Boeing at X-Roads?
Federal tax law has made American manufacturing what it is today. How should Boeing buck a trend designed to push manufacturing out of the US? Will Boeing overcome the poor funding and focus of American education? Airbus is a product of European socialism that America literally cannot match. I don't see why anyone has a criticism of Boeing when the country in which it exists has become so poisonous to manufacturing. Would a farmer reasonably blame corn for not growing in salted soil?
Federal tax law has made American manufacturing what it is today. How should Boeing buck a trend designed to push manufacturing out of the US? Will Boeing overcome the poor funding and focus of American education? Airbus is a product of European socialism that America literally cannot match. I don't see why anyone has a criticism of Boeing when the country in which it exists has become so poisonous to manufacturing. Would a farmer reasonably blame corn for not growing in salted soil?
Sorry, Boeing, not tax law, is the author of their own demise.
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I was wondering about that assertion too. While the fact of much of the manufacturing sector moving to countries with lower cost structures is an obvious one, what knowledge I might have about tax law isn't enough to identify which parts of tax law MechEngr might have had in mind, or to contradict him.
But one subpart of the post does provoke more comment. Not to say that Boeing isn't the author of its tale of demise. Rather to say that the decline of the education system has played a role.
Long years ago, in the class teaching German in the secondary school I attended, we were taught about the educational system in Germany, how it utilizes a quite rigorous exam in order to qualify for post-secondary education (or perhaps the "Arbitur" was for the level of education known as "Gymnasium", a more rigorous form of secondary school - it's way back in the Nixon Administration, so I'm not sure). One reason this has always stuck in my mind, compared to the system in the U.S., is that when it came time to select a foreign language to study as I was starting high school, the guidance counselor - my having said I wanted to be an aeronautical engineer - suggested German as the language to study (so much technical literature is published in German, he said). Though the conversation details aren't all important, he also asked me what else I might be interested in as a future career. I said something about becoming a lawyer - so he said, study Latin. Confronted with indecision, the guidance counselor then said - and the essence has remained indelible these many years - "well, maybe someday you'll be a lawyer working with airplane crashes."
But I digress. The workforce of Boeing might seem like the target or object of the criticism I'm implying. It isn't. What on earth entered into the minds of the execs and second-echelon corporate staff that would allow, let alone require, such destructive and ill-advised decisions about corporate strategy? Greed, alone? If they had received in their respective educational background some sense of calling, of higher order responsibility, maybe some leader would have emerged to contend and weigh against the decisions documented and put in context in the video recently posted up-thread. And the conclusion I draw from all this is that the only way to restore Boeing if it can be restored, or to reverse the downward slide to some extent or to slow it down, or to salvage as much remaining value as possible, is to find the latter-day version of - if not Winpisinger, then someone in that mold. A Joe Patroni of the corporate suite. Who is it? Well, George Kennedy isn't available.
But one subpart of the post does provoke more comment. Not to say that Boeing isn't the author of its tale of demise. Rather to say that the decline of the education system has played a role.
Long years ago, in the class teaching German in the secondary school I attended, we were taught about the educational system in Germany, how it utilizes a quite rigorous exam in order to qualify for post-secondary education (or perhaps the "Arbitur" was for the level of education known as "Gymnasium", a more rigorous form of secondary school - it's way back in the Nixon Administration, so I'm not sure). One reason this has always stuck in my mind, compared to the system in the U.S., is that when it came time to select a foreign language to study as I was starting high school, the guidance counselor - my having said I wanted to be an aeronautical engineer - suggested German as the language to study (so much technical literature is published in German, he said). Though the conversation details aren't all important, he also asked me what else I might be interested in as a future career. I said something about becoming a lawyer - so he said, study Latin. Confronted with indecision, the guidance counselor then said - and the essence has remained indelible these many years - "well, maybe someday you'll be a lawyer working with airplane crashes."
But I digress. The workforce of Boeing might seem like the target or object of the criticism I'm implying. It isn't. What on earth entered into the minds of the execs and second-echelon corporate staff that would allow, let alone require, such destructive and ill-advised decisions about corporate strategy? Greed, alone? If they had received in their respective educational background some sense of calling, of higher order responsibility, maybe some leader would have emerged to contend and weigh against the decisions documented and put in context in the video recently posted up-thread. And the conclusion I draw from all this is that the only way to restore Boeing if it can be restored, or to reverse the downward slide to some extent or to slow it down, or to salvage as much remaining value as possible, is to find the latter-day version of - if not Winpisinger, then someone in that mold. A Joe Patroni of the corporate suite. Who is it? Well, George Kennedy isn't available.
Along with Chrysler, US Steel, TWA, Pan Am, <long list of other American companies that either no longer exist or make crap in China or are foreign owned because of tax laws.>
Americans deserve every crappy company that screws them over, Boeing included, until they return the tax code to pre-Reagan condition.
