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Thursday, November 1, 2007 - Page updated at 12:00 AM

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Boeing may junk worldwide assembly for next jet

Seattle Times aerospace reporter

The recently ousted head of the 787 Dreamliner program said Wednesday that Boeing may build its next plane differently — axing the globe-spanning supply chain that has caused its recent problems and concentrating major partner factories at a single manufacturing supersite.

But that big prize won't necessarily be in Washington state, said Boeing vice president Mike Bair.

"The right way to do this would be to have all those big parts across the street so you could just roll them in," Bair told an audience of Snohomish County business people and politicians. "We'll see on the next airplane programs whether we can accomplish something like that."

His audience reacted with warm smiles. It sounded like great news for Washington state.

"Or someplace else," Bair elaborated in an interview afterward, puncturing the illusion. "It doesn't necessarily have to be here."

As for the global network of suppliers working on the now-delayed 787, Bair had some blunt words: "Some of these guys we won't use again."

And he said the company may return to its earlier practice of supplying complete designs to some major suppliers, rather than asking them to do design work as it did on the pioneering, composite-plastic Dreamliner.

Just four years after the Legislature passed a blowout tax-incentive package to have the 787 built here, Bair's remarks set the stage for another competition among states within the next few years to build the replacement for the Renton-built 737 narrow-body jet.

But the stakes could be even bigger, with a raft of supplier plants up for grabs along with Boeing's assembly plant.

Deborah Knutson, president of the Snohomish County Economic Development Council (EDC), said Bair's comments are as significant as those made by former Boeing Commercial Airplanes chief Alan Mulally in a 2003 speech when he famously summarized the state's competitiveness with: "We suck."

"I cannot imagine that the 737 replacement will automatically come here," Knutson said. "From everything I've heard, we'll need to work for it."

Two weeks ago, after the announcement of a costly six-month delay in delivery of the Dreamliner, Bair was replaced as 787 chief and shifted to a more strategic but less critical role at the commercial-airplanes unit: head of business strategy and marketing.

Boeing Chief Executive Jim McNerney has acknowledged that some of the first large 787 structures to arrive in Everett for final assembly were incomplete and that work done by some of the major suppliers was inadequately documented.

Tuesday in Everett, Bair kept a pre-arranged date to give a breakfast address at the quarterly meeting of the Snohomish County EDC.

His speech was both reflective and forward-looking, looking back to what went wrong on the 787 and ahead to future programs.

Bair said Boeing estimated that some 150,000 to 200,000 people around the world were working on the 787 program at its peak, a year or so ago.

He said the problems in completing the first airplane resulted from the production system in Everett being overwhelmed with parts work that suppliers should have done.

"That whole production system is built for 1,200 pieces. ... Everything about it was designed for 1,200 parts," he said. "We threw 30,000 at it."

Bair said some of the major airframe partners on the Dreamliner have performed so poorly that Boeing likely won't use them on future programs.

He also said some engineering design work had to be pulled back inside Boeing when the partners couldn't deliver.

"Some of them proved incapable of doing it," Bair said. In the interview after his speech, he expressed frustration that some partners seemed "unwilling, for whatever reason."

"They just didn't do what we thought they could do," Bair said. "Who knows why?"

Boeing's traditional model was to provide designs for suppliers to follow — a system it called "build-to-print."

But on the Dreamliner, it asked suppliers to both design and build their airplane sections.

Boeing found that "a couple of them promptly turned around and sub[contract]ed out all their engineering work," Bair said.

"There's a couple of [the supplier partners] where I could see us going back to a build-to-print solution," he said.

Afterward, Bair declined to name the suppliers Boeing "won't use again." He said he was referring not just to the six first-tier airframe partners — Alenia of Italy; Mitsubishi, Fuji and Kawasaki of Japan; Spirit of Wichita, Kan.; and Vought of Texas — but also to some of their suppliers in the second tier.

For this region, the most intriguing part of Bair's speech came when he looked toward future airplane programs.

The 737 replacement jet is expected to fly around 2015, and the manufacturing site would likely be selected at least five years earlier.

At one point, explaining the reason for the 787's global supply chain, Bair said it was difficult to ask the Japanese to invest money and then build their sections somewhere other than Japan.

So is the supersite concept — supplier factories alongside final assembly — really practical?

"I don't think it's outside the realm of what may have to be done," Bair said in the interview. "Toyota builds as many cars here in the U.S. as in Japan."

A supersite approach would make the next aircraft-assembly operation a bigger prize than the 787 plant, which has not attracted many supplier jobs to Washington.

Bair said that when Boeing staged the 2003 competition for the 787 assembly site, "we weren't being mean. Or trying to do anything heavy-handed."

"Painful as it was for everybody, it spurred a lot of action here in Washington about the need to be competitive," he said. "The state and everybody responded beautifully."

And now, his comments indicate, Washington may have to respond again.

"It really was not a game Boeing was playing," in 2003, said Snohomish EDC's Knutson. "It came down to the cost of doing business. You are going to have to do that exercise again."

Just like last time, she sees the southeast United States as this state's prime competition. She said the state should push work-force training, expanded tax breaks and other indirect incentives.

"It's ours to lose," Knutson said. "We have to fight for it. ... This may be the first warning call."

Dominic Gates: 206-464-2963 or dgates@seattletimes.com

In the original version of this story the name of the company Vought of Texas was misspelled.

Copyright © 2007 The Seattle Times Company

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