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Boeing Overcoming 787 Supply Chain Problems

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A Boeing official said the plane maker has its global supply chain under control for its 787 Dreamliner and plans to ratchet up production, a jump in output a Japanese supplier said could expose new supply bottlenecks.

Boeing has outfitted at least four 747 freighters with wider fuselages to gather parts from around the world for 787s that are then assembled at plants in Washington and North Carolina in the United States.

The company is trying to make up for earlier delays caused in part by the difficulties in managing 325 suppliers building parts for the 787 at 5,000 factories worldwide.

Boeing now assembles three and a half of the carbon-composite jets per month, with plans to raise output to five a month by the end of the year 10 per month by the end of 2013.

The new target was described on Wednesday as a "very difficult target" by Jeffrey Luckey, the Boeing executive in charge of the plane's supply management.

"We made mistakes along the way. We are currently on path to achieve 10 a month," Luckey said during a presentation at the Japan Aerospace International Exhibition in Nagoya. "We know when we are going to pick them up and drop them off," Luckey said. "We lost visibility in the supply chain."

The 787 is the most outsourced in Boeing's history and Japanese companies such as Fuji Heavy Industries and Mitsubishi Heavy Industries account for more than a third of its components, including the first wings built outside the United States.

At a Fuji Heavy plant near the show venue in Nagoya, factory manager Hiroyuki Ishikawa is preparing a new production line to build wing-boxes that connect the 787's wings to the fuselage. The factory is the sole supplier of the critical component.

While expressing confidence that his plant could match the planned acceleration in 787 output in the United States, the increase in production Ishikawa noted, "could expose bottlenecks" in the availability of parts from lower-tier suppliers.

Fuji Heavy's aerospace business, which Boeing named as supplier of the year in 2011, buys components from about 160 companies in Japan and overseas.

The 787 wing-boxes coming out of Ishikawa's facility are shipped to the United States on the upsized 747 freighters. Wing-boxes for Boeing's 777 jet the company fabricates at a line next door are shipped by sea.

Boeing's Dreamliner, which boasts fuel savings of 20 percent compared with its predecessor, the 767, has so far won 824 orders, with around 60 delivered. The plane's list prices range from USD$200 million to USD$240 million, but most sales are discounted.

Japan's All Nippon Airways was the launch customer for the 787, ordering 66 aircraft.

(Reuters)