787 Dreamliner teaches Boeing costly lesson on outsourcing(latimes.com)
latimes.com
787 Dreamliner teaches Boeing costly lesson on outsourcing
http://www.latimes.com/business/la-fi-hiltzik-20110215,0,442445.column
13 comments
It wasn't the foreign suppliers that were the problem - Mitsubishi delivered the wings on time.
It's was the excessive outsourcing to layers and layers of subcontractors without enough oversight.
So a one mall plating shop in Albuquerque goes out of business and a critical path component is missing.
This is fairly common in defense, highly specialized components are subbed out to small shops - there are lots around LA - the problem here was that there was so many layers of sub-sub-sub contractors all being bidded out to the cheapest supplier nobody had any idea who was making what. That works for Walmart - it doesn't work for Boeing.
How they thought they were going to ensure40years supply of spare parts is anybodies guess
This is fairly common in defense, highly specialized components are subbed out to small shops - there are lots around LA - the problem here was that there was so many layers of sub-sub-sub contractors all being bidded out to the cheapest supplier nobody had any idea who was making what. That works for Walmart - it doesn't work for Boeing.
How they thought they were going to ensure40years supply of spare parts is anybodies guess
Just to elaborate on your point, the outsourcing model works for Walmart because Walmart is selling numerous separate products, rather than an integrated whole. It seems that Boeing forgot that lesson and started thinking of their airplane as a "collection of parts flying in close formation".
Also very few of Walmart's products are critical path - if they run out of lemon scented cleanup squares the store still opens (gratuitous hitch hikers reference)
How does it work for EADS ? (Airbus manufacturer)
There are very much fewer sub-contractors. Major system components are built in different plants in different countries but all by a handful of airbus subsidiaries or major aerospace corps. So the supply chain is much shorter and shallower
There were still screwups, a different version of the CAD package meant changes didn't propagate and the Airbus 380 wiring looms were all made the wrong length.
There were early warnings of Boeing's problem. The prototype had to be built with non-aerospace rivets which had to all be removed and the plane rebuilt for it's first flight. Aerospace grade rivets were in short supply and Boeing was just looking for the cheapest supplier who didn't deliver.
Japanese companies taught us about the value of close working relationships with suppliers 20years ago, the car makers have learned it but Boeing didn't - they acted more like a Walmart buyer and it cost them.
There were still screwups, a different version of the CAD package meant changes didn't propagate and the Airbus 380 wiring looms were all made the wrong length.
There were early warnings of Boeing's problem. The prototype had to be built with non-aerospace rivets which had to all be removed and the plane rebuilt for it's first flight. Aerospace grade rivets were in short supply and Boeing was just looking for the cheapest supplier who didn't deliver.
Japanese companies taught us about the value of close working relationships with suppliers 20years ago, the car makers have learned it but Boeing didn't - they acted more like a Walmart buyer and it cost them.
> " the car makers have learned it but Boeing didn't"
Worked in automotive before (albeit briefly), I don't think the car makers have learned it at all. While I was there I saw GM, Chrysler, Ford, and a couple foreign (i.e., no US presence) makers shop constantly for the lowest bidder on everything, similar to the Boeing story here.
And like the Boeing story, these projects quickly became clusterfucks. As a supplier ourselves we saw the least of it - I'd hate to be the guy at GM handling projects like this.
My first week there I had to rescue a project from the brink of a multi-million dollar fine. There was a critical injection-molded plastic component in the product, but we were too cheap to pay the local provider (that we'd been with for the last couple decades) to cut the mold, and instead contracted it out to a Chinese shop an ocean away and half the price. Well, said shop was late delivering, and then the mold got held up in customs. Then management tried to squeeze a deal on the plastic provider, who turned out to be late, also.
At the end of the day the company had to airlift a few container-fulls of product from Canada to South Korea. The contractual fine was worse than that cost... and I'm pretty sure we wiped away any savings a few times over with this whole debacle.
Too much outsourcing, too far away from home, with no ability to keep an eye on things.
Worked in automotive before (albeit briefly), I don't think the car makers have learned it at all. While I was there I saw GM, Chrysler, Ford, and a couple foreign (i.e., no US presence) makers shop constantly for the lowest bidder on everything, similar to the Boeing story here.
And like the Boeing story, these projects quickly became clusterfucks. As a supplier ourselves we saw the least of it - I'd hate to be the guy at GM handling projects like this.
My first week there I had to rescue a project from the brink of a multi-million dollar fine. There was a critical injection-molded plastic component in the product, but we were too cheap to pay the local provider (that we'd been with for the last couple decades) to cut the mold, and instead contracted it out to a Chinese shop an ocean away and half the price. Well, said shop was late delivering, and then the mold got held up in customs. Then management tried to squeeze a deal on the plastic provider, who turned out to be late, also.
At the end of the day the company had to airlift a few container-fulls of product from Canada to South Korea. The contractual fine was worse than that cost... and I'm pretty sure we wiped away any savings a few times over with this whole debacle.
Too much outsourcing, too far away from home, with no ability to keep an eye on things.
Kind of unfortunate that this is the top comment here since the article has nothing to do with the immorality of outsourcing. I took his mention to be a throwaway nod of the head to the typical discussion of outsourcing. Then he moved on.
No, the agenda of the author is clear. A few paragraphs below:
a mere assembly plant, bolting together modules designed and produced elsewhere as though from kits
a mere assembly plant, bolting together modules designed and produced elsewhere as though from kits
That might be a sad state of affairs but I didn't see the author making it out to be the result of an immoral decision. Just a bad decision.
There are suggestions that part of the motivation was to reduce the power of the heavily unionized workers in Seattle and allow the company to transfer to a cheaper assembly plant in the south - just as car makers had done.
If you are only doing final assembly you can move the plant every 10years or so to get the best deal from local government. It's difficult to do that if you need an army of people with a lifetime of skills.
If you are only doing final assembly you can move the plant every 10years or so to get the best deal from local government. It's difficult to do that if you need an army of people with a lifetime of skills.
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full sentence doesn't make this agenda so clear:
Boeing's goal, it seems, was to convert its storied aircraft factory near Seattle to a mere assembly plant, bolting together modules designed and produced elsewhere as though from kits.
of course it is still designed in Seattle, and many of those parts and outsource partners are still in the USA, only 30% is from abroad according to the article.
Boeing's goal, it seems, was to convert its storied aircraft factory near Seattle to a mere assembly plant, bolting together modules designed and produced elsewhere as though from kits.
of course it is still designed in Seattle, and many of those parts and outsource partners are still in the USA, only 30% is from abroad according to the article.
Contrast the positive adjective "storied," applied to the term "aircraft factory," against the negative adjective "mere," applied to the term "assembly plant." Reading only that sentence, it's quite clear which the author prefers.
Assuming the foreign workers are not being exploited or abused, I don't understand why it is any more or less moral to channel your commerce to them as opposed to people in your own country.
Well, when you spend your money in a local economy the money tends to circulate back around. Say I shop from a farmer's market, I support people living in my community who can then spend that money on other local goods/services, and eventually some of that money may make it's way back to myself. If I shop at Wal-Mart, the money leaves my local economy forever and basically just goes to shareholders and overseas manufactures. I also think local merchants are more likely to sell goods/services that are better for their local economy than a big box retailer that is completely disconnected from the local economy.
If I shop at Wal-Mart, the money leaves my local economy forever and basically just goes to shareholders and overseas manufactures.
This is only the case if no one who gets money, either directly or indirectly, from Wal-Mart wants to buy any of the stuff your local economy was making. Think of all the people all around the world who get money from Wal-Mart. If none of these people want to buy anything you and your fellow townsmen make, then you are absolutely right that the money leaves your local economy forever.
But this points to a deeper pathology. You want something people outside your community provide (through Wal-Mart or whatever), but you refuse to give back an equal amount of value for what you extract. Because of this expectation, you rail against anything non-local. This is how trade deficits get started, and the solution to them is not to scream for a reemergence of isolationist economic policy, which is essentially your concept of a self-circulating local economy. The solution is to realize that other people want you to do things for them when they do things for you, and to get over this quaint notion of historic mainstreet town life if you really want the things that a big box style economy provides. You can't have both unless you want to go broke.
I also think local merchants are more likely to sell goods/services that are better for their local economy than a big box retailer that is completely disconnected from the local economy.
Can you back this up, or are you waxing sentimental?
As far as the flow of capital is concerned, a big box retailer provides a lot for a local economy because people spend a lot of money there. They're winning as far as cash flow goes, which means they are giving people what they want, even if they whine about getting it.
