The Wall Street Journal (7/8, B3, Sanders) reports, “Boeing Co. agreed to acquire manufacturing operations from one of its key suppliers on the delayed 787 Dreamliner aircraft at a cost of $1 billion.” The acquisition of the “plant in North Charleston, S.C., from Vought Aircraft Industries would mark the second time Boeing has taken over a key part of the Dreamliner’s supply chain.” Under the deal, “Boeing is paying $580 million in cash and will forgive $422 million in cash advances paid to privately held Vought for work on the 787.” The AP (7/8, Lovering) says, “Vought, owned by private equity firm The Carlyle Group, claims financial problems, not production glitches, prompted the sale, which is expected to close in the third quarter.”
Noting that “the Boeing Company celebrated its new 787 Dreamliner as not only a state-of-the-art plane, but as a model of how to streamline its production process by relying on outsourcing,” the New York Times (7/8, B4, Drew) adds “on Tuesday, the company took a step away from that vision.” The plane maker “has already had to contend with other supply and production problems on its delayed 787 Dreamliner, a model considered crucial to the company’s future. It recently postponed its first test flight and has faced bottlenecks at Vought and other suppliers.” Bloomberg News (7/8, Ray) adds, “The 787’s entry into service has been set back five times, in part because multiple suppliers didn’t do all the work they had agreed to, leaving more for Boeing workers to complete.”
It appears that Henry Ford may have been right — outsourcing may not be the best approach. Sometimes it’s better to own the whole design and production system.