You blame "Boeing," whatever that is, but not the workers who won't quit jobs where they make crap? QA and QC workers who don't do their jobs by taking an ax to defective work rather than overseeing out of sequence repairs? Not laws that make stock buy-backs possible (also Ronald Reagan)? Incentives that make companies vulnerable to financial mismanagement of their production?
You must mean stockholders. You should blame them. They own the company. They let this happen.
Americans deserve every crappy company that screws them over, Boeing included, until they return the tax code to pre-Reagan condition.
You blame "Boeing," whatever that is, but not the workers who won't quit jobs where they make crap? QA and QC workers who don't do their jobs by taking an ax to defective work rather than overseeing out of sequence repairs? Not laws that make stock buy-backs possible (also Ronald Reagan)? Incentives that make companies vulnerable to financial mismanagement of their production?
You must mean stockholders. You should blame them. They own the company. They let this happen.
Where is Deming when you need him?
W. Edwards Deming - Wikipedia
W. Edwards Deming - Wikipedia
Along with Chrysler, US Steel, TWA, Pan Am, <long list of other American companies that either no longer exist or make crap in China or are foreign owned because of tax laws.>
Americans deserve every crappy company that screws them over, Boeing included, until they return the tax code to pre-Reagan condition.
You blame "Boeing," whatever that is, but not the workers who won't quit jobs where they make crap? QA and QC workers who don't do their jobs by taking an ax to defective work rather than overseeing out of sequence repairs? Not laws that make stock buy-backs possible (also Ronald Reagan)? Incentives that make companies vulnerable to financial mismanagement of their production?
You must mean stockholders. You should blame them. They own the company. They let this happen.
Americans deserve every crappy company that screws them over, Boeing included, until they return the tax code to pre-Reagan condition.
You blame "Boeing," whatever that is, but not the workers who won't quit jobs where they make crap? QA and QC workers who don't do their jobs by taking an ax to defective work rather than overseeing out of sequence repairs? Not laws that make stock buy-backs possible (also Ronald Reagan)? Incentives that make companies vulnerable to financial mismanagement of their production?
You must mean stockholders. You should blame them. They own the company. They let this happen.
Could Boeing take that money and purchase a better herd of management? Maybe yes. But then there are other boards of directors bidding for the top talent in the available management pool as well. Like Ford.
MechEngr's assertion that it was bad tax law is close to the truth. It all comes down to how tax law and generally accepted accounting principles treat debt, interest, leveraged buy-outs and other accounting maneuvers that harm US business. Boeing used to be sitting on a huge pile of cash. Knowing that, from time to time, it was going to cost them billions to design and tool up for a new airplane model. But between new product launches, holding that kind of money just makes a company a takeover target to be stripped of it when a dip in the share price makes it an easy target. So the current plan is to dump cash, buy back shares and make the company look good, but not too good.
I worked the math out once. Taking the annual compensation from the entire executive suite and spreading it across the entire companies employees would have provided them with a nice (but not exceptionally large) Christmas bonus. When compared to the average employees income, executive compensation might seem obscenely high. But in the greater scheme of things, it's not that big a chunk of money.
Boeing spent 40 Billion dollars on stock buy backs and 17 Billion dollars on dividends since 2010. I am pretty sure if some of that had been spent on product development and production line QA Boeing would not be in the position it is in now.
Boeing likely would have been picked off by such as Bain Capital and sucked dry, the way that TWA was gutted.
Those incentives exist because the stockholders voted for them.
About half of those killed died because of someone else's failed incentive scheme.
Those incentives exist because the stockholders voted for them.
About half of those killed died because of someone else's failed incentive scheme.
I didn't say Boeing's incentive scheme failed.
I wasn't getting at you. I was just using your post to try to make the point that the current legal and regulatory framework support incentives for shareholders and management to financialise companies, sucking out all the money, oftentimes taking on debt to finance dividends, ramp the share price with buybacks, and often outsource parts of the operation that many would assert should be core competencies (making fuselages, anyone?).
short flights long nights
I wasn't getting at you. I was just using your post to try to make the point that the current legal and regulatory framework support incentives for shareholders and management to financialise companies, sucking out all the money, oftentimes taking on debt to finance dividends, ramp the share price with buybacks, and often outsource parts of the operation that many would assert should be core competencies (making fuselages, anyone?).
Keep it going guys, interesting discussion re shareholders and their ecosystem, legal env, Top and Medium management.
Federal tax law has made American manufacturing what it is today. How should Boeing buck a trend designed to push manufacturing out of the US? Will Boeing overcome the poor funding and focus of American education? Airbus is a product of European socialism that America literally cannot match. I don't see why anyone has a criticism of Boeing when the country in which it exists has become so poisonous to manufacturing. Would a farmer reasonably blame corn for not growing in salted soil?
I don't know why Spirit feels it best to offshore production of some structural components. Seems elaborate.
The US is anything but "poisonous" to business. More like obsequious to business. Boeing's problems are purely of Boeing's own making.