If nothing else, I think this shows that local economies aren't as special and unique as people claim they are; it's like the Lake Wobegon Effect for retail. Your local economy is not that special, your locality is not that special, and your fight to remain isolated in all the ways you think matter while becoming interconnected with other communities in all the ways you are willing to tolerate is going to backfire, because you come across expecting more from others than they are allowed to expect from you. If you want that money back, then do something that makes people want to give it back to you. It's as simple as that.
This is only the case if no one who gets money, either directly or indirectly, from Wal-Mart wants to buy any of the stuff your local economy was making. Think of all the people all around the world who get money from Wal-Mart. If none of these people want to buy anything you and your fellow townsmen make, then you are absolutely right that the money leaves your local economy forever.
But this points to a deeper pathology. You want something people outside your community provide (through Wal-Mart or whatever), but you refuse to give back an equal amount of value for what you extract. Because of this expectation, you rail against anything non-local. This is how trade deficits get started, and the solution to them is not to scream for a reemergence of isolationist economic policy, which is essentially your concept of a self-circulating local economy. The solution is to realize that other people want you to do things for them when they do things for you, and to get over this quaint notion of historic mainstreet town life if you really want the things that a big box style economy provides. You can't have both unless you want to go broke.
I also think local merchants are more likely to sell goods/services that are better for their local economy than a big box retailer that is completely disconnected from the local economy.
Can you back this up, or are you waxing sentimental?
As far as the flow of capital is concerned, a big box retailer provides a lot for a local economy because people spend a lot of money there. They're winning as far as cash flow goes, which means they are giving people what they want, even if they whine about getting it.
If nothing else, I think this shows that local economies aren't as special and unique as people claim they are; it's like the Lake Wobegon Effect for retail. Your local economy is not that special, your locality is not that special, and your fight to remain isolated in all the ways you think matter while becoming interconnected with other communities in all the ways you are willing to tolerate is going to backfire, because you come across expecting more from others than they are allowed to expect from you. If you want that money back, then do something that makes people want to give it back to you. It's as simple as that.
I don't understand why some people on HN are so needlessly condescending: Can you back this up, or are you waxing sentimental?
Why would I even want to discuss something with someone with such an unnecessary rude and snarky attitude?
Yes, I can back this up... go into your local pizza shop/taco stand/burger joint/Italian restaurant/seafood shack and get a pizza/burrito/burger/pasta/fish and compare the ingredients to Pizza Hut. One is made out of a bunch of "edible food-like substances" (to quote Michael Pollan) the other is made with actual food.
Quote:
Wal-Mart sells cheaply and uses fewer workers partly because it is a technological and organizational innovator, but its success depends even more on its relentless pressure on workers and suppliers, and its extraordinary market power is by far the dominant retailer of many goods. The corporation is likely to control 35 percent of all U.S. food and drug sales by 2007.
Wal-Mart also shifts many of its costs to taxpayers (or other businesses that indirectly pay costs of Wal-Mart’s underinsured employees). A recent study by Good Jobs First, an organization that monitors economic development policies, found that state and local governments had given at least $1 billion in subsidies to stores and distribution centers. Wal-Mart also pays so little that many of its workers rely on state healthcare subsidies, food stamps, housing vouchers and other public aid. According to a recent study by the University of California at Berkeley Center for Labor Research and Education, California alone spends $10 billion annually to subsidize Wal-Mart and similar low-wage employers. Congressional Democratic staff calculates that federal taxpayers pay $2,103 per year in subsidies for the average Wal-Mart worker.
Source: http://www.inthesetimes.com/article/the_wal_mart_effect/
Why would I even want to discuss something with someone with such an unnecessary rude and snarky attitude?
Yes, I can back this up... go into your local pizza shop/taco stand/burger joint/Italian restaurant/seafood shack and get a pizza/burrito/burger/pasta/fish and compare the ingredients to Pizza Hut. One is made out of a bunch of "edible food-like substances" (to quote Michael Pollan) the other is made with actual food.
Quote:
Wal-Mart sells cheaply and uses fewer workers partly because it is a technological and organizational innovator, but its success depends even more on its relentless pressure on workers and suppliers, and its extraordinary market power is by far the dominant retailer of many goods. The corporation is likely to control 35 percent of all U.S. food and drug sales by 2007.
Wal-Mart also shifts many of its costs to taxpayers (or other businesses that indirectly pay costs of Wal-Mart’s underinsured employees). A recent study by Good Jobs First, an organization that monitors economic development policies, found that state and local governments had given at least $1 billion in subsidies to stores and distribution centers. Wal-Mart also pays so little that many of its workers rely on state healthcare subsidies, food stamps, housing vouchers and other public aid. According to a recent study by the University of California at Berkeley Center for Labor Research and Education, California alone spends $10 billion annually to subsidize Wal-Mart and similar low-wage employers. Congressional Democratic staff calculates that federal taxpayers pay $2,103 per year in subsidies for the average Wal-Mart worker.
Source: http://www.inthesetimes.com/article/the_wal_mart_effect/
One is made out of a bunch of "edible food-like substances" (to quote Michael Pollan) the other is made with actual food.
Because once we poison the well, only then can we have a fruitful discussion about this. Let's not drop this to the level of throwing about "frankenfood" type labels; those convince for entirely bogus reasons.
And I have had some absolutely asininely terrible food from local restaurants that would make a chain look worthy of Michelin stars by comparison. I'd argue that is what you lose more of with chains; you don't get the variance that allows for the highs, but you are also somewhat covered from that same variance giving you some really dismal lows. Sometimes, predictable but mediocre is more desirable than variable and possibly outstanding or complete crap.
Wal-Mart also pays so little that many of its workers rely on state healthcare subsidies, food stamps, housing vouchers and other public aid.
FWIW, I think the subsidies given to Wal-Mart are a bunch of crap. If you dislike those, talk to your government; don't damn the recipient for taking what they've been given.
But Wal-Mart isn't entirely to be damned for the rest of this either. The presumption under all of this is that the people who are employed by Wal-Mart have no other options. Is this true? Yes, I know; of course it's true. But, is it true?
Either way, things are rather bleak. Either people aren't exercising their options to their own advantage, or they are trapped in a position with absolutely no bargaining power.
But we won't solve this by killing Wal-Mart; these problems are merely exposed by a big box store forcing the economics we've been ignoring for a long time for the sake of social harmony and idealism. Products were sold at marked up prices to support marked up sales staff, and we look back and argue all of that was to preserve a milieu that is considered an unquestionably good thing.
The same thing in the past has happened to a ton of other professions. In every case, we moved on. In a way, all of these subsidies prevent us from doing so.
I wonder if the reality is much more mundane and non-idealistic; we didn't care much either way, but didn't know until Wal-Mart and the like came along that it could be done cheaper.
As a footnote, I'm not pro-Wal-Mart. I'm just someone who is alternatively interested in and confused by people's reactions to economic forces.
Because once we poison the well, only then can we have a fruitful discussion about this. Let's not drop this to the level of throwing about "frankenfood" type labels; those convince for entirely bogus reasons.
And I have had some absolutely asininely terrible food from local restaurants that would make a chain look worthy of Michelin stars by comparison. I'd argue that is what you lose more of with chains; you don't get the variance that allows for the highs, but you are also somewhat covered from that same variance giving you some really dismal lows. Sometimes, predictable but mediocre is more desirable than variable and possibly outstanding or complete crap.
Wal-Mart also pays so little that many of its workers rely on state healthcare subsidies, food stamps, housing vouchers and other public aid.
FWIW, I think the subsidies given to Wal-Mart are a bunch of crap. If you dislike those, talk to your government; don't damn the recipient for taking what they've been given.
But Wal-Mart isn't entirely to be damned for the rest of this either. The presumption under all of this is that the people who are employed by Wal-Mart have no other options. Is this true? Yes, I know; of course it's true. But, is it true?
Either way, things are rather bleak. Either people aren't exercising their options to their own advantage, or they are trapped in a position with absolutely no bargaining power.
But we won't solve this by killing Wal-Mart; these problems are merely exposed by a big box store forcing the economics we've been ignoring for a long time for the sake of social harmony and idealism. Products were sold at marked up prices to support marked up sales staff, and we look back and argue all of that was to preserve a milieu that is considered an unquestionably good thing.
The same thing in the past has happened to a ton of other professions. In every case, we moved on. In a way, all of these subsidies prevent us from doing so.
