[HN Gopher] 'This Has Been Going on for Years': Boeing's Manufac...
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'This Has Been Going on for Years': Boeing's Manufacturing Mess
Author : eduction
Score : 148 points
Date : 2024-01-13 12:00 UTC (1 days ago)
(HTM) web link (www.wsj.com)
(TXT) w3m dump (www.wsj.com)
| dangle1 wrote:
| https://archive.ph/C9kRR
| jqpabc123 wrote:
| Eventually, Boeing management will probably decide it is cheaper
| to just buy planes from Airbus with the word "Boeing"
| conspicuously engraved on various components.
|
| American management style is to focus on marketing as the source
| of all revenue to be exalted. Engineering, design and
| manufacturing are expenses to be minimized and controlled.
|
| Right now, Boeing management is looking hard to find reasonable
| manufacturing scapegoats and when they do, heads will roll.
| Clearly, management had no involvement.
|
| Gives you that warm, fuzzy and safe feeling doesn't it?
| megablast wrote:
| Why would an airline buy an Airbus, or a Boeing branded Airbus
| with Boeing markup?
| rdtsc wrote:
| https://archive.is/t0lZc
| Morte42 wrote:
| Boeing intentionally spread its operations to as many states as
| possible in the US to guarantee itself some level of privilege
| amongst a large number of politicians from both major parties.
| There are clearly downsides to having manufacturing split up like
| this but the decision wasn't made for its engineering perks.
| Boeing is a sinking ship but nobody is eager to rock the boat
| lest their part of the ship take on more water than the others.
| stefan_ wrote:
| That's not really any different from how Airbus works (and
| explicitly so). But I learned that Boeing literally outsourced
| the fuselage and that makes you wonder if they are really fit
| to build airplanes...
| Sirizarry wrote:
| Do you have an article or two where I could start the airbus
| rabbit hole?
| dreamcompiler wrote:
| Boeing outsourced the fuselage to Boeing in Wichita, which
| had always built them. Boeing spun off that branch into a
| separate company now called Spirit, which is still basically
| Boeing except for its name.
| hakfoo wrote:
| If it's "still Boeing except for the name", that still
| smells funny.
|
| They got something out of spawning a new corporate entity.
| Without a convincing TL;DR I think most of us will assume
| it's for reasons that sound good to Boeing business people,
| but not to outside people. (I. e. being a "new entity" to
| avoid existing labour contracts, or serving as a liability
| firewall in the event chunks of plane start flying off)
| panick21_ wrote:
| Spirit is not just Boeing. Since the Spin-out Spirit has
| been buying many other companies and they are a supplier to
| both Boeing and Airbus. About 65% of their costumer base is
| Boeing. Spirit is a totally independent company.
| HeWhoLurksLate wrote:
| Lockheed Martin similarly has operations spread out to curry
| favors, but they also seem to build reliable stuff...
| damiankennedy wrote:
| The F-35 has been plagued with defects. Even the ejector seat
| had a defect.
| HeWhoLurksLate wrote:
| ...okay then, looks like I was wrong. Guess they have a
| better PR department?
| DoingIsLearning wrote:
| Boeing's (aeronautic business) end-users are millions of
| passengers, Lockheed Martin's end-users are Defense and
| Intelligence. No need for damage control if mum's the
| word.
| inferiorhuman wrote:
| They were "smart" enough to get out of the airliner
| business after the rather spectacular failure of the
| L-1011 and the whole wings falling off thing they went
| through with the Electra.
|
| The military has a much higher tolerance for bullshit.
| The wings keep falling off the C-130 and the military
| keeps flying them (and the C-5).
| hypercube33 wrote:
| I can't find a lot about c130 wings falling off. I found
| this which implies a known problem for c130a's wingbox
| which has a billion to retrofit with a new design -
| https://theaviationgeekclub.com/the-sad-story-of-
| tanker-130-...
|
| Any more information?
| inferiorhuman wrote:
| Not much more information, but it's happened a few times.
|
| https://www.iprr.org/comps/T82story.htm
|
| https://encyclopediaofarkansas.net/entries/c130-crash-
| of-197...
|
| https://www.defensedaily.com/hercules-crash-in-baghdad-
| point...
| dotnet00 wrote:
| But the most recent incident you've cited is 18 years
| old. I'd hardly say "they keep falling off and they keep
| flying them" for that.
| janice1999 wrote:
| Breaking the pilots neck is indeed a defect! [0]
|
| There were also serious issues with ejector sear components
| that affected dozens of other aircraft. [1]
|
| Here's a depressing read: "All The Ways The F-35 Tried To
| Kill Its Pilot Prior To Eglin AFB Crash" [2]
|
| [0] https://www.defensenews.com/breaking-
| news/2015/10/14/usaf-ac...
|
| [1] https://www.defensenews.com/air/2022/08/15/all-us-air-
| force-...
|
| [2] https://www.thedrive.com/the-war-zone/36970/all-the-
| ways-the...
| fransje26 wrote:
| They have so many defects, they stopped communicating about
| them (since 2021 if I recall properly?), and until that
| point, the list had only been ever-increasing.
|
| By the time they stopped communicating about the (800+)
| unsolved issues, they had more than 2 dozens potentially
| lethal for the pilots.
|
| For the fun: https://archive.is/eA7Rr
| rdtsc wrote:
| The paper from 2001 by Dr. LJ Hart-Smith, referenced in the
| article is just as interesting as the article itself
| https://www.documentcloud.org/documents/69746-hart-smith-on-...
|
| If you squint, could apply some of those observation to the world
| of software.
|
| For a TL;DR just skip to Hart-Smith's recommendations list at the
| end of the paper. Here are the ones I liked:
|
| > Look continuously at the entire activity. Do not minimize costs
| in isolation. Understand that one global cost minimization is
| worth far more than even 20 sub-optimum cost reductions.
|
| > Retain sufficient in-house production manufacturing that it is
| possible for future engineers to acquire the skills needed to
| develop new products, without which all businesses will fail.
| Even the work that is out-sourced requires internal expertise to
| write the specifications.
|
| > Acknowledge that cost-saving techniques that work in other
| high-volume industries are often quite inappropriate for low-
| volume industries like aerospace.
|
| > Listen more to your own employees about how to save cost than
| to any outside business consultants who have never run a factory
| producing your kind of product. In any event, if the advice they
| offer changes every year, it cannot possibly be correct.
| baby wrote:
| > Retain sufficient in-house production manufacturing that it
| is possible for future engineers to acquire the skills needed
| to develop new products, without which all businesses will
| fail. Even the work that is out-sourced requires internal
| expertise to write the specifications.
|
| Damn, that really reminds me of a previous company I worked
| for, that wanted to replace important core internal libraries
| with open source libraries. My argument was always that we
| should always have in-house knowledge of the core technologies.
| I think a lot of companies fail to think long-term.
|
| > Listen more to your own employees about how to save cost than
| to any outside business consultants who have never run a
| factory producing your kind of product. In any event, if the
| advice they offer changes every year, it cannot possibly be
| correct.
|
| This one is the difference between management-driven company
| and engineers-driven company.
| groestl wrote:
| Open source is different, in that you as a company can become
| maintainer and therefore expert of that component _and_
| profit of other work being upstreamed. In case the library is
| not your USP, I think it's not that clear cut.
