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I had an illuminating discussion last night with a friend who works for another large aerospace company. It seems that this company is in the long-term process of positioning itself as a “system integrator”, rather than a manufacturer of space- and defense-related hardware.

To this end, this company is divesting itself of most or all of its manufacturing capability, intending to outsource all the “dirty work” and perform only final assembly in-house.

Even though it has only pursued this path for the past few years, the unfortunate results are already becoming visible. The lack of hands-on, close-up experience, opportunities for cross-discipline training, and intergenerational knowledge transfer is showing up as poor engineering judgement. Poor communication and ill-directed cost control is allowing an increasing number of bad decisions to slip through, mistakes which could have been identified early on through consultation with subject-matter experts.

There were many horror stories involved in this discussion, which I won’t repeat here. Suffice it to say that rather than learn from its recent lessons, this company continues down the same path — one which could eventually lead to its collapse due to technical incompetence and general mismanagement.

Which is not to say that this company is alone. From what I have seen, many of the major contractors suffer to lesser degrees from the same problems afflicting my friend’s company.

This makes me wonder if we are not on the verge of a major change in the industry. If the major players increasingly outsource their dirty work to small vendors and make no effort to retain their in-house technical competence, how long will it be before the smaller companies currently supplying them end up supplanting them? Particularly if they demonstrate greater innovation, shorter schedules, and lower costs.

While I’m not sure how well the metaphor fits, the state of the aerospace industry seems similar to the computer industry in the mid-1970′s. It may be that the Wangs of the aerospace industry are soon to die out, succumbing to their own inability or unwillingness to adapt and innovate, to be replaced by Apples and Microsofts

Posted on September 4th, 2003 under Space Policy. Comments: 3