with a heavy-duty rubber extendable ramp running through stern doors in the Zumwalt’s wide, flat transom. Nearby, berthing racks are installed for a 14-member special operations team, along with space for their weapons and gear.
Hangar and Flight Deck
No nets ring the flight deck, which instead features personal safety barriers. The PSBs reduce the ship’s signature and are automatic, unlike nets fitted on destroyers and cruisers which need to be raised and lowered by sailors. On the Zumwalt, the PSBs will rise as soon as a landing helicopter is trapped by the Aircraft Ship Integrated Secure and Traverse (ASIST) helicopter recovery and handling system. The ASIST latches on to the helo and moves it into the ship’s large hangar, which is fitted with a new, two-piece solid door that could be a prototype to replace doors on other ships.
“It’s very reliable — it’s very hard to get this out of alignment,” Downey said. “The door is very easy to operate — push a button and it operates even if the ship rolls through 90 degrees” side to side.
Crew
The opportunity for a crew to get sea time before a ship is delivered is rare indeed.
“We’ve been waiting for 33 months,” said Command Master Chief (CMC) Dion Beauchamp, the ship’s top enlisted sailor. “It was very important for us to be aboard. The shipyard was gracious to allow us to do this.”
It was the second time the crew had been underway on the Zumwalt. The first was a day trip during the December Alpha trials when the crew boarded the ship in Portland and rode it back to Bath. This time they boarded in Portland but helped operate the ship for about 22 hours before returning the following day to the shipyard.
In addition to the Zumwalt crew, about half a dozen engineers from the crew of the Michael Monsoor, the second unit of the three-ship class, were on board to familiarize themselves with the engineering plant.
Crew members took part in a number of operations and tests, from conning the ship to handling the engines to learning to operate the anchor — placed inside the ship and lowering through the bottom. The high degree of system integration aboard the Zumwalt, Beauchamp said, means sailors aren’t just learning to operate specific pieces of equipment. “This is operating a system of systems.”
Beauchamp, a veteran sailor who has served on an aircraft carrier, a cruiser, and two frigates, said he had to learn 19 new technologies as a Zumwalt crew member, but he had an advantage.
“As part of the commissioning crew, you get experiences other crews don’t. You sit here with the group who designed these systems.”
He pointed out the difficulties in becoming part of the Zumwalt’s company. “All sailors have to have passed their last rating exam and do well at it,” he said. “Only one crew member is younger than 21.”
Chief Fire Controlman Dave Aitken normally operates weapon systems, but it will be another two years before the Zumwalt’s combat systems become operational. With the concentration on the hull, mechanical and engineering areas of the ship, Aitken and the FCS under his charge had other duties during the trials, working often with civilian engineers.
“The sailors learned from the Raytheon folks,” Aitken said, mentioning the prime contractor for the Zumwalt’s combat systems. “On the underway, they sat at the consoles with a Raytheon guy looking over their shoulders.”
“There are no Tomahawks or weapons on this ship,” he added, “but we assist the other half of the combat systems department. We help the IT department with the integrated systems — communications, the total ship computing environment.” The experience, he said, will mean that “after our gear gets installed, the sailors are going to better understand how they fit into the system.”
Kirk, the commanding officer, was enthusiastic about what was accomplished on the trials.
“Every sailor has to share the burden of operations. Every sailor has benefited from this time at sea,” he said. “We were able to get more done than we’d planned before the trip. That was a happy surprise for the crew.”
Embarking the crew on the trials was also a positive for Downey, the program manager.
“They seem to have enjoyed operating the ship,” he said. “From what I’ve seen from the industry and Navy guys who have been working on it, there’s a lot of positive feedback from having the crew here — along with the extra energy and enthusiasm that they’ve brought, having the chance to operate the ship.”
Downey appeared pleased as the ship entered the Kennebec River to return to the shipyard.
“We’ve met all our planned objectives,” he said. “I don’t have any failed demonstrations. We’ve got to go through the data and get ready for the next big test here in about three to four weeks — acceptance trials.”
Those Navy-run acceptance trials are expected to take place in mid-April. If all goes well, the ship will be delivered and the crew will move aboard May 20. Months of pier-side training and certifications will follow, and the Zumwalt will leave the shipyard for good in September. A commissioning ceremony is scheduled for Oct. 15 in Baltimore, and the destroyer is planned to arrive at its home port of San Diego in early December.
