To affirm that the airplane is going to revolutionize the future is to be guilty of the wildest exaggeration Scientific American Magazine, 1910

Commercial Aircraft Industry - Market Drivers Market demand for large planes –777 filled Boeing’s need for plane sized between 767 and 747 –DC-10, L-1011, and early versions of aging aircraft needing replacement –Needed to fit existing airport infrastructure

Market Drivers Seat categoryModels Intermediate twin-aisle: , A300, A310, A A330, A340, MD and larger: >400747, 747X, A3XX 777 filled this need

Market Drivers Increased globalization and travel –Higher demand for comfortable, practical business travel due to globalization –Increased market demand for long-haul flights –Boeing had to anticipate types of airplanes needed in the future –Developing countries and emerging markets, especially Pacific Rim and Latin America

Market Drivers Competition –Airbus Industrie - consortium subsidized by British, French, German, and Spanish governments –McDonnell Douglas MD-11 –Competing models in seat capacity category ( seats): MD-11, A-330, A-340 –Boeing needed new plane to compete with other new products, vs. extending 767

Market Drivers Plane design specifications –Airlines found fault with cabin widths of competitors –Configuration flexibility –Carriers such as United, American, All Nippon Airways, British Airways, Japan Airlines, and Cathay Pacific helped define 777 configuration –Reduced variability in design and production, leads to reduced costs

Market Drivers Cost Drivers –Labor - maintenance and operations –Fuel - reduced importance but still significant Aircraft Economics –Fly-By-Wire eliminates need for flight engineer –Twin engine planes are more efficient - lower fuel and maintenance costs –777 reliable enough for transoceanic flights –Lower customer financing costs

Why “paperless” paradigm shift? Slow, arduous, and frustrating design & manufacturing process Technology available –767 Engine strut (save time & costs) –Digital flight control (Airbus “fly-by-wire”) –U2 Spy & Stealth (successful design teams) Lower costs (minimize errors & rework) Risky venture

Design & Production Software CATIA (Computer-Aided 3D Interactive Application) - Dassault, IBM –ELFINI (Finite Element Analysis System) Solve linear elasticity & thermal problems EPIC (Electronic Preassembly Integration) Check for interference in sub-assembly parts

Hardware & Network 1700 WSs (Puget Sound), 7000 worldwide 8 of IBM’s largest mainframes (4 - Puget Sound, 4 - worldwide) Linked by dedicated cable under Pacific Ocean Storage capacity terabytes

“Fly-by-Wire” Computerized Flight Control –Twisted pair vs steel cables Limitations Overcome –Pilots in control –Pilots “feel” airplane Replaced Display Units –CRT with flat-panel, full color LCD

CATIA Developed by Dassault Alliance with IBM Applications to multiple industries UNIX and Windows NT Modular, scalable Dassault also a competitor of Boeing

Shorter Development Time, Improved Quality, Lower Cost Concurrent development in more than 17 time zones and privacy concerns CATIA, ELFINI, EPIC, CLASH Suppliers’ proprietary software Suppliers’ acceptance of CATIA Component integration; tolerances

Japanese supplier consortium Mitsubishi Heavy Industries, Fuji, Kawasaki Fuselage development Dedicated trans-Pacific data cables Shared investment costs Promoted airplane purchases by Pacific Rim airlines

IT: Engine Design, Integration, and Performance Pratt & Whitney (PW4000), Rolls Royce (Trent 80), GE/SNECMA (GE90) Airlines select engines FAA certification process shortened GE90: IT leads to performance gains, increased reliability  increased sales Complete engine simulations: The cutting edge of technology

IT Tools & Intellectual Capital

Impact - People Boeing Employees –Increased Communication –Team approach –Decreased Bureaucracy

Impact - People Customers –Boeing’s customer service goal –Customer integration into design process –Passenger satisfaction –Customization –Flexible purchase arrangements

Some of 777’s Major Customers American Airlines British Airways Cathay Pacific Airways Continental Delta Emirates Korean Air Lauda Air Malaysia Airlines United Varig

Airplane Design Process THEN (after WW II) NOW (after 1990) Make paper drawings & full-scale mockups Test fly to discover blunders Write maintenance manuals last Paperless, e-mockups Computer simulation removes bugs Mechanics involved throughout

Impact of Design Process Saves Boeing time and money –Easier design process –Improved accuracy –Reduced production costs More time for testing First-mover advantage

Market Outlook

Future Issues Production –Replacement of production system with streamlined DCAC/MRM system to be completed this year –Shift to catalogue “made to order” model –Integration with suppliers & customers is proving to be a challenge Seeking 5% price reductions from suppliers

Future Issues Asian Crisis –Asian demand originally drove the development of the 777 –Short-term Asian demand has dropped –Offset by long-term growth prospects in demand for airplanes

Future Issues Competition –Replication -- Can Airbus copy this technology? –Response Price competition (easier due to subsidies) Design innovations US vs. EU dichotomy

Future Issues Spillover applications –CATIA modeling used for: other civil aircraft –737-NG uses innovative production and planning techniques learned on 777 military aircraft the space shuttle –(“because it’s in the direction of goodness”)

Questions?