Tag: Manufacturing

Boeing Still Unable to Manufacture Aircraft

They are screwing up a critical structural joint on the 787 down in their union busting facility in South Carolina.

This is not a surprise.  They went there to treat employees like crap, and they have had problems, the the facility for a very long time, to the degree that some of the employees in the North Charleston facility saying that they would refuse to fly in a plane made there:

Boeing earlier this week instructed airlines to pull a batch of eight recently-manufactured 787 Dreamliners from service, prompting their immediate grounding, after the plane maker determined that a manufacturing issue undermined the strength of an area of the jet’s carbon fiber composite structure.

So far, eight 787s — all built in the last few years — have been withdrawn from flying. Aircraft for United Airlines, Singapore Airlines and Air Canada are impacted by the impromptu grounding, according to a person familiar with the situation.

According to those familiar with the issue, an area of the structure in the rear of the aircraft is unable to withstand the maximum stress that would be experienced by the aircraft in service and could fail.

By, “Could fail,” they mean a failure in flight leading to a depressurization incident, and possibly an inflight breakup.


This new issue is the first publicly known instance in the jet’s nine year service life that a structural defect with its mostly carbon fiber airframe has caused Boeing to immediately withdraw 787s from service. The 787 fleet was grounded for three months in 2013 following the overheating of lithium-ion batteries. At that point, the global cadre of 787s was just 50 airplanes and the jet returned to operation after the company developed a new containment and venting system for the main and auxiliary power unit batteries inside the jet’s electronics bay.

The source of the newly-discovered structural issue has been traced to a mating point inside the aft fuselage between two carbon fiber composite barrels, known as Section 47/48 where the two barrels meet with a large bulkhead that caps the pressurized cabin. The pieces are fabricated and joined with the aft pressure bulkhead at Boeing’s North Charleston, S.C. plant and then delivered for final assembly to the company’s nearby final assembly building or flown to Everett, Wash.


The first of the two issues causing the issue centers on how naturally occurring gaps in the structure are filled with shims that ensure stresses on the airframe are carried as they’re designed. Boeing has used a predictive shimming technology on the 787 program for more than a decade, robotically laser scanning the surfaces around the structural joins to automatically generate the required shims to fill the gaps.

In the case of the eight withdrawn aircraft, the gaps were improperly filled. On their own, that might not produce an immediate issue, but Boeing said a second manufacturing issue has prompted the pulling of the jets. The second issue centers on the inner skin of the large monolithic composite barrels. On the suspect aircraft, the skin of the woven carbon fiber fuselage is “supposed to be smooth enough so there are no abrupt ridges,” said one person familiar with the issue.


When the gaps are improperly filled in combination with the roughness of the inner skin, the required structural strength does not meet the limit load requirement. Limit load is the maximum expected stress the aircraft would ever expect to experience in service. While limit load is not solely an airline service requirement, every commercial aircraft test program has to demonstrate an aircraft’s structure is designed for limit loads before it can be safely cleared to fly for the first time.


Over the longer term, the gaps left by improper shimming can put added stress at certain points in the structure that can cause unexpected fatigue cracks to develop and propagate. The Boeing spokesman said its engineers “are analyzing data on the in-service fleet to determine if action is required, potentially including more frequent inspection or rework. It could also be determined that no further action is required if the condition is found to not impact the longevity of the structure.”


A spokesman for the FAA said that the U.S. aviation regulator “is aware of the matter and continues to engage with Boeing,” according to a single-sentence statement.


Installation of the shims across the 787s structure have been a recurring challenge for Boeing. Prior to the 787s entry into service, in June 2010, improperly shimmed horizontal stabilizers temporarily grounded Boeing’s test fleet. And the issue, according to several Boeing manufacturing engineers and aircraft assemblers familiar with the situation say the structural shimming has been a longstanding challenge for the company’s South Carolina manufacturing operation.

“Don’t get me wrong, it’s hard to do,” said one engineer. “But they are so hellbent on making rate, sometimes engineering and production aren’t aligned.” In 2012, early in the 787’s production run, Boeing found more than a dozen improperly shimmed longerons, structural stiffeners, inside the same 47/48 section requiring inspections and localized repairs for structural delamination.