| paulryanrogers wrote:
| USP?
| Swenrekcah wrote:
| unique selling point is my guess
| groestl wrote:
| Exactly
| groestl wrote:
| Unique Selling Proposition. If the thing the library
| implements does not substantially differentiate your
| company from others, it's a candidate to be maintained as
| open source project. For example, just become an expert
| ffmpeg user if you're a live streaming service. Your USP
| is your content, transcoding just needs to work. In
| contrast, if you're Dolby, that would probably not be the
| right strategy.
| dehrmann wrote:
| Or in the context of Boeing, Boeing shouldn't be in the
| business of making its own bolts. An internal lack of bolt
| expertise isn't what caused the door plug to fly out.
| hinkley wrote:
| I can hire people who have expertise in oss libraries. I have
| to build people who have expertise in our in house stuff.
|
| Importantly, we can sit around and bond over bitching about
| how bad one of those libraries is. If the authors are or were
| internal, we are now being divisive and unprofessional.
| AmericanOP wrote:
| Its the fundamental flaw of outsourcing manufacturing abroad.
| You cede all growth from innovation.
| ChrisMarshallNY wrote:
| _> Retain sufficient in-house production manufacturing that it
| is possible for future engineers to acquire the skills needed
| to develop new products, without which all businesses will
| fail. Even the work that is out-sourced requires internal
| expertise to write the specifications._
|
| That's the biggie. I think the entire US tech industry has done
| a gigantic face-plant, when it comes to this.
|
| We have not only outsourced the work, but we have interrupted
| the transfer of knowledge and expertise.
|
| I have friends that run manufacturing businesses, and they
| explained how they believe that the US will never regain what
| it has given away, in the last couple of decades.
| josho wrote:
| I've seen a variation of this problem firsthand.
|
| Working at a cable company where they contracted out to
| vendors most of their software development. They had a few
| internal systems that they developed in-house and would only
| hire 'senior' developers. I was curious how they expected to
| have a steady supply of 'senior' skills without ever hiring,
| training, and promoting a junior.
|
| I also saw they had no idea how to manage their vendors,
| partly because they didn't have in-house skills to serve as a
| sanity check on what vendors were charging. As a result,
| their vendors profited hugely from the company's ignorance (I
| know because I also switched to work for one of the vendors).
| stalfosknight wrote:
| This has been my pet peeve for a long time now. Just about
| every job listing insists on seniors only and they
| companies complain there aren't enough developers.
| ChrisMarshallNY wrote:
| _> seniors only_
|
| But under 35 (they don't _usually_ say that part, out
| loud, though).
|
| That's _my_ pet peeve.
| kypro wrote:
| I've seen exactly the same thing at a couple of companies
| I've worked at in the past too. One specifically outsourced
| all of their development because it was deemed to be
| cheaper (which it was), but after a few years without any
| in-house technical expertise to oversee development they'd
| run into all kinds of issues with bugs, outages, slow load
| times, etc.
|
| For a period when these issues occurred the business could
| say that they wanted the issues patched, but they never
| understood why there were so many issues to begin with. It
| was only until they brought a few people in house to try to
| bridge conversations between the business and the team of
| outsourced developers that it was finally raised that the
| code was completely unmaintainable. And following this an
| in house team was recruited to bring development back in-
| house. Of course, when we sorted 90% of the problems the
| business started questioning why we were needed again and
| we were all outsourced for a second time...
|
| But this same thing obviously happens in a lot high-tech
| industries. Without people who are technically competent
| overseeing what's happening you can only dictate
| requirements at a high level. You cannot dictate all of the
| NFRs because you simply do not have the knowledge or
| ability to oversee them. So what you have is something that
| at a surface level does what you wanted, but the execution
| is so horrendous that it's unsatisfactory and no amount of
| saying "please fix this", "please fix that" will actually
| resolve the fundamental issue at play.
|
| And the problem is even worse when you want to be an
| innovator because innovation is impossible when you don't
| know what is and isn't possible. To push boundaries you
| first need to know where the hard limitations are and
| what's just a engineering problem.
| JeffSnazz wrote:
| > they explained how they believe that the US will never
| regain what it has given away, in the last couple of decades.
|
| Sure we can. It requires pivoting into stealing or otherwise
| replicating China's insane level of industrialization, but
| it's a little funny seeing people become despondent at the
| idea of merely losing clear economic hegemony over the world
| and becoming #2. We didn't lose anything in the last 5
| decades we can't gain back faster.
|
| Here's hoping China's reign comes with fewer invasions.
| bluGill wrote:
| The US has not lost industry. We have lost unskilled and
| semi-skilled grunt labors, but there is a lot of
| manufacturing happening here and a lot of expertise. If you
| want to cut a piece of metal by hand to high accuracy -
| sorry we have moved all that to CNC (often laser) cutters
| and nobody remembers how to do it anymore. However if you
| want to take those cut parts and assemble them into
| something - there is plenty of expertise to be had.
| wkat4242 wrote:
| > If you want to cut a piece of metal by hand to high
| accuracy - sorry we have moved all that to CNC (often
| laser) cutters and nobody remembers how to do it anymore.
|
| That's just the tooling keeping up with the times. The
| Chinese don't do this by hand either.
|
| They're just way better at doing it at volume.
| JeffSnazz wrote:
| > The US has not lost industry.
|
| Compared to China's absolutely staggering
| industrialization it has!
| ChrisMarshallNY wrote:
| I believe in something called "Social Infrastructure"[0].
| That's basically what folks might label "tribal knowledge,"
| but it goes far deeper.
|
| This is something that takes _generations_ to build, but
| can get lost, very quickly.
|
| Folks, these days, aren't actually any smarter than our
| ancestors. We just have a vast social infrastructure that
| raises the baseline for our starting point.
|
| [0] https://littlegreenviper.com/miscellany/infrastructure/
| hinkley wrote:
| I came to say much the same thing, but specifically about IT.
|
| I used to run architectural ideas by operations people who
| would - and occasionally did - tell me I was full of shit.
| Maybe 1 in 10 of us are brave enough to to this, 1 in 6 if we
| are generous, but now there is nobody to tell us we are being
| stupid before we steer the ship toward an iceberg.
| bboygravity wrote:
| Same in Europe.
|
| I've worked at 2 companies now that have been eaten by bigger
| ones and pretty much instantly moved to lower income
| countries. Both in manufacturing, one in aerospace.
| Aloha wrote:
| Whats _most_ interesting to me, is he 's a former DAC person
| not a former Boeing one, and he saw first hand how outsourcing
| harmed DAC/MDC - particularly this section which caught my
| attention:
|
| "The correctness of the author's position' on these matters is
| easily confirmed by two facts. It was the suppliers who made
| all the profits on the extensively out-sourced DC-10s, not the
| so-called systems-integrating prime manufacturer. (The same
| thing has happened on aircraft assembled by Boeing, in Seattle,
| too.) Also, when plans were being formulated for the proposed
| MD-12 very large transport aircraft, almost all potential
| suppliers indicated a preference for being subcontractors
| rather than risk-sharing "partners". Could they have known more
| about maximizing profits, minimizing risk, etc., than the prime
| manufacturer who sought their help even though it could borrow
| money at lower rates of interest than potential suppliers
| could? The DC-8 was manufactured and assembled almost entirely
| within the Long Beach plant, with only the nose coming from
| Santa Monica. That policy was changed after the acquisition of
| the former Douglas Aircraft Company by the former McDonnell
| Aircraft Company, but the change did not improve the company's
| profitability. It is time for Boeing to reverse this policy."
