Merged: Boeing Revises 787 First Flight and Delivery Plans- Again

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Will Boeing delay the 787 Dreamliner another two years?

My recent post about Boeing's (BA) leak that it had shut down Alenia, one of its suppliers in Naples, Italy, encouraged several people close to the company to contact me. One of these people, who requested to remain anonymous, told me he spent two years working as a consultant with the 787 program across several of Boeing's systems and manufacturing organizations.

While I have only exchanged emails with him and spoken to him once, his concerns about the 787 program seem plausible. And he estimates that the 787's problems could take at least another two years to solve.

How so? My source told me that there are significant problems with a number of systems for the 787 -- news of which has so far not reached the public. The delays to date have been blamed on a variety of ills -- including suppliers not meeting deadlines, an insufficient number of fasteners, a machinist strike, problems with the 787's wing assembly -- which is causing problems where the wing attaches to the fuselage and most recently, fuselage skin wrinkling.

But I was stunned by his claim that several of the systems -- which are being made by Hamilton Sundstrand (HS) -- a United Technologies (UTX) subsidiary -- are not working. He identified the the 787's Environmental Control System (ECS), which is intended to pressurize the aircraft, as a particular problem. He says he believes there is not a technological solution to the problem.

When I asked Boeing for comment, a spokesperson said, "The 787's systems are working, including the environmental control system that pressurizes the airplane. We are continuing to improve and mature the systems, as is normal for a development program." A Hamilton Sundstrand spokesperson told me that he had no knowledge of such problems.

However, my source told me he spoke just yesterday with an engineer employed by a current Boeing partner who confirmed that this problem has not been solved. In addition to the ECS problems, he says that the 787's electrical system has not lived up to expectations and several redesigns are necessary before the aircraft enters into service.
I don't know what my source's motivations would be for providing this information, but given all the delays and leaks, I thought it worth reporting.

There is a deeper problem with the 787 and that has to do with Boeing's management style. As I wrote in my book, Boeing has a long history of command-and-control leadership -- where top executives tell everyone else what to do. Under its new CEO, Jim McNerney, Boeing had adopted a so-called Transformational Leadership (TL) approach which empowered workers to make decisions, have ownership, and to take responsibility for success and/or failure.

TL was behind Boeing's radical decision to outsource 60 percent of the 787 design and manufacturing to its suppliers. In the past, Boeing had given its suppliers very detailed specifications. But with the 787, Boeing let the suppliers do the design and manufacturing. The first manager of the 787, Mike Bair, was a transformational leader.

Bair took the blame for the 787's delays and Boeing replaced Bair with Pat Shanahan from Boeing's defense unit. As such, Boeing reverted back to its old command-and-control style of leadership. My source claims that when Boeing spent three days in the spring of 2008 with HS, the supplier of the 787's electrical systems, Boeing issued orders to its supplier about how it wanted HS to fix the problems.

Rather than listen to what HS thought would work, Shanahan's team issued orders. And according to my source, HS agreed to what Shanahan wanted even though it did not believed that his ideas or time-line would work.

This story, if true, is deeply troubling because it suggests that Boeing could be panicking and reverting back to its old style of working -- but this time without sufficient technical know-how to make the right decisions. If Boeing is suffering from this deeper management problem, delivering the 850 787 Dreamliners that the airlines have ordered is going to be an even bigger nightmare than I had previously thought.
Peter Cohan is a management consultant, Babson professor and author of eight books including, You Can't Order Change. Follow him on *******. He has no financial interest in the securities mentioned.

Source:DailyFinance

Is the Boeing 787's electrical system working?

After my post yesterday, which quoted an unnamed source who estimates that fixing the Boeing 787's problems could take two years, another insider approached me with details of problems with the 787's electrical system (ES). This source, also anonymous, says he worked as a software engineer at Boeing for a decade and is close to the 787 program. This source claims that the 787's ES failed Federal Aviation Administration (FAA) inspection last year so the FAA ordered the firm responsible for the ES's software to rewrite the code. In my reporting yesterday on potential delays, Boeing spokespeople denied knowledge of any serious problems with the 787's systems.
As claims of problems increase, in my mind, this raises some serious questions about Boeing's board.


A company's board of directors is supposed to keep an eye on the store on behalf of the shareholders. But the ongoing delays of Boeing's (BA) 787 are raising questions about whether its board is fulfilling its obligations. After all, one of the most basic jobs of a public company is to disclose market-moving information to the public on a timely basis. And shareholders are beginning to wonder whether Boeing is holding back such information.
This suggests that Boeing's board does not know about the problems with the 787 or if it does, it has decided that the details of these problems do not need to be released to shareholders. But the 787 is a huge program -- it has 850 orders amounting to a $154 billion backlog. Therefore, a delay in its delivery schedule can cost Boeing billions in late fees, delayed revenues, and potentially canceled orders.
First here's some background to explain why the ES is so important for the 787. The ES is critical to aircraft operation -- it distributes power around the aircraft from the engines and the Auxiliary Power Unit (APU) -- which provides the power to operate the air conditioning and to start the engines at the gate -- to all the systems requiring electricity.
My source told me that the ES is a so-called level A system (highest level of certification) -- which must pass stringent testing. Such certification Includes evidence of following processes in development and passing thousands of tests. Almost everything on the aircraft is electrical -- even the brakes -- so "it is very critical the system works flawlessly."
This source told me that the software that controls the ES was developed by HCL Technologies -- a $2 billion (2008 revenues) Indian software company that works with Boeing and its partners on the 787 and won Boeing's Gold Performance Excellence Award this February. He spoke with colleagues at United Technologies (UTX) division -- Hamilton Sundstrand (HS) -- which is the ES's primary contractor.
His ES colleagues told him that the Designated Engineering Representative (DER) -- a SWAT team of top engineers that tests aircraft software against rigorous standards -- and the FAA refused to certify the work HCL did and told HS to start over -- without HCL. Several of my source's colleagues joined HS at the end of 2008 in an effort to rewrite the software.
My source says the HCL was chosen for the software in response to Boeing's order that its suppliers outsource at least 25 percent of the work to overseas sub-contractors. And if this information about HCL is true, perhaps HS did not do the best job of picking a qualified supplier. But now that HS is re-doing the software itself, my source can't estimate when it will complete the job to the FAA's satisfaction.
I am surprised that Boeing has not disclosed this problem because it would seem difficult to fly the 787 without a functioning ES. The failure to disclose this suggests that Boeing's board was not aware of the problem or it decided that it was not in the board's interest to disclose it.
I think the SEC may need to look into whether Boeing's board is fulfilling its obligations to shareholders.
Peter Cohan is a management consultant, Babson professor and author of eight books including, You Can't Order Change. Follow him on *******. He has no financial interest in the securities mentioned.

Source:DailyFinance