The recurrence of shimming issues on the Dreamliner program comes as Boeing is considering consolidating 787 final assembly operations exclusively to South Carolina. The North Charleston, S.C. factory that produces the aft fuselage where the structural issue was introduced builds the section regardless of where final assembly is completed.

Shorter Boeing, “Our South Carolina facility is not executing properly, but because we are in a right-to-work state, we can push them to assemble dangerous aircraft and hit the production numbers that we want, so we want to move more production to South Carolina.”

This can’t but help Airbus, because, even if Boeing is a superior aircraft, you are wiping out a decade of advantages with a two week grounding.

Boeing’s upper management has been taken over by former McDonnell and finance types, and they are completely unable to manufacture an aircraft for a civil environment.

Boeing Cannot Make Aircraft Anymore, Part XXXIV

The delivery of one of the first two KC-46 tankers has been delayed after debris was found in the fuel tanks.

This is aircraft manufacture 101, and it happened on one of the first air frames that was supposed to been accepted by the Air Force.

Boeing really cannot make airplanes any more:

The delivery of a new KC-46 Pegasus tanker aircraft to Seymour Johnson Air Force Base in North Carolina has been delayed after foreign object debris was found inside the plane by Boeing inspectors.

The delayed aircraft was to have been one of the first two KC-46s delivered to Air Force Reserve Command at Seymour Johnson on June 12. But while the first was successfully delivered, debris was found in the fuel tank of the second during its pre-acceptance inspections.

In a statement provided to Air Force Times and Defense News on Monday, the Air Force said the debris came from “non-standard factory rework,” and not the kind of “production line quality escapes” that caused the Air Force to halt KC-46 deliveries in March 2019.

Those problems with foreign object debris, or FOD, led the Air Force to put a plan in place to correct the problem.


Just a month after Boeing began delivering the KC-46 to the Air Force in January 2019, the service found foreign object debris — tools or other materials used to build the aircraft — left behind in multiple KC-46s, creating a potential safety hazard. As a result, the Air Force stopped accepting new tankers over a weeks-long period in March and April 2019 as it investigated the issue.

I’m not sure that Boeing can be fixed without burning the whole rotten edifice down and rebuilding from the ashes.

Boeing Cannot Make Anything Anymore, Part MMMDCCXXIV

It turns out that Boeing, the company that invented the airborne tanker, has mission critical fuel leaks on its new KC-46 tanker.

Seriously, saved this issue 60 years ago, and now, after 25 years of stock buybacks, they can’t even prevent a fuel tanker from leaking fuel:

The U.S. Air Force has upgraded an existing deficiency for the KC-46A Pegasus fuel system to Category 1.

The service’s program office first identified “excessive fuel leaks” in July after an air refueling test. The Air Force and Boeing are working together to determine the root cause and implement corrective actions. A Category 1 deficiency means the government has identified a risk that jeopardizes lives or critical assets.

“The KC-46 Program Office continues to monitor the entire KC-46 fleet and is enhancing acceptance testing of the fuel system to identify potential leaks at the factory where they can be repaired prior to delivery,” according to an Air Force statement.

Every senior executive at the firm needs to be fired, including the board of directors, and stock buybacks need to be banned for the next 4 decades.

More Boeing Bad News

This is aircraft manufacturing 101, don’t leave garbage in the aircraft, and Boeing cannot do this:

Boeing Co. has found debris inside the fuel tanks of about two-thirds of undelivered 737 MAX jets inspected so far, according to federal and aviation-industry officials, indicating a bigger production-related problem than the company previously suggested.


While Boeing disclosed the debris problem publicly earlier this week, the latest details shed more light on the scale of the issue. Industry officials said Boeing has so far inspected about 50 of roughly 400 MAX planes awaiting delivery once regulators allow the jet back in the air. Materials left behind include tools, rags and boot coverings, according to industry officials familiar with the details.


On Friday, the Boeing spokesman said inspections first found the fuel-tank debris in late November and immediately notified the Federal Aviation Administration. He said the manufacturer has added safeguards to prevent workers from leaving materials inside fuel tanks at its 737 factory in Renton, Wash., and beefed up efforts across the company.


