Manufacturing Constraints – Boeing

Expecting an increase in orders for both 737 and 777s next year, Boeing would like to increase sales….

An increase in orders for Boeing is typically an increase in orders for Airbus, their main competitor, and that puts pressure on suppliers to provide more for both. Sounds like manufacturing in aerospace will be growing….

But, Boeing reports serious bottlenecks in the supply chain. Jim McNerney, Boeing’s Chief Executive, reports that many suppliers will need to make investments in plants, equipment, and training, while others will need to renegotiate contracts. Some suppliers are already feeling the burn. As reported in the Financial Times, Boeing will no longer work with Koito of Japan after discovering falsified data on up to 150,000 seats for 1000 aircraft. This impacted¬† Boeing’s current earnings report and has caused Boeing to be more cautious than they would like to be regarding 2011 revenues.

Just as folks bemoan the US manufacturing under-utilization, we discover there are plenty of opportunities to expand, just requires creativity and retooling. Sounds like a great time to consolidate smaller suppliers.

Photo: Southwest Airlines’ standard equipment, 737.