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> This sure saved them a lot of money and engineering resources. The 787 development was so poorly planned and executed that it cost Boeing $28 billion in addi

> This sure saved them a lot of money and engineering resources. The 787 development was so poorly planned and executed that it cost Boeing $28 billion in additional unplanned expenditure. And they've kicked that can down the road by booking that as 'deferred costs', an accounting sleight of hand that lets them pretend they haven't spent each dollar until they have earned it on a sale. Neither company of the duopoly came out of that rivalry looking good. But at least Airbus has accounted for all the A380 dev costs, no-one has to face that 10 years hence.

the_duke 8y ago
Yeah I remember the whole supply chain mess of the 787. Turns out outsourcing everything is not so ideal after all. Airbus had it's own fair share of development troubles with the A380 though, including the infamous cabling issue due to different software versions between France and Germany, and accompanying years of delays. I also highly doubt that the A380 has broken even. Building these beasts that are modern airplanes is just tough. I am fascinated with the whole supply chain topic though.
- Gibbon1 8y ago
  > Turns out outsourcing everything is not so ideal after all. If you want a good reason military aerospace is a mess and NaSA couldn't build a replacement for the space shuttle, that's a big big reason.
- pgeorgi 8y ago
  >> But at least Airbus has accounted for all the A380 dev costs > I also highly doubt that the A380 has broken even. That's not what it's saying, but that A380 dev is written off, while Boeing still has it on the books somewhere to make an appearance in the future.
- mannykannot 8y ago
  An engineer commenting on the DC10 / L-1011 battle for market share said something like "it turns out we outsourced all the profit and none of the risk" - I have not tracked down the source, unfortunately. Maybe John Hart-Smith of Douglas... http://community.seattletimes.nwsource.com/archive/?date=20030309&slug=boeingcritique09 http://community.seattletimes.nwsource.com/archive/?date=200...
  - rfdave 8y ago
    That paper is out on the internet. I found a copy here https://s3.amazonaws.com/s3.documentcloud.org/documents/69746/hart-smith-on-outsourcing.pdf https://s3.amazonaws.com/s3.documentcloud.org/documents/6974... it's a good read on outsourcing, profits and management.
- cc439 8y ago
  >Turns out outsourcing everything is not so ideal after all. The crazy thing is that this has been the primary business model in the automotive industry for decades at this point and it (generally) works exactly as advertised. If I had to posit why the benefits failed to materialize fot Boeing, it's that the Aerospace industry's approach to and competence with supplier development and quality control is sorely lacking in comparison to that of the automotive sector. It took decades for the major OEMs to get a handle on the mechanations of the tiered supplier system and they were also operating in a sector where production volumes are measured in the hundreds of thousands. It's far easier to absorb the cost of a "learning moment" when you can spread the cost of a new iniection mold made to the right spec over 100,000+ units. There are also far more opportunities for "learning moments" to appear when you're making hundreds of parts a day versus one a month. Not only can you play catch up without incurring too much of a cost penalty if a whole days production is scrapped, you can gather far more data to help you refine your process (statistical process control).
hinkley 8y ago
They copied some design elements in the subsequent updates to their other models, though, and the increased ranges helped with getting away fro the hub and spoke arrangement.
InTheArena 8y ago
This is incorrect - Airbus has to pay off the launch aid form governments that paid for it. The WTO later ruled this form of financing illegal, so in the last two years, Airbus has been converting it to more conventional financial structures. see: https://www.flightglobal.com/news/articles/airbus-confirms-a380-and-a350-launch-aid-amendments-448786/ https://www.flightglobal.com/news/articles/airbus-confirms-a...
- usr1106 8y ago
  > Airbus has to pay off the launch aid form governments that paid for it. I don't think so. The article you linked says only that they need to be in compliance with WTO rules. There is nothing about no government support at all. According to recent media reports in Germany Airbus and its subcontractors got a 1 billion loan for developing the plane. Paying back them is coupled to the commercial success of the product. Because of the premature end of the product the companies will probably never have to pay the loans completely. Exact figures are not public yet. https://www.handelsblatt.com/today/companies/super-loss-maker-airbus-bids-adieu-to-a-costly-adventure/23988758.html https://www.handelsblatt.com/today/companies/super-loss-make...
  - InTheArena 8y ago
    Not paying these loans back would break the WTO rules - hence the conversion of the RLI/RLA to conventional structures that must be paid off (and they are considerably more then 1billion).

