Boeing supplier getting its house in order
The chief executive of one of Boeing’s major 787 Dreamliner partners acknowledged Friday that his company is “among the riskiest, if not the riskiest, of the [airplane] structure producers.”
He presented a picture of a supplier that 18 months ago, just as production work on the 787 began in earnest, was in bad shape and poorly positioned to provide what Boeing needed.
But Elmer Doty, CEO of Vought - which makes the 787 rear fuselage in Charleston, S.C. - said things are looking up.
“Our challenges are logistical rather than technical,” Doty insisted in a teleconference with financial analysts to discuss third-quarter earnings. “We’ve got a game plan that meshes with everyone else’s and we think we can execute on it.”
Still, Vought now faces a cash crunch and is negotiating revised 787 contract-payment terms even as Boeing gives its supplier extra scrutiny.
Doty largely blamed Vought’s subcontractors for the problems.
“Production of fuselage barrels is going very well, but it is our supply chain that has struggled to deliver parts,” Doty said. “This challenge will be with us well into next year.”
He said Vought has taken some parts work back in-house, which demands extra resources.
This week, Boeing appointed Vice President Scott Strode to oversee Vought’s operations, particularly its 787 production.
Doty said Vought discussed the program with Boeing after Boeing brought in Vice President Pat Shanahan as 787 program chief.
“The big risk with us is we have a rate increase that happens in the first half of next year that we got to make,” Doty said. “We asked for help.”
He said Vought ended up in such trouble for three reasons:
• The company is by far the smallest of the partners.
• It faced a severe “liquidity crisis” 18 months ago that almost killed the company.
• When Vought took on the 787 work, it had to “reconstitute an engineering department” from disparate units that had been acquired separately, while at the same time “starting up a green field site in a remote location.”
“Given those facts, I don’t think you need to rely on rumors to assume that we are among the riskiest, if not the riskiest, of the structure producers,” Doty said.
The original 787 contract assumed payment to partners such as Vought upon first deliveries of the aircraft, which are now pushed out at least six months.
Chief Financial Officer Keith Howe said cash is stretched tight and the company is negotiating revised contract payments with both Boeing and its own suppliers.
Dominic Gates: 206-464-2963 or dgates@seattletimes.com