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Boeing Says It Won’t Repeat Mistakes of the Past as It Increases Production

Boeing plans to increase production of the 737 series while avoiding previous supply chain mistakes.

The Boeing Company plans to increase production of it 737 series of aircraft by 24 percent while avoiding the pitfalls of previous production increases according to Reuters.

In an interview, Pat Shanahan, who oversees production at Boeing, indicated that mistakes had occurred in previous attempts to boost production due to the lack of an integrated plan which included the supply chain. In 1997, Boeing undertook a plan to double its overall production rate and the results were disastrous. Suppliers were unable to keep up with demand and failed to deliver parts on time. The production lines at both Everett and Renton, Washington became choked and shut down for a month. Assembly of the 747 was halted and the building of a new version of the 737 was delayed. Worst yet, the Company lost money for the first time in 50 years after it experienced $3.0 billion in unanticipated costs.

Boeing plans to boost its current 737 production of 42 aircraft per month to 52 aircraft per month by 2018. The jetliner is one of the world’s most popular and has been a real profit center for the company. According to The Seattle Times, Boeing currently has a backlog of more than 4,000 orders for the 737 so any increase in production would aid in reducing that backlog while increasing the Company’s cash flow.

Demonstrating its ability to generate a steady stream of income could also allay concerns being raised by investors. Some analysts feel that the backlog of orders may not be as firm as it appears, especially if there is downturn in the economy and airlines begin to cancel orders. Other investors believe that Boeing does not have enough orders to maintain production of the 777 series. Any decline the 777 product could lead to major shortfall in cash flow.

[Photo: Boeing]

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