Even then, the Zumwalt will be a long way from being ready for service. Under a two-part, phased delivery plan approved in 2007, the ship will begin a six-month post-shakedown availability at a San Diego shipyard in January, and for most of the year, the full combat system will be installed, including weapons, sensors, and programming upgrades. Combat system sea trials will be in early 2018 off California, and only after that will the ship train up to deploy.
Boeing's internal demographic
statistics show a vulnerability during the next ten years where thousands upon
thousand will be leaving the company through Retirement. The baby boomers will
be "dropping the mic" and leaving the company. Boeing just announced
it will be laying off 4,000 plus workers through attrition. TheHeraldNet reports
about 7,000 to 9000 could go sooner rather than later. It also reports about
7500 Professional Engineering Employees in AerospaceSPEEA
workers are over 50 years of age which brings up a well-known consideration,
"Succession Planning".
Every
company, organization or public governance prepares an annual plan for its
workforce. Boeing has had many years for this day for the HeraldNet's
reporting. Boeing has a know-how vulnerability during the next ten years.
Perhaps announcing the 4,000 layoffs last week signaled a succession planning
correction. Boeing knew it was losing thousands of workers due to retirement, even though it was something it had planned for a long time. It now will announce those
retirements masked through a workforce reduction statement which is Stock Market speak
"everything is Okay we are a responsible corporation". They are
pruning the hedge when in fact too many will leave too soon, and Boeing will
have to hire too many too fast in the near term while using a 4,000 workforce
reduction announcement through attrition when it really obscures the real problem of an aging workforce.
Succession
planning is nothing to be feared as Boeing will inflow its workforce from many outside
sources, especially those who can't match Boeing's pay or career opportunity potential. It is a (Puget)
sound bet, University and Trade industry applicants can supply the partially trained workforce, before
the (in training) workforce requires its premium working knowledge as a Boeing
Engineer or Mechanic.
After all,
not everyone is retiring in the next 10 years from Boeing. It has a strong
workforce under the age of 45. This is the heart of Boeing that should never be
ripped out. They are the standard bearers for Boeing's future which should be
the real succession planning talking point. How is Boeing's aging workforce component
from age from 25 to age 50? It represents about 80% of the workforce for what Boeing is doing as an
airframe maker. The plan Boeing is currently showing is a workforce trimming,
controlling what it can control looking forward with its future plans.
Boeing, during March regained
some production pacing for the 787 program with 13 deliveries. This moved the
over-all 787 delivered at 393 units for its worldwide fleet. The 787 footprint
eclipses the Airbus 16 units for A350's delivered to date. Backlog for Boeing's 787-# slips
underneath the A350-# backlog of 761 during the first quarter 2016 as Boeing has reduced the 787
backlog to a standing 746, 787'syet to be built.
Chart 1.
The ninety day moving average had a tepid
quarter producing only at a rate of 10 units a month which falls below
guidance of 10.667 units a month. However, Boeing has positioned itself for a 12 a
month pacing the remainder of the years and should deliver about 35 787's
during second quarter 2016.
Chart 2.
Chart 3.
Boeing
787-9's are progressing towards a top position during the next three year as it
now has 98 787-9's delivered as shown in Chart 4.
Chart 4.
Production
inventory is slightly down over its former 50 + units in process, as it
now stands at only 45 units of all types in the works-in-process mode (Chart 5).
It's been about five hundred days
since the first A350-900 was delivered with Qatar Airlines. The Airbus record
shows only 16, A350-900 delivered. During Boeing's first five hundred days it
delivered about fifty 787-8's. This of course does not include Boeing's hiatus with battery fire and then shut down. A fair comparison for the two giant framers should go past another hundred days after had Boeing resumed post fire deliveries. This
will come in another blog on another day.
Fig 1.
Airbus data does not illustrate a time period "break-out" for every
100 days, where Boeing data is accessible and does so. However, a straight line
Airbus approach assumes about 5 units every 100 days until the last period
recorded only shows one delivered A350-900. For the sake of illustration,
during Airbus' first four hundred and seventy-two production and delivery day period it remains that it only delivered 16, A350-900's. While in a similar span of time,
Boeing delivered fifty 787-8's.
It is also important to note, Boeing has a more complex assembly
of technology applied to the 787. Airbus gave a technological forbearance and
went with the current level of technology proven industry wide. Boeing took
higher risks and still produced 50 787's during its first 500 days. Little
press is given for the stark contrast between the two production giants.
