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How is an Airliner not like Shrek?

Posted by Mark Bennett on February 1, 2009


shrek

"We know you have a choice in ogres, and we thank you for choosing us."

Yes, it is true. Snide comments about cabin smells and passenger attitudes aside, the list of differences is probably fairly lengthy.

 

If you haven’t been following the saga of the Boeing 787 “Dreamliner,“ the short version is that Boeing’s strategy and the fit of the 787’s Dreamliner design to that strategy initially appeared to be a good call. In addition, its main competition, the Airbus A380, was plagued with production delays and it looked like the 787 would come out the winner.

 

However, the last couple of years have had more and more news about 787 production delays and periodic status updates from Boeing that delivery of the 787 would be delayed to (increasingly frustrated) customers. Many have observed that these problems coincided with, among other factors, the laying off of many experienced employees in tandem with the outsourcing of large sections of an incredibly complex supply chain. The rationale behind these actions was to reduce costs in addition to navigating sensitive geopolitical considerations when trying to land deals with foreign airlines.

 

What does this have to do with talent? It’s interesting to see in an article from BusinessWeek, via Evolving Excellence, that Boeing is now reversing some of those decisions (although it is a delicate process in that the geopolitical concerns have not gone away.) In addition, some of the thinking behind the original decisions have come to light:

 

Union officials say past executives at Boeing used Hollywood as a model as they developed their plans to outsource production on the 787. Moviemakers bring together independent contractors—actors, camera operators, publicists—on a project basis for many films, avoiding the expenses of having all such staffers constantly on the payroll. By treating planes as such projects, advocates of outsourcing figured they could do the same in producing aircraft.

 

Of course, this claim is coming from people with a huge vested interest in keeping work in-house, so we should take what’s being said keeping the source in mind. Nevertheless, the actions taken by executives did occur and the consequences of those actions have cost the company over two years in delays and billions in revenue. The upshot of course, is that building jets is not at all the same as making a movie. With aircraft production, there is constant back and forth between design and production as assemblies and subassemblies turn out not to quite fit, or constraints about flow on the assembly floor are not factored in, requiring changes, and so forth.

 

As Evolving Excellence eloquently put it, “But the real bottom line is that Boeing has apparently woken up to the reality that making a 787 isn’t exactly like making Shrek.”

 

Indeed. Boeing has suffered both in terms of longer delays getting production issues resolved (let alone the inevitable delays that come from assembly providers that in turn are delayed by their part supplier delays, etc.) but as they pull more production back in, they are finding that the talent they need, but was previously laid off, has to be hired back.

 

So the question is: are companies carefully weighing the risks of how much and who they lay off to reduce costs, whether it’s to get a bump in stock price or to make payroll? Are companies just digging a deeper hole for themselves by single-minded layoffs based solely on salary cost, when that could mean losing the most experienced and therefore perhaps the most productive employees who hold the key to a turnaround? We’ve recently witnessed the collapse of Circuit City, and although the causes are likely numerous and stretch back to various mistakes over several years, many have already linked its demise to the recent layoff of experienced workers in an attempt to reduce payroll costs.

4 Responses to “How is an Airliner not like Shrek?”

  1. Amy Wilson said

    Personally speaking, if Shrek is a flop, I’ll want my 2 hours back. If the 787 is a flop, well …

  2. Meg Bear said

    I find the whole topic very interesting. I’ve been thinking a lot about the idea of private contractors with critical projects (airline industry, defense, nation-building, etc.). I agree with Amy the question is the downside risk it can’t just all be about upside benefit of reduced costs.

  3. I aggree with amy both are a flop

  4. […] Hollywood stars provide input into your innovation process. We’ve already seen what happens with ill-considered application of Hollywood business models. Rather, you’ve probably heard of the game “Six Degrees of Kevin […]

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