Boeing Tianjin Composite's High-flying GM Talks to Business Tianjin

By Tracy Hall

Boeing Tianjin Composites Co. Ltd has been the city's leading aerospace manufacturing facility for a long time. Not only is the American led firm is a major employer and an extraordinary asset to the Tianjin's local economy on the whole, it signifies a broader trend of China moving up the global economic value chain. Amongst other accolades, Boeing CEO and Chairman of the Board Jim McNerney has awarded the Boeing Tianjin Composites team for their safety record, which is among the best of Boeing facilities around the world.

We recently spoke to the site's General Manager, Mr. Justin Franke, to find out more about what is happening at this world class production facility. Here is what he had to say.

Tell us a bit about your life before you came to Tianjin.
I am from Seattle, Washington, a great city that is home to many world class companies - including this one of course. I've been with Boeing for about 18 years now. During this time I have had various roles within the financial and supply chain management aspects of the company. I have to say that I am very thankful for the educational and work experience opportunities that I have had from this organisation throughout my time with them.

Before I came to Tianjin in April 2014 I was leading a programme called Partnering for Success. My mission was to coordinate the joint efforts of Boeing and our global supplies to reduce costs and thus make the company more competitive. I have always had a passion for international business, building teams and getting people to focus on a common goal. I am very honoured to be working at BTC here in Tianjin, the most accomplished aerospace production facility in the whole of China. I hope to become more involved in the Tianjin community going forward.

Your role must be very challenging. What are some of the key aspects of your job and how do you deal with the challenges of managing such an important centre of aviation manufacturing?
It is by nature a challenging assignment, especially working here as an expatriate. Most days are very exciting, especially when you're working alongside such a great team of people and in an environment that is changing so dramatically. China is of course the fastest growing market for the aerospace industry in the world. My key roles include making sure that all of our employees are safe, ensuring that all of our stakeholders are satisfied (employees, suppliers, customers, and so on), and I am responsible for ensuring that all of our tools, processes and training are of the very highest quality so that we can continue to lead the aerospace industry.

Why the company originally chose to base some of its manufacturing facilities here, as opposed to elsewhere in China or the Far East?
Boeing recognised a long time ago that there was an enormous amount of opportunity in China and we have developed a very close relationship with the central government, which gives a great deal of support to the aerospace manufacturing sector. Tianjin is a fantastic site for a manufacturing facility of this kind. It is an aerospace hub in China, has a relatively skilled workforce, a good regulatory and tax environment, as well as being a great sea port. Over time our operations here in Tianjin have become more complex, which reflects the fact that China's manufacturing sector more broadly is moving up the global value chain.

How many people do you employ in the area and in what ways do your firm's operations impact the local economy?
BTC is the largest aerospace employer in the city. We currently have over a thousand employers and more than a hundred contractors that are involved in our operations here. So we are creating a lot of very good jobs, with excellent compensation packages and a brilliant working environment. This obviously has a significant multiplier effect on the broader Tianjin economy. Right now we only employ five expatriates at this site, so our workforce is almost exclusively comprised of local people. At the moment we are also looking to shift some of our product sourcing away from North America over here to China. This makes us more cost effective but it also helps us to build good relationships and centralise all aspects of our business here in China.

Specifically, which parts of the aircraft manufacturing process do you and your colleagues deal with?
At this site we are currently manufacturing and delivering over 14,000 parts per month. It is very busy place indeed. The vast majority of our programmes have been increasing significantly over the last few years. The main process that takes place here is laying out carbon fibre and fibre glass composite parts. We fabricate primary, secondary and structural parts for aircraft, as well as things like interior panels for the flight decks. The parts we produce go to all Boeing aircraft in use today: the 737, 747, 767, 777 and 787. Many of these parts have hardware built into them, which is something we are increasingly doing as we continue to become a more high level assembly facility.

We work with our owner companies to provide training opportunities that develop greater aerospace composite expertise here in China. AVIC (Aviation Industry Corporation of China) is one of our owner companies so we work very closely with them. This includes providing technical assistance and specialist knowledge on a regular basis. We also share our expertise with other Boeing suppliers in this country.

In what is perhaps the tightest quality control environment in the world, how do you assure that the highest standards are consistently maintained during the assembly process?

It goes without saying that there is absolutely no compromise when it comes to the quality of our products. Like any company we have to be cost efficient but there is certainly no trade-off between costs and quality at Boeing. We have built our outstanding reputation in part by having a zero tolerance stance on quality issues and the industry has extremely high expectations of us. That is why, for instance, we have machines and inspection methods in place here that would allow us to find a single hair if it was nestled within one of our composite pieces. As a leader it is also on me to make sure that our employees feel comfortable enough to raise their hand when they have made a mistake so that we do not any defects slip through the net.

BTC has certified its production system to meet all global quality requirements and we are required to meet, or indeed surpass the standards of our Boeing facilities around the world. We do this by seeking approval from within our company, the regulatory bodies and third party auditors. It is about constantly striving for excellence in all of our procedures, resources, training, and the discipline with which we approach the job.

Give us an insight into how the demand for your aircrafts has developed in this region over the last few years and where you see most of the demand coming from going forward.

Boeing recently estimated that there will be demand in this country for over 6,000 new commercial planes over the next twenty years. That represents a price value of around 870 billion dollars. We also expect the Chinese carriers to take around 45% of the total demand in the Asia Pacific region during this period.

China's aerospace market is going through dynamic changes right now as the middle class continues to grow in size. The demand for both domestic and international air travel is increasing considerably every year. Boeing planes, such as the 737 MAX, the 777X and the 787 Dreamliner, are well positioned to take passengers directly to their destinations and help airlines generate more revenue. More low cost carriers and a new generation of more fuel-efficient aircraft are coming in to the market and amongst these companies there is a lot of demand for single-aisle planes at the moment. Our models offer them the best value for money in this segment.

What are your thoughts on the competition in this sector going forward?
Given the ambition of the Chinese, Japanese, Brazilians, Russians and many others around the world to develop their own domestically produced alternatives, there is always going to be plenty of competition. This is good for the industry as a whole because it forces companies to improve their services and invest in better technology. As always, our job is to find the best way to meet the customers' need. We will have to keep doing this if we want to survive.

It is common knowledge that while we are not always the cheapest player in this market, we are unmatched when it comes to value. Boeing is very confident that our focus on giving the customers exactly what they want and the quality of our future products will allow us to compete very aggressively for all of the new business going forward. It is worth pointing out though that this is a highly collaborative industry and Boeing works very closely with other firms on the issues that we all have a vested interest in - which above all else is the safety of the flying public.

Tell us about some of the impressive new models that Boeing will be putting onto the market in the coming years.
Right now we have several models that are going take the Boeing range to a whole new level. The 737MAX, for example, has already accumulated 2,453 orders to date, from 52 customers around the world. It is the fastest selling aeroplane that Boeing has ever produced. In its category this model is by far the best plane on the market as it allows airlines to carry more passengers at no additional cost. Boeing recently announced that they will produce a 200 seat version of the plane at the Farnborough air show. This gives airlines an extra 11 seat's worth of revenue. So at the moment we are striving to make our already leading product even better.

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