December 22, 2024

Aircraft Makers Shy Away From Risky Bets in Building New Planes

Boeing’s announcement last week that it had begun pitching airlines on an enhanced version of its 777 jet, rather than a whole new plane, underscores how the aerospace industry is pulling back from the risky bets that have led to costly, and humbling, delays on other planes, like Boeing’s 787 Dreamliner.

Instead of following the Dreamliner template, in which it sought to create a revolutionary plane brimming with new technology, Boeing is now seeking a safer, more incremental path. It plans to add the most crucial new technologies, like lightweight plastic composite wings and more fuel-efficient engines, to the 777, while avoiding the time and expense of designing a replacement from scratch.

Airbus, too, has expressed concern about the “go for broke” mentality that prompted Boeing to fill the Dreamliner with novel features, including a greater use of composites and a more advanced electrical system to increase the fuel savings.

After smoke and fire erupted from the new lithium-ion batteries on two 787s in January, forcing the grounding of the entire fleet, Airbus dropped its plans to use the volatile batteries on its new A350 jets and went back to more tried-and-true ones.

“Risk, risk, risk,” Tom Enders, the chief of Airbus’s parent company, European Aeronautic Defense and Space, said of Boeing’s approach to the Dreamliner.

Mr. Enders said Airbus had made similar mistakes in designing some of the components on its latest planes. “It’s pushing the technology envelope and not always taking enough care that the technologies were mature when we put them on an aircraft,” he said. “And that doesn’t benefit the customer, obviously.”

Aviation analysts said Boeing had to make a technological leap with the Dreamliner over the last decade to again surpass Airbus in total plane sales, just as it now has to upgrade the 777, its long-range workhorse, to counter a new challenge from the A350.

But while Boeing needed to take radical steps, like molding the entire fuselage of the Dreamliner out of the plastic composites to cut fuel costs by 20 percent, it can achieve similar fuel savings on the 777 by using advanced engines and adding huge composite wings to a metal frame.

The prospect of gaining such savings with a more cautious approach delights both the airlines and Boeing’s investors, who would love to see it complete the development process without the kind of white-knuckle ride — or the extra billions in cash — that the Dreamliner required.

W. James McNerney Jr., Boeing’s chief executive, said recently that “we all remember the times of fighting through the 787 development where the technologies weren’t quite as mature as we hoped they’d be.” He said the company’s strategy in updating the larger 777, and creating two additional versions of the 787, was to “harvest some hard-fought gains” in that technology without taking such big risks.

Mr. McNerney said the new version of the 777, which is still subject to final approval by Boeing’s board, would include much more substantial improvements than most planes derived from existing ones and could be ready by the end of the decade. “So I think we may be in an era where we can absorb somewhat less risk and still deliver a lot of performance,” he added.

The company’s plans for the updated 777, known as the 777X, are also significant because it could be the last new model that Boeing builds before the 2030s. And the updating is not risk-free: advances in engine technology can prove difficult, and the composite wings on the new 777 will be wider and more complicated to fabricate than those on the 787.

Boeing’s efforts to seek advance orders for the plane will also set off an intense new phase in its rivalry with Airbus, one determined more by how efficiently each company can produce the planes than their visions.

“Airbus squandered a decade on the A380,” a gigantic jet that has had disappointing sales, said Richard L. Aboulafia, an aviation analyst at the Teal Group in Fairfax, Va. Boeing, he added, lost the advantage with its troubles on the 787. With the A350, which also has a composite body and wings, he said, “what’s important is that Airbus is catching up.”

Article source: http://www.nytimes.com/2013/05/06/business/aircraft-makers-shy-away-from-risky-bets-in-building-new-planes.html?partner=rss&emc=rss

Machinists and Boeing Reach Deal

Union officials said that the deal resolved their disputes with Boeing and that they would ask the National Labor Relations Board to drop a politically charged case against Boeing over a new plant it opened this year in South Carolina. The agency, which filed the case in April in response to a complaint by the machinists’ union, is asserting that the company’s decision to build the $750 million plant in South Carolina constituted illegal retaliation against machinists in Washington for exercising their right to strike.