The inspections have raised red flags, some of the officials said, because Boeing’s commercial-airplane unit traditionally has been recognized as a leader in devising systems to combat such production lapses. All tools used inside aircraft are supposed to be logged and tagged, with employees double-checking each other to verify each piece of equipment is removed. The Boeing spokesman said the company has ramped up such checks to prevent future problems.

Boeing has become a hedge fund that makes aircraft, and hedge funds do not build aircraft well.

737 Line Shut Down

This is what happens when you let Wall Street values run a business.

Nine months after the Federal Aviation Administration (FAA) grounded the 737 MAX, Boeing finally pulled the plug on the jet’s production Monday. The company announced it’s temporarily halting the assembly lines in Renton from January, with no specified timeline for a restart.

However, in a welcome surprise for the 12,000-strong Renton workforce, Boeing said there will be no layoffs.

“During this time, it is our plan that affected employees will continue 737-related work, or be temporarily assigned to other teams in Puget Sound,” Boeing said in a statement.

Boeing has faced an unprecedented crisis, with more than 700 MAX aircraft grounded worldwide, including nearly 400 built since the grounding. Many have been in storage so long they’ll need extensive maintenance before they fly. The production stoppage will stop the parked fleet from growing to unmanageable proportions, while retaining the workforce will allow a smoother restart of the assembly lines when that time comes.

If this shutdown runs longer than a month, their supply chain is going to take weeks to come back up to speed.

This is why you don’t let finance types run your business.

Boeing will be suffering as a result of Harry Stonesphincter for years to come.

Boeing Cannot Make Aircraft Anymore

The 767 first flew in 1981. The first cargo variant from the plant, as opposed to a conversion, was delivered in 1995.

And they cannot make the f%$#ing cargo tie downs work?

The financialization of Boeing is complete:

The U.S. Air Force has identified a potential new design flaw with the KC-46A tanker and banned the fleet from carrying cargo or passengers until a solution is found and delivered.

Multiple cargo locks embedded in the floor of the aircraft released inadvertently during a recent operational test and evaluation flight, according to a statement by Air Mobility Command (AMC).


An uncommanded release of the cargo locks could allow pallets of cargo or passenger seats to shift position during flight, potentially changing the center of gravity of the aircraft.

In response, the Air Force generated the third unresolved Category 1 deficiency report charged to the KC-46 program, AMC says. A Category 1 deficiency reflects an identified risk that jeopardizes lives or critical assets.

The Air Force agreed to accept the first KC-46 last January despite two Category 1 deficiencies still pending.

Seriously, whiskey tango foxtrot.

Not a Serious Car Company

Buried in a what appears to be a rather run-of-the-mill article about a an independent Tesla service center that specializes in keeping Roadsters, Tesla’s first car, running.

The bigger story is that Tesla has stopped supporting a car less than 7 years after they ended production on the model, so this guy has to fabricate circuit boards, body panels, etc.

While there appears to be no law requiring that an automobile manufacturer maintain parts beyond the term of the warranty, 7 years is seriously deficient.

This is Insanely Cool Tech

Someone has come up with a method of engraving riblets on the surface of aircraft using laser interference patterns.

Riblets are (very) tiny grooves carved in the surface of an aircraft to reduce skin drag:

A process to automatically laser drag-reducing riblets onto the painted surfaces of aircraft has been developed by two German companies, laser surface treatment specialist 4JET and aircraft paint supplier Mankiewicz.

The Laser Enhanced Air Flow (LEAF) technology uses laser interference patterning to rapidly create fine streamwise grooves in the paint topcoat. These microscopic grooves, or riblets, have long been known to reduce viscous drag from turbulent flow over aircraft surfaces.

Riblets have been proven to reduce drag by up to 10%, for fuel savings on long-haul airliners of more than 1%, the companies say. Ways of exploiting this benefit have been previously developed, from covering the airframe with grooved plastic film to embossing riblets into the topcoat during painting. But issues from accessibility to durability have so far prevented adoption.

