It don't come easy

On Tuesday Boeing announced a revised schedule for the 747-8 Freighter. At the same time we announced a $1 billion pre-tax charge resulting from production and market challenges facing the program.

Unfortunately, the 747-8 has required more significant rework than we anticipated, due primarily to late maturity of engineering designs. While we’ve struggled with the disruptions that this caused for the program, we believe we’re now on the right course.

As you saw in our announcement, we now expect first flight of the 747-8 Freighter to take place early next year rather than at the end of this year.

First delivery of the 747-8 will be in the fourth quarter of 2010. First delivery of the passenger version remains planned for the fourth quarter of 2011.

image/photo

The first 747-8 Freighter is now more than 90% assembled.

In calculating the charge, we coupled our manufacturing issues with the near-term decline in freighter demand caused by the global economic downturn. So, in light of this environment, we’ll be postponing for about two years our planned 747 production rate increase from 1.5 to 2 airplanes per month.

We’re flying through tough skies right now, but I want to emphasize that we do fully expect this market to recover as global trade and economic conditions improve. That’s why we remain confident in the 747-8’s prospects.

The 747-8 is a very competitive airplane with a strong future and a significant market niche. We’re making progress. The first freighter is more than 90% assembled, and power-on has been achieved. The remaining work is mostly in systems functional tests.

Right behind that airplane, the second 747-8 Freighter is more than 80% complete and has also completed the power-on milestone. The third airplane is 75% assembled.

Overall, eight 747-8 Freighters are in various stages of assembly. On the passenger version, known as the Intercontinental, 75% of the engineering is released.

I’ve mentioned here many times that new airplane development is inherently difficult, even on an airplane we know well. But clearly, so far our performance has been unacceptable.

It’s important that we get our airplanes built and that we deliver the products that enable our customers to succeed. It hasn’t come easy, by any means, but sooner rather than later, we’ll be talking about first flights, first deliveries, entries into service, and the exceptional operational performance of Boeing’s newest airplanes.

Comments (25)

Karl:

Yes, it hasn't come easy for you guys lately. But I ask myself this question. If I was a student in engineering school taking exams throughout the year and failed every one of them so far, either I'd be kicked out of school or I take myself out and no waste my hard earned cash.

I don't know how many times I've read from Boeing managers that "we're finally on the right course" just to read a few months later, "Boeing postpones first flight again" because things were not going according to plans.

Yeah, perhaps we readers and investors expect to much of this company or we just don't get it.

Don Harrington (Bellevue, WA):

Better late and correct than on-time and wrong. First flight will happen when the time is right. Too bad, though, I was betting on the 747-8 first flight to happen before the 787 (sorry). :-)

In any case, first flight of both great airplanes is eagerly anticipated!

John T. Shurr (Everett, WA, USA):

A huge obstacle has been the learning curve. Boeing saw fit to throw warm bodies at the work statement, without regard as to what those people could contribute. Many of my co-workers have no structures/mechanical engineering background what so ever. Trying to teach these folks, while keeping to a schedule has proven difficult and mistakes have been made.

For myself, my background is in electrical, electronics and management. I was surprised to hear that I was going to structures planning. It is not beneath my capabilities, but it is certainly not my forte. And I've struggled with trying to come up to speed and be productive. I would have thought, with my background and education that I would have been more effective in electrical systems and/or design and/or management.

As an efficiency expert, I would suggest HR pay more close attention to what's on an employee's resume.

While being a warm body has its benefits, I'd be much more productive doing what I know best.

Raymond (Seoul, Korea):

Sorry to hear about your 747 and 787 woes. But I'd rather you guys take your time to get the job done right the first time. I'll wait - but I'd love to see both airplanes flying at next Paris Airshow in 2011!

Jim Hasstedt (Everett, WA, USA):

"Got to pay your dues if you wanna sing the blues
And you know it don't come easy"

Well we're definitely paying our dues! Hopefully some lessons learned from this and the 787 programs are to lengthen those development schedules back out more like the 777 was, especially on airplanes introducing new technology!

alexandar (oakland):

I appreciate the immediate response on your blog. As a die hard 747 fan, I am still extremely disappointed at the delay and charge, thinking that the 748 program would be the showcase to reverse the 787 PR and execution failures.