The labor board’s move against Boeing — in which it seeks to have the company to move the production line to Washington State — has been fiercely denounced by South Carolina officials and Republican presidential candidates, who have said the N.L.R.B. should not be telling companies where they can build new plants.

Boeing and the union said the settlement, announced 10 months before their existing contract expires, represented a new day between the often-feuding sides. Officials of the International Association of Machinists and Aerospace Workers expressed relief and delight that Boeing had decided to build a new aircraft in the Puget Sound area. The union had feared that Boeing would decide to build that aircraft in a southern state where unions are weak, just as Boeing did when it decided to build the new plant for its 787 Dreamliner in South Carolina.

The company and union announced Wednesday that Boeing would build its 737 Max, a more fuel-efficient version of its workhorse passenger jet, in Renton, Wash., near Seattle. Boeing currently builds 35 planes of the older 737 model each month in Renton. It plans to increase that to 42 per month, and perhaps more if it can achieve productivity improvements through incentive bonuses that are laid out in the new contract.

Industry analysts said the agreement was reached now because demand for new planes had soared and both the company and the union had a strong interest in making sure that production was not disrupted, a prospect that could send sales to Boeing’s rival, Airbus.

Officials with the machinists’ union said that they were pleased with the new contract and would urge the N.L.R.B. to drop its case against Boeing once union members ratified the contract.

“If this agreement is ratified, we will engage the government in discussion and inform them that our issues with the Boeing Company are behind us,” said Tom Wroblewski, president of Machinists Union District Lodge 751, which represents 28,000 Boeing workers in the Puget Sound area.

Lafe E. Solomon, the labor board’s acting general counsel, who brought the case against Boeing, called Wednesday’s agreement “a very significant and hopeful development.” He added that if it was ratified, “we will be in discussions with the parties about the next steps in the process.”

While it’s up to the labor board whether to drop the case, the union’s newfound embrace of Boeing could heavily influence the board’s course.

Industry analysts said the proposed contract was unusually generous and aimed to put a definitive end to a fractious era during which the machinists went on strike five times since 1977, including a 58-day strike in 2008 that cost Boeing $1.8 billion. With its huge order backlog, its plans to ramp up production and fierce competition from Airbus, Boeing seemed eager to solidify a new contract that would ensure years of labor peace — especially when some customers had threatened to give orders to Airbus if there were more strikes.

Under the tentative agreement, the workers would receive annual wage increases of 2 percent, cost-of-living adjustments, a productivity incentive program intended to pay bonuses of 2 to 4 percent and a ratification bonus of $5,000 for each member.

Workers will pay more for their health insurance, but at a time when many companies are pushing to replace traditional pensions with less costly 401(k) plans, Boeing agreed to a more generous pension formula and to guarantee that new hires would continue to receive traditional pensions.

Mr. Wroblewski said an especially important aspect of the agreement was its job security provisions, which he called “precedent setting.” He said the contract would “secure thousands of jobs while raising machinists’ pay and pensions.”

“Hopefully it also signals the start of a new relationship that can both meet our members’ expectations for good jobs, while giving Boeing the stability and productivity it needs to succeed,” he said.

James F. Albaugh, president and chief executive of Boeing Commercial Airplanes, voiced similar optimism.

“If our employees ratify a new agreement, building the 737 Max in Renton will secure a long and prosperous future there, as well as at other sites in the Puget Sound area and in Portland, Ore., where 737 parts are built,” he said.

Several other states, including Texas and South Carolina, had vied to win the 737 Max production.

Scott Hamilton, managing director of the Leeham Company, an aviation consulting firm in Issaquah, Wash., said the new agreement was good for virtually everyone. “Boeing wins in that it has four more years of production stability,” he said. “It doesn’t have the pain and agony of a potential strike. It also wins in that it certainly appears that the N.L.R.B. case will go away.”

“The union wins in that it will have the new 737 Max in Renton and job security,” Mr. Hamilton added. “Boeing’s customers win because they don’t have the potential of a strike disruption. I don’t see any loser, other than the other states that were salivating to build the Max.”

Article source: http://feeds.nytimes.com/click.phdo?i=ec2949bda3447041a7532278d92f0860