Upcoming is the segment of Boeing 787 groundings. Where zero 787's
were delivered during the 500-600 day time frame. However, Boeing regained its
production prowess once the grounding ended and it regained its delivery pace. A
complete comparison should include a 700 day delivery set absorbing the
grounding and any Airbus improvements or stumbles within its delivery schedule. Even though
Airbus is dependent on Zodiac seats for a timely delivery, Airbus is treating
this delay as if it were like a Boeing grounding of its delivery schedule. Both air framers have suffered delays and mishap. All things being equal this becomes a measure of
resolve over obstacles. Airbus falls on its own omission, "we are being so
careful", when in fact they cannot resolve production setbacks.
Below is an unabashed chart from Wikipedia showing the A350
delivery progress. Even though its un-official, since it does not come from
Airbus, it is an excellent thumbnail sketch with all Airbus excuses, included for how
Boeing and Airbus both delivered its product during each other's first 500 days in production. Boeing wasn't free of mishap during its first 500 days, therefore this side by side comparison in time suggest how each manufacturer was able to overcome initial start-up woes and Boeing's taller mountain climbed beat the Airbus hill by a wide margin.
Norwegian Air has 787's on the books but not fifty in play for its
Gatwick operations. Moving some 787's from other European Norwegian bases will
not account for it ever expanding fleet of 787's. The Gatwick nod for Norwegian
Air coming into its airport is a done deal. Now Norwegian will need 50 787's
for filling its slots. Therefore, more Boeing 787 orders for 2016.
"Norwegian – currently
Gatwick’s third largest airline – has announced ambitious plans to locate 50
Boeing 787 Dreamliners to serve global long haul destinations at an expanded
Gatwick.
Sputnik and Mina have taken to
the oversight of everything problematic concerning the F-35. Examples of this
type of journalism is twofold, one is soliciting clicks for sensational
rebukes of the F-35, the other comes from the river denial for anything US made
is somehow inferior to Russian made. Sputnik reports about a Chinese hacker
stealing F-35 secrets is a Chinese national hero.
Sputnik
International: "Su Bin pled guilty to conspiring
with others to break into the networks of Boeing and other
American defense contractors in a federal court in Los Angeles,
California. The hacking took place between October 2008 and March 2014,
according to prosecutors."
Hacking
is a sketchy outcome. Even with the F-35 struggling with its ALIS system fixes
clear to next year, the hackers have long since left the "terminal"mic drop (Bam).The F-35 is no longer your big
brother's F-35 it has become more like your little brothers F-35. "He is
still looking for the batteries not included" The Chinese could have
stolen developmental and conceptual engineering data, but does not have
concurrent data, which brings forward the F-35 lethality.
The Chinese version of stealth may incorporate design features of
the F-35 in a Chinese looking F-35 knock-off. However, the things that make the
F-35 scary is not its looks nor its Block I capabilities, but what follows-on in
the mad science of the JSF. In 2015 many enhancements were added to the F-35.
By 2014 "the Chinese" were caught with the F-35 hacks while it had not reached its full
capability. Many proposals were still on the table in 2014. When hacking began
in 2008 the F-35 had not found its soul or making the grade it so had desired. Hack away,
hack away and hack away all, the F-35 was "the bomb". What was stolen isn't
applicable with today's F-35. China go make your...
Chinese J-20
Stealth VTOL
What China has
learned is a conceptual purpose from the F-35, which has currently evolved beyond the
relevant range of its own J-20 capability. The Chinese engineers have probably
achieved a collective appreciationof how far they
have to go, and by the time they get there the F-35 will have to go further
forward causing some military angst. China needs hackers not in jail, but remaining
on the front lines of intellectual theft. Getting caught does not make you a
hero it makes you caught and in jail. Access denied! Concurrency confuses the Chinese as well as Lockheed.
The 787 orders have reached a
bottom lull as if it were an inverted bubble about to burst. Several noted
slips of the tongue suggest more 787 orders could be announced. One customer
has already spoke of more 787 orders in the makings, Norwegian Air and TUI have
mentioned they need more wide bodies. China is in need of further expansion from
its leading Airlines. Hainan has already filled in with 787-9 orders not noted. The
Boeing 787 backlog is rapidly shrinking making a Boeing purchase more likely as
it goes for producing twelve 787 a month. The "tea leaves" suggest a
market ready to absorb more 787 orders during 2016. So what are the ordering
stoppers and shoppers?
Ordering
Stoppers:
·Fuel
Prices staying low indefinitely
·National
economy and lower currency valuations (ex: China Market)
·Outstanding
commitments with competitor manufacturer
Ordering
Shoppers
·Profitable
2016 (China/Hainan)
·An in
place working fleet expansion built on the 787 Model.
