Boeing gets grip on 787 supply chain with upsized jumbos

A Boeing Co official said the planemaker has its sprawling global supply chain under control for its lightweight Dreamliner jet and plans to ratchet up production, a jump in output a Japanese supplier said could expose new supply bottlenecks.

Boeing has outfitted at least four 747 freighters with wider fuselages, dubbed "Dreamlifters", to gather parts from around the world for its 787 jet that are then assembled at plants in Washington and South Carolina in the United States.

The company is trying to make up for earlier delays caused in part by the difficulties in managing 325 suppliers building parts for the 787 at 5,000 factories worldwide.

Boeing now makes three and a half of the carbon-composite jets per month. It plans to raise output to five a month by the end of the year and raise it to 10 per month by the end of 2013.

The new target was described on Wednesday as a "very difficult target" by Jeffrey Luckey, the Boeing executive in charge of the plane's supply management.

"We made mistakes along the way. We are currently on path to achieve 10 a month," Luckey said during a presentation at the Japan Aerospace International Exhibition in Nagoya. "We know when we are going to pick them up and drop them off," Luckey said. "We lost visibility in the supply chain."

The 787 jet is the most outsourced in Boeing's history and Japanese companies such as Fuji Heavy Industries Ltd <7270.T> and Mitsubishi Heavy Industries Ltd <7011.T> account for more than a third of its components, including the first wings built outside the United States.

At a Fuji Heavy plant near the show venue in Nagoya, factory manager Hiroyuki Ishikawa is preparing a new production line to build wing-boxes that connect the 787's wings to the fuselage. The factory is the sole supplier of the critical component, which is about the size of a small house.

While expressing confidence that his plant could match the planned acceleration in 787 output in the United States, the hike in production Ishikawa noted, "could expose bottlenecks" in the availability of parts from lower-tier suppliers.

Fuji Heavy's aerospace business, which Boeing named as supplier of the year in 2011, buys components from about 160 companies in Japan and overseas.

The 787 wing-boxes coming out of Ishikawa's facility are carried to the United States on the upsized Dreamlifters. Wing-boxes for Boeing's 777 jet the company fabricates at a line next door are shipped by sea.

Boeing's Dreamliner, which boast fuel savings of 20 percent compared with its predecessor, the 767, has so far won 824 orders, with around 60 delivered. The plane's list prices range from $200 million to $240 million, but most sales are discounted.

Japan's All Nippon Airways <9202.T> was the launch customer for the 787, ordering 66 partially made-in-Japan aircraft, which it has put at the center of its fleet planning.

(Reporting by Tim Kelly; Editing by Matt Driskill)

(This story corrects to South Carolina from North Carolina in second paragraph)