Boeing CEO blames industry for 787 bolt shortage

NEW YORK (Reuters) - Boeing Co's BA.N chief executive pointed the finger at Alcoa Inc AA.N and others for the lack of bolts that has delayed the first flight of its new 787 Dreamliner and threatens its delivery schedule.

The Boeing 787 Dreamliner during its world premiere outside the Boeing assembly plant in Everett, Washington, July 8, 2007. Boeing's chief executive pointed the finger at Alcoa and others for the lack of bolts that has delayed the first flight of its new 787 Dreamliner and threatens its delivery schedule. REUTERS/Robert Sorbo

The shortage of aluminum and titanium bolts -- known as fasteners in the aerospace industry -- has been publicly discussed by Boeing for six months or so, but the problem is still not completely solved, Boeing CEO Jim McNerney said at an investor presentation on Tuesday.

“The supply chain is just gradually catching up,” McNerney said. “We are making progress -- it’s still a scramble though, if I’m honest.”

The shell of Boeing’s first 787 was quickly assembled with temporary fasteners to meet the public unveiling date in early July, and Boeing is still pulling them out and replacing them with permanent ones.

The shortage of permanent fasteners, plus some flight software delays, caused Boeing last week to postpone test flights of the new plane to mid-November at the earliest, three months later than originally planned.

Boeing officials said as early as March this year that the tight supply of fasteners was a concern for the plane maker. Scott Carson, the chief of Boeing’s commercial plane unit, emphasized the issue in a briefing with reporters before the Paris air show in June, suggesting the sharp contraction of the aerospace industry after the attacks of September 11, 2001, was a major factor.

McNerney echoed those remarks on Tuesday, saying suppliers didn’t predict the resurgence of planemaking activity in the last few years.

“You know the root cause here -- the fastener industry got consolidated, post 9/11,” said McNerney. “The consolidators misjudged the demand swingback -- a lot of us misjudged the demand swingback -- post 9/11.”

That appeared to be a direct reference to Alcoa, the chief supplier of bolts for the 787, which acquired Huck Fasteners and Fairchild Fasteners since 2000. Boeing has not publicly identified its other fastener suppliers.

Alcoa, which makes the bolts for the 787 at plants in southern California, said it was tackling the issue.

“We are working with them (Boeing) to try to get them as many fasteners as we possibly can for this program,” Alcoa spokesman Kevin Lowery said. “Every day we are getting them more and more -- we are making great progress.”

McNerney said its fastener suppliers are catching up, but full resolution of the shortage is not “guaranteed.”

“We have a lot of temporary fasteners in that first airplane, that are now being reworked,” he said. “The supply chain is just gradually catching up.”

After pushing back the first 787 test flight to a range of mid-November to mid-December, Boeing now has no more than six months to finish test and certification before first delivery of the plane to Japan's All Nippon Airways 9202.T in May.

Wall Street is minutely scrutinizing the 787 program for signs of delivery delays like those which hurt rival Airbus’ A380 superjumbo. Boeing says it is still on schedule to start delivering the hot-selling 787 in May.

The first flight delay was a “stutter-step,” said McNerney, defending the shortened test schedule. “It’s an aggressive plan, but it has substance to it,” he said.

Boeing shares were up 2.3 percent at $97.54 on the New York Stock Exchange.

Reporting by Bill Rigby