Removing paint using lasers is a well-known technology, but is too slow to create the high density of riblets required to achieve drag reductions, the companies say. Instead of creating the grooves line-by-line using a single laser spot, 4JET says it has developed a way to speed up the process by a factor of 500 using laser interference patterning.

The laser beam is split into two and recombined on the surface so that the light waves overlap in a controlled way. This superposition creates a pattern with dozens of equidistant lines with alternating high and low intensity within a single laser spot. This allows about 1 m³ (35 ft.³) of riblet area to be created in less than 1 min., the companies say.

Way to think outside of the box.

Something Is Very Wrong

It looks like Boeing altered changed the operation of trim and autopilot switches in the 737 MAX for no discernible reason.

This makes no sense, which leads me to believe that, somehow or other, this was driven by some sort of bizarre business case:

In the middle of Boeing 737 cockpits, sitting between the pilot seats, are two toggle switches that can immediately shut off power to the systems that control the angle of the plane’s horizontal tail.

Those switches are critical in the event a malfunction causes movements that the pilots don’t want. And Boeing sees the toggles as a vital backstop to a new safety system on the 737 MAX – the Maneuvering Characteristics Augmentation System (MCAS) – which is suspected of repeatedly moving the horizontal tails on the Lion Air and Ethiopian Airlines flights that crashed and killed a total of 346 people.

But as Boeing was transitioning from its 737 NG model to the 737 MAX, the company altered the labeling and the purpose of those two switches. The functionality of the switches became more restrictive on the MAX than on previous models, closing out an option that could conceivably have helped the pilots in the Ethiopian Airlines flight regain control.

Boeing declined to detail the specific functionality of the two switches. But after obtaining and reviewing flight manual documents, The Seattle Times found that the left switch on the 737 NG model is capable of deactivating the buttons on the yoke that pilots regularly press with their thumb to control the horizontal stabilizer. The right switch on the 737 NG was labeled “AUTO PILOT” and is capable of deactivating just the automated controls of the stabilizer.

On the newer 737 MAX, according to documents reviewed by The Times, those two switches were changed to perform the same function – flipping either one of them would turn off all electric controls of the stabilizer. That means there is no longer an option to turn off automated functions – such as MCAS – without also turning off the thumb buttons the pilots would normally use to control the stabilizer.

Peter Lemme, a former Boeing flight-controls engineer who has been closely scrutinizing the MAX design and first raised questions about the switches on his blog, said he doesn’t understand why Boeing abandoned the old setup. He said if the company had maintained the switch design from the 737 NG, Boeing could have instructed pilots after the Lion Air crash last year to simply flip the “AUTO PILOT” switch to deactivate MCAS and continue flying with the normal trim buttons on the control wheel. He said that would have saved the Ethiopian Airlines plane and the 157 people on board.


Lemme said he’s surprised that Boeing made the change to take away the functionality that could have allowed the pilots to shut off MCAS without shutting off the electric switches at their thumbs.

“I don’t get it at all,” Lemme said. “I don’t see what the benefit was for making that change. It was like change for change’s sake.”

Seriously, what the F%$# were they thinking?

I’m Not Sure that Boeing Can Make Aircraft Anymore

It now appears that the Ethiopian Air pilots followed Boeing’s protocols for dealing with a runaway trim and that the system still drove the aircraft into the ground:

The pilots of Ethiopia Airlines Flight 302 apparently followed the proper steps to shut down an errant flight control system as they struggled to regain control of the 737 MAX aircraft shortly after takeoff. But according to multiple reports, data from the ill-fated aircraft’s flight recorder revealed that the anti-stall feature of the aircraft’s Maneuvering Characteristics Augmentation System (MCAS) was triggered at least three times—and at least one time after the pilots followed the correct steps to shut it down.

Both Reuters and The Wall Street Journal report that the air crew followed procedures laid out by Boeing following the crash of a Lion Air 737 MAX in October, according to officials briefed on the initial findings of the investigation. But the pilots failed to regain control of the system, and the MCAS was reactivated again—triggering yet another automated correction of the aircraft’s stabilizers that would have pushed the nose of the plane down.


