Boeing Gets Its Wings (plant) In Everett, Wa.

Boeing is building more than a 1.2 million square foot plant in Everett, Washington, it’s getting its wings for lofty soaring in the financial markets. A recent Wall Street 24/7 article  Chris Lange has pointed out the subtle and strategic Boeing Change Management move in his article. No longer will Japan's heavy industry independently shoulder the wing load as Boeing will produce the 777X family of folding CFRP wings. AKA (carbon fiber reinforced plastic) 

Wing Plant Under Construction Biz Journal Photo 2015.

The whole move to Everett is not about the 777X wing but a bigger picture which is emerging. Boeing is embarking on an additional CFRP expedition into the world of concept, design and make process. Boeing wants to control its own destiny in this world of high tech adventures. Value added comes to mind as a power point word play offering. Boeing has shifted in a seismic manner using Everett expertise and Charleston manufacturing muscle. The pathway is being paved with nuanced cement pouring on acreage found around the US. Everett wing plant is built for much more than the 777X wing. It is positioned to... start naming the commercial, military and space list of things to do before getting too excited about wing plant possibilities. 

Wing Plant Model

Its extremely huge autoclaves could cure an M-1 Abrams Main Battle Tank, if the military wanted a CFRP-MBT, hah no chance for that unless...?  The crazy group of "Men in Black Rimmed Glasses" maybe turned loose in Everett's 1.2 million sq. ft. playground. The outcome is a vast array of ideas for every purpose using CFRP. Trekkies say, "the Space the Final Frontier Convention", being held at the Everett wing plant sometime after the "San Diego Convention Center" loses Comic-Con in 2024. Fat chance that will happen when the 797 needs wings followed by a new single aisle wing. Don't forget my wish list for a MBT offering that the guy in Black Rimmed Glasses proposed. They might even make a movie sequel to "Men in Black". Will Smith may drift on by when picking colors out for his new jet. 

Wing Plant CFRP Auto Clave could fit a A1 M1 MBT @ 144 inch wide where the autoclave is 336 inches at its widest point

The point is, Boeing has made a square foot pivot for a purpose driven facility for which Charleston does not have in any foreseeable time. Boeing has inserted another manufacturing and development cog within its Everett facility foot-print.

Machine in Wing Making mode.

   

Boeing Filling The Gap by The Numbers

It’s by the percentages when viewing a gap offering. The center point in the gap is about 220 seats. The object is filling a hole from single aisle to duo aisle. The step increase is in the relevant range of 20% seat change depending on range requirements. Boeing is going for about 220 seats on its 797 proposal.

Reading the chart can become mind boggling, but if following color queues and seat count relationships one can establish a firm picture of the "Gap" emerging where the 797 will fill-in and strike against the A-321 at the same time. The 787-8 has engineered 242 seats and the 737 Max -8 only has 162 in its standard configuration. A span of 80 seats jumping from the 737 Max 8 and the 787-8 exists and the midpoint between the two is 202 seats. It is not coincidence that 202 seats mirrors the 200 seat 737 Max-200 Ryan Air has ordered. It straddles center between the 162 seat 737 Max 8 and the 787-8's 242 base seating configuration.

The chart is a basic explanation of relational sizing in Boeing's family of aircraft and where the 797 should fit in the scheme of things. All comparisons are based against the 787-8 seat count of 242 as shown in figure 1.

·      787-8 242 seats and a 0% relationship with itself

·      787-9 is a 290 seat configuration 20% larger seat capacity than the 787-8

·      787-10 is a 330 seat configuration 36% larger than the 787-8 and 14% more than the 787-9

Fig. 1

That completes the 787-8 Green matrix without considering the 797-Gap or the 737 Max 8 positioning. Going down the left column and tracing across are results of capacity increases by percentage from model to model starting with the 787-8 column and moving right. The gap again is somewhat centered between the 787-8 and the 737 Max 8. The closer to +- zero percentage the closer to the 787-8 in seat capacity.

Considering the 797 row it appears the seating capacity of 220 seats is 9% less than the 242 seat 787-8 capacity, 24% less of its capacity of the 787-9, and 33% less than the 787-10 seat capacity. 

The 737 Max 8 is the primary seller of the single aisle frames in this decade and is used as a base line in this case for single aisle comparisons with Boeing dual aisle mid wide body types. The 787-8 is the nearest dual aisle aircraft capacity above the Max family core. The gap dynamic between single aisle and duo aisle is filled-in with a 797, assuming its the fill between dual aisle 787-8 and the 737 Max 8.

