subscribe: Posts | Comments | Email

Boeing 787 Dreamliner Program Remains in Crisis- Commentary Two

1 comment

It has been roughly eight days since the grounding of all operational Boeing 787 Dreamliner’s as a result of unexplained electrical and other issues. Multiple governmental agencies have initiated ongoing investigations related to two specific fire related incidents on aircraft operated by Japan Airlines and All Nippon Airways, the global launch customer of this aircraft. The investigation as to the probable cause(s) of component or system failures has taken on global dimensions, similar to the 787’s global supply chain. The media coverage is endless, with publications like The Wall Street Journal providing multiple daily reporting on all angles of the investigation and the potential consequences. Meanwhile, Boeing continues to deal with the short or longer-term implications.

Once again, Supply Chain Matters provides yet another commentary from a supply chain, information technology and B2B process and learning lens.  Readers are welcomed to review numerous past 787 centered commentaries by searching on “Boeing supply chain” in our blog content search box.

What is Known Thus Far

According to a press briefing held today by the head of the U.S. National Transportation Safety Board (NTSB), what is known is that the lithium-ion batteries in the prior two incidents experienced thermal runaway, a potential short circuit, and fire. Thermal runaway occurs with electrical overcharging, causing electrolyte breakdown that generates excessive heat or fire.  Global agencies are attempting to coordinate various investigations that focus on both the electrical systems and manufacturing methods related to the 787.

Investigators in Japan have thus far been satisfied that the lithium-ion batteries produced by supplier GS Yuasa Corp. performed to electrical specification.  They continue to also probe into the battery production methods. According to other published reports, investigators are looking into the wiring, circuit boards, electrical monitoring and other systems involved in supplying aircraft power. NTSB investigators are widening their probe to include the battery charging system produced by U.S. based Securaplane Technologies Inc., a division of U.K. aerospace provider Meggitt PLC. Today, the NTSB indicated that the battery charging system tested with no abnormal faults. Another sub-contractor, Thales SA of France was responsible to integrate the batteries with the charging and safety system. The NTSB notes that in the Boston incident, the battery monitoring unit experienced extensive damage, inhibiting any specific testing of that unit. Investigators are now testing production units.

Global agencies have further indicated that the current investigations include reviewing manufacturing records for any trends or issues along with supplier audits.  There are currently two full time shifts of government and Boeing investigators working around the clock to secure information. There have also been some reports of some friction among each of the global investigative teams in the timeliness and clarity of sharing information, but reports indicate that information sharing is improving with time.

Implications

As of today, indications are that there remains no definitive timeline for wrapping-up the investigation.  That is obviously not good for Boeing, the 787supply chain community, airline and leasing customers and those of us who fly on a regular basis. There are already reports that airlines with delivered 787’s will seek financial compensation for disrupted scheduling and/or substitute aircraft and added expenses.

There are untold implications for 787 suppliers, some of which are already in the public looking glass.  Depending on how wide and how deep the current investigations progress, there may be implications for new design changes and/or added delivery program delays. Then again, the issues may be localized to the plane’s electrical charging system. Some are questioning why Boeing elected a dependence on fire prone lithium-ion battery technology, while other cite that rival Airbus elected to design two redundant lithium-ion battery sources in its rival A350 program.

Boeing’s procurement, product management and PR teams must be sensitive to buffer the tendencies for media to quickly throw some suppliers “under the bus” as initial or unsubstantiated information as to potential cause are reported. Supply Chain Matters noted how quickly battery provider GS Yuasa was cast with a negative connotation which immediately impacted its stock price.

For Boeing itself, every passing day of a grounded aircraft brings new operational, brand image and other monetary implications. Even arch competitor EADS, global provider of Airbus aircraft has publically stated its sensitivity to Boeing’s current challenges with the 787, refusing to add any public comment., and viewing this incident as learning for the industry as a whole.  Cudos to Airbus for taking that stance. Thus far, investors have not completely punished Boeing stock which has traded in a range of $74-$77 since January 4th.

In our view, Boeing was somewhat late in participating in and buffering the business and social media narratives related to this incident.  Supply Chain Matters praised CEO McNerney for finally getting visible with stating a complete corporate commitment to resolve all issues, but candidly, that should have occurred earlier.  What drove us crazy, were initial statements from Boeing executives that indicated that glitches were a normal course of events with the operational introduction of new aircraft.  What does that communicate?  Does it imply that you expect to have component failure incidents?  Would the narrative been different with consistent statements indicating complete confidence in the innovative design of this aircraft, along with disappointment in the frequency and types of incidents that occurred. That would be followed by senior management commitments to resolve problems in the most expeditious and safety minded manner.

Finally, an aircraft program with the promise of cutting-edge innovation, but plagued with a long history of glitches, too little understanding of the implications of major component global outsourcing and an overdependence on suppliers, must now deal with the latest crisis and its short and longer-term implications. This is not Boeing’s sole challenge, but one that is shared across its global supply chain.

We trust that the current investigations will conclude in a timely and eventual positive outcome for this innovative aircraft program and we will continue to provide periodic updates.

Bob Ferrari

 

Be Sociable, Share!
  1. Bob Ferrari says:

    Hello Everyone,

    On Friday, All Nippon Airways (ANA), the global launch customer for the Boeing 787 Dreamliner cancelled an additional 379 flights that were scheduled for the time period of February 1-18. That move is being interpreted to indicate that the return of the 787 to active flying is still some weeks away.

    The latest cancellations raises the tally of cancelled 787 flights at ANA alone, to be 838 flights. It further provides evidence that some airlines will have to seek financial compensation from Boeing, regarding the grounding.

    Bob Ferrari