To prevent the MCAS from continually pushing the nose down in the event of bad sensor data or some other software failure, Boeing instructed pilots to deactivate the system using procedures already in place for dealing with runaway stabilizer control systems in other 737 aircraft—flipping two stabilizer trim “cutout” switches to the “cutout” position. Failure to do so could result in the system pushing the stabilizers to their movement limit—putting the aircraft into a steep dive. The pilots of the Ethiopian Airlines flight did flip the cutout switches, and they cranked the controls to attempt to regain positive stabilizer control. But they continued to have difficulty controlling the aircraft.

It is not clear at this point whether the pilots purposely reactivated the MCAS’ stabilizer control or if the software reactivated on its own after shutdown. While a Wall Street Journal source said that it appeared the pilots turned the system back on in hopes of regaining control over the stabilizers, Reuters reports that the software may have reactivated without human intervention, and further investigations of that possibility are ongoing.


If the air crew did follow Boeing’s instructions on recovering from an MCAS system failure, the information emerging from the Ethiopian Airlines crash investigation raises more questions about Boeing’s response to the Lion Air crash five months earlier and the Federal Aviation Administration’s review of that response.

Every time we get more information on MCAS and the crashes, it just gets worse and worse, and now it seems that there are some very basic problems on their factory floor, as the Air Force has paused deliveries of the KC-46 tanker because of problems with foreign objects being found in delivered aircraft.

Seriously, that is aircraft building 101:  Don’t leave sh%$ in a plane when it rolls off the production line:

The Air Force has stopped accepting deliveries of Boeing Co.’s new refueling tanker aircraft for the second time in a month because of debris found in closed compartments, according to Secretary Heather Wilson.

The halt in deliveries of the KC-46A Pegasus is the latest issue to plague the $44 billion effort to create the first U.S.-built flying gas station for the Pentagon’s fleet since the KC-10A Extender in 1981.

“We actually stopped again,” Wilson said Tuesday at a House Armed Services Committee hearing. Wilson told lawmakers that the Air Force found “foreign object debris” in closed compartments of the aircraft.

Elaborating on the trash left behind by workers, Wilson told the House Appropriations Defense subcommittee later in the day that it was a “manufacturing discipline” issue on the assembly line where “we saw a breakdown.”

“If you drop a wrench you have to find a wrench,” she said. “You have to wipe down surfaces so you don’t have pieces of aluminum that over time get in the midst of things and cause serious problems.”

Boeing has lost its way.

It has been relentlessly chasing MBA-think and over-inflated executive compensation, and making aircraft has become secondary.

I so hope that I am flying Airbus to Portland in June.

Elon Musk Is Killing His Workers

But Hey, They Get Free Frozen Yogurt, So It’s All Good

Have you looked at the Tesla Motors safety record at their palant?

It is Charles Dickens work house bad:

When it comes to building cars in America, most big names have chosen to set up shop in rural states which carry a large presence of automaking production facilities, but not Tesla. Instead, the electric giant set up shop in Fremont, California where it relies on the work of an estimated 15,000 workers and contractors who make building its cars possible.

While the number of active workers may be more than any other manufacturer who produces cars in the US, Tesla has seemingly also discovered that more employees mean more risk to injury that needs to be stymied. In fact, data collected by Forbes shows that Tesla has accumulated more than three times the number of Occupational Safety and Health Administration (OSHA) violations that its top 10 competitors amassed from 2014-2018.

A fish rots from the head, and Elon Musk does not give a flying f%$# in a rolling donut about his employees, or labor law, or settlements with the SEC, so this is not a surprise.

If you are thinking of buying a Tesla, remember that some literal blood probably went into is manufacture.

What Fresh Hell is This?

In response to repeated news about how they are contemptible liars, Facebook has adopted a new strategy, they are cutting details with phone manufacturers to install their app and make it unremovable:

Sorry #DeleteFacebook, you never stood a chance.

Yesterday Bloomberg reported that the scandal-beset social media behemoth has inked an unknown number of agreements with Android smartphone makers, mobile carriers and OSes around the world to not only pre-load Facebook’s eponymous app on hardware but render the software undeleteable; a permanent feature of your device, whether you like how the company’s app can track your every move and digital action or not.