The far right two columns is a comparison with each of the 787 family of aircraft comparing the concept 797, and the single aisle 737 Max 8. As an observation, the 737 Max 8's seating capacity is less than all duo aisle aircraft and moving increments  of about 10% seating change from model to 787 model. The 797 is also shown as a negative percentage while tracking in increments of about 10% with each of the 787's listed, however. 

Additionally, the 737 Max starts at 33% less seats than the 787-8 and then moves against succeeding 787 models at about a 10% incremental change with each 787 model change. What this shows is the 797 proposal is positioned well in the center as it is starts about 10% less than the 787-8 seats and moves about 10% capacity change per model. When factoring seat options a customer may order the 797 will center itself between the 737 Max and 787-8.

Range will always change as payload weight changes by number of seats availble on a particular aircraft. It may be a good assumption the 797 would fly either from 4,000 to 5,000 miles depending on the load factor of seated customers.

Loong Air China On Verge Of Order (for a) Large Single Aisle Order

In a down order year, Boeing is pulling strings while keeping up the order pressure on Airbus. There is a China completion center caveat in the order book recipe. Boeing is going to build a single aisle completion center in China. The latest hint comes out of Aviation Week & Space Technology.

"Boeing’s biggest rewards for agreeing to set up 737 completion center in China will come in the years ahead. But a taste is probably imminent, as an airline based in the same province prepares to order 737 MAX aircraft and sizes up 787s for another contract. By a happy coincidence for Boeing, Loong Air has the most aggressive expansion plan of any small airline in China and has the backing of a strong provincial government, auguring well for repeat orders."

How many and when, will be posted as soon as someone speaks of an order completion? Loong Airlines (China) could be a significant player in China's aviation industry. There is a hint of a 787 order on a second contract. Another pending feather in Boeing's hat may float down during 2017. A slow order year can be an exciting year after-all. 

Boeing is Finding MoM

Below is the mathematical midpoint between the A321-Neo and the 787-8 spotting the Middle of The Market or reverently called MoM. On one side Airbus has crept in an A-321 NEO beating range and seats over the 737-9 while slightly exceeding the seating of the 737-10. The MoM chart below is guiding Boeing towards the 797 model parameters. Logic plays guessing a Boeing sweet spot for a MoM. Halfway between the 787-8 and A-321NEO is the target area. Boeing will most certainly find a protected zone for competitive offerings going years into the future. The 757 is long in the tooth on renovated design features. Airbus would have to go clean sheet answering any Boeing MoM design costing billions for a thousand airplane market potential. On the other hand, Boeing will reach down with its bag of tricks using current engine makers, a 777 wing plant and the 787 suite of technology. It will be dual aisle traveling 5,000 miles and a base of 220 passengers seated.

Fig. 1

A “Winging It” guess is seven across seating with about 30" narrower body compared with the 787-8. This subtle difference maximizes CRFP body manufacturing and weight advantages without increasing over-all airplane costs. Boeing can use its 787 manufacturing infrastructure in place, even though the aircraft body tube is smaller than the 787 model. A decision point becomes, going all plastic or copy the 777X experience having a metal body with CRFP wings and flight surfaces in the tail section? A guess would be it will at least have plastic wings made in Everett, Wa. 

The 747-8 program may close shop by 2024 when a 797 can start-up in its space. The debate at this junction is whether Charleston will have the 797 program in its manufacturing entirety or Everett?  As both are situated for having the ability of changing manufacturing space with some lower economic impact where it usually cost a program many hundreds of million for installation with a new program. The move will go to the best deal. It’s a fifty-fifty proposition for Everett or Charleston at this time.

Another prediction is Everett will win out first building the 797 for its development acumen and initial entry into service resources. Judging on how sales will go for the 777X program, it would certainly involve a Charleston decision if more 777X are sold over the next three years. A busy Everett without the 797 is a busy Charleston with the 797. There are a lot of tipping points for consideration before a 797 announcement, but Boeing at this time has a good idea how all things 797 will fall into place. The talk of the 797 at the San Diego aviation show in early March indicates a commitment on Boeing's behalf that the 797 program outline is complete. It probably has a launch customer at this time unofficially named United Airlines. Boeing would need a half dozen more "United's" before launching.

A core group has already formed but nothing is certain at this time as Boeing would await handshake signatures at this time. A “Winging It” observation breaks down potential regional customers. Two from North America, three from Europe and at least two from the Middle East where some Max orders are converted to 797 orders in apportioned amounts. The prime candidate from any guessing would suggest Ryan Air, Norwegian Air and BA. The North American contingent may stretch Southwest Air wings and having United Airlines as launch customer. In the Middle East comes more surprises and some carrier’s re-examine regional routes where a 797 works extremely well. Emirates is delaying its mega order during 2017. Ethiopian also is positioned to fly all of Africa and the Middle East with a 797. Asia is the hold card in this scenario.

