Counterfeit titanium in jets
 

https://www.zerohedge.com/markets/counterfeit-titanium-found-boeing-and-airbus-jets

Boeing is no longer the pride of American aviation. The plane manufacturer is riddled with so many problems it's impossible to keep track. Yesterday, the FAA announced an investigation (yet another...) into a 737 Max 8 jet that encountered a dangerous mid-flight 'Dutch roll' several weeks ago. Now, a report from the New York Times reveals that some Boeing jets are built with 'counterfeit titanium.'

Some recently manufactured Boeing and Airbus jets have components made from titanium that was sold using fake documentation verifying the material's authenticity, according to a supplier for the plane makers, raising concerns about the structural integrity of those airliners.

The falsified documents are being investigated by Spirit AeroSystems, which supplies fuselages for Boeing and wings for Airbus, as well as the Federal Aviation Administration. The investigation comes after a parts supplier found small holes in the material from corrosion. -NYT

The report continued: (click on link to read all)

I read this today from another news source. Serious problem but it goes deeper. There is a big trend outsourcing parts in other industries as well. I'm retired but I worked for a Teir 1 automotive supplier. In my 35 years with the company, we were bought/sold 5 times. Every owner stressed profits and lower manufacturing costs. The idea of internal manufacturing is lost - you don't care where it is made - getting it outsourced outweighs the internal method. It comes at a cost of labor savings, but it also has risks: quality control and intellectual knowledge and processes. You can literally put the outsourced company in business and possibly a competitor.

I'm guessing "counterfeit titanium" is actually titanium but not of the correct grade for aircraft.

Titanium is really difficult to produce and there are not a lot of processing plants world wide (search "titanium sponge").

I saw this. Not good at all. And interestingly have some experience with metals in the supply chain of aerospace and fraud. See SAPA Federal Lawsuit for details. People go to jail for this thing. And they should.

The hits keep coming... "We", the engineering staff as a whole, first began raising concerns about the new direction we saw the company embarking upon in about the late 1990's. All of our concerns fell upon deaf ears. We were labeled as stuck in our ways, resistant to change, unable to "think outside the box". We would reply with "you have to know what is inside that box before you can understand the impacts of the changes you are pushing". All to no avail.

It was (and still is) a race to the bottom. Find the cheapest possible supplier who can provide the cheapest possible components. Offload, offload, offload. Then those to whom we had offloaded offloaded again, sometimes several suppliers deep. We lost track of who was building what. Then, even worse, we offloaded design responsibility. To companies that then offloaded portions of that as well. Then we didn't even know who was designing what.

As if things could not get any worse, then suppliers starting defaulting on their contracts, paying the fines to get out before our cost demands drove them under. Well, ok then, we'll find another supplier - give us your designs, and we'll part company. Not so fast - these are no longer Boeing's designs, they are the suppliers designs. We had to start over with someone else, often several "someone elses" because so many suppliers decided it was cheaper to bail out and pay the penalties than it was to continue.

The end result was a number of 787's dubbed as "the teenagers". About the first 15-18 meant for customer delivery after the first couple of flight and static test aircraft. We were not allowed (by the FAA) to sell those aircraft. For the simple reason that we could not tell them who built what. The documentation was so completely garbled and untraceable because of the constantly changing suppliers that we had lost track. We spent years removing and replacing untraceable parts. As far as I know most sit undelivered to this day.

This worked out for us in AOG as it turned out we had some "practice airplanes". When I designed new repair or maintenance equipment, we could actually try it out on a live bird before we had to travel with it. What a windfall for us, we never had that opportunity before. It was usually "best guess" and then modify and fit in the field in many cases. But what a hell of a way to be provided that opportunity...

I retired seven years ago. I loved my job and still miss it and the people with whom I was privileged to work. But I don't miss the company. Oh, I miss what it was when I started, a veritable playground for engineers, but I do not miss what it has become. What it has become is a large part of why I retired early.

‘It was (and still is) a race to the bottom.‘

Every industry.
Private equity has accelerated the trend.

Very insightful, Jeff. Thanks for you post. It was honest but also frightening.

Yep, it's the whole world these days. The most important thing is profitability, and the best way to get that is under/cheap staff and cheapest cost for anything that's going to be sold or turned into something that'll be sold.

Hidey-ho....off to PARF we go...? C'mon, guys.

