I'll tell you what you can do with your tail fin, Mr. CEO Phil Condit

[747FOCAL]

Column: How much more must we grovel?
Seattle Times 10/16/03
author: Nicole Brodeur
(Copyright 2003)


So now they want a fleet of cargo planes?

And even if we bankrupt ourselves to meet this, the latest demand from Boeing, the most we can hope for from the 7E7 contract is the honor of making the tail fin?

I'll tell you what you can do with your tail fin, Mr. CEO Phil Condit.

And as for you, Boeing Commercial Airplanes Chief Alan Mulally, well ... To paraphrase your recent, high-minded remarks to the Rotary Club of Seattle about our state's business competitiveness and transportation network: You suck, too.

I guess being a corporate giant in a troubled economy means you can treat entire states with the same self-important disregard that Arnold Schwarzenegger has shown women foolish enough to have rear-ends.

State officials have already offered Boeing a textbook example of corporate welfare, serving up more tax breaks and incentives than the state's middle- and low-income residents will ever know in their lives.

In return, we're being offered the sorry south end of the 7E7. Literally.

It's a taunting taste of what some other place will get for being able to touch its nose to its toes, and get Boeing parts from here to there without having to stop for gas, lunch and dinner.

Granted, our lawmakers should be throttled for sitting on their hands while hundreds of thousands of cars choked Washington's roads over the past decade or so, making business transportation something akin to the Pony Express.

(And don't get me started on Sound Transit or the Monorail; the yoga and deep breathing are just starting to take).

But the place known as Jet City should get a little more consideration from the company that made its name here. We've already been dumped; do we have to model swimsuits beside Kansas, Texas, Japan and — the indignity — Italy to get a second look?

If that's the kind of dealmakers Boeing's honchos are, then they don't need cargo planes.

What they need is to be pushed into the back of a battered Buick Skylark as they step out of their Windy City headquarters, and driven to a dark alley on the South side of Chicago for a little talk about what it means to be fair, decent businessmen. Then they should be left to find their own way home.

We lost a large part of our identity when Boeing moved its headquarters to Chicago.

Now, with the 7E7 contract being dangled in front of us like a check from the Publisher's Clearinghouse, we're losing some of our pride, as well.

Take the wings of the 7E7. It looks like they will be made in Japan.

We used to be known for our wings. Boeing loved our wings. Boeing bragged about them as its key engineering marvel, our wings.

It's like your kid suddenly choosing canned soup over the homemade you've slaved over, and he's raved over, for years.

You can't help but feel hurt, angry and confused.

Have we changed that much? Or has Boeing?

I'm not even sure they're in the airplane business anymore.

This feels more like being railroaded.

[PAXboy]

Not nice. Not clever. Just modern business.

We have seen many examples of this in the last 10/20 years. People follow 'value for money' so hard that they chase round in a circle and find that they start to eat themselves. What starts out as pursuit of profit turns into the decimation of the company.

In the UK, people are outsourcing call centres to India. That's good for the bottomline. That's good for India and will help to raise them up. But it also impoverishes those in the UK who would have used other services but are now unemployed. We have been doing things like this for some time. I don't know where it started - and it doesn't much matter - because that is how it now works. Unfortunately, no one has yet managed to document how to find the balance between holding on to what you do well and reducing your costs.

Really sorry to hear this, you DO have my sympathy but it is already way to late to stop the drift of your company.

[747FOCAL]

PAXboy,

True words. I used to think if you got a Bethune or a like type individual you might just be able to pull it off.

The only other way I see to recover would be to divide one of the big hangers and put up a wall. Take one aircraft series and start building it there only this time you do it like a start up. Nothing Boeing on that side of the wall. But that is a long story.

[Gordinho]

Take a look at Naomi Klein's book "No Logo" for an initial look at the implications of Job migration for the people left behind and the people taking the work. It's an ugly picture. You're left wondering who wins, apart from a very few fat cats.

[Schrodingers Cat]

Surely there must be space in this thread for some crass, boorish comment from 411a...what is the world coming to?

[Lucifer]

Sympathetic: yes, but this is the commercial reality that manufacturing jobs go to those places where costs are competitive. Fair enough, it allows other countries to catch up - the only disagreement I have is sub-standard conditions for those other workers - this being how costs are undercut.

The reality is that people must retrain, however galling it is - if Boeing didn't do this, there wouldn't be a Boeing as Airbus would simply ruin them in terms of pricing.

[Iron City]

Since the large civil aircraft market is now a basically 50/50 proposition with Boeing market share down from whatever it was whatever years ago to splitting it with Airbus they have to do something to keep the company viable.

Moving corporate HQ to Chicago doesn't do it. Building better airplanes doesn't do it. Building good enough airplanes cheaper might do it. Getting into other businesses might do it if you think you can bring some added value to those other businesses. Boeing and other major aerospace companies have tried it and not gotten very far.

