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In 1991, the Boeing Company started studying specifications of the single-deckers and double-deckers to respond to the challenges of United Airlines to build a 600 or 700-seat aircraft for transpacific flights, whose design could be drafted from a baseline of 747 derivatives with 777 technologies. The company invented an aircraft concept – the Sonic Cruiser with the code name “Glasier”, which was supposed to be built of composite materials with a large wing and two engines placed on the rear side of the fuselage that meant further reduction of the overall aircraft size and its landing gear. The Sonic Cruiser project was submitted for a patent application and included $ 14 billion plan with accompanying sketches, which included technical specification of the future transpacific aircraft. These sketches described a 200 feet-length twin-engine aircraft with maximum take-off weight of 450,000 pounds, equipped with 777’s power plants that are aimed to shorten the cruise speed in the rate of accessible Mach number, and allow the aircraft to fly 8, 5000 miles without refueling.
After the company faced manufacturing melt down in 1997, had to lay off of up to 12,000 employees in 1998, and was hit by a strike in 2000, Boeing had to reduce production of 787 models (previously known as 7E7 models) by 50% in 2002. In order to decrease the loss of revenue and shorten the time to build the jets, Boeing authorized the foreign suppliers to perform more than 35% of the manufacturing work, when the final assembly of the aircraft was supposed to be completed by the Boeing Company on the existing Charleston Plants.
These strategic initiatives of the company resulted into the difficulties of bringing the site’s business and manufacturing process in line with the rest of the company, due to the manufacturing faults committed by the foreign suppliers, and delivery delays that caused $840 million of charged compensation. Regardless the fact that, Boeing completed 800 orders since 2011 the recent technical problems has forced the company to ground 50 planes worldwide, and put the certification of the designed battery systems into question.
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Outsourcing as the Cause of Production and Manufacturing Delays, which Resulted into Cost Overrun and Occurrence of Technical Problems
By July 2007, 47 customers worldwide have ordered 683 airplanes with a net worth of $ 110 billion (Bair, 2007). However, considering the fact that the final assembly of 787 jets was performed in May 2007 in Everett instead of Charleston, the company faced more than three years of production delays. The delay resulted from the necessity of completing the maintenance of the wing-body joint fix, eliminating the error in the sections of the nose-and-cockpit and fuselage, and repeating the wing stress by the employees of the Boeing Company. Therefore, these manufacturing delays were caused by the time handicap of three days period left for performance of the final assembly, which was caused by the external vendors, and resulted into the strike of 27,000 mechanics, forcing the company to sign a non-strike agreement and place minimum restrictions of the external suppliers.
Cost overrun previously occurred in 1996, when the company increased cost for the then “Sonic Cruiser” project to about $ 7 billion, in order to implement the adaptation of 777 style features. Furthermore, the project forced the company to write off the biggest charge in its history of $ 2, 6 billion, which resulted from the manufacturing collapse of the 737 family jets. The company faced 20% drop of revenue in 2002, had to cancel manufacturing of the 757 jet lines, and was very close of cancelling the production of 767 family in 2003. However, in 2005 the company managed to sell eighteen Dreamliners to North West Airlines, and won orders from Air Canada and Air India. Regardless the fact that, Boeing’s net income reached $ 967 million, and production rates jumped from 2,5 to 3,5 airplanes per month, the company has a potential risk to overrunning the cost for producing 787 model by $ 12 billion, which is 120 % higher than the original budget of the project.
The experts of Federal Aviation Administration state that the review of the 787’s critical systems is needed, and could result into more production delays owing to two technical incidents that occurred on Japan Airlines 787 jets. Previously indirect connection of the accident to the lack of hydraulics in the lithium-ion batteries was contradicted by the Japan Airlines authorities, who detected faulty wiring of the valve of one of the six generators. Japan authorities stated that there was no voltage surge on the fly-by-wire generators, although an auxiliary power unit started a fire after accumulating less than 100, 000 flight hours.
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Another technical problem of the oil leak that resulted into the delay of Japan Airlines flight from Boston was investigated by the Ministry of Transport, who identified improper paint job that caused malfunction of the switch. The same authority stated that cracks on the cockpit glass were caused by inadequate tapping when a faulty part resulted into braking problems. Furthermore, Japan Airlines and All Nippon Airways agitation for compensation can complicate Boeing’s assumption that grounding of the 50 jets worldwide and re-certification of the battery systems would not impede the company financially.
Boeing’s short-term goal is focused on the fixing of the battery system that would require addressing the problem of “thermal runway”. Considering data of the protection research foundation, for initiation of such reaction the rate of the heat in the cell of the battery must exceed the rate of the heat loss. Therefore, if a cell is brought to this igniting temperature, it will self-heat to the point thermal runway initiates, and spread hot short-circuits from one battery to another, impeding the whole system (Mikolajczak et al., 2012). Considering the fact that 787’s batteries are produced with the lack of hydraulics, fixing of these batteries would require addressing an uncontrolled overheating reaction that comes from compromise in favor of weightless, faster and powerful lithium-ion batteries.
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Regardless the fact that, the Dreamliners consume 20% less fuel than other similar jets, and 50% of the fuselage weight is compromised by the usage of composite materials instead of aluminium, the Boeing Company has run into several critically acclaimed issues regarding its management, technical and financial procedures. Furthermore, the company is predicted to face $ 12 billion cost overrun, which is $ 7 billion higher than its original budget projections. Since the company hugely practices outsourcing management, it has potential risk of losing adequate communication with the external suppliers due to the undoable set of the tasks that the company’s mechanics should perform to deliver the final assembly of 787 jets.
In addition, the key selling points for the carriers regarding the technical specification of the plane are threatened by the FAA’s insistence of withholding the company’s certificate for the intercontinental flights. Additionally, these threats are based on the recent battery problems, and fault that include condensation drips inside the plastic fuselage. Therefore, the company’s unconditional trust in the suppliers resulted into the disappointment of its customers, and initiated engineering utopia that will not see its end, once it was started.
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