Boeing’s relationship with Mexican supply chain grows
By Michael Hissam
What supply-chain provider wouldn’t like to be associated with a growth industry that spends US$35 billion a year? All the supplier has to do is earn the privilege. As Boeing moves forward with new products and ramped up production rates, every supplier must be in step with the next in line all the way to the Washington state-based OEM. For more than 20 Mexico-based Boeing suppliers “in step” serves as the imperative. ¡Sin duda! (Without a doubt!) Jose Garza, Director, Operational Excellence, SSG Supplier Management, told MEXICONOW that Boeing’s growing relationship with aerospace suppliers in Mexico has a significant impact on airplane production programs. He also lauded the Mexican government for taking a longer-range forward view to support the industry. Following are excerpts of Jose Garza’s interview with MEXICONOW.
These are busy times for Boeing. We hear about record production targets for the 737 jetliner that Boeing must meet in the next three years. What are those targets and why the optimism Boeing can meet them?
We are currently building a record 42 Next-Generation 737s a month on two final assembly lines in our Renton, Wash. factory. Over the next few years we will be focused on building the new 737 MAX on a new, third final assembly line. In 2017, we will begin to build 47 airplanes a month and then increase our production rate to 52 airplanes a month in 2018. Those 52 airplanes will be a mix of Next-Generation and MAX airplanes. We are confident that we can reach those record production rates based on our successful rate increases in the recent past, including our 2014 increase to 42 airplanes a month from 38. Over the last 10 years we have doubled our factory output from 21 to 42. Those rate increases have been enabled by productivity gains in production systems and advanced manufacturing tools and processes as well as employee-inspired process improvements that shave hours, days and weeks off of our production flow. Additionally, we work closely with our suppliers to ensure that our supply chain and production system incorporate lean principles that ensure efficiency in the build process.
That is just the 737. What is going in terms of preparing for other Boeing products, for example the 777X?
The 777X program is on track for firm configuration later this year. Engineering designs are progressing according to plan. The 777X will be the largest and most-efficient twin engine jet in the world, with 12 percent lower fuel consumption and 10 percent lower operating costs than the competition. Combined with the 787-8, -9 and -10 and the 747-8, the 777X will offer airlines more options and flexibility to meet their long-haul needs than Airbus can offer. Additionally, work to prepare the Composite Wing Center is under way and the first autoclave is scheduled for installation this year. This is a major undertaking and will consist of three autoclaves, a clean room and an overhead crane system. The building will be more than 1 million square feet.
Last year you reported Boeing spends more than $1 billion annually with Mexican suppliers. Keeping in mind the seemingly ambitious product plans, to what extent is Mexico keeping up with the ability to keep Boeing supplied?
Mexico is an important contributor to Boeing’s global supply chain, and Boeing’s growing relationship with aerospace suppliers in Mexico has a significant impact on our airplane production programs. Our partners in Mexico continue to produce quality, reliable work in a cost-effective way.
Looking at this supply chain support – the nearly $1 billion in purchases from Mexico – what types of components and systems does Boeing receive from the Mexican Tier-I suppliers?
Boeing contracts directly with more than 20 aerospace companies in Mexico to provide parts and assemblies for airplane, propulsion and spares programs. They supply:
Aero-structures major assemblies and components
Air Management Systems components
APU (auxiliary power units) and components
Turbine blades/nozzles manufacturing
Fan module assembly
Landing gear components
Emergency Evacuation systems
Machined and sheet metal parts
What are examples of the communication and support you offer your partners in Mexico to keep Boeing on schedule, on budget and exceeding customer expectations?
As a matter of course, we communicate and closely collaborate with all of our suppliers on an ongoing basis to ensure they understand our requirements and are on track to meet our production schedules, budgets and customer expectations.
What opportunities do you see for Tier II and Tier III suppliers in Mexico? What must they do to qualify to be in the Boeing supply chain?
The Mexican government has shown its commitment to growing the aerospace industry in Mexico and has made significant improvements to infrastructure in support of a vision and strategy for positioning the country for future work. Because of that, we see an opportunity for Mexico to develop sub-tier suppliers to provide support to our Tier 1 suppliers. We look for suppliers who have the current and future capacity, expertise and stability to meet our planned production rate increases. We also look for suppliers who can add value to our supply chain through innovation, manufacturing excellence or new technologies. Many of the Boeing suppliers and sub-tiers in Mexico participate in Partnering for Success, a companywide program to improve quality, gain efficiencies and drive costs out of the Boeing supply chain.
You are aware of Mexico’s push for engineering and education to support the aerospace industry. What are specific examples of knowledge that Mexico must provide its current and next generation students to help themselves as well as Boeing succeed?
A skilled and diverse workforce is critical to our success at Boeing, so we can lead Boeing’s second century of innovation. That’s why we partner with campuses around the world, joining with engineers, technologists and business minds, to support innovative programs that emphasize science, technology, engineering and math (STEM). At Boeing, we generally seek employees who have an understanding of airplane manufacturing and operations, familiarity with engineering processes, and are experienced with tooling processes.
During the past year we have seen in the United States a drop in vehicle fuel costs. To what extent has this been affecting the airline and aerospace industry?
Fuel prices increase and decrease on a regular basis, but with the exception of personnel, an airline’s largest cost is fuel. So it is incumbent on us to respond to that reality by developing airplanes that fly further and use less fuel. Our 787 is 20 percent more fuel efficient than other airplanes in its sector. The 737 MAX will be 14 percent more fuel efficient than today’s most efficient Next-Generation 737s and 20 percent more efficient than the original Next-Generation 737s when they first entered service. The 777X will offer 12 percent more fuel efficiency than its competition.
What will the airline customer experience in terms of the flight as well as connectivity during the flight as your new products take off?
Boeing continues to incorporate features that enhance the flying experience so that our airline customers can offer their passengers world-class comfort and confidence. For example, the 787 has innovative environmental control systems that provide gaseous air purification and enhanced airflow; smoother ride technology, reducing the effects of mild turbulence and minimizing passenger air travel symptoms; and advanced LED lighting and an open architecture, creating a more comfortable and spacious travel experience. The airlines are better able to discuss the connectivity options they will offer their customers.