Have airplanes become such commodities that given the designs and tooling built by geniuses any old Tom, Dick, or Mohamid, or whomever can bend the tin or composites? Didn't this happen already in shipbuilding and other industries?

[Schrodingers Cat]

Of course if the enormous subsidies handed out by the military were subject to the same rules the rest of us have to do business by, there wouldn't even be a Boeing.........

[ferrydude]

Continuing with that logic, I suppose one could then say, without BOEING, most of Europe would be speaking German nowdays.

[White Bear]

Nice retort ferydude, (There but for Avro go you or I) but lets not forget the HUGE subsidies given to Airbus by all European countries. It's a nasy web of deceit, disinformation, and the corporate need to survive.
W.B.

[Capt Homesick]

Do we really have to have another Boeing vs Airbus "Your state support is unfair: ours is legitimate!" thread in here? They used to be fun but it's been gone over so many times already... as has the "You'd all be speaking German" suggestion.
Getting back on topic I hope: 747focal, I can identify with your unhappiness. Until the Depression, around 30% of all the world's ocean-going ships were built within 25 miles of where I live: some of the greatest ocean liners of history were built within about 5 miles. All the shipyards are gone now: a lack of investment, outsourcing... I hope Seattle fares better than Clydeside did.

[yakker]

I agree with you Capt Homesick.

The trouble is our manufacturers have to comply to ISO standards, Health and Safety, Cosh, provide pensions, pay VAT, taxes, huge real estate costs etc..
ALL imposed by our Goverment. Then the work goes abroad because its cheaper, ofcourse it is, they do not have all these costs. When these places have the knowledge they will build the aircraft and we will have no choice but to buy them, by then Boeing and Airbus will have lost all the labour skills.
This will be repeated in all manufacturing industries, as already mentioned, in shipping.

PS The USA did not win the war on their own, I think we were there, maybe your history books don't show it though.

[Iron City]

So the manufacturing part of the aircraft business can go to third world (or at least second world) countries like India, Malaysia, and Kansas.

This implies that the design part can stay in Seattle. Except it also seems that a lot of sofware development, help desk (okay, that isn't very technically demanding) and other IT and computer stuff can go offshore too. When will the design of the aircraft be outsourced to other countries? If this comes to pass or there is pressure for this what will the regulatory scheme be? How good are these countrys' CAAs at design certification and who will buy or insure the aircraft thus produced?

In the ship building business the manufacturing work went offshore, where did the design work go? Did it stay in Clydebank etc? Seems a lot of the passenger and higher technology ships are coming from designers in Europe and are built where the economics support it. Model for the airliner future?

[7p3i7lot]

Alas I feel the USA is starting to go the way of so much of the UK and Western Europe. We have so many folks who buy the "tax the corporations" to pay for our benefits line that our fate may be sealed as well. The next step after companies go "overseas" for manufacturing is protectionism which in the long run fails as well.

Fact: corporations do not pay Taxes! They merely raise prices to offset the cost of taxes making them less competitive. In the Boeing case, the peoples republic of Washington State (a subsidiary of the Socialist State of California) thought they had a captive corporation to cure all their mismanagement of their social programs. Boeing found a better offer (still in the USA in this case) and moved their "cheese". Of course they no realize that the only way to compete with Airbus is to find partners around the world that will guarantee a market for the product they build. Smart global business thinking if you ask me.

enough ranting. Have a jolly ole time!

[CowboyEngineer]

Embraer Brazil will start building "upsized" regional jets using cheap Brazilian labor and screw both Boeing and Airbus. Prolly design them using cheap Indian engineers.

Then they won't be able to sell them because the airlines will go out of business because no one in the US or Europe will have jobs with which to buy airline tickets.

[Snoopy]

Iron City wrote:

"In the ship building business the manufacturing work went offshore, where did the design work go? Did it stay in Clydebank etc? Seems a lot of the passenger and higher technology ships are coming from designers in Europe and are built where the economics support it."

Well Japan has been making ships for ever, but Korea and China are relative newcomers to the game, both of which saw large government subsidies and investments. The Koreans are no. 1 shipmakers worldwide now and if you visit the largest shipyard in the world at Hyunda in Ulsan (and they also happen to be the largest 2-stroke marine engine manufacturer) it will just take your breath away. It is a demonstration in logistical planning and excellence. Admittedly, the EU is currently arguing with Korea about the subsidies, but the fact is that the Koreans don't care what the EU thinks because their shipyards are full until 2007....

The Chinese for their part have announced that by the year 2010 they will have doubled their capacity for building ships and marine engines. Here as well government subsidies are at work. They are just as cheap as Korea, but the quality is not yet as good and, of course, the facilities are still a lot older on average.

