Success Breeds Competition: The Airbus A320 ups the ante and Boeing is forced to answer
In 1988, the first serious competitor to the 737 monopoly, the Airbus A320 entered service. With even more advanced systems like fly-by-wire flight controls, new higher powered and fuel efficient engines, a wider cabin, the first major use of composite materials in a narrow body airliner, and somewhat larger capacity on a direct model comparison basis, the A320 family quickly became a force to be reckoned with. In addition, Airbus offered aggressive pricing and quicker delivery windows. Having only recently launched the 2nd generation 737s, Boeing didn’t respond to the European framer’s challenge for another 5 years.
In 1993, Boeing finally answered with the Boeing 737 Next Generation. First flying in 1997, it first entered service in 1998 as a 737-700 (comparable in size to the 737-300) for launch customer Southwest. While retaining commonality with the 2nd generation 737s, the NextGens included a redesigned wing, and eventually winglets, that increased total fuel capacity by 30% and range to over 3,000 miles. Quieter, more powerful and more fuel-efficient engines in the form of CFM56-7Bs came online as well. The flight deck was further upgraded with new avionics. The NG’s upgraded passenger cabin was inspired by the then new 777 with bigger overhead bins and more curved surfaces. Airlines ordered 724 of the Next-Generation 737 models between the Next-Generation program launch Nov. 17, 1993, and the day the first airplane was delivered on Dec. 12, 1997.
The family quickly expanded on the low-end to the 737-600 to the high-end -700, -800, and eventually the -900. These new models allowed the 737 to perform missions once thought unthinkable for an airliner of its size such as trans-oceanic and trans-continental services. When the 737 was stretched to the -900 in 2000, the 737 affectively again hastened the demise of another Boeing brethren, the 757. With a perfect storm of the global bullish economic era of the mid-to-late 1990s and the emergence of low cost carriers such around the world such as WestJet, EasyJet and RyanAir, sales of the 737 NextGen order book absolutely exploded. In 2004, The 1,500th Next-Generation 737 was delivered to ATA Airlines. The Next-Generation 737 family reached this milestone delivery in less time than any other commercial airplane family, six years after the delivery of the first model. The Next-Generation 737 bested the previous record holder, the Classic 737 series, by four years. Where it took 26 years to reach 2,500 737 total deliveries. It only took another 13 years to reach 5,000 deliveries – a Southwest 737-700 in 2006. At this point, the Guinness World Records acknowledged the 737 as the most-produced large commercial jet airplane in aviation history. It was just shy of 15 years between the first Next-Generation 737 order and the 5,000th order. Again, the Next Generation 737 reached this order milestone more quickly than any other commercial jet in history. The milestones continued to pile on. On April 16, 2012, Boeing delivered the 4,000th Next-Generation 737. The delivery, a 737-700 with the new Boeing Sky Interior to China Southern Airlines, occurred two years and eight months after the 3,000th Next-Generation 737 delivery to India’s Jet Lite in August 2009. The 4,000th! 737NG, a 737-800, was delivered to China Southern Airlines on April 13, 2012.
The Best of Times. The Worst of Times at Renton
Though this unprecedented success was a boon to sales and marketing’s bulging order book, it was an absolute bust to manufacturing. The orders were coming in fast and furious but the suppliers and sub-contractors couldn’t keep up. On top of that, there were the issues of co-building the NextGen and Classic together. 1960s production flow techniques were being used to build state-of-the art aircraft. This meltdown culminated into an embarrassing and costly stoppage to the 737 line in 1997. Labor relations were still somewhat sour following a 1995 strike that didn’t help the situation. “We bit off more then we could chew”, admitted Randy Tinseth VP/ Marketing, Boeing Commercial Airplane.
Clearly something had to be done.
Boeing considered a number of things including closing Renton and moving 737 production to the large, and largely soon to be unused former 717 factory at Long Beach, California that Boeing had acquired in the 1997 merger with McDonnell Douglas. While Airbus expanded its production footprint for the A320s with factories in Hamburg, Germany and China, real-estate swollen Boeing following the MDC merger began to shrink Renton selling off 65 acres. This land became apartments and a shopping mall that now hem in the complex. The Renton complex retained about 145 acres. This decision would come back to haunt the company a few years later, but also spurred it to be much more innovative and efficient in assembling jetliners. In spite of the most optimistic of marketing predictions at the time, no one could foresee how profound these decisions would be just a few years down the road.
Carolyn Corvi, then VP/GM of the 737/757 Programs led ground-breaking initiatives which reinvented the assembly process not only for the 737, but Boeing as a whole. Under Corvi’s leadership, the 737/757 Programs incorporated industry-leading applications of lean manufacturing principles. Erik Nelson, the Director of 737 Manufacturing describes Lean+ as “Boeing’s one overarching continuous improvement approach centered around a five-step continuous improvement process that integrates various techniques and tools, which we call Elements. It provides a common language, tools, principles and training so we can improve productivity, and make our amazing products and services better tomorrow than we do today – and better than our competitors ever could.”
