While Boeing is totally focused on fixing the problems with the 737MAX, its major competitor, Airbus, has focused on advances in manufacturability and the facilities in which they are built. Over the long-term, this could provide a significant advantage if a production gap develops between Airbus and Boeing.
Airbus is now successfully integrating additional automation in its assembly line in Hamburg, while Boeing could not make similar technology work for its forthcoming 777-X line in Everett and abandoned that automated technology for conventional, but more labor intensive, processes.
Analysis
Airframe OEMs understand well the performance characteristics of their competition, and have the ability to negate any disadvantage by pricing to the point of economic indifference. This has become an art form in recent years, and has led to a focus on reducing costs to improve margins. Of course, when taken to extreme, as Boeing
did with the 737 MAX disaster, this can create major problems, but cost reduction and efficiency are key in establishing profitable operations. Both Airbus and Boeing have focused on efficiency in their operations, but appear to be taking different routes.
The news today is that David Calhoun begins his tenure as Boeing’s CEO after being a long-time member of the Board of Directors, replacing Dennis Muilenburg.The challenges he will face are daunting, as the company remains in the midst of the MAX crisis and a clear change in direction is needed.We wish him the best of success in turning around a troubled Boeing.
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