I wonder if the reality is much more mundane and non-idealistic; we didn't care much either way, but didn't know until Wal-Mart and the like came along that it could be done cheaper.
As a footnote, I'm not pro-Wal-Mart. I'm just someone who is alternatively interested in and confused by people's reactions to economic forces.
Are you sure you know where the local restaurant's food comes from? It's most likely from SYSCO: http://www.sysco.com/products/productpage_search.asp?product...
Not every local restaurant sources local organic farm-to-plate food.
Not every local restaurant sources local organic farm-to-plate food.
Well my girlfriend is a food analyst for one of SYSCO's rivals, so I tend to have a bit more knowledge than the average person, but yes I agree that a lot of local restaurants don't use local produce, but it's still better than going to basically any chain restaurant.
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This claim is ridiculous. Your mental model of the economy involves tracking the movement of a particular dollar bill and ignoring the movement of dollar bills which start at distant locations. This is a fallacy.
If you shop at Walmart, that particular dollar bill is put on a truck and sent to Walmart Secret World Headquarters hundreds of miles away, and it eventually makes it's way to producers a world away from you. On the other hand, Walmart (and other businesses located hundreds of miles away) will buy goods from your locality, ship them to other distant locals, and send you a different dollar bill in return.
The fundamental issue is whether gains due to comparative advantage > shipping/logistics costs. As a result of shipping/logistics costs dropping rapidly (walmart has been a pioneer here), the non-local goods have won out.
(Granted, none of this has anything to do with the morality of giving a job to a guy named Jose instead of a guy named Joe.)
If you shop at Walmart, that particular dollar bill is put on a truck and sent to Walmart Secret World Headquarters hundreds of miles away, and it eventually makes it's way to producers a world away from you. On the other hand, Walmart (and other businesses located hundreds of miles away) will buy goods from your locality, ship them to other distant locals, and send you a different dollar bill in return.
The fundamental issue is whether gains due to comparative advantage > shipping/logistics costs. As a result of shipping/logistics costs dropping rapidly (walmart has been a pioneer here), the non-local goods have won out.
(Granted, none of this has anything to do with the morality of giving a job to a guy named Jose instead of a guy named Joe.)
21st century mercantilism.
One problem with the modern system is that it seems to be an unstable equilibrium - it's more efficient, but what happens if the global logistics infrastructure breaks down because of war/rising oil prices/political turmoil etc? It seems that we (meaning communities/regions/the US) have given up self-sufficiency in exchange for this increased efficiency, which surely has some sort of cost.
One problem with the modern system is that it seems to be an unstable equilibrium - it's more efficient, but what happens if the global logistics infrastructure breaks down because of war/rising oil prices/political turmoil etc? It seems that we (meaning communities/regions/the US) have given up self-sufficiency in exchange for this increased efficiency, which surely has some sort of cost.
what happens if the global logistics infrastructure breaks down because of war/rising oil prices/political turmoil etc?
What happens if some local infrastructure breaks down in a way that that the local community is put to a standstill until things get fixed?
A good example of this: a major highway bridge becomes impassible in a way that is not trivial to repair. The lack of this bridge becomes a huge expense and drain on quality of life in the region. You can either ride of self-sufficiency to get this bridge rebuilt, or you can rely on the efficiencies of volume producers of raw materials, machinery, and whatever else you'll need to build that bridge back up.
Self-sufficiency, in the sense that you exchange with few or no other people for your own wants and needs has huge costs as well; but, because most of us aren't self-sufficient in that sense, we tend to romantically gaze in that direction and only remember all the good that comes out of being self-sufficient. The trade-offs are not that obvious and one-sided.
What happens if some local infrastructure breaks down in a way that that the local community is put to a standstill until things get fixed?
A good example of this: a major highway bridge becomes impassible in a way that is not trivial to repair. The lack of this bridge becomes a huge expense and drain on quality of life in the region. You can either ride of self-sufficiency to get this bridge rebuilt, or you can rely on the efficiencies of volume producers of raw materials, machinery, and whatever else you'll need to build that bridge back up.
Self-sufficiency, in the sense that you exchange with few or no other people for your own wants and needs has huge costs as well; but, because most of us aren't self-sufficient in that sense, we tend to romantically gaze in that direction and only remember all the good that comes out of being self-sufficient. The trade-offs are not that obvious and one-sided.
What happens if some local infrastructure breaks down in a way that that the local community is put to a standstill until things get fixed?
In a non-networked world, the problem is limited to the local community. In a networked world, everyone is harmed.
It's pretty easy to see that there are tradeoffs to be made between reliability and efficiency. As we become dependent on products which are centrally produced (very efficiently) and widely distributed, we all become vulnerable when a disaster strikes the producers.
I personally believe that the efficiency gains outweigh the reliability losses, but that doesn't mean the tradeoffs don't exist.
In a non-networked world, the problem is limited to the local community. In a networked world, everyone is harmed.
It's pretty easy to see that there are tradeoffs to be made between reliability and efficiency. As we become dependent on products which are centrally produced (very efficiently) and widely distributed, we all become vulnerable when a disaster strikes the producers.
I personally believe that the efficiency gains outweigh the reliability losses, but that doesn't mean the tradeoffs don't exist.
As we become dependent on products which are centrally produced (very efficiently) and widely distributed, we all become vulnerable when a disaster strikes the producers.
True, and I tend to underestimate just how centralized the production of a lot of things are, since what I do isn't really based that heavily on geographic location.
My counter to that, though, is that there is usually at least a couple of producers of most products, and that sometimes -- though not always -- they are geographically separated enough that the risk is somewhat mitigated. Other times, though, geographic constraints sort of mandate that every supplier be located within a small number of miles of one another; suppliers of natural resources (coal, oil, etc) come immediately to mind.
True, and I tend to underestimate just how centralized the production of a lot of things are, since what I do isn't really based that heavily on geographic location.
My counter to that, though, is that there is usually at least a couple of producers of most products, and that sometimes -- though not always -- they are geographically separated enough that the risk is somewhat mitigated. Other times, though, geographic constraints sort of mandate that every supplier be located within a small number of miles of one another; suppliers of natural resources (coal, oil, etc) come immediately to mind.
Where did I say anything about tracking a particular dollar?
If I spend my money at a local restaurant that uses local produce/local products and is a small business, that's much better for my local economy than going to say Outback Steakhouse/Olive Garden etc. where they don't pay their employees well and the money I've spent is literally leeched out of my local economy. Whereas, by going to the local restaurant the money will go back into the local economy. For every one job Wal-Mart hires, it kills 1.5 jobs in the local economy. It's called the Wal-Mart effect and several studies have shown this: One 1999 study reported that 1.5 jobs had been lost for every job that Wal-Mart created. A recent projection by the University of Illinois at Chicago’s Center for Urban Economic Development concluded that the proposed West-Side Chicago store likely would yield a net decrease of about 65 jobs after that Wal-Mart opens, as other retailers in the same shopping area lose business. A study cited in Business Week as showing modest retail gains after Wal-Marts open actually reported net job losses counting effects on warehousing and surrounding counties. http://www.inthesetimes.com/article/the_wal_mart_effect/
But “Walmartization of America has a broader impact than just retail workers,” says Greg Denier, spokesman for the United Food and Commercial Workers, which represents grocery workers. “Wal-Mart probably has had more negative impact on manufacturing than on other jobs in the United States.” Wal-Mart also squeezes American consumer goods producers, forcing them to cut labor costs, move overseas or be replaced by foreign suppliers. Accounting for 10 percent of all U.S. imports from China in 2002, the corporation even pressures wages downward in poor countries, from El Salvador to Bangladesh. It also drives competitors to import more, pushing the True Value hardware store cooperative to boost imports from less than 1 percent of its products to 18 percent.
It's moral not to put my neighbors out of business and look out for one another. You are your brother's keeper, I think is the phrase. (I am completely atheist, but I still think this is true.) Sometimes what's in your own self-interest is also moral, there's no reason those two qualities are mutually exclusive.
How is this so controversial? It's common sense.
