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ROBERT SIEGEL, host:

From NPR News, this is ALL THINGS CONSIDERED. I'm Robert Siegel.

NOAH ADAMS, host:

And I'm Noah Adams, your fill-in host for several days here.

The 787 Dreamliner has been a real headache for Boeing. The first test flight will take place at the end of the year, that's nearly two and a half years late. And this week, Boeing replaced the man in charge of its passenger jet business.

NPR's Wendy Kaufman has the story.

WENDY KAUFMAN: To build the 787, Boeing took two giant leaps. First, it created the structure not from metal, but from lightweight composite material. And second, it outsourced more than ever before.

From the outset, there were serious quality problems and delays, but that didn't stop the company from its elaborate rollout celebration two summers ago. The date: 07-08-07.

(Soundbite of music)

The highly produced red carpet ceremony at the Boeing factory in Everett, Washington, was broadcast live around the world, and 15,000 onlookers cheered wildly when the plane made its debut.

(Soundbite of cheering)

KAUFMAN: But there was also some unease.

Mr. JON OSTROWER (Reporter, Flight International): I had a chance afterwards to kind of walk around the airplane and just look at it for a second. And it didn't look quite right.

KAUFMAN: Jon Ostrower, a reporter for Flight International magazine, says the plane didn't look flight-ready, and that didn't mesh with what senior Boeing officials were saying just a couple of weeks earlier at the Paris Airshow.

Mr. OSTROWER: The program manager actually said that the airplane would be structurally complete at the time of the rollout. Well, that wasn't exactly the case. That was actually far from the case.

KAUFMAN: He and others wondered: Did senior Boeing officials know the plane was nowhere near ready to fly, or were they totally out of the loop and unaware of numerous problems? Either answer is troubling. And questions about the program's leadership and the production model have persisted as the jet was delayed and delayed and delayed again.

To save money and minimize its financial risk, Boeing outsourced not just production, but also design and engineering in ways it had never done before.

Mr. RAY GOFORTH (Executive Director, The Society of Professional Engineering Employees in Aerospace): Boeing had this, essentially this colonial model.

KAUFMAN: Ray Goforth is executive director of the engineers' union at Boeing.

Mr. GOFORTH: They were going to be the colonial power. And they would have these colonies, and they would tell the colonies what they needed. And the colonies would deliver the parts to them, and they would reap the profit. It was really this arrogant vision for how this was going to work.

KAUFMAN: The union, which has a vested interest in keeping work inside Boeing, opposed the company's outsourcing plan from the beginning. But the union accurately predicted many of the problems, including suppliers with insufficient technical expertise and vast communication gaps.

This summer, Boeing had to scrub the first flight test because of structural problems. And the company ordered a major Italian supplier to stop producing fuselage sections because they weren't good enough. Boeing declined to provide an executive to interview for this story. But the company has acknowledged not all of its suppliers were up to the task and says it will pay more attention to them in the future.

Airline industry analyst Richard Aboulafia says Boeing's attempt to, in his words, do things on the cheap hasn't worked out.

Mr. RICHARD ABOULAFIA (Aerospace Analyst): The idea of spreading risk and cost on the 787 has basically horribly backfired. The amount of money needed to repair the damage by this production model has greatly outweighed any of the cost savings associated with adopting the model.

KAUFMAN: This week, Boeing replaced the head of its passenger plane business. The new CEO, Jim Albaugh, comes from Boeing's defense unit.

Analyst Cai von Rumohr of Cowen and Company notes Albaugh has run technically complex programs, but…

Mr. CAI VON RUMOHR (Managing Director, Cowen and Company): He's jumping in the middle of this program. He has no experience in running commercial aircraft programs. He doesn't know the commercial customers. He doesn't know the commercial suppliers.

KAUFMAN: The challenges are immense. And says analyst Richard Aboulafia…

Mr. ABOULAFIA: Hanging over all of this is the question of aircraft performance. There's a lot we don't know. If there are problems, how quickly can they refine the design and manufacturing of the aircraft to meet the original expectations?

KAUFMAN: Despite dozens of cancellations, Boeing still has more than 800 orders for the new jet. It remains the bestselling new aircraft in history. But Boeing has to demonstrate the 787 is still worth waiting for. The first flight test is now slated for the end of the year. Boeing has a lot riding on it.

Wendy Kaufman, NPR News, Seattle.

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