|
| This closing also caught my eye -
|
| "The fate of the former Douglas Aircraft Company, which was
| reduced to a systems integrator in the early 1970s by excessive
| outsourcing of DC-10 production, is a clear indicator of what
| will happen to other companies which fail to sustain the
| conditions under which it is possible to launch new products.
| It is hoped that this sacrifice can save the new and expanded
| Boeing from a similar fate."
|
| Boeing in the end took the track that led to DAC functionally
| going out of business, putting thousands out of work in the
| end. It's not too late to undo it however - buying Spirit back
| would be one way to go about doing it - but I dont know if the
| Boeing management is aware enough being that the headquarters
| is in Arlington, VA, far away from any engineering or
| manufacturing centers that this is what must be done.
|
| Whats even more astounding to me, this made the Seattle Times
| in 2003(!),
| https://archive.seattletimes.com/archive/?date=20030309&slug...
| mckn1ght wrote:
| I saw another one of his gems the other day in another thread:
|
| > "The performance of the prime manufacturer can never exceed
| the capabilities of the least proficient of the suppliers,"
| Hart-Smith wrote. "These costs do not vanish merely because the
| work itself is out-of-sight."
|
| https://news.ycombinator.com/item?id=38980098
| hencq wrote:
| That line is quoted in the article (and in fact the comment
| cites the article)
| outside1234 wrote:
| Note: Alan Mulally, CEO of Boeing, was briefly in the running for
| CEO at instead of Satya. Just shocking to think how bad a choice
| that would have been.
|
| * https://www.businessinsider.com/alan-mulally-as-microsoft-ce...
| chihuahua wrote:
| Very interesting, I had no idea.
|
| After all these years, I'm still stunned that Microsoft got a
| new CEO who didn't run it into the ground. They used to make so
| many bone-headed decisions at the top levels.
| Spooky23 wrote:
| They were comically thin skinned in the Ballmer era. My boss
| used to have us flaunt MacBooks and iPhones when we would
| have senior MS execs come in to get yelled at or for a hard
| negotiation.
|
| They'd get visibly agitated. It was funny.
| wkat4242 wrote:
| They did but running it into the ground they did not.
| Questionable business practices sure, but they were
| successful.
| gumby wrote:
| This point (I put it in italics) should be discussed more:
|
| > At the time, then-Boeing executive Alan Mulally said _selling
| the factory to a private-equity firm_ would let Boeing focus on
| final assembly, where it could add the most value to its
| airplanes.
|
| By now I think we've learned that products made in factories
| owned by PE firms should carry warning labels. They are
| proactively anti-quality organizations, focused on extracting the
| maximum cash out in the short term at the cost of long term
| value.
| ldoughty wrote:
| You could say the same about publicity traded companies.
|
| It all depends on who is in charge... And unfortunately self-
| serving people tend to reach the top more easily in both
| scenarios. You don't get Dan Price's very often (relatively).
|
| In public companies, there is more public information, but that
| doesn't stop a company from doing "bad" things of the short
| term stock movement is good enough.
|
| Look at all the merger promises that are broken. They all know
| what they are doing. Uphold the promise a year, then it's to
| late to undo the merger when you start to ignore the promise.
|
| Can also look at all the fines companies get for willfully
| breaking laws (or treading the line).. (fine < profits)?
| success!
| gumby wrote:
| I think the PE companies have a specifically pathological and
| parasitic business model. There is more info about public
| companies and the majority of them don't suffer from the
| things you mention (which are real phenomena), and when they
| occur in the majority they do more from incompetence than
| malice. (I'm not talking about microcap companies).
|
| The PE model is: - buy company with debt. - after purchase
| company assumes the debt (pays off PE company) and pays
| further fees to acquirer - company therefore cannot make a
| profit, cuts staff which cuts output over time - company goes
| bankrupt
|
| This is the canonical business model from the big PE
| companies like Bain (Romney), KKR, Blackstone, CVC, Carlyle,
| etc.
| whatshisface wrote:
| Something does not add up. Banks would not lend to PE firms
| of they would all then go on to default.
| Spooky23 wrote:
| It's syndicated. The initial lenders make money off of a
| variety of tax and other schemes.
| whatshisface wrote:
| That's missing a lot of steps... Like how to profit by
| not being paid back for the money you loaned!
| mrcode007 wrote:
| It's siphoned off the acquisition target
| adgjlsfhk1 wrote:
| the business goes bankrupt and the bank is ahead of
| customers and employees in line for who gets paid first.
| whatshisface wrote:
| So the scheme is to get in debt to unsophisticated
| lenders (employees and customers), take the money out,
| and finally default?
| Spooky23 wrote:
| The initial lenders aren't idiots. This is a multi-
| billion dollar business. They sell the obligation to
| another sucker, who will often bundle it with a bunch of
| other debt (good or bad) and sell it to institutional
| investors.
|
| Your 401k in 2008 or whatever had some shitty balanced
| fund that held 0.5% of assets in some toxic shit like
| Sears/K-Mart for the "high yield" portion of the fixed
| income component. So you make some money on government,
| agency and Apple/Exxon bonds, and get a high yield on
| K-Mart that goes poof a year later.
| boeingUH60 wrote:
| Please explain these mysterious tax schemes you're
| hinting at...
| gumby wrote:
| Banks get their money back. Debt is second in line (after
| taxes) in bankruptcy.
| tome wrote:
| You're completely right that it does not add up. PE
| detractors really need to be able to explain how this
| observation fits in with their analysis.
| wewxjfq wrote:
| The companies have to refinance their debt perpetually to
| avoid default, which is where the banks make money. Also,
| that debt will then be repackaged and sold to others, so
| the banks won't be the bag holders.
| ImPostingOnHN wrote:
| It's been explained multiple times in this thread.
|
| tl;dr: the "observation" is made-up and false.
| MostlyStable wrote:
| -edit- I realized that part of it is that you are
| conflating "the big PE firms" and "all of PE". I guess the
| TL:DR of my comment is: don't' do that. The big firms are
| not all of PE and you should probably avoid ascribing what
| they do to all of PE as a category. Ok, the rest is my
| original comment.
|
| You just can't generalize like that. My step dad was
| brought on as the CEO of a small Ag manufacturing company
| when it was acquired by a PE firm. He is an engineer. He's
| been in charge now for close to 10 years. He has developed
| new products, invested in procedures and protocols, and in
| general focused on an increase in quality and repeatability
| of procedures while bringing new products into development.
| He cares deeply about the company (and has in fact tried at
| least once to buy it from the PE firm)
|
| This might very well be a non-central example (I certainly
| don't have industry wide stats to argue either way), but
| the point is that there is nothing _inherent_ to PE that
| means companies have to be cut to the bone and stripped for
| parts. Yes, it absolutely can and does happen, but it 's
| not _because_ it 's PE that's doing it.