Bloomberg spoke to a U.S. owner of a Samsung Galaxy S8 who, after reading forum discussions about Samsung devices, found his own pre-loaded Facebook app could not be removed. It could only be “disabled,” with no explanation available to him as to what exactly that meant.

It means that your privacy is toast.

A Facebook spokesperson told Bloomberg that a disabled permanent app doesn’t continue collecting data or sending information back to the company, but declined to specify exactly how many such pre-install deals Facebook has globally.

How many times has Facebook promised this, and has been found to be lying through teeth?

OK, too tough.  You run out of fingers, and toes.

How many times has Facebook promised this, and has been found to be lying through teeth ……… THIS YEAR?

Seriously, I highly recommend rooting your phone.

A Star Mangled Spanner

It appears that Scientists have managed to adapt 3D metal printing to zero gravity, and have produced a small wrench.

This is actually tougher than it sounds, since the powdered metals used can be explosive in the right (wrong?) proportions, and there is no gravity to hold them down.

This did not actually go into space, they produced the parts on a “vomit comet” flying a parabolic course.

Credit where credit is due, the pun comes from Arthur C. Clarke.

And Elon Musk is Overrated

After years of production problems resulting from automation issues that have been documented by legacy automobile manufacturers, Elon Musk has finally admitted that over-reliance robots and automation was a mistake, and has noted that “Humans are underrated“.

This is what happens when someone thinks that they are smart enough to ignore lessons leaned over decades from auto manufacturing across the world:

In a rare mea culpa for the mercurial billionaire, Tesla CEO Elon Musk acknowledged that the company has been too reliant on robots for production.

Yes, excessive automation at Tesla was a mistake. To be precise, my mistake. Humans are underrated.

— Elon Musk (@elonmusk) April 13, 2018

“Excessive automation at Tesla was a mistake,” Musk wrote, responding to a Wall Street Journal reporter’s tweet. “Humans are underrated.” He also talked about this with CBS News’ Gayle King, adding “we had this crazy, complex network of conveyor belts….And it was not working, so we got rid of that whole thing.”

You know, if humans are underrated, and you admit to over-automating your assembly line.

If you have REALLY have learned your lesson, how ending your policy of treating your assembly line workers like complete sh%$?

Applying Software Ethos to the Real Word

I am referring, of course to Elon Musk and Tesla Motors.

The author draws analogies to the bad old days of the US auto industry, where shipping was more important than shipping it right:

The idea that Silicon Valley could reinvent the auto sector the way Apple reinvented mobile phones is an appealing one, and by some metrics Tesla has done just that. The Silicon Valley automaker’s distinctive product features — blistering performance, long-range batteries and slick touchscreen interfaces –have beguiled legions of fans and investors, giving the impression that the future of the auto industry had suddenly arrived.

But recent reports call that glowing future into question. After 15 years, it’s increasingly clear that Tesla has nothing to offer in the area that, as the tech analyst Horace Dediu puts it, is where “almost all meaningful innovation occurs”: the production system.

Throughout its history, Tesla has been plagued by poor manufacturing quality and missed production deadlines. And now, CNBC’s Lora Kolodny has the scoop on Tesla operations tasked with “reworking” and “remanufacturing” poor quality cars and parts, illustrating a deeper problem than the poor quality itself. By reworking vehicles after they come off the line at its Fremont, California, assembly plant at a dedicated remanufacturing facility in nearby Lathrop — and even reportedly in its service centers — Tesla is taking automotive manufacturing back to dark ages.

Once upon a time, this was the standard practice for Detroit’s automakers. Driven by logic derived from Henry Ford’s manufacturing system, U.S. automakers kept production cranking in order to maximize efficiencies of scale, and then repaired defective cars after they rolled off the line. Though many factors contributed to the decline of the Big Three in the 1970s and 80s, the inefficiency and apathy entrenched in company culture by this approach to quality was one of the most important.