If I spend my money at a local restaurant that uses local produce/local products and is a small business, that's much better for my local economy than going to say Outback Steakhouse/Olive Garden etc. where they don't pay their employees well and the money I've spent is literally leeched out of my local economy. Whereas, by going to the local restaurant the money will go back into the local economy. For every one job Wal-Mart hires, it kills 1.5 jobs in the local economy. It's called the Wal-Mart effect and several studies have shown this: One 1999 study reported that 1.5 jobs had been lost for every job that Wal-Mart created. A recent projection by the University of Illinois at Chicago’s Center for Urban Economic Development concluded that the proposed West-Side Chicago store likely would yield a net decrease of about 65 jobs after that Wal-Mart opens, as other retailers in the same shopping area lose business. A study cited in Business Week as showing modest retail gains after Wal-Marts open actually reported net job losses counting effects on warehousing and surrounding counties. http://www.inthesetimes.com/article/the_wal_mart_effect/
But “Walmartization of America has a broader impact than just retail workers,” says Greg Denier, spokesman for the United Food and Commercial Workers, which represents grocery workers. “Wal-Mart probably has had more negative impact on manufacturing than on other jobs in the United States.” Wal-Mart also squeezes American consumer goods producers, forcing them to cut labor costs, move overseas or be replaced by foreign suppliers. Accounting for 10 percent of all U.S. imports from China in 2002, the corporation even pressures wages downward in poor countries, from El Salvador to Bangladesh. It also drives competitors to import more, pushing the True Value hardware store cooperative to boost imports from less than 1 percent of its products to 18 percent.
It's moral not to put my neighbors out of business and look out for one another. You are your brother's keeper, I think is the phrase. (I am completely atheist, but I still think this is true.) Sometimes what's in your own self-interest is also moral, there's no reason those two qualities are mutually exclusive.
How is this so controversial? It's common sense.
Where did I say anything about tracking a particular dollar?
Your entire post discussed the circulation of money in the local economy, and said nothing whatsoever about money coming into the local economy. Unless Walmart plans to keep providing your local economy with low cost steaks forever, and get nothing in return, money will eventually need to return. But it might be a different dollar bill spent by a different purchaser.
If I spend my money at a local restaurant that uses local produce/local products and is a small business, that's much better for my local economy than going to say Outback Steakhouse/Olive Garden etc. where they don't pay their employees well and the money I've spent is literally leeched out of my local economy.
If the money leaves your local economy, that's a good thing. It means you traded some inedible green paper for a delicious steak. Your community has gained, the outside world has lost. If, in turn, someone trades green pieces of paper for products produced in the community, you gain less - you gain 1 steak but lose some eggplants. (Of course, the community with a surplus of steaks and a shortage of eggplants considers the opposite trade a gain.)
It wouldn't surprise me if walmart destroys retail jobs - they are fantastically efficient. Computers and the internet have also destroyed many jobs (newspapers, for example). Money no longer circulates around the local economy. Is this also a bad thing?
Destroying jobs through increasing productivity is generally a good thing.
I've discovered a very enlightening way to think about such questions: explain the harm in terms of goods and services, without mention of green pieces of paper. E.g., "the housing bubble was bad because we labor and materials building houses we didn't need." Can you provide a similar explanation of the harm caused by walmart?
It's moral not to put my neighbors out of business and look out for one another.
Why is it moral to put a much poorer Chinese person out of business? Is the Mexican farmer selling goods to Walmart somehow less of a human being than your wealthy neighbor?
Your entire post discussed the circulation of money in the local economy, and said nothing whatsoever about money coming into the local economy. Unless Walmart plans to keep providing your local economy with low cost steaks forever, and get nothing in return, money will eventually need to return. But it might be a different dollar bill spent by a different purchaser.
If I spend my money at a local restaurant that uses local produce/local products and is a small business, that's much better for my local economy than going to say Outback Steakhouse/Olive Garden etc. where they don't pay their employees well and the money I've spent is literally leeched out of my local economy.
If the money leaves your local economy, that's a good thing. It means you traded some inedible green paper for a delicious steak. Your community has gained, the outside world has lost. If, in turn, someone trades green pieces of paper for products produced in the community, you gain less - you gain 1 steak but lose some eggplants. (Of course, the community with a surplus of steaks and a shortage of eggplants considers the opposite trade a gain.)
It wouldn't surprise me if walmart destroys retail jobs - they are fantastically efficient. Computers and the internet have also destroyed many jobs (newspapers, for example). Money no longer circulates around the local economy. Is this also a bad thing?
Destroying jobs through increasing productivity is generally a good thing.
I've discovered a very enlightening way to think about such questions: explain the harm in terms of goods and services, without mention of green pieces of paper. E.g., "the housing bubble was bad because we labor and materials building houses we didn't need." Can you provide a similar explanation of the harm caused by walmart?
It's moral not to put my neighbors out of business and look out for one another.
Why is it moral to put a much poorer Chinese person out of business? Is the Mexican farmer selling goods to Walmart somehow less of a human being than your wealthy neighbor?
As they say, the thing about common sense is that it's often neither common nor particularly sensible.
Why does physical proximity equal morality in purchasing decisions? I can understand your argument from a perspective of _greed_ (as in "I believe that if I spend my money locally it is more likely to enrich the people in my community and therefore me.) But it doesn't make any sense to intentionally _mis-allocate_ resources by making spending decisions on a non-economic basis, then justify that decision on moral grounds.
From a moral standpoint, it seems to me that you should allocate your spending to the group that is producing value most efficiently, since that improves everyone's situation. If guys in China can make a product more efficiently / cheaply than your local maker, shouldn't they get that business? Why is an American more deserving of your purchase than someone in Indonesia? Essentially, you're saying that one human is more valuable than other due to their proximity to you.
If $0.50 of pay makes a bigger difference to the quality of life of a worker in China than $1.00 does for your neighbor, isn't the moral thing to do really buying the product from China? It results in a larger net improvement in quality of life.
(Note that I'm not advocating buying foreign. I'm just taking issue with the idea that buying local is necessarily more "moral" because it benefits people near you.) It's like those who argue you should block immigration because people already in the country have a moral right to those jobs.
Why does physical proximity equal morality in purchasing decisions? I can understand your argument from a perspective of _greed_ (as in "I believe that if I spend my money locally it is more likely to enrich the people in my community and therefore me.) But it doesn't make any sense to intentionally _mis-allocate_ resources by making spending decisions on a non-economic basis, then justify that decision on moral grounds.
From a moral standpoint, it seems to me that you should allocate your spending to the group that is producing value most efficiently, since that improves everyone's situation. If guys in China can make a product more efficiently / cheaply than your local maker, shouldn't they get that business? Why is an American more deserving of your purchase than someone in Indonesia? Essentially, you're saying that one human is more valuable than other due to their proximity to you.
If $0.50 of pay makes a bigger difference to the quality of life of a worker in China than $1.00 does for your neighbor, isn't the moral thing to do really buying the product from China? It results in a larger net improvement in quality of life.
(Note that I'm not advocating buying foreign. I'm just taking issue with the idea that buying local is necessarily more "moral" because it benefits people near you.) It's like those who argue you should block immigration because people already in the country have a moral right to those jobs.
So the reason it's moral is because you might get the money back? Isn't that just self-interest?
Consider the "local economy" as the entire planet. There is no reason to expect that "local" has to mean your own country. Goods, currency and labour are all placed on a global platform for competition. If you are concerned with trying to sandbox your bit of currency into a particular geographical area then you are fighting a loosing battle because there is no real reason to do that.
I don't see any reason why a local merchant would be interested in selling goods/services that are somehow better for their local economy. They will attempt to sell what sells best. As will the big box store.
I don't see any reason why a local merchant would be interested in selling goods/services that are somehow better for their local economy. They will attempt to sell what sells best. As will the big box store.
Can't upvote enough. People have no problem that they can buy a kettle for £5 that was made in China, but take issue withe the fact that manufacturing jobs are going to... China.
>> People have no problem that they can buy a kettle for £5 that was made in China, but take issue withe the fact that manufacturing jobs are going to... China.
Well, some people have a problem with that. Some people try to buy fair trade goods, and don't mind paying more for locally made items.
But it's getting harder and harder to find an item that's not made in China. A few years ago I tried to find a blood pressure monitor that was made anywhere but China. No luck. The only choice I had was not to buy one at all, and that wouldn't work for me. I've experienced this problem time and again.
Well, some people have a problem with that. Some people try to buy fair trade goods, and don't mind paying more for locally made items.
But it's getting harder and harder to find an item that's not made in China. A few years ago I tried to find a blood pressure monitor that was made anywhere but China. No luck. The only choice I had was not to buy one at all, and that wouldn't work for me. I've experienced this problem time and again.
> Some people try to buy fair trade goods, and don't mind paying more for locally made items
Some, yes. I'll wager it's a minority though.
Some, yes. I'll wager it's a minority though.