I would like Boeing to be more candid as to what caused the delay and what substantiates the new first flight schedule. Like anyone else, there is no reason for me to believe this new schedule.

Ron D. Smith (Everett Cust Engineering):

Thanks for your continuous efforts to try and put all the bad news in the best possible light. No easy job.

Jeremy Hahn (Seattle, WA):

Wasn't engineering completed over a year ago and just 6 weeks ago we heard that it was going to fly in November? How does something that was finished 50+ weeks ago suddenly change the outlook in the last 6 weeks??? I feel like there's more to this story that's not being addressed.

PJM (Seattle):

Sure, blame engineering for the lack of foresight by management to have a realistic schedule at three distinct points in time: 1) The beginning of the 787 program (I want to have some of the stuff that management was on when they honestly thought that they could revolutionize aerospace with a bleeding edge design in just 3.5 years), 2) The beginning of the 747-8 program, 3) The delays in the 787 program (should have forced management to hire more talent and bring back old hands who know the airplane and teach the next generation how to do it right). We all know that management is busy patting themselves on the back and putting on blinders and rose-colored glasses and using others as whipping boys.

Chris C (South Africa):

Very impressive photo! The first 747-8F looks simply beautiful!

The complexity of designing and engineering that goes into a commercial airplane is simply phenomenal, and whilst the 747-8 is a major derivative of the legacy 747 program, it’s only natural that issues will occur.

Indeed, this postponement of first-flight from late this year to early next year is a clear and present disappointment and certainly not a proud day for Boeing. But this too shall pass, and as you’ve rightly highlighted in the last paragraph, “sooner rather than later, we’ll be talking about first flights, first deliveries, entries into service, and the exceptional operational performance of Boeing’s newest airplanes.”

The 747-8F is simply a phenomenal airplane, period. Although being a major derivative of the legacy 747 family, the -8F is able to fly 805nm further than the 747-200F, whilst hauling 22,910kg more revenue freight. In addition, whilst the -8F is London Heathrow’s QC2 departure noise compliant, the -200F is a noisy QC16! In total, even though the -8F is significantly larger and heavier than the -200F, it’s able to achieve a 29% lower fuel/ payload tonne burn over the -200F! Clearly, the -8F is the freighter of the future, as will the -8I be the ultimate passenger airplane in the 450seat market in the future, period.

There’s also an excellent photo in Boeing Frontiers October Edition of the -8F gear-swing.

“The 747-8 is a very competitive airplane with a strong future and a significant market niche.” Well said, Randy!

Barun Majumdar (Seattle, WA, USA):

A Seattle Times column this morning by an aerospace industry think tank /analyst Richard Abulafia corroborates your comment that "so far, our performance has been unacceptable". He underscores various reasons for the dismal outcome. I'd like to emphasize that innovation needs to be a key ingredient in any new airplane development program. There are challenges which are so unique in nature that we need to innovate them instead of only relying on available solutions.

I'd like to conclude with the famous quote of our founding father William E. Boeing: "We are embarked as pioneers upon a new science and industry in which our problems are so new and unusual that it behooves no one to dismiss any novel idea with the statement that 'it can't be done!'" This statement is stunningly true at this trying time.

Abu A. Khan (Falls Church, VA):

I am really puzzled about the whole 747-8 program! It seems as though Boeing really doesn’t know how to build aircraft anymore. It’s a derivative aircraft, how difficult can it be? Boeing 787 I understand but 747-8....

james robinson (Long Beach):

From what I can tell from open source information, the 787 and 747 are being well managed now. Unfortunately some bad leadership on the 787 up through the first few months after roll-out have had a cascading effect which is being felt right now on both the 787 and the 747. Based on that understanding, it is important to note Boeing is doing the right things to make these programs healthy and deliver quality airplanes.

At the same time, I believe more could be done to explain all the bad leadership choices which were made on the development of the 787 up through a few months after roll-out.