In contrast, Toyota’s cars may not have had the dramatic, chrome-draped designs or V8 performance of American competitors, but the legendary Toyota Production System (also known as TPS, or “lean”) did away with rework, and its dependable, high-quality cars eviscerated Detroit’s market share. By systematically eliminating all forms of waste — “muda” — from its manufacturing, Toyota found that both capital efficiency and quality benefited enormously from building cars right the first time.


Tesla seems either uninterested in or oblivious to the historical lesson here. On last quarter’s earnings call, chief executive Elon Musk told analysts that Tesla doesn’t see TPS as a model for his company, even as he reiterated his goal of “productizing” Tesla’s factories.

Manufacturers have learned that it’s better to get it right the first time over the past few decades, computer programmers, not so much.

Hence we see the bloated software that is as full of bugs as it is full of new features that no one really needs.

Rinse, lather, and repeat, and we have Elon Musk’s Tesla.

Same as it Ever Was ……… Same as it Ever Was ……… Same as it Ever Was ……… Same as it Ever Was ……… Same as it Ever Was ………

When Boeing rolled out is 777, it decided that the best way to maximize profits was to recruit potential competitors to be risk sharing partners to minimize its upfront costs.

The net result was significant delays and a loss of technical know-how, and now, both Boeing and Airbus are looking to bring these capabilities, because it turns out that they outsourced their profits as well:

The world’s largest plane makers are testing a seemingly simple formula to smooth production, cut costs and fatten profits: Make more of the parts that go into their jets themselves.

In the wake of United Technologies Corp.’s proposed $23 billion deal to buy Rockwell Collins Inc., that push is taking on more urgency. The deal is the latest in a round of consolidation among the world’s biggest suppliers of aviation parts—something Boeing Co. and European rival Airbus SE have eyed warily.

Earlier this week, Boeing said it might cancel some of its parts contracts if the deal undermines competition further in the aerospace supply chain. Airbus had previously expressed its skepticism over it.

Worried about getting squeezed by the consolidation, Boeing and Airbus have moved to protect themselves by building more of their parts in-house. This month, Boeing will start construction of a new production facility in Sheffield, England, that will make some of its own actuation equipment—motors that help move a wing’s flaps. Airbus, meanwhile, is planning to build some of its own nacelles, the metal casings that house a plane’s engines. United Technologies is one of the world’s largest nacelle suppliers.


Boeing decided two years ago to make some of its own nacelles after years of buying them. In July, the company also said it is planning to develop and build some aircraft electronics, a market dominated by companies such as Rockwell Collins and Honeywell International Inc.

The wings for a revamped version of Boeing’s new 777 jetliner also will be built at a new plant near Seattle rather bought from a supplier. Boeing bought the wings from a supplier for its last big project, the 787 Dreamliner.


Bringing production in-house helps level the playing field.

Those parts makers have also traditionally been able to suck out more profit for their components than plane makers like Boeing and Airbus can extract for selling whole aircraft. Profit margins for plane and engine makers have averaged 9% over the past two years, compared with 14% for so-called “tier one” suppliers such as United Technologies and Rockwell Collins, which make finished parts directly for plane makers. Margins come in at 17% for tier 2 suppliers, which provide smaller components for those parts, according to Boston Consulting Group.

This is not a surprise.

The idea that drove the outsourcing of critical technologies for the 787 was that Boeing could be more profitable and efficient by doing and knowing as little as is possible about the underlying business.

This is classic MBA/High Finance type thinking, and MBA/High Finance type thinking unmoored from the underlying business has ALWAYS been a recipe for dismal failure.

Elon Musk Naked

No, no pictures, I am referring to the fact that the emperor may have no clothes, and Elon Musk, in particular his Tesla Motors project, seems to be increasingly unmoored from reality:

If you’re a hedge fund analyst looking over a public company’s numbers and you see a troubling financial trend making itself evident in the data (like a company burning through cash while booking revenue for a product that is seems perhaps incapable of delivering in the volume promised in the timeframe laid out), you will feel the natural urge to short that company’s stock and wait quietly for the money and praise to roll in.

But we want you to pause for a moment and look at the top of that file. Does it say “Tesla Motors, Inc. (TSLA)”?

It does?

Yeah, you’re going to want to rethink that short, homie, because you have not factored “Blind Elon-ic Faith” into your Alpha.