In Boeing's case wasn't there a secondary goal in outsourcing of drumming up foreign demand? I seem to recall reading an article a few years back where Boeing agreed to outsource the wing sub assembly to some Asian country and in return that country agreed to buy some number of Boeing planes. I can't seem to find the article now though.
This is part of it. Its also part of the reason why Airbus/EADS quite successfully builds bits of aircraft all over Europe (and even proposed expansions of operations in Alabama as part of their bid for USAF tankers)
Also, it may surprise the article author to learn that there are outside specialists who have capabilities that Boeing couldn't effortlessly replicate in Seattle. Italy and Sweden certainly don't have low labour costs and they don't have much of a domestic market for long range airliners either.
Ultimately Boeing's logistical cockups have more to do with the overall ambition and complexity of the project than cost cutting.
Also, it may surprise the article author to learn that there are outside specialists who have capabilities that Boeing couldn't effortlessly replicate in Seattle. Italy and Sweden certainly don't have low labour costs and they don't have much of a domestic market for long range airliners either.
Ultimately Boeing's logistical cockups have more to do with the overall ambition and complexity of the project than cost cutting.
Airbus's distributed manufacturing is more about pork-barrel politics, it's spread around the countries that own shares in the airbus consortium
Ironically Several of the components of the 7e7 are made in europe by Airbus suppliers. The undercarriage, tail and bits of the fuselage are made in the same plants that are building them for airbus.
AFAIK the only certified engines at launch are Rolls-Royce
Ironically Several of the components of the 7e7 are made in europe by Airbus suppliers. The undercarriage, tail and bits of the fuselage are made in the same plants that are building them for airbus.
AFAIK the only certified engines at launch are Rolls-Royce
Mitsubishi, Kawasaki and Fuji Heavy Industries in Japan are building several of the components for the 787 and All Nippon Airways is to be the first airline to receive a 787.
http://www.seattlepi.com/business/275465_japan27.html
There were issues with where the wing meets the body (both parts built in Japan), but the responsibility supposedly lies with Boeing who designed the parts.
http://seattletimes.nwsource.com/html/boeingaerospace/200956...
Japanese and Korean suppliers are working to ramp up production of parts.
http://www.bloomberg.com/news/2010-10-01/boeing-787-supplier...
http://www.seattlepi.com/business/275465_japan27.html
There were issues with where the wing meets the body (both parts built in Japan), but the responsibility supposedly lies with Boeing who designed the parts.
http://seattletimes.nwsource.com/html/boeingaerospace/200956...
Japanese and Korean suppliers are working to ramp up production of parts.
http://www.bloomberg.com/news/2010-10-01/boeing-787-supplier...
Yea, that's what I've heard as well. I think India for example basically told Boeing and Airbus, "we're buying from whoever creates the most local jobs for us". So it has nothing to do with outsourcing to save money, and everything to do with outsourcing to close sales.
It's the Aerospace industrial complex! Only instead of representatives and US states, it's corporate boards and other nations.
Work share deals are just part of getting contracts signed for items at this price point. Given the resulting cost and schedule overruns, and that Boeing has not pulled everything back in-house (yet?), we may want to rethink the degree to which these agreements were secondary motivators for outsourcing...the cost of efficient breach in terms of damages to suppliers and lost sales would have to be greater still than eating the current and projected overruns.
I was thinking the same thing, then I remembered a fiction story I read about an airliner "outsourcing the wing" (Airframe, Michael Crichton), so now I'm wondering if I had that impression from the fiction, or if I read it in a real-world story about the Dreamliner.
The title should really be 787 Dreamliner teaches Boeing a costly lesson in due-diligence. This sort of thing has nothing to do with outsourcing and everything to do with poor decision making by management.
Here's the problem, though: Who is capable of doing the due diligence? By outsourcing, you end up losing a lot of the in-house knowledge necessary to spot problems early on.
Who is capable of doing the due diligence?
There's a classic business case study about two handset manufacturers, a Philips fab in Mexico and a small fire in that fab. Details can be found here :
http://www.ftpress.com/articles/article.aspx?p=1244469
In light of Nokia's latest struggle with iOS and Android, aren't they both a success story and a cautionary tale for due diligence and proactive management. Nokia had a second fire-- a burning platform.
By the logic of the book excerpt that I finally had time to read, they should have read the tea leaves about the iOS and Android universes much quicker than they did. Nokia's burning platform memo would not have been so dire if their response had occurred one year earlier. Nokia was already considerably left behind by the application universe at that point. iOS had momentum then and should have been considered a direct threat even though the Android userbase was only 1/10th of the size it is now.
I still find that corporate cultures tend to sideline Android to this day because they underestimate the value of an open platform on commodity hardware with infinite hackability that intrigues developers. The same incredible growth occurred with Linux and Apache on the web as the 888% Android growth in the last year. Android will win partly for the same reason Microsoft beat Apple's superior UI in the 80s and 90s-- Apple is still tied to expensive proprietary hardware and the need to completely control their platform.
By the logic of the book excerpt that I finally had time to read, they should have read the tea leaves about the iOS and Android universes much quicker than they did. Nokia's burning platform memo would not have been so dire if their response had occurred one year earlier. Nokia was already considerably left behind by the application universe at that point. iOS had momentum then and should have been considered a direct threat even though the Android userbase was only 1/10th of the size it is now.
I still find that corporate cultures tend to sideline Android to this day because they underestimate the value of an open platform on commodity hardware with infinite hackability that intrigues developers. The same incredible growth occurred with Linux and Apache on the web as the 888% Android growth in the last year. Android will win partly for the same reason Microsoft beat Apple's superior UI in the 80s and 90s-- Apple is still tied to expensive proprietary hardware and the need to completely control their platform.
Fantastic article, thank you for sharing this!
That's not necessarily true; systems integration is a skill in its own right. It's just about what level of abstraction you work at. As software people we ought to understand this better than anyone.
You need freshmen code grunts first to become analysts later. Once you remove the low level design work, you lose (in time) the experts as well.
You can't have someone figure out how to put wings to hull properly if he never ever drawn a single fastening bolt in his life.
You can't have someone figure out how to put wings to hull properly if he never ever drawn a single fastening bolt in his life.
You can hire those pre-experienced in that from your vendors. This happens tonnes in industry; if you want a well-paid senior networking job, get a low-paying entry-level job in Cisco TAC and wait to be poached...
You can hire those pre-experienced in that from your vendors.
Just how loyal and committed are these folks one is poaching from vendors?
Just how loyal and committed are these folks one is poaching from vendors?
Certainly no worse than any other employee. We're all grownups here.
The implication here is that outsourcing is for companies with good processes and solid culture. On the other hand, it could be quite a bad move for a dysfunctional company. I could see many ways outsourcing would actually amplify dysfunctions.
Given the context, this seems a bit absurd.
Well due-diligence seems to have been an issue in individual cases. But overall they seem to have missed two fundamental problems.
1. Manufacturing parts and then selling them throughout the life of the aircraft model has a high margin of profit. Assembling an aircraft form parts has the lowest margin of profit.
2. Outsourcing requires more coordination form HQ, not less.
It seems like those two were pretty big and important. Especially #1, what kind of an executive does not understand the value chain of the business he's in?
This is why I don't think CEO are stupid, but I do think they act economically rationally (perhaps not ethically) by increasing their compensation by pumping up the stock price in the short term.
In this case the CEO raised stock prices in the short term by appearing to create cost savings. His compensation goes up, he leaves the company, cost savings turn out to be costs, but the old CEO has already been paid and is gone, this is the new guy's problem.
1. Manufacturing parts and then selling them throughout the life of the aircraft model has a high margin of profit. Assembling an aircraft form parts has the lowest margin of profit.
2. Outsourcing requires more coordination form HQ, not less.
It seems like those two were pretty big and important. Especially #1, what kind of an executive does not understand the value chain of the business he's in?
This is why I don't think CEO are stupid, but I do think they act economically rationally (perhaps not ethically) by increasing their compensation by pumping up the stock price in the short term.
In this case the CEO raised stock prices in the short term by appearing to create cost savings. His compensation goes up, he leaves the company, cost savings turn out to be costs, but the old CEO has already been paid and is gone, this is the new guy's problem.
This makes it sound like US companies were better than foreign countries just because they are american.
Me, I feel slightly insulted by that. Just look at american cars. I kid.
There is nothing wrong with patriotism and there is nothing wrong with outsourcing, if both is done with due diligence and proper planning. But there is no way one company is any better than any other company just because it is registered in a different country. The 787 did not have problems because of outsourcing, it has problems because of bad planning--at the all-american Boing HQ itself.