Back to the Southwest comment, it is known as a single aisle only 737 carrier per its business plan. However, nothing should stay the same if an operation is to remain competitive. Southwest cannot open new routes within its own footprint without the 797 proposed capability. Southwest may introduce some pond jumping for its portfolio while keeping the 737 business model in mind maintaining economic fares going anywhere in its network. A 797 would give Southwest synergy with its single aisle 737. Possibilities exist where it never existed before and pairing 737 and 797 routes together leveraging the airline for more passenger and revenue miles. Draw five thousand mile circles around Las Angeles, Chicago, and New York and the 797 looks extremely appealing even to a single aisle carrier going anywhere in the Western Hemisphere and Europe.

Route Pairs for 737 and 797 as the sun sets in the west.

• 737 Seattle to Hawaii
• 737 LA to Hawaii 
• 797 New York to Hawaii
• 797 Chicago to Hawaii
• 797 Hawaii to Australia, New Zealand, Japan, Polynesia (Tahiti) and the whole of the South Pacific region.

The 797 Market is ripe for the picking and airlines are envious of having the 797 in its stables.

The Winging IT Market Cycle of The 787 Wide Bodied Aircraft

·      Market Conception 2004-2011: The market learned about the 787 on January 23, 2003. Boeing announced the 7E7 and the world paused, analyzed and placed orders in great numbers from 2004-2011. At the end of 2011, its widebody order book stood at 752 ordered.

·      Market Experience 2012-2015: The second period starts after first delivery to ANA on September 23, 2011, and ended with 368 additional orders from 2012 while delivering 363 of its 787. All lessons are learned during this period.

·      Market Saturation   2015-2016: The third period is the critical market saturation period where potential widebody routes for this type saturates the playing field, thus squeezing any competition into taking left-over orders remaining. The delivery pace fills the market with 272 delivered 787’s and tapering of orders for another 157 of the 787’s.

·      Market Pause 2017-2018: The market saturation had reached a climax and ordering pace drops only having orders coming from customers who are expanding fleets and not replacing fleets. The first three stages are completed and the ordering binge is over as the 787 matured in operation with its customers who learn of its value through its operations on a daily basis.

·      Market Renewal   2018-~: The last segment starts in 2018 as some fleets already have been flying the 787 for five years and the lower fuel price glut is over. Time to drop old frames flying under low fuel prices and trade-in for new wide-body aircraft. Some 787’s may be traded for newer 787-9’s or expanding fleets with 787-10’s. The used 787 market emerges as a continuous flow as long as the 787 stays relevant.

As in all airplane histories, there is a beginning, middle, and end (BME). The timeline lengthens for the BME’s as aircraft evolution become more effective for its purpose. The Wright Brothers, “Wright Flyer” 1903 (prototype-four flights) until the British WWI Sopwith Camel which demonstrated its expanded evolutionary shelf life from 1917 through 1919.

Starting with Boeing 707, 727 and 737 progressions: (~) signify counting continues

·      707 Built from 1958-1979   Years: 21

·      727 Built from 1963-1984   Years: 21

·      737 Built from 1967 ~        Years: 50~

·      747 Built from 1969 ~        Years: 48~

·      757 Built from 1981-2004   Years: 23...in service for 36 years

·      767 Built from 1982 ~        Years: 35~

·      777 Built from 1995 ~        Years: 22~

·      787 Built from 2011 ~        Years:   6~

From the above listing of Boeing aircraft, there appears a life cycle which suggests as technology and engineers improve aircraft so does the operational life span increase further. The 757 is an anomaly but it was built for a longer period of time than both the Boeing 707 and 727. A Boeing decision was to cease production as the 787-300 was in a concept production schedule at that time. It could have been produced for another fifteen years had the 787-300 never been considered. Currently, a 797 is under consideration which would straddle the gap coming from single-aisle 737 to duo aisle 787.

If Boeing had not designed the 787-300 during the 2004 time frame the 757 would continue its building to date and competing against the A-321 NEO. It most certainly would have been re-engined and had a complete 787 avionics suite added. Using winglets and other advances the 757 would remain an order item for customers until a 797 emerges by 2020. That would make the 757 an almost forty-year build cycle and thus supporting the theory of advancements increase life cycle for every succession of airplane type. 