In January 2002, Boeing introduced a moving assembly line that reduced 737 final assembly flow time from 22 days in 1999 to 11 days in 2005. This is quite a feat considering each 737 uses 394,000 unique parts and 42 miles of wiring. Erik Nelson points out “Production of an airframe officially beings at the spar load. From spar load to delivery takes about 2 ½ months, a process which used to take a year.” The 737 moving line was inspired by a visit to Toyota as well as commercial aviation’s first moving line, the Boeing 717 (MD-95). It has since inspired the 767 and 777’s moving line and the 787’s pulsing line. Once the Boeing 757 production ended, The 737 took over the 2nd line at the Renton Factory in December 2005. Airbus didn’t introduce their moving line until 2004.
Final Assembly Process of the Next-Generation 737 (From Boeing Fact Sheet)
The factory operates on 2 production shifts 5 days per week with a 3rd shift used for maintenance and some production work. The assembly line moves at 2.3 inches per minute.
- Barrel arrives from Wichita. Spirit AeroSystems builds 737 fuselages in Wichita, Kansas. The fuselages make their 2,000-mile rail trip to Renton, Wash., in about eight days. Each fuselage exterior receives a thin, green protective coating, which washes off before the airplane is painted.
- Flow days 1-3: Initial interior installation. After the fuselage arrives in Renton from Spirit AeroSystems in Wichita via railroad, it is loaded by overhead crane into the “systems and installation” position inside one of two final assembly buildings. Mechanics install 80 percent of the permanent flooring and 20 percent temporary (in areas where flooring must be removed for later work), electrical and hydraulic systems, plumbing and insulation blankets inside the fuselage; and add the overwing doors and radome on the ‘nose’ of the airplane. The radome protects the airplane’s antenna from the weather.
- Wing and winglet assembly. The 737 wing build-up process begins in a separate Renton building and culminates in a final assembly building. At its final stop, a set of wings receives its hydraulic and electrical systems, and optional fuel- and emissions-reducing Blended Winglets (wingtip extensions). Winglets add range, increase fuel efficiency, lower takeoff noise and decrease fuel burn by up to 4 percent on flights greater that 1,000 nmi. About 95 percent of airlines choose Blended Winglets. The slats and flaps originate from Spirit in Tulsa, Oklahoma. The spoilers come from Goodrich in Charlotte, NC while the ailerons arrive from Malaysia.
Flow day 4: Wing-to-body join: An overhead crane moves the wings to the wing join position and mechanics use laser alignment to align the wings to the body and then affix the wing. Next, mechanics install the landing gear, and the airplane joins the “moving line,” a continuously moving assembly line which slowly moves products from one assembly team to the next. The vertical fin is sourced from Xi’an Aircraft Industry, China. The horizontal stabilizer is built by Korea Aerospace Industries while the rudder comes from Bombardier in Belfast.
Flow day 5: Tail join: The airplane has a more finished look with the addition of the vertical (tail) and horizontal stabilizers and painted rudder. Pre-painting the rudder aids in balancing the part during installation. Standard paint can weigh up to 12 pounds per gallon (5.4 kilograms per 3.7 liters). Mechanics also add plumbing, tubes and ducts, and rig flight controls.
- Flow days 6-9: Interior completion and engine hang: Mechanics complete interior installation, including installing the sidewalls, seats, lavatories, galleys and so on. Crews perform about five “flight days” worth of functional testing before the airplane receives its engines. Engine supplier CFM trucks engine “cores” from Ohio to Renton and Boeing adds hydraulic, plumbing, exhaust and fire suppression systems to complete the build up. About two-thirds of the engines come from CFM in Ohio, and one third from Snecma of France. Engines are about one-fifth of the cost of an airplane.
- Rollout: The nearly-completed airplane spends about five days at Renton field before it makes its “B1” or first flight. Renton Field finishing touches include avionics installation, engine run and fueling. Painting takes up to three days and may occur either in Renton or at Boeing Field in Seattle, Wash. Aircraft are flown to Boeing Field for flight testing and final delivery. Once rolled-out, this is a 3-6 week process depending on the airline’s specifications and other factors such as where its painted.
Corvi also was responsible for the “Move to the Lake” project, which co-located most of the people who design, build and support the 737 inside the Renton Final Assembly building on the south shore of Lake Washington. In 2004, 2,500 support employees from finance, engineering, tooling, and materials management to the Renton Final Assembly Building consolidating most involved with the program into 1 location. Area where parts were previously stored were converted into office space in three towers. This was designed to support the flow of the product – the support staff in the factory delivers drawings, financial date, build plans, and parts list to the factory floor similar to the way parts and tools are delivered. With just-in-time parts delivery, excessive storage space is needed. As an added touch, the towers correspond to the earth’s hemispheres while the conference rooms are named after cities served by the 737.