Me, I feel slightly insulted by that. Just look at american cars. I kid.
There is nothing wrong with patriotism and there is nothing wrong with outsourcing, if both is done with due diligence and proper planning. But there is no way one company is any better than any other company just because it is registered in a different country. The 787 did not have problems because of outsourcing, it has problems because of bad planning--at the all-american Boing HQ itself.
You're only insulted because you misread outsourcing to mean offshoring. Boeing farmed work out to other companies, and it bit them. The fact that some of those companies were based in other countries is not a point mentioned as a contributing factor.
Oh! My bad, you are right! I repent!
Among the least profitable jobs in aircraft manufacturing, he pointed out, is final assembly — the job Boeing proposed to retain.
...and...
"I warned Boeing not to make the same mistake. Everybody there seemed to get the message, except top management."
If top execs aren't keeping an eye on where the profits are, you're screwed. Are they compensated too well to care?
...and...
"I warned Boeing not to make the same mistake. Everybody there seemed to get the message, except top management."
If top execs aren't keeping an eye on where the profits are, you're screwed. Are they compensated too well to care?
No. They are given stock options which means that they have an incentive to pump the price up short term even if it means that long term the company would loose more money.
Precisely, and this explains a wide swath of seemingly nonsensical decisions being made in western countries in the last decade.
I feel like most execs are still concerned about their long term credibility and legacy ove their ability to pump some of their stock at a higher value in the short term. And I say that with full cynicism - it's simply suboptimal for them personally to do so.
Most of the stock options given to top execs have exercise dates well in the future and no-resale clauses.
Short term gains in stock price may get them a bonus, but it won't boost the value of their long term options.
Short term gains in stock price may get them a bonus, but it won't boost the value of their long term options.
The Innovator's Solution (by Christensen, who wrote the Innovator's Dilemma) says that assembly can be profitable or non-profitable, depending on what qualities are currently in demand in the market.
As an example, Dell made a lot of money being an assembler.
As an example, Dell made a lot of money being an assembler.
> The Innovator's Solution (by Christensen, who wrote the Innovator's
> Dilemma) says that assembly can be profitable or non-profitable,
> depending on what qualities are currently in demand in the market.
> As an example, Dell made a lot of money being an assembler.
But Dell is also the support agent. They purchase components (that they select) and place them into a chassis (that they designed) and sell that product. Their second product is service and support, few companies using Dell servers or workstations would buy them without also having a service plan (for failed components, software/hardware issues and the like). When a harddrive fails, you don't open the computer see that's its Western Digital and give them a call. Instead, you contact Dell and they send you an equivalent size drive, perhaps Seagate this time. This service and support is an added value to the customer. Dell becomes an intermediary between the company and the coponent manufacturers. Since there are multiple producers of roughly equivalent components Dell is also able to do this for relatively low cost to themselves -- they can buy in bulk, they can select parts based on quality metrics like MTBF to reduce service rates.
Boeing isn't setup in the same way for the 787. Nearly every component has a sole-provider. When it fails or needs servicing airlines won't be calling Boeing just so they can pay extra for services they can get directly from the manufacturer of the component.
For an example, consider line-replaceable units (LRUs). These are typically custom built for the aircraft to meet its particular size/connector requirements. That means it's a one-off product though internally it may be essentially the same as every other similarly functioning LRU that manufacturer provides. The time and cost invested to field an LRU is enormous. Not only does a company have to satisfy its QA and Boeing's QA processes, it must also get past the FAA. The controls that are required to get software through are a substantial burden (especially when done in the typical last-minute fashion) that no one else will likely try and reproduce a company's product either.
So now an airline has a failed or service-needing component. They contact company X who offers them tech data to try and service it themselves for tens or hundreds of thousands of dollars, or for hundreds or thousands of dollars per part the airline can send the part to company X for servicing. If Boeing owned the parts, then they could make the profit off of this portion, but as it is they (presently) offer no additional value (convenience, quality of service) to prevent the airlines from bypassing them. Company X reaps all the benefits of this relationship, and Boeing gets the profit only on the initial sale, and on whatever components they happen to control (there's more I'm sure, but a lot is also lost).
> As an example, Dell made a lot of money being an assembler.
But Dell is also the support agent. They purchase components (that they select) and place them into a chassis (that they designed) and sell that product. Their second product is service and support, few companies using Dell servers or workstations would buy them without also having a service plan (for failed components, software/hardware issues and the like). When a harddrive fails, you don't open the computer see that's its Western Digital and give them a call. Instead, you contact Dell and they send you an equivalent size drive, perhaps Seagate this time. This service and support is an added value to the customer. Dell becomes an intermediary between the company and the coponent manufacturers. Since there are multiple producers of roughly equivalent components Dell is also able to do this for relatively low cost to themselves -- they can buy in bulk, they can select parts based on quality metrics like MTBF to reduce service rates.
Boeing isn't setup in the same way for the 787. Nearly every component has a sole-provider. When it fails or needs servicing airlines won't be calling Boeing just so they can pay extra for services they can get directly from the manufacturer of the component.
For an example, consider line-replaceable units (LRUs). These are typically custom built for the aircraft to meet its particular size/connector requirements. That means it's a one-off product though internally it may be essentially the same as every other similarly functioning LRU that manufacturer provides. The time and cost invested to field an LRU is enormous. Not only does a company have to satisfy its QA and Boeing's QA processes, it must also get past the FAA. The controls that are required to get software through are a substantial burden (especially when done in the typical last-minute fashion) that no one else will likely try and reproduce a company's product either.
So now an airline has a failed or service-needing component. They contact company X who offers them tech data to try and service it themselves for tens or hundreds of thousands of dollars, or for hundreds or thousands of dollars per part the airline can send the part to company X for servicing. If Boeing owned the parts, then they could make the profit off of this portion, but as it is they (presently) offer no additional value (convenience, quality of service) to prevent the airlines from bypassing them. Company X reaps all the benefits of this relationship, and Boeing gets the profit only on the initial sale, and on whatever components they happen to control (there's more I'm sure, but a lot is also lost).
I'm surprised no one is talking about the fact that this is one of the most complex projects ever undertaken by human beings. It was being designed and orchestrated in the only way we know how, and it broke down. I don't believe bringing in the people 20 layers below the top management and giving them a paycheck that says 'Boeing' on it would solve all the problems. They were building something too complicated for their basic process (blueprints, documents, proposals, etc.)
Many of the problems such as parts that don't fit and supply chain problems could be solved by current machine learning techniques. Too bad Google and Facebook hire all those people and sets them to work optimizing ad placement.
Many of the problems such as parts that don't fit and supply chain problems could be solved by current machine learning techniques. Too bad Google and Facebook hire all those people and sets them to work optimizing ad placement.
The surprising thing is that they managed to design and build the 747 in the 60s in record time, without access to machine learning or any CAD tools whatsoever.
Although the Dreamliner is a completely new design using new materials, I'd say the 747 was a far more impressive accomplishment at the time.
Although the Dreamliner is a completely new design using new materials, I'd say the 747 was a far more impressive accomplishment at the time.
The problem I saw working on the 787 and other modern aircraft is that we now bury ourselves in analysis and data in the name of accuracy. Just like in programming, when the code gets complex and you have more and more dependencies. One small change impacts lots of other things and you go round and round in circles and iterations.
Back in the day they used to do more conservative, more basic calculations and conventinoal designs that they knew would work.
If there was a small change they didn't have to go and revisit everything because everything was still well within their original conservative calculations.
It's basically Paretos Law, they got 80% of the results for 20% of the effort. We are now chasing that other 20% of the results and the complexity to do so has balooned.
Back in the day they used to do more conservative, more basic calculations and conventinoal designs that they knew would work.
If there was a small change they didn't have to go and revisit everything because everything was still well within their original conservative calculations.
It's basically Paretos Law, they got 80% of the results for 20% of the effort. We are now chasing that other 20% of the results and the complexity to do so has balooned.
I appreciate someone in your position posting this comment more than you can imagine. The research project I'm working on is an attempt to confront this problem. As you say in another comment on this thread, GA's are good for small problems, but don't scale well as more people are involved on the problem.
The problem is more about software engineering and project management, in my opinion. What would we replace CAD systems with if we could? What does the IDE look like when everyone is trying to encode their expertise in such a way that the final design is determined by a machine learning algorithm? That is, it's conceptually easy to imagine those final iterations being done by a machine learning algorithm, but how do we do that?