The only consideration halting this theory is a dramatic market change and an emerging technology that would cancel building a model. The (~) sign is representative of an ongoing duration of a build timeline. The 757 has two other models in production dating from before its own inception into the market, the 737 and the 747. The 747 is reaching an end and will close-off soon and probably with a presidential aircraft as its opus.

The four-engine concept has become a market place “White Elephant”. Even the very efficient A-380 is losing interest faster than Airbus can build it. It too should stop production by 2024, with or without a NEO package hung on it. Airbus doesn’t want to spend more investor money required only to build fifty more A-380s. The 777X masterstroke has caught Airbus flat-footed in a limited widebody market. That observation ties into the current order cycle lull that the mega makers are now experiencing. During 2017 Boeing will have a hard time generating significant mid to larger widebody order. Both the 787 and 777 families of aircraft will dip in orders as has it often done on a periodic basis. Looking back on the 787 programs.

Fig. 1 The historical Order and delivery chart since 2004 -2017 YTD

  

This brings us to the point of what will happen in the widebody order market for 2017. The players are the 787, 777X and 747-8. The 747-8 is a scratch out as it fades gracefully into the horizon. The 777X has had a quiet period for some time and it will burst out 20 Singapore Airline orders with the 777-9X and then save Boeing's 787 widebody order year another of its 19 787-10's before years end. This is already written into a Letter of Commitments from customers. Only the final contract language remains to be completed with signatures included. Boeing should go plus fifty 787 orders in 2017 and then another 25 777 orders during the year. This does not even count on the Emirates order that could be completed at year's end. If it isn't confirmed during 2017, the Emirates status will be most definitely solved in 2018.

One thing holding Emirates back is the aforementioned market place. It is stalled on widebodies at this time. The Market has filled its long-range routes with delivered 787's and the just delivering A-350's. The market is waiting before jumping on new orders until fuel prices rise and old aircraft are retired as the fuel price changes make it more expensive. Cheap fuel has saturated the widebody market as carriers can fly old equipment and make money doing so. The widebody demand has shrunk from this condition alone.

The long-range route exploitation from superior aircraft has limited slots available while the Single-aisle market is in a continuous churning mode for new orders. It takes a huge fleet to operate regional single aisles under 4,000 miles. It takes a continuous replacement regimen keeping businesses fresh within the single-aisle market. Southwest Airline, a Boeing exclusive customer, is an example for this blog. It will need to replace and advance its fleet over the next ten years and beyond in a continuous churning of out with the old, and in with the new. Factor in growth and the Boeing single-aisle order machine will not pause beyond 2017. 

In fact large Boeing single-aisle orders are not yet booked but signed off with LOI's. Boeing will post more orders in its blog before quarters end.

The 2017 order outlook once again becomes more of a mystery than an industry-wide slump. There is some low hanging fruit to be plucked for airline geek pallets. This order fruit may show-up in 2018 so Winging It splits the difference between dismal and ordinary with a few surprises waiting until year's end as always. My unofficial prediction for Boeing is 450 single-aisle ordered and another 150 wide-bodied aircraft of all types making a 600 Boeing order year.

The year 2013 jumps out as the year the 787-10's were offered for sale. However glancing at the year by year tally, it is quick to notice the ebb and flow of the program orders while the deliveries built up to its current high of 137 built 787's in one year.

The analysis becomes a straight line when throwing out the 787-10 orders during 2013. Boeing typically has taken in an order tally from 40-99 after its entry into service. In 2015, Boeing received 99 orders for its 787. This largely due to a new customer ordering up 19 Norwegian air 787's and the unidentified group had 23. Without those two orders, Boeing would have only booked 57 of its aircraft which would put it right in line for the years entry into service in 2011.

This does not even count on the Emirates order that could be completed at year's end. If it isn't confirmed during 2017, the Emirates status will be definitely solved in 2018. In order to reach 150 wide-bodies, Boeing must secure 70 additional widebody orders not yet identified as possibilities.

Boeing's Five Year Look and Plans Expectation

The five year planning and production controls are important factors for determining the long term outlook. Even using a basic build-up model will help determine a direction Boeing will take in its productivity scheduling. For the sake of simplicity the below chart is just a segue into the fine details as to how Boeing may plan its production or how Boeing will perform in the near term of each year’s production goals based on past data.

A build-up becomes complex when using just-in-time strategy for controlling resources for making something big. Boeing only needs parts at a specific time and does not want storage of parts in over abundance. It just wants parts for the next thirty days for this example. Storing too much supplies for building airplanes cost production dollars. The ideal lean production model would seek a just in time parts bin. A build-up planner only uses parts in predetermined optimal availability for building an airplane over the next 30 days.