Very disappointing. BA’s management needs to be completely overhauled. BA shareholders need to be stuck with many years of low earnings/no dividend until the company fixes itself and launches a new aircraft. I personally think BA HQ needs to be moved back to Seattle.

Similar to INTC, but INTC replaced top management, lit a huge fire under its own ass, revamped its business practices, and is on the way to recovery. Even so it has a good ways left and success is not certain.

What should we (USA) do if BA fails to turn it around? Let commercial airliners become an Airbus monopoly or an Airbus + China duopoly? Take control of BA and force change? Split off the military/space part and let the commercial part die?

BA’s problems are hurting others - LUV (Southwest) for one, it’s 100% Boeing fleet is a risk when BA isn’t delivering the planes LUV needs, and if travelers start avoiding Boeing aircraft, LUV will be screwed.

"Chinesium" has been known to be real thing for decades. How can anyone making aircraft be caught sleeping on the issue today?

It’s not just airplanes, it’s steel and material, for navy ships and submarines, etc.

When I was still working we had a problem with lifting fixtures being made of suspect titanium.
Couldn't trust lifting a multi-million dollar satellite with a bad piece in the lifting link. PIA to deal with when schedules were pushing the build.

The Industrial might of the USA won WWII. Our miliary was supplied "in house", so to speak. We should get smart and do so again.

Off-topic, but I watched a documentary yesterday about illegal salvaging of world war two ships in the Indonesia area. The metal is worth more, because it was not exposed to radiation. When they catch the dirtbags, they should lock them up for life.

And many Rx/OTC ingredients as well.

The fan blades are titanium right, that would be a worse failure! Don’t they have to x-rayed and verified? If they are passing crap every engineer and their bosses including executives should be charged!

Yeah, and while its really bad in aircraft, ask your indy auto guy how long he expects to be in business with the current auto parts chain. Unless its a current production vehicle, everything in the aftermarket is suspect. It's not all bad, some actually vg, but its a total crapshoot.

The engines are made by other companies - GE, Pratt & Whitney, Rolls Royce. Engines can have problems - a big recall is costing Pratt & Whitney billions right now.

1000% agree.
We've had over 40 years of experience with the Milton Friedman neo-liberal economic experiment and it has been an abject failure. It's time for corporate responsibility toward the people businesses have been exploiting.

Medical devices...

http://forums.pelicanparts.com/uploa...1718624901.jpg

What about AS9100D? Shouldn’t that have prevented this? :rolleyes:

Making API 6A parts under API Q1, we had a potential disaster that surfaced 4 years ago. We had a BOP come in for recertification that needed a weld repair (erosion). We sent it out and the welding shop called and reported that the hardness was too high. For H2S compatibility, max hardness is 22 Rockwell C. This BOP body was as high as 26.

We had the MTR from when we made it 8 years previously, and it said it was in spec (18-22 RC)…

I had the body sent back to our shop and we confirmed the out of spec hardness.

I then ordered a Spark test to verify the alloy composition… it was tool steel. Not 4130.

We contacted the steel supplier who then contacted the mill. These were both big name Canadian and American companies. After numerous meetings, the mill admitted they had 3 billets that were swapped. The BA5TARDS knew. Their customer that ordered the tool steel knew immediately that they got 4130 because it wouldn’t harden and they didn’t contact us.

We had to recall 2 other BOPs from active service, one was in the Middle East.

The mill did cover our costs.

This 5hit does happen. None of this material was chinesium.

The worst part for me was that I pulled the manufacturing records for these BOP bodies and the machinist noted the hardnesses as out of spec on his QC sheets, nobody even looked at this. Our quality manager was more concerned about implementing more BS process than learning from this and trying to prevent a future occurrence.

I got recruited to go elsewhere and this was a big factor in my decision to leave. My company put innocent lives in jeopardy and the people that should have cared, didn’t.

To put this into perspective, these billets were about 21” in diameter and 5 feet long. Big chunks of forged 4130… I mean 1075 tool steel.

Does Boeing test material or just trust the heat certs?

I don't think I could work in a shop that didn't have a material analyzer gun and hardness tester onsite. We usually rely on heat certs but if anything is suspect or super critical we check it.

It's always been this, really, it's just that outsourcing and the international movement of capital is so easy nowadays that you'll die if you don't do it.