The problem is more about software engineering and project management, in my opinion. What would we replace CAD systems with if we could? What does the IDE look like when everyone is trying to encode their expertise in such a way that the final design is determined by a machine learning algorithm? That is, it's conceptually easy to imagine those final iterations being done by a machine learning algorithm, but how do we do that?
Geez, where do I begin... :)
It's a fascinating problem and on very small engineering projects with a small team of people willing to experiment with new methods it would be great to try and take things in this direction and see what works.
The reality of how aircraft projects and pretty much any engineering project really, is undertaken is currently so far from lending itself well to this type of thinking it's not funny.
Best that can be done is to chip away at little sub problems at a time tyring to improve things.
In terms of CAD data, there is a shared workspace amongst the different teams around the world. You can see what everyone else is up to.
The problem is that 90% of what goes into that design is not something that lends it self easily to an optimisation problem of any kind. At least not without gathering a ton of metrics that are currently in various documents from the 40s, people's heads and difficult to quantify metrics like what manufacturing options are currently available, what things people already have experience at etc etc.
A huge part of engineering is almost black magic. It's peoples experiences and judgements.
Also, many things are not done by analysis because we don't understand all the factors involved fully, they are done based on emperical evidence of what worked in the past. This emprical data is spread all over the place in tables and documents or just some old timers brain.
Reducing much of it to an optimisation problem is an enormously difficult task.
Then there is the analysis side of things. This is where it could be more akin to programming and could be "solved" potentially.
However, the current processes involved in doing engineering analysis makes life difficult. Basically, hundreds or even thousands of engineers produce mountains of Excel spreadsheets, words docs, text files of data and hundreds of other formats that all relate to one another somehow to tell a story of whether the aircraft is safe to fly or not.
This is far from computer code where the variables all neatly reference one another and a computer can understand it. Picking through it and figuring out how the numbers in one file match the numbers in another is a nightmare at times. I do not envy the senior engineers that have to check it and sign their name on it to say it is correct.
As you say, if everyone was working in a common IDE to do this and forcing things to have relationships the world would be a much better place for engineers. The mountain that has to be climbed to get there in the aerospace industry is enormous however.
So that I don't sound like a complete skeptic though, there is hope!
On the design side, things are most simple early on in a project where people are working on the early conceptual designs. This is were the problems are simple enough that things can be solved. It's once the conceptual design is thrown out to the large engineering departments to fill in the millions of details that the trouble begins.
And on the analysis side, the world is moving toward more and more finite element analysis. This is basically the brute force approach to analysing a structure. This is where it is in machine readable form and optimisation is possible. However, the answers the computer gives you are always layered and compromised from the engineers looking over them and having to turn them into something that's actually practical, can be built and takes into account the many requirements the computer does not know about.
It's a fascinating problem and on very small engineering projects with a small team of people willing to experiment with new methods it would be great to try and take things in this direction and see what works.
The reality of how aircraft projects and pretty much any engineering project really, is undertaken is currently so far from lending itself well to this type of thinking it's not funny.
Best that can be done is to chip away at little sub problems at a time tyring to improve things.
In terms of CAD data, there is a shared workspace amongst the different teams around the world. You can see what everyone else is up to.
The problem is that 90% of what goes into that design is not something that lends it self easily to an optimisation problem of any kind. At least not without gathering a ton of metrics that are currently in various documents from the 40s, people's heads and difficult to quantify metrics like what manufacturing options are currently available, what things people already have experience at etc etc.
A huge part of engineering is almost black magic. It's peoples experiences and judgements.
Also, many things are not done by analysis because we don't understand all the factors involved fully, they are done based on emperical evidence of what worked in the past. This emprical data is spread all over the place in tables and documents or just some old timers brain.
Reducing much of it to an optimisation problem is an enormously difficult task.
Then there is the analysis side of things. This is where it could be more akin to programming and could be "solved" potentially.
However, the current processes involved in doing engineering analysis makes life difficult. Basically, hundreds or even thousands of engineers produce mountains of Excel spreadsheets, words docs, text files of data and hundreds of other formats that all relate to one another somehow to tell a story of whether the aircraft is safe to fly or not.
This is far from computer code where the variables all neatly reference one another and a computer can understand it. Picking through it and figuring out how the numbers in one file match the numbers in another is a nightmare at times. I do not envy the senior engineers that have to check it and sign their name on it to say it is correct.
As you say, if everyone was working in a common IDE to do this and forcing things to have relationships the world would be a much better place for engineers. The mountain that has to be climbed to get there in the aerospace industry is enormous however.
So that I don't sound like a complete skeptic though, there is hope!
On the design side, things are most simple early on in a project where people are working on the early conceptual designs. This is were the problems are simple enough that things can be solved. It's once the conceptual design is thrown out to the large engineering departments to fill in the millions of details that the trouble begins.
And on the analysis side, the world is moving toward more and more finite element analysis. This is basically the brute force approach to analysing a structure. This is where it is in machine readable form and optimisation is possible. However, the answers the computer gives you are always layered and compromised from the engineers looking over them and having to turn them into something that's actually practical, can be built and takes into account the many requirements the computer does not know about.
I agree almost 100% with what you're saying. I'll just add 2 comments:
1) Regarding the fact that at any given time, there is knowledge that people have that hasn't been encoded in a form usable by the optimizer: I think this can be addressed by generating a set of decent designs with machine learning (on the pareto front, if you will) and then providing user interface tools to allow the humans to pick the designs that best handle the knowledge that wasn't optimized against. These user interfaces will often have to be quite elaborate but that's a tractable problem.
2) When working with Genetic Algorithms, and any machine learning technology, really, my experience has been that the first results only show what is wrong with the problem setup. The designs that are returned by a genetic algorithm are invariably nonsense at first and the then it's a matter of playing whack-a-mole as the optimizer exploits inaccuracies in the problem statement, a fix is made, a new exploit is found, repeat. This is often viewed as a deficiency of genetic algorithms but in my opinion the fact that the metrics being used can be gamed is valuable information that needs to be addressed as early as possible.
Finally, I understand my original comment came across as somewhat naive. If we ever get to a point where we can design physical products, I am imagining starting with something along the lines of a mechanical pocket watch, or maybe a nice desk chair. Airplanes are gonna be last.
1) Regarding the fact that at any given time, there is knowledge that people have that hasn't been encoded in a form usable by the optimizer: I think this can be addressed by generating a set of decent designs with machine learning (on the pareto front, if you will) and then providing user interface tools to allow the humans to pick the designs that best handle the knowledge that wasn't optimized against. These user interfaces will often have to be quite elaborate but that's a tractable problem.
2) When working with Genetic Algorithms, and any machine learning technology, really, my experience has been that the first results only show what is wrong with the problem setup. The designs that are returned by a genetic algorithm are invariably nonsense at first and the then it's a matter of playing whack-a-mole as the optimizer exploits inaccuracies in the problem statement, a fix is made, a new exploit is found, repeat. This is often viewed as a deficiency of genetic algorithms but in my opinion the fact that the metrics being used can be gamed is valuable information that needs to be addressed as early as possible.
Finally, I understand my original comment came across as somewhat naive. If we ever get to a point where we can design physical products, I am imagining starting with something along the lines of a mechanical pocket watch, or maybe a nice desk chair. Airplanes are gonna be last.
Oh absolutely, if the problem is simple enough it's definately possible :)
Even in aerospace finite element optimisation techniques have led to some very effecient structures.
The problem is when you pass the limits of what is manufacturable and have to start breaking it up into simpler pieces joined together based on time, budget, abilities, what you know will work etc.
Also when you have to meet hundreds of requirements like having to fit lots of systems that people haven't designed yet and don't fully know what they'll need yet. It's the problem of compounding unknowns etc.
An awesome chair is definately doable :)
Even in aerospace finite element optimisation techniques have led to some very effecient structures.
The problem is when you pass the limits of what is manufacturable and have to start breaking it up into simpler pieces joined together based on time, budget, abilities, what you know will work etc.
Also when you have to meet hundreds of requirements like having to fit lots of systems that people haven't designed yet and don't fully know what they'll need yet. It's the problem of compounding unknowns etc.
An awesome chair is definately doable :)
> Many of the problems such as parts that don't fit and supply chain problems could be solved by current machine learning techniques.
How? I know a bit of ML but don't understand what you're saying.
How? I know a bit of ML but don't understand what you're saying.
Optimization research is most directly applicable. Genetic algorithms are probably the most widely known.