But you wouldn’t be alone.

Tesla reported yesterday, and from a purely logical perspective it was a mixed bag:

Tesla’s reported a net loss of $336 million, or $2.04 per share, compared to a loss of $293 million, or $2.09 a share, a year ago.

Excluding stock based compensation, Tesla lost $1.33 a share, which was narrower than expected, according to a consensus estimate from Thomson Reuters.

Revenue climbed to $2.79 billion from $1.27 billion in the year-ago period, and outpacing Wall Street’s estimates of $2.51 billion.

Yeah, we said “mixed”:

Heading into the earnings report, analysts expressed concerns about whether Tesla would ramp up production of its Model 3, a more affordable electric car with a base cost of $35,000, quick enough. In the past, Tesla has struggled with production issues.

Musk also said that he hasn’t ruled out dipping a toe back into the debt market.

See, Tesla is currently promising that it can make 1,500 of these things in the entire third quarter of this year, but Elon is also telling anyone who will listen that he will be able to make 10,000 in a week by the end of 2018. That kind of ramp-up has led a lot of people in the asset management game to doubt Tesla’s long-term strength, what with logic dictating that cash will burn at the altar of Elon’s ambition, and that the fire might rage out of control while he’s busy glancing over at his rockets, his Hyperloop tunnels or putting the finishing touches on his dope-ass new solar roof. All those factors are causing David Einhorn and a legion of his fellow traders to go short on TSLA.

Just to remind you, their plant used to be the joint Toyota-GM NUMMI plant, and the most cars that it ever produced under that management was 428,633 units in 2006, or less than 8,500 units a week, and Tesla is saying that it can ramp up from about 120 units a week to 10,000 units a week over the next 18 months.

For his next trick, Elon Musk will appoint a horse to his board of directors.

But the underlying story here is that Tesla releases profoundly mixed numbers, reveals that its production ramp up plans are unrealistic, and they get shorted by speculators.

In response to an awful quarterly report, the stock goes up, and the speculators take it on the chin, because ……… Elon!

This is what happens when you short a cult. At this point, R Kelly has nothing on Elon Musk. And the notion that a short squeeze might put a shudder in Tesla’s rise seems – like all other rational ideas that come in contact with Tesla – to be neutered by whatever Tesla investors think of Tesla.

So, here’s our last word of caution to you hedgie analysts out there crunching numbers on TSLA: You’re wasting your time. Tesla isn’t about facts and figures, it’s about belief in the divinity of Elon f%$#ing Musk. You’ll never understand what is happening because the Kool-Aid is the stock and a lot of people can’t stop drinking it.

(%$# mine)

So, Tesla is facing a unionization effort from employees who say that their manufacturing facility is abusive and dangerous, and the corporate response has been (I am not kidding here) free frozen yogurt at their Freemont, CA plant.

So now Tesla is warning its workforce, one that already has issues with excessive mandatory overtime ans safety issues that they will be facing, “Production Hell“.

Honestly, I’m half expecting a strike in the next 18 months:

When Tesla chief executive Elon Musk handed over the first 30 Model 3 sedans to reservation holders last Friday, he warned employees they’ll be in “production hell” for the next several months. It was a curious remark, as Tesla employees have been voicing concerns about workplace injuries since earlier this year. Employees reiterated those points in a letter to Tesla’s board Monday, and demanded answers to questions about pay transparency and safety.

“We’re tired of suffering preventable injury after preventable injury,” said Michael Catura, a production associate at Tesla, in a statement. “It impacts morale, it slows down production and it’s of course traumatizing and financially difficult for the affected person. We want to know what the company’s plan is to address this problem, and to see whether or not any progress is being made.”

The letter, signed by the Tesla Workers’ Organizing Committee, said it believes in Tesla’s mission to build a mass-market, emission-free electric vehicle. But the committee cites a number of ongoing issues, and it requests access to a safety plan and clarity on pay and non-retaliation agreements for employees trying to form a union. Earlier this month, a group of 10 factory employees presented a petition with questions about how workers are paid and how raises are distributed. BuzzFeed reported that about 400 employees had signed the petition.