Extremes are funny
Although I appreciate thinking out loud, the posts about taxes and wages are missing the point..
It's like hyper-liberals and hyper-conservatives pointing at each other and blaming the other side for all of the problems in the United States... By focusing on one end or the other, you don't have to come into the messy middle where intelligent compromise is almost always a good outcome.
Yes the tax structure is screwed up, yes employees are horribly underpaid, and yes executives are driven by stock values as opposed to product value..
All of these are extreme problems and there are many more, and it doesn't really accomplish much to focus on them individually because they are interdependent...
What Boeing is missing, as much of corporate America is missing today, is product 101.
Figure out what your market needs... Figure out the cost to do it well... Work closely with industry management to determine optimal pricing... And work closely together across the entire industry to increase value for the end user.
This is a common sense growth model that has worked over and over and over but it's too easy to get pulled into any of the secondary arguments that get most of the attention.
Monday morning quarterbacks, who haven't managed all of these interdependencies, miss the fact that they're all connected and you need good maths to build strong potential models.
And those maths come from good tested research...
Just one small example... Pricing is far more complex than most imagine... You can't just add up cost and throw a margin on top for many many reasons.. and you can't just ask a customer out of the blue because they will prioritize cost and try to drive it as low as possible...
Instead, you need models developed with customers that clearly demonstrate measurable value to the customer... Pricing triangulation is a great example of simple research that helps manufacturers predict pricing margins that are optimal for everyone...
So from my perspective, management and engineering should be looked at resources... It's the business analysts and product managers who should be driving the future with support from management and engineering..
I'm sure this will drive some mad, but once again, product management 101 that simply needs to be tweaked for any market.
It's like hyper-liberals and hyper-conservatives pointing at each other and blaming the other side for all of the problems in the United States... By focusing on one end or the other, you don't have to come into the messy middle where intelligent compromise is almost always a good outcome.
Yes the tax structure is screwed up, yes employees are horribly underpaid, and yes executives are driven by stock values as opposed to product value..
All of these are extreme problems and there are many more, and it doesn't really accomplish much to focus on them individually because they are interdependent...
What Boeing is missing, as much of corporate America is missing today, is product 101.
Figure out what your market needs... Figure out the cost to do it well... Work closely with industry management to determine optimal pricing... And work closely together across the entire industry to increase value for the end user.
This is a common sense growth model that has worked over and over and over but it's too easy to get pulled into any of the secondary arguments that get most of the attention.
Monday morning quarterbacks, who haven't managed all of these interdependencies, miss the fact that they're all connected and you need good maths to build strong potential models.
And those maths come from good tested research...
Just one small example... Pricing is far more complex than most imagine... You can't just add up cost and throw a margin on top for many many reasons.. and you can't just ask a customer out of the blue because they will prioritize cost and try to drive it as low as possible...
Instead, you need models developed with customers that clearly demonstrate measurable value to the customer... Pricing triangulation is a great example of simple research that helps manufacturers predict pricing margins that are optimal for everyone...
So from my perspective, management and engineering should be looked at resources... It's the business analysts and product managers who should be driving the future with support from management and engineering..
I'm sure this will drive some mad, but once again, product management 101 that simply needs to be tweaked for any market.
Last edited by Zionstrat2; 13th Feb 2024 at 20:58.
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An engineering company?
Boeing seems to be moving along from one disaster to the next, what with continued problems with the in-service 737Max 8&9 aircraft, the never-ending certification saga of the Max 7 and 10 and the continued production problems with the 787, which by now should be a mature program free of any problems.
What a difference from the Boeing of thirty years ago, when the 777 was nearing entry into service and the 737NG program was going strong. Today, Boeing can't even get type certification of the most recent 777 derivative, admittedly a major development, from an understandably mistrustful FAA.
I'm very glad that this most recent failure involving the Alaska aircraft didn't result in anything more than an emergency landing and a grounding until inspected of most of the Max 9 aircraft in service.
This from the company that designed, built and delivered six different types over less twenty five years.
What happened to the engineering and corporate culture of integrity that brought the 707, 727, 737, 747, 757 and 767 to the world's carriers and their travelers?
How does a company go from being a respected standard setter to being a bit of a tragic joke?
What a difference from the Boeing of thirty years ago, when the 777 was nearing entry into service and the 737NG program was going strong. Today, Boeing can't even get type certification of the most recent 777 derivative, admittedly a major development, from an understandably mistrustful FAA.
I'm very glad that this most recent failure involving the Alaska aircraft didn't result in anything more than an emergency landing and a grounding until inspected of most of the Max 9 aircraft in service.
This from the company that designed, built and delivered six different types over less twenty five years.
What happened to the engineering and corporate culture of integrity that brought the 707, 727, 737, 747, 757 and 767 to the world's carriers and their travelers?
How does a company go from being a respected standard setter to being a bit of a tragic joke?
Last edited by fdcg27; 13th Feb 2024 at 23:29.