Renton Factory Assembly Building Factoids
- 109’-2” (33.3 m) high
- 1,124’-3” (342.7 m) long
- 756’-2” (230.5m) wide
- 3-quarters of a million square feet (69,677 square meters)
- Door openings are 300′ long by 90′ high, and consist of 8 door segments equally divided in an accordion fashion.
The Boeing 737 Goes Into “MAX” Overdrive
The Boeing 737 NextGen order book continued to bulge, growing virtually unabated even through the deep worldwide economic slowdown / crisis of 2008-12. Ironically, this era of financial strife and sharply escalating fuel costs, as well as the growth of emerging markets, helped 737 and A320 sales go from strength to strength. Boeing however didn’t stand on it its laurels or did it? Boeing claims with the introduction of its latest performance improvement package “PIP”, today’s NGs are 6-7 more efficient then when they were first introduced in the late 1990s. Boeing’s Tinseth points out that “The (737) program has taken off with record sales. It’s simple. We make it better every time. We were first in its class with ETOPS 180, glass cockpits, Sky Interiors, and high bypass engines. We lower the operating costs through such new technologies as blended winglets, heads up display, carbon brakes, and more fuel-efficient engines. We enhance customer appeal with the new Sky Interior. This is an airplane that appeals to the heart of the market: emerging and developing economies and it is very successful with the LCC business model”. These new LCC airlines in emerging markets include Lion Air, Air Asia, and Gol! An unintended benefit of the weak economy, particularly in the U.S., is the poor financial results led to an elderly, fuel-in-efficient, maintenance intensive fleet which created an advantage and some say a bubble for airframe manufacturers, particularly in this sweet smart of the market. “The significant driver in the US is the demand to replace older and less efficient aircraft”, said Tinseth.
Even though the A320 sales were outpacing the 737 in the mid-to-late 2000s, Airbus had not seriously updated the A320 family technology or engines since the type was first introduced nearly 25 years before. In January 2011, the European airframe maker launched the A320 neo “New Engine Option”. Targeting a 2016 entry-into-service, Airbus claims the neo will offer 20% lower maintenance costs, an additional range of 500 miles, and burn 16% less fuel then the current A320. Additional features include an updated cabin to compete with Boeing’s industry leading Sky Interior and their own winglets called “Sharklets” The market responded in droves. By the end of 2011, Airbus had received 1,196 firm orders for the A320neo family making it the fastest selling new commercial aircraft in history. A big blow came when American Airlines, who had been an all-Boeing customer for over 20 years ordered 130 A320s and A320neos in July 2011. This ominous event in Boeing’s view had as much with delivery positions as it did with price and technology. Airbus with 3 plants building A320 family aircraft and a 4th eventually in Mobile, could deliver single-aisle airplanes quicker then Boeing. Other airlines such as Lion Air split their new fleet orders between the 737 and A320 which was previously virtually unheard of. This led to intense efforts to up the production rate at Renton with the production rate rising to 35 aircraft per month in December 2011. Simultaneously, Boeing faced the dilemma whether to develop an entirely a new design or build a fourth generation 737.
Taking it to the MAX
Boeing was evaluating a clean-sheet proposal called the Y-1 “Project Yellowstone” that was rumored to even be a double-aisle airframe. Boeing’s Tinseth exclaims that not going forward with the new program was not about protecting one of Boeing’s biggest cash cows nor had the company become risk averse following the 787 issues: “The clean sheet design was coming together from a tech perspective. The biggest challenge was the production system. It would take a long time to go from a green field to 38 aircraft per month and it would be tough to compete in this market. New engines from P&W and CFM led us to mitigate the risk. The composites and other vanguard technologies on the short-medium haul were not as compelling as they were on larger planes such as the 787. Other technologies would allow us to respond quicker in the market and upgrade this aircraft”.
Nearly a year after Airbus launched the neo and under pressure from customers, Boeing reached its decision. On August 30, 2011 launched the Boeing 737 MAX. The MAX will feature a larger diameter, more powerful and fuel-efficient engine the CFM International Leap-1B engine. A new type of wingtip device resembling a 3-way “V-shaped” combination of a blended winglet, wingtip fence, and raked wingtip would provide a distinctive visual cue different then any aircraft before. Boeing claims the new engines, winglet, and other aerodynamic changes will contribute to an a 16% lower fuel burn than the current Airbus A320, and 4% lower than the Airbus A320neo. This is a claim naturally disputed by the Toulouse airframe-maker. As for a further up gage of the 737 to replace the hole in the market vacated by the 757? According to Tinseth, “We’re on the edge of where we can go with the 737 MAX 9. The 757 territory is filled on the low-end by the 737-900 / MAX 9 and on the high-end by the 787-8”.
