Recent Stories with tag hbr

It's like a Bizarro-world "Gung Ho"!

It's not the landing gear or brakes--Boeing has eight and a half months to get all the kinks worked out of the 787 Dreamliner mechanically, and test pilot Randy Neville probably enjoyed trying a 2-g pull. They have just begun trying to break things. No, the truly scary "test flight" that Boeing is on is global outsourcing: not because it might fail, but because it might succeed.

Over at the Harvard Business Review, blogger Dick Nolan (Boeing Philip M. Condit Professor of Business Administration at the UW's Foster School of Business) thinks Boeing's Trojan Horse moment was in outsourcing that famed Boeing know-how. Writes Nolan, "Before the 787, Boeing had retained almost total control of airplane design and provided suppliers precise engineering drawings for building parts (called 'build to print')."

Not that that has changed entirely--ironically enough, here's this recent headline from the Wall Street Journal: "Boeing takes control of plant." But that's a South Carolina plant. For the 787, Boeing has constructed 300-partner supply chain that spans the globe.

Continues Nolan:

Boeing effectively gave Tier 1 suppliers a large part of its proprietary manual, "How to Build a Commercial Airplane," a book that its aeronautical engineers have been writing over the last 50 years or so. Instead of "build to print," Boeing provided suppliers with performance specifications for parts and components and collaboratively worked with them in the design and manufacturing of major components such as the wing, fuselage section, and wing box.

The only problem is that once Boeing has trained and retooled its far-flung suppliers, it will have planted a worldwide crop of competitors. China, Nolan thinks, is the most likely to run with the commercial airplane ball. Airbus has already agreed to a Chinese final-assembly plant, work that it, like Boeing, has tried to keep "stateside."

So forget South Carolina: Asia's lower-paid workforce is learning from the best how to build a plane from nose to tail, and how to put it together and sell it for about fifteen percent less (per Nolan) than Airbus or Boeing. It's a fait accompli, a matter of when, not if.