Many people incorrectly blame outsourcing work as the root of the problems on the 787. Boeing should really come clean on how badly the leadership failed to execute the outsourcing strategy and manage the program as a prime contractor sub contracting out various tasks should have. Only by admitting those mistakes and shining a light on the people responsible can Boeing ensure those mistakes are not repeated and ensure the strategy of outsourcing work packages is not blamed for the lack of oversight on Boeing's part.

Andrew Boydston (Caldwell ID):

Thank you for your candid update on Boeing progress.
On another blog site I expressed some frustration over one more announcement concerning delays with the 747-800 coupled with the recent 787 delays to progress. I believe Boeing has a terrific strategy for developing these type of products it will be offering, but often wonder if Boeing is taking too much of a quantum jump when considering all the delays it has experienced with its complexities.

However, as stated earlier by Boeing, it must not fly until absolutely ready. The public should realize there are many considerations within these projects way beyond the general understanding offered by the press, blogs and technical reviews.

Most of us (readers) are not in the maelstrom of development and implementation of these two projects, so we can only frustrate and speculate. Even those working on these projects may not have the total big picture often leading to a credibility gap and confidence within its workforce and those associated with this endeavor.

Therefore, I appreciate solid assurances given by its leadership and any opportunity taken to give us these types of updates. This keeps the vision place and the objective in play.

Ankih Fre (Seattle WA):

I thought the program would go smoothly, maybe have the first flight and delivery earlier. The only good part about this is that nothing has gone wrong with the plane itself like the 787.I hope that it will still roll out and finish gauntlet tests and the others needed before the first flight this year.

Paulo M (Johannesburg, RSA):

It looks horrendous - not the plane. That is a pretty plane.

It appears as if neither Airbus not its great rival Boeing have any tabs on how to do on time, on budget and to spec jets lately.

This latest delay, unfortunate it may be, I'll try to think of as a smart move rather than one that sinks Boeing's credibility further. The idea with the 747-8 was timing it perfectly with the 747-400 market replacement cycle - the way I understood it. And it makes perfect sense seeing the market fragmented with the arrival of the 777-300ER and A380-800 taking the parts of the 747-400 market that they could economically replace. But you still need a viable - real - 400-500 seater (and 140 tonne hauler), and that is the 747-8.

Randy Baseler explains 'Market Timing' (777) here:
http://boeingblogs.com/randy/archives/2007/04/market_timing.html

Randy Tinseth explains 'The replacements' (747) here:
http://boeingblogs.com/randy/archives/2007/05/the_replacements.html

I think the 747-8 became slightly early for the (1st major) 747-400 retirement/replacement cycle with the current global conditions. There's another major cycle around 2018.

There's also an apparent engineering staff bottleneck at Boeing. This shouldn't have been allowed. (I read, earlier this year, about a looming engineers shortage in the UK, and Rolls Royce efforts to combat that. It's an industry-wide problem.)

JJ Pothoven (Schiphol, Netherlands):

As being an powerplant engineer for an airline myself, I can understand the technical difficulties. However, from a commercial perspective this is unacceptable. A longer but more realistic developing and delivering schedule should be maintained for future aircraft programs. I wish Boeing the best for both the 747-8 and the 787.

bruce (seattle):

Not surprised that Boeing programs are suffering from a lack of experienced people from the top to the bottom. Corporate was WARNED when the engineers had their unprecedented strike that if Boeing were to start divesting themselves of inhouse engineering and management groups/personel, ie, outsourcing inhouse engineering and management, that the company would lose control of the airplane design and production, to it's detriment. Now it has happened. And what about product liability? Now there is another question.

Funny, they hired engineers and managers to figure things out, and when they figured this out, the Company basically said, oh, we didn't mean for you to figure THAT out. Sheesh.

Norman (Long Beach, California, United States):

Better late than never, better safe and late than sorry and grounded. I am sure no one feels more frustrated than the people working on the factory floor that put their skills, passion and talent to work every day as well as those who ware the ties in the offices. Simply assigning blame to one person or team is just looking for a quick and easy answer for a complicated problem. What ever problem it is, it must be dealt with rationally and assertively.

Boeing Investor (New York):

Randy,
I admire your ability to try to make disappointments sounds like normal business protocol but Boeing has displayed a series of them that indicates something far deeper.