The ideas in this example looks at 30 days and how many airplanes it may build during this period of time. If it tends to build 42 single aisle in a 30 day period then a build-up chart may call for a two week supply of parts in storage allowing time for parts delivery delays without shortages to the production floor. In this case two weeks represents 21 sets of 737 parts on hand in storage. Everyday a computer tracks the supply inventory and makes an order based on how many 737 sets are on hand. If only 18 sets are on hand it auto orders 3 more sets. Each day this occurs its suppliers can respond in a two week period supplying those complete sets for building aircraft. This is an over simplification example. It gets more complex than this in a hurry.

Below is a chart using five years of past data for formulating how much production resources are needed going forward. Each model is represented whether it’s a prior generation unit or next generation unit. A 737 is a 737. If it’s a NG or Max its counted as a 737 and so forth for all other models. The element identified are as follows:

·      The past five years of orders combined by model

·      Dividing total orders by five years

·      Total of deliveries for five years by model 

·      An average of deliveries made over the same five years.

 Fig. 1

The above Fig. 1 chart is historical data from Boeing's website. Using the 737 column for simplification of its production flows. The five year period is important standard since it is a relevant business time period range. It is very difficult to project a forecast with any degree of accuracy beyond five years. Most customers update its outlook through its annual reporting which would include the next five years of planning. A moving statistical base uses prior years for formulating future years  trends statistically. 

·      A total of 5,349 737's were ordered since January 2011 through December 2016. This is the five year basis for which averages are taken. During this time Boeing Averaged 1,070 single aisle orders a year it is also delivering 539 a year of its 737 during this same period.

·      The orders to delivery ratio for this period is 1.98 or better stated for every two 737's ordered one 737 was delivered. The ideal orders-to-delivery is a 1 to 1 one relationship, thus maintaining a static backlog. The .98 factor suggests increasing production by some calculated build-up amount. The .98 factor is the amount above the one to one ratio goal.

·      In the 747 column the ratio has dipped below one by a negative .52 factor. This suggest Boeing needs to reduce its production output significantly.

Going across the table a picture quickly emerges for Boeing. Increase 737 production and implement leveling the 787 production capacity until additional sales are added. The marketing team has its gauntlet thrown down across the board. It must increase orders during the next five years for all models. Where it is likely the 747 will retire. This year in 2017, a slow order period will strain the backlog and production build-up.

This basic view demonstrates Boeing has its work cut out in the near term within its several market segments. Production decisions rely on pre-set production build-up requirements, otherwise adjustments may occur during the year. Boeing has reduced the 747 to only one frame a month and it may go lower to .5 frames a month.

The 787 program may curb its production capacity from 145 units over the next two years and then could reduce productivity to only about ten 787's a month until sales pick up. The world's largest producer of aircraft will run out of productivity backlog before Airbus does at this time. Boeing is making inroads with Airbus in the single aisle segment. It leads airbus in the wide body segment but an end is in sight for some of its bigger models such as the 747. 

Is The Era of Mega Orders Over?

This is a perplexing question for both mega builder Airbus and Boeing where they both come out and stated it will be a soft sales year. Boeing has stated it can replicate 2016 order numbers during its 2017 campaign. Airbus acknowledged a tough year ahead for maintaining its blistering pace set during the last half dozen years. Typically, Airbus has kept an above 1,000 airplanes ordered for about a half dozen years. It likes to announce massive end of year orders in January of each year for the prior year ending. This year Boeing had a shot and added over two hundred orders at the end of the year, but couldn't catch Airbus as it held out with its last minutes orders reported.

The year to date ending in February 2017 has Boeing with 58 net orders and Airbus with -8 net orders after sixty days.

2017 has started slow as Boeing has a nominal lead over Airbus, which can quickly evaporate in one Airbus reported deal. However, it also means the prediction of a slower order year is probably a reality from its own analysis. If Boeing can hold serve by replicating last year’s numbers and Airbus finally has padded its backlog too far, customers can wait before placing another order with it. 

A Competitive travel market keeps the mega manufactures in balance of each other. The airline who can renew or expand fleets the fastest will best its competitors. Those customers are always seeking timely deliveries from the builder. The plates are spinning in the air. A builder needs orders and another builder needs production and its customers need airplanes just-in-time. 

The 2017 summary awaits the airshow announcements and December surprises before correctly analyzing who is right on the question of the era of the mega order being over.