No, it has not "always been this". Nothing could be further from the truth. Not at Boeing, not at a litany of other manufacturers. "This" has largely been the inevitable result of these sorts of companies pushing "shareholder value" beginning in the late 20th century, picking up momentum in the 21st century. Shareholders owning stock in publicly traded companies now expect to make their money through increasing stock prices rather than dividends. It never used to be that way. The artificially escalating "values" of tech stocks during the big tech boom, which engendered the rise of the "day trader", is where this all began. Everyone else had to compete for that interest and, to do so, had to find ways to dramatically raise their stock prices every quarter.

Prior to that, "blue chip" companies, like Boeing, played the long game, providing solid returns via dividends, not stock prices. It was an entirely different game in those days. I had the great good fortune of spending the first 20 years of my career in such a company, one that valued its reputation amongst its customers, and absolutely did not scrimp on quality in anything. I saw it. I lived it. It was far, far different than it is today. So, no, it most vehemently has not "always been this".

meanwhile? Boeing? …… 44 billion in stock buybacks. aka market manipulation.

Yup, artificially inflating stock prices. The other go - to has been selling off assets to artificially inflate profits. They can only do either for so long until it's time to pay the piper. But, well, when performance is measured quarterly, there are huge (if not temporary) incentives driving this business model.

What took Boeing decades to build and acquire was sold off in a matter of just a few years in the early 2000's. The CEO responsible, and a series of successors are all long gone, bonuses and incentives in hand, leaving behind a mere shell of the company that so many had worked so hard and had risked so much to build.

Well said!

My buddies type 4 fairly mild race engine grenaded the second race. His ARP rod bolts were found to be counterfeit.

This

I worked in telecom in the 90s. The senior management team ran the companies on leverage and stock value. They watched their personal portfolios more than anything else.

Did it used to be like that because of values inherent to leadership and a focus on long-term growth or was it that competition was different? I often wonder. We often look back on the post-war period as a time of businesses that cared about quality and employees, but is that because leadership was different or because they didn't face the same constraints from global competition?

That's what I meant by "it's always been like this", that businesses have always pursued lowest costs. They've always chased the cheapest supplier but what that means is different when you're looking at a national vs. international environment where business laws and regulations are different.

Edit: To add to that they need to be servants to their customers, which just want to move as many people through the sky as cheaply as possible. The only quality they care about is where it doesn't cost them money because passengers don't care what brand of plane their butt will sit in.

That's a great model. For a privately owned business. Publicly traded? That won't 'fly' now. There will be a takeover, or a shareholder revolt. Maximize profits or GTFO.

We are going through it where I work. Solid engineering company run by technical people, but owned by a mega-corp. We are being sold off as a 'weak link', despite solid performance and good profit. We will be bought by cost cutters.

Well do businesses exist to make money or make products? To the people with the money to decide the answer is obvious.

all companies exist to make money and maximize profits, but I think Jeff nailed it his posts. There has been a fundamental change in corporate mindset (across industries) in recent decades to maximize profit (and thus bonuses/pay packages) NOW! For the benefit of the CEO NOW! Long term strategic thinking with a focus on building the best possible product AND make a reasonable margin at the same time is all but gone. Today, any sacrifice that can be made to increase this years EPS will be greenlighted as CEO’s eye up their next vacation house. It’s not right, but it’s just the culture these days. Maximized shareholder value used to be done in concert with building a long and sustainable business model. Today, it’s all about how much $$ can we extract as soon as possible. Basically the private equity model has taken over public co’s in general….

What's reasonable, and why isn't it a larger margin? Why would investors in publicly traded companies ever consider anything outside of ROI, and with how rapidly things can move in the modern, global economy, why would investors keep their cash idle in slow and dependable businesses when they could have it in something growing?

So I suppose when I say it's always been like this, what I'm saying is that the mindset of chasing profits has always been present, and while the focus has shifted to short term over long term, it's more-so that the definitions of short term and long term have changed tremendously and the speed of change has increased.

For example, I'm in the automotive world, and the expected timeline for new OEM facilities has dropped precipitously, from 3-4 years PO to SOP down to 12-15 months. It's absurd and costly but every manufacturer knows that if they don't do it somebody else will and their product will be late to market. I'd also point out that I could see plenty of short-term over long-term decisions in old factories (like sacrificing room for expansion that costs more when that expansion comes, or leaving equipment abandoned in place which restricts existing operations), so it's not exactly a new concept, just the timelines are different now than they used to be.

As hard as you keep trying, David, you are still dead wrong. You simply could not be more wrong. Every way in which you have tried to support your assertion that "it's always been like this" fails. Because it is simply not true.