|
| I'm fully willing to believe that the big PE firms that
| everyone thinks of when they make statements like yours
| have exactly the track record you claim. But it's not
| _because_ they are PE. Smaller PE firms like the one my
| step dad works for is proof-by-existence that responsible
| PE is not an oxymoron.
| KerrAvon wrote:
| PE is notorious for buying firms with debt and then
| driving them into bankruptcy by loading them with that
| debt. It's the only thing they're notable for. They've
| essentially killed all traditional US brick and mortar
| retail -- it wasn't Amazon alone; it was crushing debt
| load and/or profits siphoned off to the PE firm instead
| of reinvesting in the business.
|
| If you don't want your stepdad associated with those
| monsters, find a different term to describe his work.
| mise_en_place wrote:
| This is just way out of touch. How do you think Elon
| raised funds for buying Twitter? PE is the only way to
| fundraise outside of going public.
| AceJohnny2 wrote:
| The whole Twitter debacle isn't an example of PE being
| good for anything, you know.
| gumby wrote:
| You can, you know, just sell bonds in the traditional
| way, which IIRC is how he did it and is why banks are in
| a hole.
| gumby wrote:
| Well it's true there's a spectrum: venture capital is a
| tiny corner (really just a pimple) of the private equity
| space. But there are tiny PE buyout funds doing the same
| -- look at Bending Spoons who is discussed on HN for how
| they manage acquisitions like Evernote.
| boeingUH60 wrote:
| The model of most PE firms is to buy a company and sell it
| for a higher price later.
|
| What you said happens various times, especially with the
| big PE firms, but it's not the norm.
|
| You really think banks will be lending to PE deals if the
| business model is to make the company bankrupt?
| antihipocrat wrote:
| Yes, that is the model. Large short term profits can be
| made if costs are cut. The idea is that the PE firm loads
| the target asset with debt, then drastically cuts labor,
| capital maintenance and other costs. The balance sheet
| looks good, and profits rise for a few years. The PE firm
| then sells the asset for profit.
|
| The buyer, and sometimes even taxpayers, are left holding
| the bag when things start breaking. The PE firm knows
| exactly what it's doing
|
| Thames Water is the classic example:
|
| https://www.dailymail.co.uk/news/article-12245021/Thames-
| Wat...
|
| The large PE asset management firms don't need the banks
| to lend them money.. they have more than enough capital
| to fund their investments.
| fuzzfactor wrote:
| >Large short term profits can be made if costs are cut.
|
| What else can a "businessperson" do if they don't have
| the acumen to build up corporate value at all compared to
| those who came before and laid the foundations to begin
| with?
|
| The purpose of the stock exchange was to make it possible
| for a diverse bunch of investors to come together and
| fund the growing needs of a growing country.
|
| IOW the type of shareholders that this was designed to be
| suitable for are those who are actually _investing_ in
| the registered corporations so those corporations can
| level up to accomodate unmet demand and grow capabilities
| to reach a more prosperous stability, thereby providing a
| fair but lucrative return for the investors over time. As
| the corporations grow in value so do the shares,
| naturally.
|
| OTOH once the _market_ has been established, and
| especially in case it grows faster than the underlying
| value for a long enough period of time (like longer than
| one human lifetime, or longer than a single business
| career[0]), then a sizable amount of "investment"
| capital can end up manipulating the system to extract
| established value through their trading[1]. Especially
| when it comes to things like voting shares and mergers &
| acquisitions. Probably the longer a corporation has been
| publicly traded can figure prominently since that can be
| a corporation living longer than a human lifetime too.
|
| So rather than _investing value beneficially_ , you end
| up with large chunks of capital actively working to
| _extract value parasitically_ [2], which is like a
| double-whammy, and eventually the stock exchange and the
| market it spawned are not working as intended at all.
|
| Maybe just the opposite.
|
| IOOW with Boeing the value was lost a long time ago with
| an unfavorable merger, and every _stakeholder_ has been
| doing without ever since. It 's just becoming unbearably
| impossible to ignore any more.
|
| It just so happens that with an aircraft company, it's
| not only the shareholders, employees, and customers of
| Boeing who make up the majority of stakeholders. The
| flying public (who pays for it all to begin with)
| participates in far greater numbers and depends on the
| product aircraft with more of a life-or-death risk factor
| than the stakeholders who are on the financial receiving
| end.
|
| And it all comes down to integrity.
|
| Some business operators are still traditionally astute
| enough to create value where everyone financially
| involved gets their money's worth.
|
| Others never will be able to accomplish this, and lots of
| them know who they are from the beginning and have had a
| lifetime focusing their efforts on ways not to give
| people their money's worth. Sometimes with the most
| insidious strategies.
|
| And that's merely from poor integrity, even when ethics
| are not fully compromised.
|
| Now look what happens when the ethics go out the window
| too . . .
|
| Well that whooshed by and most people never saw it
| coming.
|
| [0] where some may rake it in and retire early from a
| relatively short career.
|
| [1] often including long-ago established value or utility
| that is now irreplaceable economically or legally.
|
| [2] from anything smaller or less powerful in their path,
| with who knows what kind of motivation not aligned with
| the growing needs of a growing mother country.
| roenxi wrote:
| Sounds plausible. I assume they could cobble together a
| strategy where the company limps along zombie-like while
| interest rates are very low, then when rates go up they
| lots of companies go bankrupt simultaneously, a crisis is
| declared and the public takes on the losses. There are
| some obvious risks, but the middle managers don't have to
| worry to much and the big shot callers are presumably
| secure in their ability to influence politicians.
|
| That was pretty much Silicon Valley Bank as I recall.
| Very high risk business model; turns out the plan when
| the bomb exploded was to change the regulations so that
| someone else held the risk.
| gumby wrote:
| SVB's failure was due to the same trigger but opposite
| impact. Banks in the US have to hold a percentage of
| their deposits in something safe and liquid. SVB made a
| big bet on low interest rates, buying a lot of government
| debt (safest available), but when interest rates went up
| the value of those bonds went down ( who'd buy one that
| paid low interest rate when higher was on offer?).
| gumby wrote:
| > You really think banks will be lending to PE deals if
| the business model is to make the company bankrupt?
|
| Sure, as long as they get their money back before
| bankruptcy occurs.
| ImPostingOnHN wrote:
| Yes, the pattern seems to be to quickly transfer value
| from the company to the PE firm, or directly into the
| pockets of the PE managers and friends, even if it
| hollows out the company and leaves it a shriveled mess.
|
| As an example, the PE firm owning our company recently
| mandated that we switch our tooling from X to a more
| expensive Y, because Y is owned by the PE firm, and doing
| so makes the PE firm more money, at the expense of our
| company. This pattern repeated for multiple solutions we
| used.
|
| Sometimes the PE firm will literally tear the company
| apart to sell the pieces, inventory, equipment, etc. The
| goal is to make money. That _might_ come from making the
| company stronger and more competitive long-term, but in
| my experience and observation, that is not how a lot of
| PE firms approach the goal
| throwup238 wrote:
| _> You really think banks will be lending to PE deals if
| the business model is to make the company bankrupt?_
|
| Yes, just like banks sold houses to unqualified buyers
| and packaged them up as overinflated securities to dump
| on the public. The people authorizing the deals get
| bonuses now and leave other suckers holding the bag
| later.
