787 Dreamliner teaches Boeing costly lesson on outsourcing

[mahatmakanejeeves]

787 Dreamliner teaches Boeing costly lesson on outsourcing

The airliner is billions of dollars over budget and about three years late. Much of the blame belongs to the company's farming out work to suppliers around the nation and in foreign countries.

February 15, 2011|Michael Hiltzik

The biggest mistake people make when talking about the outsourcing of U.S. jobs by U.S. companies is to treat it as a moral issue.

Sure, it's immoral to abandon your loyal American workers in search of cheap labor overseas. But the real problem with outsourcing, if you don't think it through, is that it can wreck your business and cost you a bundle.
....

Boeing can't say it wasn't warned. As early as 2001, L.J. Hart-Smith, a Boeing senior technical fellow, produced a prescient analysis projecting that excessive outsourcing would raise Boeing's costs and steer profits to its subcontractors.

Among the least profitable jobs in aircraft manufacturing, he pointed out, is final assembly — the job Boeing proposed to retain. But its subcontractors would benefit from free technical assistance from Boeing if they ran into problems, and would hang on to the highly profitable business of producing spare parts over the decades-long life of the aircraft. Their work would be almost risk-free, Hart-Smith observed, because if they ran into really insuperable problems they would simply be bought out by Boeing.

[formercia]

1. Fucking Bean Counters

All they can see is the next quarter's bottom line.

[Blue_Tires]

2. a perfect storm of fuckwitted decision making from the top...

1. A short-term, scorched earth cost-cutting philosophy
2. A new-from-the-ground-up design of the most sophisiticated airframe built to date, and a very aggressive production schedule
3. Outsourcing to contractors (who outsource to others) with little oversight or vetting
4. Allowing those minor-league contractors not only build major components, but create their own designs for them as well -- And then when things go wrong, needing to send a team of technicians to hold their hands or just buy the company outright...


The 787 was supposed to be the pride of America, but it's been a PR nightmare full of setbacks instead... If more of the work was scheduled in-house; the world would be flying it now...