Boeing chief defends outsourcing plan

Boeing's chief executive officer said that outsourcing production of parts for the 787 jetliner to manufacturers worldwide remains a good plan, despite four production delays and costly penalties.

However Jim McNerney conceded that relying on Boeing's far-flung suppliers has not been completely smooth.

"The supply chain was a very aggressive move by us," Mr McNerney said. "In a couple (of) cases we gave our partners a little more work than they could handle effectively."

In at least one case, Boeing has had to take over work it had contracted out to partners.

The company took control over some 787 pre-integration work - done before the aircraft parts are shipped to Everett, Washington, for final assembly.

It took over that work by agreeing to buy Vought Aircraft Industries' 50% share of Italian-American fuselage builder Global Aeronautica in March.

"If we have to do something like that somewhere else, we'll consider it," Mr McNerney said.

Boeing's unprecedented plan to assemble a jet from components manufactured largely by other companies has resulted in production delays and four postponements of test flights for the company's first newly designed jet in over a decade.

The delays will likely cost Boeing billions of dollars in penalties.

The outsourcing will also be an issue when contract negotiations between Boeing and the International Association of Machinists and Aerospace Workers begin on May 9.

Speaking after an annual luncheon for the Seattle Business Forum, Mr McNerney said the union's stance on outsourcing won't change the fundamentals of Boeing's international production model.

Tom Wroblewski, president of IAM District Lodge 751, said the union opposes outsourcing so much of the work traditionally done by union members. He would not say whether the union would demand a shift in Boeing's strategy, however.

Mr Wroblewski said that the contract talks are "our opportunity to show the company what we've been telling them all along, that as you start to subcontract you lose control of the product".

"Our members have been the ones putting it together and installing the systems."

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