But in general, the problem involves doing pattern detection between possible designs and their quality metrics. When the whole thing is in software the designs can be verified ahead of time. For instance, you can create a language for designing airplane wings, and then the optimizer can generate potentially good designs, they can be verified to be manufacturable, and then they can be fed into a virtual wind tunnel to figure out if the design performs well. They can also be scored by things like weight and cost to manufacture. Let the optimizer iterate a few thousand times and you're really doing a machine learning problem where the blueprints and the quality metrics are the data set.
But in general, the problem involves doing pattern detection between possible designs and their quality metrics. When the whole thing is in software the designs can be verified ahead of time. For instance, you can create a language for designing airplane wings, and then the optimizer can generate potentially good designs, they can be verified to be manufacturable, and then they can be fed into a virtual wind tunnel to figure out if the design performs well. They can also be scored by things like weight and cost to manufacture. Let the optimizer iterate a few thousand times and you're really doing a machine learning problem where the blueprints and the quality metrics are the data set.
As someone who has worked on the 787 and other large aircraft programs as an engineer and whose job it was to automate as much of the process as possible, I admire your line of thinking but I'm afraid reality is very different to what you have in mind.
If aircraft were machined out of a single block of material into an ideal structure and didn't have a million systems on board, designed by thousands of people trying to cooperate together best they can, you might have a chance.
GAs etc, are useful for small tasks here and there, but at the end of the day how the aircraft gets made and what goes wrong comes down to politics, people, communication, arcane processes and documents, money, time, regulations, rules of thumb etc etc etc
If aircraft were machined out of a single block of material into an ideal structure and didn't have a million systems on board, designed by thousands of people trying to cooperate together best they can, you might have a chance.
GAs etc, are useful for small tasks here and there, but at the end of the day how the aircraft gets made and what goes wrong comes down to politics, people, communication, arcane processes and documents, money, time, regulations, rules of thumb etc etc etc
you didn't get the article. What you're saying requires [necessarily] common "virtual design studio" and/or at least very good communication channels between different participants. The article clearly mention that some subcontractors even didn't have their own engineering department. Be the task contained inside Boeing - there would at least be some "common workspace", though i'm not necessarily saying that it would be sufficient condition.
the virtual design studio you mention is precisely the system i wish the machine learning community was building.
You're a technologist, so you see the solution to all problems as technology.
But the problem also could have been solved with good management and communication. Give employees the power to communicate and raise issues/questions.
But the problem also could have been solved with good management and communication. Give employees the power to communicate and raise issues/questions.
Boeing has been late on almost all their projects. The Australia tanker is behind by 2 years, the Japanese shipment is behind by 3 years and counting.
Its sad to see a company that is politically corrupt still win contracts by the U.S. Government even though it delivers years behind schedule.
Its sad to see a company that is politically corrupt still win contracts by the U.S. Government even though it delivers years behind schedule.
To be honest, though, its not like any of the other aerospace companies are any better. Airbus, for example, experienced huge delays in getting the A380 built, simply because its engineers were using two different versions of the same CAD tool (http://www.cadalyst.com/management/what-grounded-airbus-a380...).
The US Government (Department of Defense and "Intelligence Community") doesn't have a lot of choice. They've let the already incestuous aerospace industry contract to about 4 main companies, and those 4 don't compete with Boeing in the passenger aircraft space.
Boeing probably hasn't had a "farm team" of design engineers for 20 or 25 years, now. Designing a new passenger jet isn't something that comes around more than once in a lifetime.
Boeing probably hasn't had a "farm team" of design engineers for 20 or 25 years, now. Designing a new passenger jet isn't something that comes around more than once in a lifetime.
Politically Corrupt? That is a fairly large blanket statement your throwing out there.
I'll take planes I don't want to get in for 1000 Alex!
Seriously, think of software projects that took years longer than predicted and went way over budget. What kind of product was finally delivered? I don't want to be a seller of fear (I hate that about the US) but I won't be surprised to see serious issues with this thing when it enters service. Anyone here ever work on a 3 year long 1 year project? I have and its rare to see the attention to quality at the end of that 3 year death march that you see in the beginning.
Seriously, think of software projects that took years longer than predicted and went way over budget. What kind of product was finally delivered? I don't want to be a seller of fear (I hate that about the US) but I won't be surprised to see serious issues with this thing when it enters service. Anyone here ever work on a 3 year long 1 year project? I have and its rare to see the attention to quality at the end of that 3 year death march that you see in the beginning.
Off topic, but I'll keep this short:
At the time I post this, there are just 52 comments on the story at LATimes site, while there are 75 here !!!
I guess that'll surprise a few.
At the time I post this, there are just 52 comments on the story at LATimes site, while there are 75 here !!!
I guess that'll surprise a few.
Not too surprising. Any talk of outsourcing will hit a pretty personal nerve among the hacker and programmer community.
A small clarification: :-)
Being fairly new here at HN, I was not fully aware of the popularity of this community and actually speaking, the only context in which I made my observation was a comparison of general traffic/interest/engagement levels between HN and LATimes.
Being fairly new here at HN, I was not fully aware of the popularity of this community and actually speaking, the only context in which I made my observation was a comparison of general traffic/interest/engagement levels between HN and LATimes.
It depends upon how the outsourcing is managed. By outsourcing you're adding extra complexity, unknowns and unmeasureables to the problem - increasing the variety in cybernetic terms. Unless you have a sufficiently good way of managing that additional complexity you're going to get into trouble, which in business terms means overruns or in the worst case failure of the enterprise. See Ashby's law for details.
Aim to establish India in global supply chain: Boeing
http://timesofindia.indiatimes.com/business/india-business/A...
Interesting viewpoint from hat retired employee who said the final assembly has the least value. Kind of put the fact that the final assembly of electronics such as the iPhone is outsourced while some of the component are home mad or at least home designed.
Why do you believe that components are home made? They are only home-designed.
Nearly all of the iPhone is built and assembled outside of Apple and outside of the US. The (non-standard parts of the) hardware are "designed by Apple in California", and the bulk of the software is created in Cupertino as well.
http://texyt.com/iphone+manufacturer+supplier+assembler+not+...
Nearly all of the iPhone is built and assembled outside of Apple and outside of the US. The (non-standard parts of the) hardware are "designed by Apple in California", and the bulk of the software is created in Cupertino as well.
http://texyt.com/iphone+manufacturer+supplier+assembler+not+...
Not much different from what happened to airbus only a couple of years before.
Not much different from what happened to airbus only a couple of years before.
Airbus also had French / German co CEO's at that time, which didn't help decision making.
The problem stemmed from the fact that manufacturing is divided between various plants in various countries. Notably between Toulouse (France) and Hamburg (Germany). This is certainly not the same thing as outsourcing critical components to external suppliers (which I'm sure Airbus does too to a lesser extent).
Upon final assembly of the A380 in Hamburg they bungled the cabling which hit them back another six month or so. They where other problems of course, which there are always bound to be on such an ambitious project and with the (likely) unrealistic time scale for delivery.
The A380 was two years late, which is probably not bad for such a project. I wouldn't bank on it that the Dreamliner takes of in 2011. At least not commercially.
The airbus style big block integration actually worked quite well - engines from RR, undercarriage from airbus and wings from Mitsubishi all worked well.
The problem was that they eg. farmed out the avionics to mega corp, who farmed out the hardware to company A and software to B. Company B farmed out bits to company C and company D. Nobody realised that company D was a single contractor shop until they were late which went all the way up the chain.
There was an article on here at the time, Boeing literally couldn't find out the name of the company doing a vital part of the avionics software.
The problem was that they eg. farmed out the avionics to mega corp, who farmed out the hardware to company A and software to B. Company B farmed out bits to company C and company D. Nobody realised that company D was a single contractor shop until they were late which went all the way up the chain.
There was an article on here at the time, Boeing literally couldn't find out the name of the company doing a vital part of the avionics software.
Hasn't Airbus always been some sort of multinational/EU-national plane manufacturer? I believe thats how it started as instead of a bunch of small enterprises siloed in each country they were pooling resources and talent to take on the American hegemony in aerospace.
I know a lot of people who talk like this. However when it comes to spend their own money, they always go for whatever's cheapest, whether it's clothes, electronics, whatever. You can literally see these people ranting about worker's rights while wearing Primark and talking on a Huawei OEM'd handset.
Me, I'm a capitalist, and proud of it, but y'know, I'm the one willing to spend a little extra for a UK PLC product. Bullshit talks, money walks.