A Wing and a Prayer: Outsourcing at Boeing

In making its new 787 Dreamliner, Boeing outsourced work to a global network of more than 50 partners, a marked contrast to the traditional practice of manufacturing planes at its base near Seattle, Washington. The plane is nearly three years behind schedule, beset by technical and supply problems and billions of dollars in cost over-runs. Boeing workers complain that the failures derive in part from excessive outsourcing and a loss of local knowledge in production challenges. For the 787, outsourcing partners contributed 65 percent of the new air frame, Boeing claims, compared to 52 percent reported for its competitor Airbus. Confronting technical challenges for the 787, made from carbon-composite materials rather than aluminum, Boeing shouldered risks with foreign suppliers, a strategic move with international customers comprising 80 percent of its order backlog. Despite the problems, the fuel-efficient 787 has record orders. That won’t stop the arguing among US engineers, workers and foreign suppliers over the ideal rate of outsourcing for a complex aeronautical product. – YaleGlobal