| lotsofpulp wrote:
| How does your comment square with fact that it was Boeing,
| a publicly listed company, that decided to outsource its
| manufacturing in order to reduce costs and liability and
| knowingly sacrificing quality?
| forrestthewoods wrote:
| > And unfortunately self-serving people tend to reach the top
| more easily in both scenarios. You don't get Dan Price's very
| often (relatively).
|
| Oh boy do I have bad news for you.
|
| https://www.seattletimes.com/business/seattle-celebrity-
| ceo-...
| Simon_ORourke wrote:
| Perhaps it's the one common feature of air travel (safety &
| reliability) that they may start playing with to "reduce costs"
| elsewhere. Imagining two flights from L.A. to Vegas, one on an
| Airbus that costs $100, and one on a Boeing that's $5 but you
| have to sign a waiver going onboard.
| Certhas wrote:
| It's perfectly possible that that cost difference is
| massively exaggerated. It might well just be 95$ vs 100$. But
| if you don't have the information that one is far more risky,
| then you always pick the 95$ option, don't you?
| JumpCrisscross wrote:
| > _if you don 't have the information that one is far more
| risky, then you always pick the 95$ option, don't you?_
|
| Air travellers by and large choose their travel based on
| price. If a subset started paying a premium for Airbuses,
| the market would sort them and remain relatively equally
| profitable for those flying Boeings.
| jbm wrote:
| The only signal that was surfaced on many sites was cost,
| it's not surprising that it is the only thing flyers look
| at.
| bluGill wrote:
| I decided about 10 years ago I'm willing to pay the
| premium for economy plus seats (more leg room). I don't
| fly often enough for the market to notice me, but when I
| fly I notice that those seats do sell out faster, if
| nothing else I can still pay extra for those seats. I can
| also pay extra for first class - however the premium is
| high enough that I cannot afford it despite wanting to.
| Vvector wrote:
| I'd pay $5 more for a ticket on a better airplane, but not
| $50. Unsure where I'd draw the line
| jonplackett wrote:
| I can see Ryanair going for this!
| chopin wrote:
| They are all Boeing.
| mp05 wrote:
| No. Please do your research.
|
| Mostly Boeing? Sure.
| closewith wrote:
| All Ryanair-branded flights are on a single type rating,
| the 737. They do have Lears for parts and personnel
| transfer and acquired a subsidiary, Lauda, which
| exclusively fly A320s.
|
| But if you book Ryanair, you'll board a 737.
| dehrmann wrote:
| Hopefully it doesn't come to this. Something I really like
| about the airline industry is it doesn't compete on safety.
| inglor_cz wrote:
| Falcon 9 is also produced by a PE firm and it is very reliable.
| German Mittelstand corporations are often family-owned for
| generations, and they are known for high-quality products.
|
| As in everything, humans and their motivations cannot be
| ignored. Firms are conglomerates of people, and it matters
| _which_ people are on the top.
| 55555 wrote:
| Are you calling SpaceX a PE firm or am I missing something?
|
| https://en.wikipedia.org/wiki/Falcon_9
| inglor_cz wrote:
| Maybe I understand the term wrong, but I was under the
| impression that PE means "not publicly traded, in private
| hands". Which is what SpaceX is.
| TheOtherHobbes wrote:
| Thete's a big difference between a private firm and a
| private equity firm.
|
| Private firm - no public trading of stocks.
|
| Private equity - a business model created by syndicates
| that borrow money to buy companies, saddle the companies
| with that borrowing, demand a quick return (-> layoffs,
| selloffs, and wage cuts), then bankrupt the company when
| all the value and productivity have been extracted.
| inferiorhuman wrote:
| To demonstrate that I'm not an economist: PE is a more
| specific than just private company. Boeing sold its
| Wichita division to an "investment firm". An investment
| firm is essentially a company that buys and sells
| companies. Typically they're focused on short-term
| profits to juice the stock price before it's sold.
|
| Spirit was created and sold to the investment firm (Onex)
| in 2006, and Onex turned around and sold its the last of
| its stake in Spirit in 2014. Onex got over $3 billion for
| their initial $375 million stake in Spirit. The cost, as
| we're rediscovering, is that quality of Spirit's product
| went to shit and the long-term viability of Spirit is in
| question.
| coryrc wrote:
| If it was so bad why did people pay so much more for
| Spirit stock in 2014?
| sobkas wrote:
| > If it was so bad why did people pay so much more for
| Spirit stock in 2014?
|
| Fact that it sold for more doesn't mean it was in good
| shape. There are many potential reasons why people would
| pay more, even if Spirit was in bad shape.
| oasisaimlessly wrote:
| https://en.m.wikipedia.org/wiki/Private_equity_firm
| foofie wrote:
| > By now I think we've learned that products made in factories
| owned by PE firms should carry warning labels. They are
| proactively anti-quality organizations, focused on extracting
| the maximum cash out in the short term at the cost of long term
| value.
|
| I'd say basically the same thing but from a different
| perspective. Outsourcing is used to simplify management, as it
| allows companies to shift away from building quality
| organizations into the easier task of using coersion towards
| external organizations to drive down cost and avoid any
| liability due to loss of quality. Outsourcing is a cheat code
| for managers, and one which invariably causes serious harm to
| the company while shielding any decision-making exec from being
| held liable for nuking the company.
| gumby wrote:
| > Outsourcing ... invariably causes serious harm to the
| company while shielding any decision-making exec from being
| held liable...
|
| OK I posted that spinning off a portion of your manufacturing
| is bad, but I think your statement overstates the issue. Ford
| used to be so vertically integrated that they raised sheep
| for the wool in their seats! It makes sense to buy bearings
| from companies that specialize in the metallurgy and
| precision of good bearings. Focus on what you're good at and
| what really makes the difference to your customer.
|
| I once visited a home generator factory in India. They bought
| billets of aluminium and copper and manually machined the two
| stroke engines, drew the wire and made the generators, and so
| on. They hadn't updated their design since the 80s. If they'd
| sourced the engine from an engine company and the generator
| from a generator company the two could have advanced
| separately based on the demands of a larger customer base.
| foofie wrote:
| > OK I posted that spinning off a portion of your
| manufacturing is bad, but I think your statement overstates
| the issue.
|
| I was addressing the statement of "(...) selling the
| factory to a private-equity firm would let Boeing focus on
| final assembly (...)", which corresponds to outsourcing
| manufacturing of everything and anything used in a plane,
| up until the last step of the manufacturing process.
|
| It's one thing to leverage existing third-party products in
| your own product line. It's an entirely different thing to
| aim for an Ikea-like approach of buying everything and just
| put the thing together once you get all the parts.
| MBCook wrote:
| I wonder if we'll ever get the guts to outlaw PE somehow, or at
| least make it so unprofitable it's very rare.
|
| Nothing good ever seems to come from it, despite their claims.
| candiddevmike wrote:
| It makes a lot of rich people more rich at the expense of
| workers and retail investors. I don't think you'll ever be
| able to get rid of it.
| ryandamm wrote:
| Ended the carried interest deduction would be low hanging
| fruit if we want to discourage purely rent-seeking financial
| behavior.
