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Boeing is finding that out with its new 787, the snakebit Dreamliner. Seventy percent of the airplane's components were made outside of the United States.
The Dreamliner was certified for service four years late and as much as $18 billion over budget. The airplanes were grounded around the world this month because of concerns about safety.
What makes the outsourcing especially galling is that Boeing is a major defense contractor. The company received $19.4 billion from U.S. taxpayers in 2010. (According to the Project on Government Oversight, the company has also paid more than $1 billion in fines since 1995, for misdeeds such as transferring rocket data to China, discrimination, polluting groundwater, overbilling and fraud, to name a few.)
Yesterday, Reuters reported that Japan lowered safety standards for the Dreamliner:
Japan's government stepped in to give Boeing Co's now-grounded 787 Dreamliner and its made-in-Japan technology a boost in 2008 by easing safety regulations, fast-tracking the rollout of the groundbreaking jet for Japan's biggest airlines, according to records and participants in the process.
The concessions by an advisory panel to Japan's transport ministry reflected pressure from All Nippon Airways (ANA) and Japan Airlines (JAL) and a push to support Japanese firms that supply 35 percent of the 787 from the carbon-fiber in its wings to sophisticated electrical systems and batteries used to save fuel.It still isn't clear that the lowering of safety standards had anything to do with the malfunctions -- ranging from fuel leaks to battery meltdowns -- that resulted in the grounding of the fleet. But it's crystal clear that outsourcing components was a terrible idea.
Nearly two years ago, the Seattle Times reported that a Boeing engineer predicted the disastrous outcome of the offshoring plan -- in 2001. The engineer, John-Hart Smith, was a world-renowned airplane structures engineer who presented a paper at a company symposium that year. Reports the Times,
Hart-Smith, who had worked for Douglas Aircraft and joined Boeing when it merged in 1997 with McDonnell Douglas, was one of the elite engineers designated within the company as Senior Technical Fellows.
His paper was a biting critique of excessive outsourcing, a warning to Boeing not to go down the path that had led Douglas Aircraft to virtual obsolescence by the mid-1990s.
The paper laid out the extreme risks of outsourcing core technology and predicted it would bring massive additional costs and require Boeing to buy out partners who could not perform...
Hart-Smith argued that it was wrong to use (a) financial measure as a gauge of performance and that outsourcing would only slash profits and hollow out the company.Though many Boeing engineers agreed with Hart-Smith, he was sidelined for his views. By the time the news story appeared, he was retired and living in Australia. He had gotten word that his views were vindicated.
The whole story is well worth reading. You can find it here.