The postponement of the 747 and the reasons for it reveal a loss of engieering and management control.

What should have been protection of product lines and respect for the difficult process of creating new models has been compromised. Schedules were unrealistic, resources were not allocated properly and the result has been a lack of control and inefficiency.

A description of the CATIA and systems engineering mistakes on the 747 just sounds downright incompetent.

Jon Grams (Colorado Springs):

Well, this is certainly disappointing. Parts being that far out of tolerance seems very unlike Boeing. I can't help thinking that part of the reason for this delay is the perhaps greater urgency for the 787 to fly before 2010. Also, the recent downturn in the freight market probably means the -8F customers are not in dire need of their aircraft right now.

Lufthansa I'm not so sure about. However, now I believe it is absolutely critical that the 747-8 not only flies in the first quarter of 2010, but that it significantly exceed performance specifications, particularly with the improved A380 (weight reductions) predicted for 2012. I think for the Intercontinental we should see a .86 to .865 mach cruise speed and 8300-8400nm range (basically, like the 777-300ER/LR exceeded specs).

Additionally, it may be helpful to advertise the Intercontinental as carrying 479 passengers (or 475 to make a nicer-sounding number) as the upper deck galley stowage option (freeing up 12 passenger spaces) seems to be the way airlines want to go. Using the higher thrust GEnx-2b69 as standard on the Intercontinental may also be helpful in improving takeoff/climb performance and reducing acoustic footprint.

Kevin (Los Angeles, CA):

One look at the wing shows that the 748 involves more than a simple stretch of the fuselage.

As for the problem with engineering talent/resources, I often get dismayed when students in grade school are treated like hopeless nerds by their peers if they do well in math and science. But that's the way the modern society has evolved--why struggle to draw a force diagram and solve for a vibration frequency when one can invest someone else's money and become rich before age 30?

Julia (Moscow, Russia):

It is always hard to hear such news about the plane you are working now. The 747-8F plane is like a little baby for me. I liked to see the first plane on final assembly under the factory lights. Seems it will stay there a little bit longer ... not too bad for really good airplane!

Mark:

I think as well what is unacceptable the fact that we have a lot of design work done in Australia and Russia, yes maybe a lot of you guys don't know, but that is the truth, ask any design engineer working in the towers in Everett, and a lot of the CATIA work gets done overseas.

Now, how new engineers can learn the process when the company is outsourcing the core job to other countries, pretty much we are paying them to learn, so later they can leave the company and build their own airplanes. I guess the only thing left is to start building airplanes in China!.

When it come to engineering in order to make revenues there are not cut corner, you need to get your hands dirty and learn by doing so, teach the new guys, and be open to new idea. The 787 program is mirror of what not to do in the future, you need to keep the core work in house. I for see a market very competitive for Boeing, we soon are going to see Embraer and Bombardier version of our own 737, thank again from a guy that has been in the company only 4 months. If want to learn how get thing done in a timely manner you should read the "Kelly's Johnson 14 Rules to Management". Kelly was arguably the most successfull engineering manager of this past century.

James Harper (Everett WA) (Everett WA):

This delay is far from surprising; an obvious domino effect from the plagued 787 development, but even more evident is the on-going mis-guided philosophy where emphasis is placed more on creating perception than reality.

These development programs must be run by a bunch of Drama majors. All the "we're going to revolutionize the industry" rally cries, followed by the inevitable, "we're sliding the schedule again because it's better to get it right than done on time" along with the implication that those in charge are still smarter than the rest of us. It should be UNACCEPTABLE to get it wrong the first time, let alone time and time again. LATE = WRONG. LATE costs $Billions to Boeing, suppliers, partners, and customers.

These real failures are the result of real problems being ignored or under-emphasized because they cloud the imaginary reality that those in charge continue to perpetuate so to keep the paychecks and bonuses flowing nicely until a graceful exit can be accomplished. We've been driven to a point where if we keep spending money - we're screwed. And if we stop spending money - we're screwed. Sure, as long as they keep printing more money, it'll end up ok. Don't count on it.

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