What Airbus Learned from the Dreamliner
TOULOUSE - Sometimes it pays to be in second place. Over the past four years, Airbus has watched rival Boeing (BA) rack up nearly 900 orders for the fuel-efficient 787 Dreamliner while repeatedly stumbling in its own effort to launch a competing plane, the A350. But on Apr. 9, Boeing acknowledged the Dreamliner's launch has fallen at least 14 months behind schedule, to late 2009. While the A350 isn't likely to enter service until 2013, the lag might be a blessing if Airbus can learn from its competitor's mistakes. "We're obviously keeping a close eye on the problems Boeing is having," says Airbus CEO Thomas Enders.
Airbus can't afford to get this plane wrong. It has already taken a $6 billion profit hit from problems with its most recent plane, the double-decker A380. And the A350, which has won 371 orders from airlines, helps Airbus counter its most urgent financial problem, the euro's rise against the dollar. While it built past planes largely in Europe, Airbus expects to outsource production of substantial chunks of the A350 to places as far-flung as China and Russia.
A SERIES OF MISSTEPS
Sounds logical, but that's what got Boeing into trouble with the 787, a new widebody that promises a 20% boost in fuel economy. The U.S. giant outsourced 70% of the plane's construction to contractors, but some of them were overwhelmed by the task. Essential parts ran low, and quality suffered. The 787's groundbreaking design led to further missteps. In March, when the plane was already on the assembly line, engineers had to redesign a critical part that attaches the wings to the fuselage.
Airbus could face similar troubles. Like the 787, the A350 will contain about 50% lightweight composites, and roughly half of production will be outsourced. Because only a few suppliers worldwide can work with such materials, it's likely Airbus will rely on some of the same companies that have struggled with the 787.
To avoid production glitches, Airbus is giving contractors an unprecedented role in designing the A350. For months, engineers from aerospace companies such as Honeywell International (HON) and Thales Group have been working alongside Airbus staff, poring over the design and suggesting changes to simplify manufacturing. Outside engineers, for instance, proposed moving fuselage joints away from the wings to make it easier to fasten sections together on the assembly line. Boeing held similar consultations, "but Airbus is taking it a step further," says Greg Albert, a Honeywell vice-president who oversees its work with Airbus.
To give suppliers more time to identify potential production kinks, Airbus doesn't plan to start A350 assembly until early 2011, more than two years after a scheduled "freeze" of the plane's design details. Boeing, by contrast, started assembling the 787 about 18 months after completing the design. Taking advantage of the extra time, Honeywell is setting up a testing center in Mexico. "We'll be shaking things out that normally wouldn't be tested until the plane was already flying [test flights]," Albert says.
Airbus is also simplifying its sprawling supply network. In the past, it awarded contracts to some 250 key contractors on each aircraft. But Klaus Richter, a new procurement chief recruited last year from BMW, has winnowed that number to about 70. The suppliers, in turn, are expected to assemble their own teams of subcontractors. The challenge will be making sure that those outfits, which account for as much as one-third of production costs, have the technical knowhow and manufacturing capacity to deliver what Airbus needs. "The lower-tier supplier base," says Kirk Bozdogan, an aerospace researcher at the Massachusetts Institute of Technology, "is the Achilles' heel."