Boeing’s 737 production snag: from sacked chief to hired retirees
Boeing is feeling the pressure over its 737 production delays and its latest fix for the problem looks a lot like a last-ditch effort. The plane maker has reportedly decided to call in retired workers at its 737 manufacturing plant to speed up production rates as the company continues to face delays and parts shortages from its supply chain. So how far behind is the plane maker and will it be able to make up for lost time?
According to a report by Reuters on September 11, 2018, Boeing has started hiring retired mechanics and inspectors to its 737 facility in Renton, Washington, as a temporary measure to alleviate production challenges.
This came after reaching an agreement with the International Association of Machinists and Aerospace Workers (IAMAW) on August 15, 2018, the union’s spokeswoman Connie Kelliher confirmed, adding that Boeing had a similar deal with the union last autumn after a round of voluntary layoffs.
Boeing’s executives told analysts on September 5, 2018, that the company is adding about 600 employees to the 10,000 already working at Renton: a combination of new hires and employees transferred from its other – Everett – plant and local facilities in Washington, The Seattle Times writes.
And if the workforce additions are not enough to highlight the scope of the problem, consider this: as of the same reported week of September, over 50 undelivered 737 jets were parked outside Boeing’s Renton plant, up from 40 back in August 2018.
Do not forget, the 737 family of single-aisle jets is the company’s best-selling model. The pile up at Renton translates to around $1.8 billion worth of 737 assets sitting on the tarmac. Over a third of them – engine-less.
Of the growing pile of motionless 737s, the vast majority are the new MAX model, the Seattle Times reports. Not surprisingly, as, Boeing has been trying to gradually transition from production of the 737 Next Generation to the MAX, simultaneously with the announced ramp up.
According to Edward Ambrose, an analyst writing for Seeking Alpha, a third of the July year-to-date 737 production was the MAX model with CFM’s LEAP engines. By his estimations, as of September 5, 2018, the backlog for the 737 MAXs was 95%.
Overshooting its targets
Boeing has ramped up production of the narrow-body plane, increasing from 47 to a record 52-jet monthly pace in June, 2018, according to the Puget Sound Business Journal; the company had also said it aims to reach 57-jet monthly rate in 2019.
But already in August 2018, the plane maker announced it is cutting production of the 737 this (third) quarter, saying it expects to have deliveries of the jetliner lower than the existing production rate, Reuters reported at the time.
The problem has in fact been visible all year and Boeing should have been well aware its was coming, as key suppliers battled to keep up with production rates and increasing demand.
The usual suspects are CFM International, a joint venture between Safran and General Electric, which produces LEAP-1B engines that power the 737 MAX, and Spirit AeroSystems, the U.S., Kansas-based manufacturer that supplies the fuselages.
And Boeing has already made some heads roll as a result of the problem. Back in August 2018, vice president and general manager of the 737 program and Renton site manager, Scott Campbell, was forced to step down after three decades working for the plane maker, the Puget Sound Business Journal reported.
Campbell’s departure came after a disastrous month at his managed Renton facility: in July 2018, Boeing delivered just 39 jets, of which 29 were narrow-bodies, Simple Flying writes. It was its lowest delivery count since 2012. And so, the plant’s boss will retire at the end of the year and will be replaced by Eric Lindbard, chief of Boeing's new 777X wide-body program at Everett plant.
Getting back on track?
Just in: on September 11, 2018, Boeing announced its figures for August, 2018, stating it delivered 48 of its 737 jetliners, thus rebounding from the six-year low. According to Bloomberg, total commercial-aircraft shipments rose to 64 last month from the 39 in July 2018. While the 737 deliveries are still a few jets less of the monthly production rate, they count as a major improvement.
Boeing also reported that its 2018 net orders totaled 581 aircraft through August 2018, which is up from 487 toward the end of July 2018. That includes 90 orders in August for 737 variants from leasing firms and undisclosed customers, Reuters writes. Question is, is this real progress or a temporary high?
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