| milesvp wrote:
| Would be nice. I think the main fix would be making sure that
| debt used to buy companies can never be transferred to the
| company purchased. I understand that money is fungible, but
| accounting is often there to deal with the most egregious
| abuses of fungibility. It would at least make leveraged
| buyouts much more expensive. Especially since now, the
| purchased company needs to maintain some kind of
| profitability over several years to be able to service this
| debt. Oh, and make it so the purchased company cannot borrow
| money for several years after purchase. If the purchaser
| wants to borrow money and infuse it into the company that's
| fine. I know there's still all kinds of accounting
| shenanigans that can be played to payout to PE purchasers,
| but that'd be a good first step I think.
| Aurornis wrote:
| > I wonder if we'll ever get the guts to outlaw PE somehow
|
| PE is just a type of company that participates in the act of
| buying and selling businesses.
|
| You can't outlaw buying and selling businesses. You can't
| outlaw people working together to buy companies with
| financing.
|
| Yes, there are a lot of PE horror stories, but there are also
| 100X more invisible private equity style buyups that you
| never hear or think about because nothing is going wrong.
|
| Many of them actually improve when they roll up the company.
| My local eye doctor was bought out by a PE firm. They came in
| and installed all new diagnostic equipment that was
| standardized across their locations. They now nail my
| prescription on the first try and it's faster than ever
| before. The service is also more streamlined. This is the
| kind of thing that nobody ever thinks twice about, but it
| happens all over the place.
| kibwen wrote:
| _> You can 't outlaw buying and selling businesses._
|
| Sure you can, and I'll argue that we should.
|
| Competition is the only thing that keeps businesses honest,
| and acquisition is the antithesis of competition. Shut it
| down and force companies to compete rather than for the
| richest to snap up their competitors, and to force startups
| to dream of sustainability rather than a fat exit.
| ribosometronome wrote:
| So companies should live and die with the founder? Or
| only be able to be transferred to their heirs? That's
| going to be amazingly unstable compared to a system that
| allows businesses to change ownership.
| dehrmann wrote:
| You haven't thought about how bizarre this would be. All
| growth and declines would have to be organic, so rather
| than the obvious winner just buying the market loser and
| cutting 20% of staff, the loser would bleed-out over
| years. Companies also couldn't sell divisions they're not
| interested in, so rather than finding someone who cares,
| they'd have to go through the motions to not lose money
| while letting it slowly die. It'd be a lot of zombie
| companies.
| matheusmoreira wrote:
| > My local eye doctor was bought out by a PE firm.
|
| All new equipment and better service is great _for you_.
| There are serious disadvantages for your eye doctor though:
| he no longer enjoys the autonomy and freedom of his own
| medical practice. Lack of autonomy is a major cause of
| insatisfaction in medicine. Hopefully he got some fat
| stacks of cash to compensate for that. As a society though,
| nothing compensates for the fact we 're approaching the
| fabled "you'll own nothing" future.
| zeroCalories wrote:
| Outlawing PE would be incredibly difficult. Instead we should
| focus on punishing individual executives, board members, and
| even share holders that cause harm from cutting costs. It
| could be a criminal case, or even a culture of directly
| naming, shaming, and tracking people so that they can't get
| involved in another company without the share price instantly
| tanking.
| JumpCrisscross wrote:
| > _we've learned that products made in factories owned by PE
| firms should carry warning labels_
|
| Source? The data I've seen don't show quality differences based
| on ownership model _except_ when there is family ownership.
| x0x0 wrote:
| I just get hung up on being an airplane company that doesn't
| manufacture the plane. How is that possibly not a core
| competency for the design and manufacture of airplanes?
| rgmerk wrote:
| It's a matter of degree. Are they supposed to run a chip fab
| to make all the chips that go into their plane?
|
| That said, fuselages do seem to be a core aspect of making
| planes!
| bluGill wrote:
| Given the chip shortages of the past few years maybe they
| should have. For that matter given how often perfectly good
| chips go obsolete maybe they should just so they don't have
| to spend $$$ redesigning a perfectly good circuit.
| drexlspivey wrote:
| AMD and Apple don't run chip fabs and Boeing will..
| People in here will literally argue any point no matter
| how stupid
| bluGill wrote:
| The trick is figuring out what is a core competency and what
| should not be. Boeing should obviously not make the light
| bulbs in their planes. Should they make the engines? How
| about the seats or carpet? What about the plastic bezels in
| the cockpit? At that point is something a thing they should
| do in house and when is it something to outsource? There is
| no easy answer, and often the best answer changes over time.
| hinkley wrote:
| I was there when Mulally was and people already knew what a
| horse's ass he was.
|
| Most of this is his fault, and the board who hired him.
| PedroBatista wrote:
| Since the late 90s/early 00's this type of concerns / horrible
| culture shifts and strategic mistakes were known and by the time
| the Dreamliner came out it was common knowledge even in the
| mainstream. Of course when the Max 8's started to fall and
| killing people everybody pretended to be shocked and surprised
| again.
|
| And of course the "incidents" are always "different and not
| related", but as any very complex system goes, these "incidents"
| always end up happening due to the same root cause.
|
| And yet again another evidence nobody learned anything with the
| latest big scandal of 2018/19, Boeing actively lobbied to reduce
| and get even more exceptions for QA and safety rules AFTER 2019.
|
| During the 00's it was already clear many of their planes were
| clearly not the best on the market for various reasons, but a few
| phone calls from key people in the US government to the
| prospective buyers would always "help" the customer to make the
| "right buying decision", so new orders were always arriving,
| money coming in, stock and compensations for the big wigs was
| obviously sky high so anyone who raised any concerns was always
| ignored or fired, but by that time Boeing was already rotten.
|
| I just pray I'm wrong and all of those planes don't crash until
| they are retired, but the new ones seem to be even worse.. so I
| don't know..
| riffraff wrote:
| Is the dreamliner bad?
|
| I was under the impression it was quite nice and had partially
| eaten the lunch of Airbus' A380 by making longer flights with
| smaller plane economically advantageous.
| Dalewyn wrote:
| The 787 is fine. It's by far the most comfortable aircraft
| I've ever ridden, and the batteries-going-up-in-flames issue
| was short-lived and if I recall stemmed from some
| manufacturing deficiencies at the Japanese OEM (I am
| brainfarting their name).
|
| That being said however, the kind of workmanship negligience
| we have reason to suspect of Boeing means absolutely no
| Boeing aircraft manufactured during the timeframe(s)
| concerned can be considered safe until inspections are done.
|
| For now we don't have reason to suspect this extends beyond
| 737 MAX 9, but that could change drastically depending on
| what FAA finds.
| the_mitsuhiko wrote:
| > For now we don't have reason to suspect this extends
| beyond 737 MAX 9
|
| Boeing in 2023 deferred 787 deliveries again because the
| manufacturing process was found to not have been properly
| followed. In the past they also found debris left on
| planes.
|
| Maybe this issue specific to the MAX 9 but manufacturing
| issues at Boeing are not at all an isolated thing.
| RaftPeople wrote:
| Ya, 787 quality issues have been publicized for a few
| years now, especially at the South Carolina facility. I
| also remember the DoD temporarily stopping deliveries of
| planes from Being due to quality, possibly last year or
| the year before.
