Global Outsourcing cuased Boeing's 787 - $18 billion losses

[FreakinDJ]

Great Article how outsourcing has cost Boeing's 787 program $Billions in additional cost and lost sales

A 'prescient' warning to Boeing on 787 trouble

In a late January appearance at Seattle University, Boeing Commercial Airplanes Chief Jim Albaugh talked about the lessons learned from the disastrous three years of delays on the 787 Dreamliner.

One bracing lesson that Albaugh was unusually candid about: the 787's global outsourcing strategy — specifically intended to slash Boeing's costs — backfired completely.

"We spent a lot more money in trying to recover than we ever would have spent if we'd tried to keep the key technologies closer to home," Albaugh told his large audience of students and faculty.

-snip-

Some Wall Street analysts estimate those added costs at between $12 billion and $18 billion, on top of the $5 billion Boeing originally planned to invest.

http://seattletimes.nwsource.com/html/sundaybuzz/2014125414_sundaybuzz06.html

[bossy22]

1. time to bring it back home

IIRC boeing already said they were going to start bringing more production in house

[jacquelope]

6. Serves them right! n/t

.

[pansypoo53219]

2. low wage republikkklans

hoist on their own petard.

[seeviewonder]

3. I know of several people personally

that would love to have the chance to build a 787 right here in the U.S. Too bad they can't because the corps sold out America and Americans to other places.

[JohnWxy]

4. would have recommended this but was past the window. Important info!

[nuxvomica]

5. Outsourcing is contrary to the idea of a large corporation, IMHO

Corporations arose to achieve large-scale production with a reduced transaction cost. Advanced communications technology has reduced only part of that cost, the handshake, but there are issues of control and reliability that remain, and they can expose firms to a great deal of risk. For example, how do you effectively deal with software bugs when you've outsourced IT functions? Or angry customers, when you've outsourced customer service? I think we'll see more insourcing as companies realize the unexpected costs of oursourcing.

[angryfirelord]

7. I've certainly seen this before

Any kind of skilled labor that is shipped overseas is not a cost-saving term in the long run. I know someone where the company outsourced his work to another firm in India. However, they kept him employed because the quality assurance for the work that they do is not guaranteed. So they pretty much lost money in the process because they have to keep using the programmers from India and him.

Here's another example here: http://legalpad.typepad.com/my_weblog/2010/05/when-outsourcing-proves-too-expensive-bring-it-on-home.html

And another one: http://www.theregister.co.uk/2005/03/07/gartner_offshore/

Unfortunately, when one only looks at the balance sheet and not at market trends and other variables, we get these short-term decisions that ultimately hurt us in the end.

[golfguru]

8. Programming is easy to learn and therefore

easy to out source.

[pscot]

9. This was a misguided attempt at union busting

Developing a new plane involves some trial and error. Design flaws didn't show up until they tried to match the part from Italy with the part from Japan and found the channels for the wiring didn't line up.