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Bumpy Ride

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Mulally’s ambitions collided with the frugality of the former McDonnell Douglas executives. Conceptual drawings showed that the Dreamliner’s cost would at least match the $10 billion-plus price tag of the 777. After becoming chief executive in 2003, Stonecipher said he intended to seek board approval for the Dreamliner. However, the unspoken message was “but not at the current price,” says Jon Ostrower, an aviation insider who writes for Flightglobal.com. Mulally was told that the plane’s projected development costs would have to be 50 percent or more below the 777’s.

To meet this demand, Mulally came up with a wildly unorthodox plan: He would farm out the design, engineering, and manufacturing of the 787—virtually everything except final assembly—to suppliers that would shoulder more than $9 billion of the project’s $13 billion cost, in exchange for lucrative, multiyear guaranteed contracts and a slice of the plane’s sales. These outside companies would coordinate with one another to produce whole sections of the plane, stuffed with assembled components, systems, ducting, insulation, and wiring. Boeing workers in Everett would merely have to connect the major parts of the aircraft.

No large manufacturer had ever before so audaciously turned over control of the entire process—from concept to shipment—to outside firms. In a critical oversight, no provision was made for monitoring the suppliers. Mike Denton, vice president of engineering for Boeing’s commercial-airplanes division, recalls that the vision for the Dreamliner was “not to encumber the partners with the Boeing way of doing everything. So we erred on the side of giving them more free rein than in retrospect we should have.”

By the end of 2003, the company had greenlighted the Dreamliner.

Moving quickly, Boeing signed up dozens of suppliers. Japan’s Mitsubishi Corp. agreed to make the wings; France’s Messier-­Dowty SA took on the main landing gear; and Italy’s Alenia Aeronautica SpA would build the 64-foot-wide horizontal stabilizer. The vertical fin, the sole piece of the airframe slated to be made in the Seattle area, would connect to a rudder from Chengdu, China, and a front-facing edge from Shenyang, China.

In 2005, Stonecipher was fired for having an inappropriate relationship with a female executive. After McNerney was chosen as chief executive, Mulally left Boeing in 2006. Whether Mulally could have made a success of the outsourcing strategy, had he stayed, is one of the great what-ifs of the Dreamliner saga. He became chief executive of Ford Motor Co., where he introduced more efficient techniques in the automaker’s factories. In part because of Mulally’s streamlining, Ford has been able to wave off government bailout money taken by its rivals.

The suppliers were expected to deliver their completed parts in early 2007, giving Boeing enough time to assemble the initial Dreamliner for its first public display on July 8, 2007—or 7/8/07—a date chosen to match the plane’s model number. Under pressure from Boeing, the suppliers sent to Everett as much as they had finished. Sections arrived in an incomplete or defective state, or failed to fit adjacent parts made by other suppliers. The Dreamliner that Boeing rolled out to the applause of 15,000 workers and their families and friends resembled a mismatched model airplane.

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