Boeing executives this week acknowledged they’ll need to cut 777 production in 2018 as assembly of the new 777X jet begins. Meanwhile, on the ground in Everett, preparations for 777X are advancing with a massive building taking shape.
Even as Boeing’s preparations for its new 777X plane advance rapidly in Everett, company executives this week acknowledged — in muffled tones — that they’ll need to cut 777 production in 2018 as assembly of that new jet begins.
To provide some buffer for the added complexity of building the new 777X, Boeing will leave an undetermined number of empty positions in the manufacturing flow when it starts assembling the new plane. The scope of that planned production slowdown hasn’t been determined, executives said.
But any reduction in output of the tremendously profitable 777 — each sold for about $165 million — will cut into Boeing’s revenue and profits.
Employment at the widebody jet plant is unlikely to be affected as workers spend extra time building the first 777Xs.
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Briefing journalists this week in advance of the Paris Air Show in mid-June, Boeing 777 Vice President Elizabeth Lund said the jet maker “will feather in with some blanks” as it begins building the 777X.
What she refers to as “blanks” are empty positions introduced into the 777 workflow, from initial fabrication of parts through final assembly. As mechanics cope with the extra work and the learning process that comes with building a new model, having no airplane in the slot directly behind offers some breathing space.
“When you fire a blank, you just build one less,” Lund said.
Yet, in a circumlocution that left journalists scratching their heads, she strained to portray this as leaving the production rate unchanged.
“Yes, you would deliver one less airplane the month that you get to delivery, but that is not a rate break,” she said.
Jason Clark, vice president of operations for 777 and 777X, said this slowdown tactic is normal anytime a new airplane is introduced on an existing assembly line. Inevitably, it takes much longer to build the early models of a new design that hasn’t been built before.
“Say you are bringing your first fuselage into the production system for 777X, you usually want to put a little time in between. … You bring in a couple of blanks,” Clark said.
“You could almost call it a little micro-break, one month when you just don’t have a line number, so instead of delivering 8.3, you are delivering 7 one month,” he added.
The 777 is currently produced at a rate of 8.3 jets per month, or 100 jets per year. Keeping up that production rate is important to maintaining cash flow as the company transitions to the new version.
What order gap?
Analysts have speculated that with airline customers not keen to buy the last of an old model off the line, Boeing may not land enough additional sales of the current 777 and will have to reduce its production rate substantially toward the end of the decade.
Management has repeatedly dismissed that view, insisting it will bridge the order gap between the current 777 and the new 777X with forthcoming sales.
Engineers are working on ways to improve performance of the existing model by the second half of next year — adding extra seats, making small aerodynamic changes, getting more fuel efficiency out of the engine — to entice buyers with a promise of 5 percent increased fuel efficiency per seat.
Lund reiterated that the sales gap will be bridged, while insisting that delivering fewer airplanes does not amount to a production rate cut.
Boeing Chief Executive Jim McNerney, in an interview published online Friday by trade magazine Aviation Week, also acknowledged that 777 production is likely to “dip.”
McNerney said the company will not have to reduce 777 production “for lack of demand.” However, he added that “we may dip it as you normally do, transitioning from one airplane to a new airplane on the same line.”
Boeing will begin building the first 777X in 2017 on a dedicated final assembly line separate from the main 777 assembly line, then gradually shift everything to that main line, which will be equipped with new tools capable of building either model.
At some point in 2018, Boeing will need to raise 777X production to one per month. If a single blank were inserted each time for the first dozen airplanes, that alone would reduce annual production from 100 jets to 88. But it’s unclear how many blanks will be needed.
“We are not going to speculate on quantities,” said Lund. She said the plan for “feathering in” won’t be pinned down until after the jet’s design is firmed up later this year.
“At that point, we’ll know how quickly we can commit to the 777X ramping up and that will ultimately pace everything,” Lund said. “We are just finalizing it.”
Clark said the dedicated line would be run for “about a year,” and he spoke only of “a few blanks here and there.”
But last month, following a private briefing at Boeing’s annual investor conference, Wells Fargo industry analyst Sam Pearlstein wrote a note to clients suggesting the coming production slowdown could be more consequential.
“For example, if one 777X is feathered in, it may replace two or three 777-300ER production slots. Therefore, Boeing … might be delivering at a lower rate, perhaps 6/month,” Pearlstein wrote.
Richard Aboulafia, industry analyst with the Teal Group, said he can’t figure out Boeing’s convoluted and evasive message.
“The rate is staying the same, we’re just feathering in blanks. What? What? What?” he asked incredulously. “You aren’t delivering these planes. Your revenue drops. Tell me again, what’s that about feathering in blanks?”
Staffing won’t change
The good news for Everett is that employment won’t be affected and that the 777X will eventually add impressive technological capability at the site.
Lund said that even with the “blanks” in the line, the rate of flow and the staffing for that work will be unchanged.
Meanwhile, Boeing is installing new robotic technology in its Frederickson plant, where the 777 tail is built, as well as in Everett, where the fuselage and wing are fabricated and the plane assembled.
In Frederickson, robots will reduce manual drilling operations by 80 percent, Lund said.
In Everett, Boeing is building a separate fuselage facility where robots similar to those used in auto manufacturing will stitch together the aluminum panels to make the 777 fuselage.
Elsewhere on the site, behind closed doors, Boeing has already built an 80-foot-long prototype composite wing section to get a head start on perfecting the automated manufacturing process.
To further cut the risk inherent in bringing in new manufacturing methods, automation of the fuselage and tail fabrication will be introduced on the current 777 model, well in advance of the 777X production.
“We’ll have it all worked out, then transition to the new jet,” said Lund.
Huge wing center
After Lund’s briefing this week, journalists toured the construction site where more than 1,000 workers in two shifts are rapidly building an immense new facility for fabricating the giant composite wings of the 777X.
Hidden from public view behind the main Everett assembly building, the new wing center covers 27 acres. It is 1,250 feet long, 950 feet wide and 100 feet high.
Half the superstructure is already erected. Huge cranes are busy rigging up the next pieces.
Mark Gosnold, Boeing’s construction project manager, said the skeleton of the structure is built from “insanely thick” steel, strong enough to support a 450-foot span free of obstructing columns. That’s more than 100 feet wider than any of the bays in the main assembly building.
The gargantuan building sits on pilings as large as 8 feet in diameter, sunk as deep as 100 feet into the ground.
Nearby at Paine Field, the wing facility’s first big autoclave is under construction. It’s one of three high-pressure, cylindrical ovens — each 120 feet long and 28 feet in diameter, weighing 1.2 million pounds — that will be used to bake the wing’s composite parts to hardness.
It’s so massive that Gosnold said Boeing will spend five days just transporting it from Paine Field, across the bridge that straddles I-526, and into position in the wing facility.
The autoclave is due to make that journey in September. Installation will then take months.
The wing facility is due to be complete in May 2016, and Boeing will begin assembling the first 777X in 2017.
By 2018, the “feathering in” process will begin as Boeing introduces a new way of building a new plane — while keeping the old model rolling down the same line at the highest rate it can manage.