·Threat of
rising fuel prices
·Economic
soundness (Qantas)
·Market
opportunity remains open (Norwegian Air)
·Fleet
expansion (Air India)
·2nd tier
airlines (waiting for its ship to come in) ordering has begun.
The above
bullet points are the obvious items affecting both buying or not buying the 787
in 2016. Further study could go deeper into causal reasons for both situations
determining the 2016 order book for the 787.
When fuel
price reaches a low plateau it will trigger the pent up energy for
ordering the 787. No longer can airlines wait it out using older less efficient
airframes on the low fuel price tide. A constant fuel price norm will force
airlines to eventually use up the used inventory of less efficient aircraft
where they will be forced to buy the newer more efficient aircraft. Airbus has already charted this condition and is taking the opportunity with its A330-900
offering, hoping it snips at the heels of the 787 market. Airbus already
sees a "flat fuel price market/fleet renewal condition" as it offers the A330NEO as its answer. If the fuel price climbs steeply, then the 787
will have its highest demand quotient.
The
market is in transition from the 2015 dynamics for ordering wide bodied
aircraft. The "other factor", such as reduced production backlog, hence
available production slots, are ready for the market. The internal profitability factors and fleet
opportunity, all contribute towards more 787 orders. The A330NEO is an example
of low fuel price opportunity, and the 787 is an example of higher fuel price
opportunity, and all other market conditions point towards buying the 787 first
and consider other manufacturer types second.
Market
forces will return with having a 787 choice over the A350 member of aircraft.
In light of constant low fuel prices there are too many compelling reasons for
buying the 787 offsetting the price of fuel at bottom.
From the "Johnny
English" movie fame comes a term from Mr. Bean "I'm a spent
force", from his arrogant humility coming out from super-secret agent talk
addressing his beautiful counterpart at the door. Is Boeing (being) "a Bean spent
force"? They (Boeing) have deadlines for its tanker program with only a
year to deliver 18 KC-46 Tankers. The tanker program just started flying its
test beds with two more yet to fly for this purpose. It has unanswered
solutions from tests fleet discoveries before installing remedies on the first
production flow.
Boeing
has just started first assembly of the 787-10 in Charleston, SC. Boeing has
built and flown the first Max 737-800 test aircraft. It’s also nearing
completion of the Everett wing building for the 777X program. How would a "Mr. Bean" handle all these daunting, make or break challenges? Go to the
Orient? It remains a Yes and Yes answer to those questions. Having oriental
sales and production capability would lift Boeing's wide spread programs moving
forward. With a Boeing, Being, "Bean" approach, somehow Boeing’s
great aviation convergence will meet by 2018. Boeing has a plan which contains
the number eight prolifically throughout its insanely paced catch-up over its
rival Airbus. 2018, 787 and Max 8.
In the
sport of hockey there are line changes to put the freshest player on the ice
gaining a way for superiority over the opposition. A goal is all that is
required from any line change. Boeing has flipped its leadership through
a line change at a crucial point for all its programs during the last few
months. One VP to Chicago one VP transferred in the Seattle rink. A new CEO
here and a new VP there is the line change. However, the problems remain for
Boeing. The KC-46 program is at a crucial crossroads for any hope of early
profitability. If "being" a little late, it loses hundreds of
millions for the Bean counters. There are many risks and unforeseen risks yet
to be resolved after tests have begun. There are production woes of no space
and no time to build the KC-46 on time.
The
Boeing's big wing plant opens this summer at which time, that building starts
contributing to the 777X program bottom line. It is a big cash out depository
moving into the capital valuation category. Return on the building asset is
years away. Who would buy a wing plant if it were for sale anyways? Who would
even attempt to buy the World's Largest Building somewhere in the NW rainforests for
that matter? Boeing is stuck in Everett and the new line of execs have entered the
game taking over the hand that is dealt them.
Boeing Being Bean In The Orient
737 Max
will reach first delivery as projected. The 787-10 will once again prove the
787-9 is not a one off experience. The 777X is coming months late for
covering any of its own production Gap from the 300er to the 9X, but when it comes, it will change the market. The KC-46 project
will reach completion a little late costing Boeing more millions (it's the
military stupid) but Boeing big pay day comes later where the military says the
179 tankers are a down payment for its overall tanker fleet renewal. In fact the Military will
need another 200 tankers for complete renewal over the next ten years. By then, Boeing will have the corner on
the Tanker Market, and that is what they now will spend money towards perfecting.
All in
all, Boeing Being Bean is a sound strategy, it has a new line of men and women inserted in the
game with fresh legs.
Christopher P. Cavas