Many products were, at one time, built to a standard, not a price. Many remain so today. Not as many as in times past, but there are still plenty of examples. Aircraft used to be one of them.

My home is filled with artifacts which are the results of that manufacturing philosophy. Most of them are older, dating at least from the 20th if not the 19th centuries. Built at a time when there was pride in craftsmanship, cost and/or profitability be damned.

When I started my career at Boeing, profit margins stood somewhere around 2-3%. The pension fund was over funded, everyone got paid every couple of weeks, the lights stayed on, and we built aircraft to a standard, not a price. The CEO made about 12-15 times what the average engineer made, we paid dividends, everyone was happy.

By the time I left the CEO was making over 300 times the average salary paid by the company. The Board had consistently voted itself ludicrous "bonuses" that were not even performance based. Anything less than 10-12% profit margin was unacceptable, even if it required the sale of assets to meet those targets. Stock price, profitability, and executive portfolios were now the drivers.

So, no, even with all of your attempts at qualifiers, it has absolutely not "always been like this". Not by a long shot.

Okay I'm not sure what you're arguing. I was commenting on another post that said "The most important thing is profitability, and the best way to get that is under/cheap staff and cheapest cost for anything that's going to be sold or turned into something that'll be sold."

That's always been the case. What manufacturer of the past was buying or making more expensive stuff than they needed because they wanted to have the best product, regardless of whether or not they made money selling it? That sort of thinking rings of nostalgia for yesteryear more than reality. Edit: If I'm to expand on this--the market allows for some manufacturers to make "the best" product because people with means can afford it and want something of a higher grade never mind the price, but anything mass market has to be value-focused.

Have economic realities shifted drastically such that people can extract even more wealth from companies than they could have in the past? Yes. Is a focus on profitability the same as it ever was? Yes.

Hell, auto manufacturers fought the requirement for seat belts tooth and nail. Seat belts! Too expensive!

Edit: I work for a global, publicly traded automotive process supplier. We're an industry leader developing the cutting edge of technology in ways that most other suppliers only copy.

We constantly lose projects because manufacturers decide they can get it cheaper from China and customers can't tell the difference between products that were made with old technology vs. new technology. They only look at additional capital expense vs. energy and material savings from improved technology. The cutting edge stuff gets saved for high-end manufacturers that want the higher grade product (usually). This is the aspect of "same as it ever was" that I'm talking about.

Thanks for this post.

It's before my time, but gave a great insight.

I suppose then that one way to avoid this behavior is to focus on dividend oriented companies.

I also wonder how much internet connectivity has altered the landscape.
The speed at which a publication can spread is unmatched, and points of contact beyond the first can go faster and farther with easy forwarding and re-links.
Then there is the added problem that many major corps prioritized social media for research.
Problem is social media means that you may not be getting input from actual customers.
Or worse, many accounts run by a few that work to tilt the scales.

While it shouldn't be ignored, I observe priority was placed too high.

Even dividend oriented companies can't ignore margins, and demands for higher dividends are ever present.

The shift predates social media significantly. It was during the 80s when automation and globalization took off, along with the way that payment packages for executives were taxed.

That has become abundantly clear.

No, it has not. This appears to be the part you do not understand.

Uh, no, this is not some sort of misty eyed, rose colored glasses nostalgia. This absolutely was the reality in much of (if not most) the manufacturing world at one time. While no one goes into business to lose money, profit expectations were wildly different in the not too distant past. Many were happy to make enough money to make a comfortable living while at the same time "pursuing excellence" in whatever endeavor they chose. I've tried to explain this to you. This concept appears totally lost on you, so you deny it ever existed. I lived and worked it, as mentioned earlier. I wish you could have experienced this at some point during your career. It was wonderful.

Today, yes. In the not too distant past, this was absolutely not the case. Even the most mundane daily items were once built to a standard, not to a price. Just because you never experienced this does not mean it was never that way.

No. It's not "economic realities", it's "business ethics". No one cares about the long-term viability of the company they lead. They all want to extract as much as possible as quickly as possible and leave the company in shambles if need be. There is no longer any thought towards any sort of a "legacy" or "reputation". Rape, pillage, and burn. Then get the hell out with a sweetheart severance package.

No. See above.

And that is where you are dead wrong. It may be all you have ever experienced, but it is absolutely not the "same as it ever was". Not even close.

I've tried to explain the differences between "then" and "now", as have others. It appears as though you have not understood a word of it.