In Japan shipyards are also full until early 2007. Most of the ships are for locallly-owned fleets, but they still have some orders from foreign shipowners. Nowadays shipowners are ordering from whoever can deliver the soonest. There was a lot of talk about some mergers a couple of years ago, but now that the order books are full it has gone really quiet on that front. Interestingly enough, the most successful and largest Japanese shipyard (and 4th largest worldwide) is a family-owned company.

The big advantage that these three countries had over Europe were lower wages, less union problems (despite the fact that Korean unions are very strong), and a firm commitment by the governments to ensure the survival of these crucial industries.

Cruise ships and luxury liners are still mainly built in Europe, but it is a completely different technology to building a crude carrier or a container vessel. It's basically interior design on water....

[ZK-NSJ]

leroy brown lives on the south side of chicago dosnt he, maybe he can go sort them out

[PAXboy]

I would agree that the subsidy process has made things more difficult to follow but, in Europe, it has run rather like this:

1) No subsidy for anything.
2) People get together and introduce subsidies to support old business (farming) because their 'way of life' is being threatened and to 'save' jobs. Also for new business (aeroplanes) because it will bring 'new' jobs.
3) Complexity and size of subsidy grows.
4) Some folks want to stop subsidy as it is costing money and distorting the market.
5) Groups start to reduce subsidy but might introduce tariffs or other protectionist process'.
6) By this time, others have seen that they can produce goods cheaply due to lower wages and real estate cost.
7) Sometimes, subsidies are prevented by law. eg state airlines being sold off and govts no longer able to put cash into them - even paying it back when found out.

By the time people reach 6 + 7, it is too late. BUT subsidy is NOT the sole problem, it is a small factor by comparison with the overall prosperity 'arc' through which the country is going.

Countries build wealth and high standards of living. But they have now consumed too much and made themselves too comfortable - whilst not providing enough for their old age. Their economy starts to implode but they do not want to give up any of the goodies that they already have. Nor do the youngsters see any reason not to have the good things their parents had.

Rich countries start to save money by changing subsidies/tariffs/barriers and then outsourcing of jobs. This, ultimately, does more damage as the long term loss of jobs affects the country. BUT each company can only look after itself - not the country. Since the country does not see it's role as interfering in each company .... the country must decline.

This cycle of wealth and power will continue under the first country is poor and the second is rich and they start to outsource back to the first country! How long that cycle will take is not possible to guess.

The alternative is to go to war. Some countries in the world are already doing that.

[plantzzman]

I guess in many ways we are all to blame-we all want more for our money-at some point companies have to make drastic moves to be able to continue to operate.But when that happens to mean sourcing from other countries we all cry foul.Where I live in the UK happens to be a major player in the aero engine market and was heavily into the railway market.Thankfully currently the aero engine side seems to be going ok but the rail side is suffering after a major rail operator chose I think a German company to build new trains for them instead of the company in my city in the UK.When the local paper looked into things in other European countries they all sourced there rolling stock from companies in there countries keeping the work in there back yards-not so the British.
Others have mentioned the outsourcing of call centres to India which again is bad for the UK.I get alittle comfort by using strange terms when they call me-the other day it was CAN YOU JUST RUN THROUGH THAT AGAIN? Deathly silence at the other end of the phone.
I wonder how long it will be before the countries in question start outsourcing work back to places such as the USA and the UK?
As for workers at Boeing loosing work to other countries you can only hope the produced products are of a lower standard and Boeing are forced to turn back to the USA.
Now the only thing that sticks in my throat is the we would all be talking German bit which comes across from the USA far to regularly.Thankfully over here in the UK etc we all know the residents of the USA have been watching high budget hollywood films far to much when trying to learn world history.
Yes thankfully we dont all speak German in the UK.We now speak Afgan,Iraqi,Kosovan,Albanian,Kurd, I could go on but somewhere at the end of the line there is English.

[PAXboy]

pzman: Your retaliation tactic: "CAN YOU JUST RUN THROUGH THAT AGAIN? Deathly silence at the other end of the phone." is magnificent and truly British. If they offer you a choice of something, your reply might be, "That's six and two threes."

As for the call centre or production or whatever switching back to the original country? Nope. Too many people have made money and do not wish to lose face. Perhaps after MUCH public attention and newspaper stories but only then.

Simple example: I always bought mobile (cell) phones from a particular manufacturer as they were tough when you dropped them and managed to pull in a signal when others didn't. They were slightly larger and heavier and more expensive - but they worked very well.

Now that company produce phones that are light, break easily, have software faults and are cheap. Substitute the product or service of your choice and you have the great and wonderful triumph that we call human society. (I don't ascribe it to capiltaism or communism as both methods get trampled underfoot by the individual human desire to get rich!)