At the time of launch, American Airlines the only disclosed customer. In December 2011, Boeing announced Southwest, who had launched the 2nd and 737NG would be the 737 MAX launch customer with a firm order of 150 aircraft and 150 options with an entry into service in 2017. Other major orders from United, AeroMexico, Virgin Australia, and Lion Air came flooding in and in 2012, the 737 surpassed the A320 neo for orders that year, though still lagged behind overall. Like the 787 and 747-8, The MAX would depart from Boeing’s customary “dash nomenclature” and become the 737 MAX 7, 8, and 9. Tinseth concedes that “With the MAX we were second to the market, they had a head-start. We’ve had an opportunity to market and share it with the market, who has responded well. We have a decided value advantage with the MAX.”
In terms of history repeating itself, Renton was once again an “aviation boom town” and the 737, a program once almost given up for dead, was the cash cow of the company, even exceeding the 777. Faced with the goal of ramping up NG production to 42 aircraft per month by mid-2014 and the assembly of the new MAX beginning in 2015 without disrupting current NG production, Boeing could have decamped for other U.S locations. Instead, the company decided to double down on Renton and add up to 1,000 new workers in the process, on top of the already 10,500 already employed there. On October 31, 2013 Boeing announced the production rate would rise to a record 47 aircraft per month by 2017 likely making the MAX surge line permanent. Given the existing expertise and supply chain in the Pacific Northwest, more harmonious employer / labor relations, and incentives from the state of Washington. Renton is crucial to Boeing’s competitiveness as the sole location for 737 assembly. Its competitor Airbus has already stepped up production of the rival A320 jet family to 42 per month at its 3 final-assembly plants in Europe and China. Beginning in 2016 its newly under construction plant in Mobile, Alabama will give it additional capacity of up to 4 aircraft per month at lower labor rates then Europe. Boeing is clearly feeling the pressure. Erik Nelson, the Director of 737 Manufacturing, gave us an exclusive tour of a facility not open to the public to demonstrate how Boeing’s going to meet these challenges “cockpit” on.
Boeing is in the process of making major changes to the production site including:
- Removing delivery, processing and storage of buyer-furnished equipment such as seats and galleys from the final assembly area.
- Constructing a new 75,000-square-foot building to house buyer-furnished equipment. This is the only new building to support the rate increases.
- Expanding the systems installation of wings to accommodate 42 airplanes a month.
- Since 7 aircraft won’t fit nose-to-tail as needed, Boeing added a 7th position to assembly line 2 that due to the shorter line, requires the aircraft to make a right turn to the next position.
- Expanding the capacity to build wings, including investment in capital equipment and constructing another production line for building the wing boxes. The wings used to be built in heavy, towering fixtures with mechanics ascending tiered decks to work on the vertically hung assemblies. Now the flat lying wings move through three assembly stations and are advanced by a robotic tug every approximate 5 ½ hours.
To increase production, Boeing had to increase its 2nd line up to the production capacity of the first. Boeing synced-up the 2 lines to 19 aircraft per month, with 2 “blanks” traveling within the system. The January 2013 acceleration to 38 aircraft per month was accomplished by slowing down production on line 1 from 21 to 19 and increasing production on the modified, but still shorter line 2 from 17 to 19. The “blank platforms” will be filled with aircraft to arrive at 42 aircraft per month, 21 on each by 2014.
Then in 2015, Boeing will construct a third “temporary” line parallel to line 1, to build the MAX. The lessons learned from the existing “Classic” 2nd generation 737s interfering with 737NG ramp up back in the 1990s are clearly being applied nearly 20 years later. To make this happen, the prep area for engines, galleys, lavatories tails, and other components will be relocated, thus “clearing the clutter”. Boeing isn’t quoting the projected production figures for the MAX line. The plan is to integrate the MAX’s into the existing lines 1 and 2 as the 737NGs phase out. If production requires it, Boeing has the option of making the interim MAX line permanent or adding production in another part of the Renton plant. One mooted possibility is the separate line belonging to the P-8 Poseidon, a Naval variant of the 737-800 built for anti-submarine warfare.
With a clean-sheet design likely not due until the mid 2020s, Boeing has staked its future on the 737 MAX and Renton. Boeing has extended its lease to use Renton Municipal Airport through 2030. There’s always the chance of choppy air, but if history is any guide, the world’s most prolific aircraft factory is clearly up to the task.
Special thanks to: Boeing’s Doug Alder, Jr; Michael Lombardi, and Erik Nelson for their invaluable time, expertise, and assistance in the writing of this post.