| fransje26 wrote:
| To add to the manufacturing issues, there are also other
| 787 issues to be concerned about. The lithium-ion
| debacle, for one. It's only by shear luck that the
| original design issues didn't end in fatalities. And the
| fix is.. ..meh.. The redesign of the lightening
| protection system to save costs is also something that
| has been overlooked until now.
| wkat4242 wrote:
| While I'm a fan of airbus they're not perfect either.
| Consider the paint flaking issues at Qatar airlines. Even
| though airbus says this shouldn't be a safety issue, it
| is really a serious quality problem.
| inferiorhuman wrote:
| The 787 is an innovative aircraft, but its existence is a
| comedy of errors. It was never competition for the A380
| though. The problem is that Boeing bit off more than they
| could chew when they tried to innovate in three areas:
| concept, design, and execution. They outsourced the latter
| two and provided insufficient oversight.
|
| Concept: Lithium-ion batteries are great tech.
|
| Design: Boeing outsourced the electrical system design work
| to Thales, and the first production airliner designed around
| lithium-ion batteries seemed like a great idea until they
| started catching fire.
|
| Execution: Relying heavily on sub-contractors to build big
| chunks of the 787 was a great idea to save money, until the
| subs couldn't maintain the pace Boeing wanted for the price
| Boeing was willing to pay. So Boeing bought the South
| Carolina facility.
|
| And Boeing keeps insisting on learning the hard way. Last
| year the FAA halted deliveries of the 787 for a few months
| due to quality issues.
| philwelch wrote:
| The outsourcing and the SC facility are also motivated by
| Boeing's decades-long war with its unions in Washington.
| Unfortunately for Boeing, the unionized workers in Renton
| and Everett were really good at their jobs compared to the
| workers in SC and at the subs, to the point that customers
| specifically demanded only to receive 787's that were built
| in Everett.
|
| I am not, in general, a pro-union guy, so I'm arguing
| against my natural bias here. But Boeing fucked up big time
| moving production out of Washington.
| hinkley wrote:
| It seems like McDonnell Douglas thinks unions are the
| biggest threat to Boeing, not IP. Big parts of the 787
| design did not require the ridiculous gantry crane to
| move and place.
|
| I could see that the point of that was to be able to spin
| up new production sites effectively, and the main value
| in that was not building a million planes but leverage
| against the unions.
|
| I think buying SC was crocodile tears at best.
| panick21_ wrote:
| The 787 is not bad. Its a great aircraft and they have sold a
| shit-ton of them.
|
| But it was also a program that went hilariously over budget.
| Nearly costing as much as the A380. It had a whole bunch of
| problems and still has problems today. Lots of production
| issues.
|
| This had lead to a situation where they will need to sold
| literally 1500 or more planes to break even on the program.
| And 1500 is a gigantic amount of wide-bodies.
|
| The 787 didn't really eat A380s lunch. Its more like 2
| companies both thought about what the best investment would
| be for the future. Boeing picked the right plane. Airbus
| picked the wrong plane. The competitor to the A380 was the
| 747-8 and the 777.
|
| Had Airbus not totally misread the market and invested in
| totally the wrong market. The Dreamliner could have backfired
| on Boeing. If Airbus had a 787 serious competitor out at the
| same time, the 787 might never have sold more then 1500
| times. They already have total order of around 1800 and there
| are likely gone be many more because Airbus doesn't have a
| perfect competitor plane.
|
| In the wide-body market, Boeing is still totally competitive
| with Airbus. Its the narrow body market where Airbus is
| kicking Boeing ass.
| gmac wrote:
| I thought the A350 was Airbus's answer to the 787. Curious
| why that's not a 'perfect competitor'?
| rowyourboat wrote:
| It's a bit larger, more in the range of the 777 than the
| 787.
|
| Roughly, it used to be A330 vs 767 and A340 vs 777, the
| A330 and the 777 were the winners in these segments. The
| 787 was built to beat the A330, and it did, and the A350
| was built to beat the 777, and it might.
|
| Airbus reacted to the 787 with a re-engined A330, the
| A330neo, which was not a great success, but not a total
| flop. Boeing re-engined and enlarged the 777 to create
| the 777X, whose smaller variant positioned against the
| A350 is a slow seller, but whose larger variant, which
| has no direct competitor, has seen some sales - if Boeing
| manages to get it out of the door, the program is again
| hugely delayed and over budget.
| fransje26 wrote:
| > and they have sold a shit-ton of them
|
| Incidentally, that also sold a shit-ton of 737 MAX. Maybe
| not the best metric to choose.
|
| > Had Airbus not totally misread the market and invested in
| totally the wrong market.
|
| Missed the market by so much, they are pulling the A380s
| out of storage.
|
| > They already have total order of around 1800 and there
| are likely gone be many more because Airbus doesn't have a
| perfect competitor plane
|
| The A350 _is_ the perfect competitor. The two planes are,
| by their design, not competing in the same segments.
| koonsolo wrote:
| I have an inside story about the Dreamliner. I know a person
| that was part of buying a few for an airliner. To my
| understanding there were 2 factories that made them, Seattle
| and somewhere in the South. There was a huge difference between
| the quality of the two. Everyone buying tried to get a plane
| that was made in Seattle and not in the South (can't remember
| exactly where it was).
| philwelch wrote:
| South Carolina.
|
| Also Boeing doesn't have any factories in Seattle. They have
| factories in Renton and Everett. The 787 used to be made in
| Everett. Renton is kind of a suburb of Seattle but Everett
| isn't even particularly close.
| RaftPeople wrote:
| I think when people say "Seattle", they are generally
| referring to the Seattle metro area which frequently
| encompasses Seattle, Everett, Tacoma and the eastside (e.g.
| Bellevue), but for some conversations Tacoma is considered
| a separate metro area.
| philwelch wrote:
| Seattle people get touchy about referring even to Seattle
| suburbs as Seattle but Everett isn't even close. Calling
| Everett Seattle is like calling Santa Cruz San Francisco.
| rootusrootus wrote:
| Or referring to Beaverton, Oregon City, or Gresham (and
| similar) as Portland. That makes sense, locals absolutely
| see the distinction, but if I told someone in another
| state (other than perhaps Washington) where I lived, I'd
| just say "Portland" even though I don't live anywhere
| near the city limits. But the actual Portland people are
| quick to jump on me if we're in a call and I say I'm from
| Portland :).
| d3w4s9 wrote:
| Yes. For I long time I thought Microsoft is based in
| Seattle, which is not correct (Redmond) but not
| completely wrong either
| philwelch wrote:
| Redmond is at least a suburb of Seattle. It's not an
| entirely different city an hour and a half away like
| Everett.
|
| But I do find it weird that nobody claims that Apple,
| Google, and Facebook are all based in SF.
| eightysixfour wrote:
| I think you may be overestimating the distances here. It
| is 35 mins from downtown Seattle to the Boeing facility
| in Everett and 25 mins to Redmond.
|
| Everett isn't in Seattle, but considering it part of the
| metro area isn't a stretch. You never leave dense burbs
| between the two.
| hinkley wrote:
| You do, but it's for a minute or two, if you don't hit a
| traffic jam.
|
| It's hard to think of a traffic jam as being in a rural
| area.