the_duke 8y ago

Yeah I remember the whole supply chain mess of the 787. Turns out outsourcing everything is not so ideal after all. Airbus had it's own fair share of development troubles with the A380 though, including the infamous cabling issue due to different software versions between France and Germany, and accompanying years of delays. I also highly doubt that the A380 has broken even. Building these beasts that are modern airplanes is just tough. I am fascinated with the whole supply chain topic though.

Gibbon1 8y ago
> Turns out outsourcing everything is not so ideal after all. If you want a good reason military aerospace is a mess and NaSA couldn't build a replacement for the space shuttle, that's a big big reason.
pgeorgi 8y ago
>> But at least Airbus has accounted for all the A380 dev costs > I also highly doubt that the A380 has broken even. That's not what it's saying, but that A380 dev is written off, while Boeing still has it on the books somewhere to make an appearance in the future.
mannykannot 8y ago
An engineer commenting on the DC10 / L-1011 battle for market share said something like "it turns out we outsourced all the profit and none of the risk" - I have not tracked down the source, unfortunately. Maybe John Hart-Smith of Douglas... http://community.seattletimes.nwsource.com/archive/?date=20030309&slug=boeingcritique09 http://community.seattletimes.nwsource.com/archive/?date=200...
- rfdave 8y ago
  That paper is out on the internet. I found a copy here https://s3.amazonaws.com/s3.documentcloud.org/documents/69746/hart-smith-on-outsourcing.pdf https://s3.amazonaws.com/s3.documentcloud.org/documents/6974... it's a good read on outsourcing, profits and management.
cc439 8y ago
>Turns out outsourcing everything is not so ideal after all. The crazy thing is that this has been the primary business model in the automotive industry for decades at this point and it (generally) works exactly as advertised. If I had to posit why the benefits failed to materialize fot Boeing, it's that the Aerospace industry's approach to and competence with supplier development and quality control is sorely lacking in comparison to that of the automotive sector. It took decades for the major OEMs to get a handle on the mechanations of the tiered supplier system and they were also operating in a sector where production volumes are measured in the hundreds of thousands. It's far easier to absorb the cost of a "learning moment" when you can spread the cost of a new iniection mold made to the right spec over 100,000+ units. There are also far more opportunities for "learning moments" to appear when you're making hundreds of parts a day versus one a month. Not only can you play catch up without incurring too much of a cost penalty if a whole days production is scrapped, you can gather far more data to help you refine your process (statistical process control).

hinkley 8y ago

They copied some design elements in the subsequent updates to their other models, though, and the increased ranges helped with getting away fro the hub and spoke arrangement.

InTheArena 8y ago

This is incorrect - Airbus has to pay off the launch aid form governments that paid for it. The WTO later ruled this form of financing illegal, so in the last two years, Airbus has been converting it to more conventional financial structures. see: https://www.flightglobal.com/news/articles/airbus-confirms-a380-and-a350-launch-aid-amendments-448786/ https://www.flightglobal.com/news/articles/airbus-confirms-a...

usr1106 8y ago
> Airbus has to pay off the launch aid form governments that paid for it. I don't think so. The article you linked says only that they need to be in compliance with WTO rules. There is nothing about no government support at all. According to recent media reports in Germany Airbus and its subcontractors got a 1 billion loan for developing the plane. Paying back them is coupled to the commercial success of the product. Because of the premature end of the product the companies will probably never have to pay the loans completely. Exact figures are not public yet. https://www.handelsblatt.com/today/companies/super-loss-maker-airbus-bids-adieu-to-a-costly-adventure/23988758.html https://www.handelsblatt.com/today/companies/super-loss-make...
- InTheArena 8y ago
  Not paying these loans back would break the WTO rules - hence the conversion of the RLI/RLA to conventional structures that must be paid off (and they are considerably more then 1billion).