Why would Boeing outsource its electronics production and then bring its manufacture back in-house?

In the early 2000s, The Boeing Company (NYSE: BA (Links to an external site.)) outsourced key portions of its aircraft manufacturing and design operations, including electronics and central computers. Beginning in 2007, Boeings 787 Dreamliner (a new model for Boeing) was assembled in the U.S., with global subcontractors assigned the work of assembling key sections of the 787. Subcontractors also worked on various software systems and electronics components for the 787.

Due to many software and electronics issues, the 787 Dreamliner delivery was delayed. When it did start flying, there were defects found in its software systems, electronic components, and other parts.

Boeing is now starting to bring the design and manufacture of its aircraft electronics back in-house. In addition to supplying its own aircraft with these in-house electronics, Boeing is looking to supply the parts to airlines and military operations around the world.

Fun Fact: Boeing is the largest exporter of U.S. goods, as measured by total dollar sales.

Discussion Questions

1. List several benefits, both qualitative and quantitative, that Boeing could realize from bringing the design and manufacture of its aircraft electronics back in-house.
2. What are some potential disadvantages for Boeing caused by designing and manufacturing its aircraft electronics in-house?
3. What are some activities (activity bases) that could cause the design and manufacturing costs to change if Boeing goes forward with this decision? What is the relevant range of each chosen activity?