|
| Everett itself is farther north, but the turn to the
| factory and Paine field is before you hit town (but after
| you hit Everett speed traps)
| rootusrootus wrote:
| It's interesting, I kinda buy the 'Everett is part of the
| Seattle metro' but I'd have said Marysville is not. But
| clearly it is, and my perception is wrong.
| B1FF_PSUVM wrote:
| Used to be that Silicon Valley - Santa Clara, Sunnyvale,
| Milpitas, etc. - was distinctly different from San
| Francisco.
|
| Actually, it's weird to see headquarters in SF being
| called in SV ...
| jvolkman wrote:
| The Renton and Everett plants are almost equidistant from
| my actually-Seattle house. The trip to Everett is estimated
| to be a couple of minutes shorter, but both are currently
| less than 40 minutes.
|
| The airport at the Everett facility, Paine field (PAE), was
| recently renamed "Seattle Paine Field International
| Airport"
| hinkley wrote:
| There's less than a mile of wooded area from where you
| leave "Seattle" and run into Everett highway patrol speed
| traps. They've practically merged at this point. One more
| boom cycle.
| hacketthfk wrote:
| Boeing's core capability is regulatory arbitrage and getting gov
| contracts, so it makes sense for them to outsource everything
| non-core, like building planes. Similar to NASA.
|
| Boeing did the correct thing outsourcing the actual building of
| planes, so they could focus on their core competency. Standard
| tech industry advice.
| gchokov wrote:
| Yeah they did the correct thing, only to get their airplanes
| falling like apples.
| archerx wrote:
| Apparently for some people the correct thing is profit over
| safety/quality which is quite sociopathic and the cancer that
| is killing our society.
| kmeisthax wrote:
| I'm sick and tired of "core competency" rhetoric. Business
| management should not rigidly follow the UNIX philosophy,
| there's plenty of reasons you wouldn't want to outsource
| everything.
|
| Furthermore, while those core competencies might sound correct
| _to Boeing_ , they wouldn't sound like it to Boeing's
| customers. You're paying Boeing for a plane and support, not a
| trading company that can find five other companies who can
| outsource each task to a different firm that delegates
| responsibility to...
| riffraff wrote:
| I remember someone on this forum argued at some point that
| business management is basically just flip flop between
| "things are bad, we need more vertical integration" or
| "things are bad, we need more core focus".
| sgt101 wrote:
| The key think for Boeings customers is finance.
|
| If you can get 70 airframes for five years in a way that
| means that you just have to borrow a nubbin of cash and then
| make regular payments that's what you will do. All your
| actual money can go to the shareholders and exec
| compensation. If the business (airline) folds the airframes
| go back to Boeing and you go on to the next gig - who
| cares...
|
| If Boeing will take the risk the banks are happy to fund,
| local airlines - well the banks will be nervous. Every other
| consideration is either imposed by regulation or of no
| interest at all.
| novok wrote:
| Core competency is a reminder, otherwise you start doing
| things like making your own chat system and word processing
| software when you should be just buying slack and google
| workspace while you are a B2B database company.
| dralley wrote:
| There's an entire paper about why this is nonsense, written by
| someone AT Boeing, 23 years ago.
|
| https://www.documentcloud.org/documents/69746-hart-smith-on-...
| cryptonector wrote:
| GP was being sardonic.
| specialist wrote:
| Agree with #1. Number #2 should be qualified: Good for Wall St
| and Boeing execs, at the expense of everyone else.
|
| Then State House Rep Reuven Carlyle was the point person for
| negotiating WA state's $11.4b (?) tax breaks for Boeing. With
| non-binding terms like agreeing to create jobs. Boeing's
| negotiators completely lost their shit when Carlyle tried to
| add good government amendments like transparency (to the
| public) about the actual monetary value of tax breaks.
|
| Similar to the US Sen Al Franken's inside baseball version of
| wrestling with corporations over the mergers of telecoms &
| cables. The corps demanded all, conceded nothing, had no
| intention of honoring their promises, completely lost their
| minds when Franken tried to get future promises in writing.
|
| The USA is a Corporatocracy. Partisanship, culture wars, moral
| panics, food fights, etc. all serve to obscure that central
| fact.
| mjfl wrote:
| Seems like a really good case study in how complex engineering
| technologies become unknowable overtime and this leads to a
| collapse as understanding of the core product declines.
| ImageXav wrote:
| Boeing's competitors seem to be doing just fine. Rather, this
| is a clear case of poor management leading to a degraded
| engineering culture.
| alkonaut wrote:
| Boeing just has one big competitor in the civiiian space and
| it would be really interesting to know what management and
| organizational differences exist. Because Airbus is known to
| be pretty complex too in terms of manufacturing in different
| sites with staff speaking a dozen languages and so on. Are
| they doing the same thing better or something fundamentally
| different (such as outsourcing merely distributing work among
| their own facilities)?
| smcin wrote:
| We could label that the 'Mad Max' theory of how safely building
| airplanes became arcane lost knowledge...
|
| Anyway in reality, look at how post-merger, McDonnell Douglas's
| professional managers hollowed out Boeing's legendary
| engineering. And the stock market cheered that.
| scrps wrote:
| This is what happens when the people who build the world we all
| live in are contravened by people who think they run the world we
| all live in.
| 082349872349872 wrote:
| See also early (1960s) CAD/CAM saving a Boeing project in
| https://inria.hal.science/hal-01526813/document
|
| > _"I just can't get the wing data to match the body data, and
| time is no longer on my side." "Show us your wing data. Hey where
| did you get this stuff?" "From the body project." "But they've
| given you old data; you've been trying to fit an old wing onto a
| new body." (The best time to make a design change is before
| you've actually built the thing!) An hour later life was restored
| and the 727 became a single numerical entity._
| JohnCClarke wrote:
| Blaming "outsourcing" sounds like passing the buck.
|
| The MCAS software debacle and penny pinching walk-back on the
| MCAS remediations shows that the rot has set in within Boeing.
| OhMeadhbh wrote:
| I don't think this will change until Boeing's compensation
| committee cuts pay and bonuses for their execs. Even then they'll
| just move on to the next corporate job and the new execs will
| negotiate bonuses based on improving metrics which can be gamed.
|
| In the mean time airlines are stuck with Boeing planes (at least
| part of) the public thinks of as ticking time-bombs. Some (many?
| most?) are stuck with planes that they've sunk a fair bit of cash
| into. Or, more likely, the airlines' corporate parents own a
| company that owns planes that leases them back to the operating
| airline for tax reasons. And while that might seem to reduce
| pressure on the carriers, it's unlikely their corporate parents
| will want to walk away from that investment.
|
| The last time we had a problem with the 737-900 MAX's, Alaska
| started flying Airbusses. This time my monthly SEA -> SJC flight
| is on an Embraer. This can't be good for anyone (except Airbus
| and Embraer.)
|
| Maybe it's time for corporate America to get serious and only pay
| the c-suite bigbux if they don't destroy the company.
| awongh wrote:
| A lot of people blame the current toxic culture on the McDonnell
| Douglas merger that happened in the late 90s.
|
| One of the reasons that merger needed to happen though, was that
| Boeing didn't know how to be profitable in a non-government
| regulated market (post deregulation of the airlines).
|
| It's easy to make well engineered planes when the government has
| a hand in guaranteeing you good profit margins and you don't have
| to worry too much about costs.
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