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I really, really hope this isn't necessary. We're currently in one of the longest (if not the longest) periods of continued economic growth in US history, and t

I really, really hope this isn't necessary. We're currently in one of the longest (if not the longest) periods of continued economic growth in US history, and the knock-on effects from a halt to 737 production could help put an end to that. (not just from the direct hit which was estimated at of 0.6% of GDP, but the confidence hit that would cause) EDIT: To be clear, I think the best outcome is for the 737 Max to be made safe and to fly again. If it can't be made safe, obviously cancelling production of useless planes is a good idea.

allengeorge 7y ago
Alternatively, I’d like to see companies like Boeing feel the effects of cutting corners recklessly.
- backtobecks 7y ago
  I am a sharerholder, but I think management is at fault and should be sacked with no severancee
  - btmiller 7y ago
    That'd be a good start. One thing, however, that bothers me lately is the pursuit shareholder value above all else. The commentary always arrives at that end (shareholder value) in order to justify the means every time a company's direction might not translate so nicely for customers: YouTube ads, Uber rate increases, Boeing cutting corners, etc. Being a profitable company is one thing, but I can't help but watch and think, I don't feel any sense of compassion for shareholders losing a few bucks because they were impatient or made a bad investment. Of course Boeing's shareholders want <insert new Boeing thing> delivered yesterday, but the "bloody ROI"[1] can't be what drives Boeing development. [1] https://www.forbes.com/sites/stevedenning/2014/03/07/why-tim-cook-doesnt-care-about-the-bloody-roi https://www.forbes.com/sites/stevedenning/2014/03/07/why-tim...
    - TheOtherHobbes 7y ago
      This should be easy to change. Make shareholders culpable for management failures. Balance this with an oversight structure that gives shareholders a direct influence on corporate ethics, with the power to investigate and terminate management malpractice and systemic abuse. Of course the whole point of public share ownership is profit without responsibility. The distancing of benefit from external consequences is considered sacrosanct. So this suggestion is the the worst kind of heresy. But why should share ownership somehow magically excuse consequences that would be considered criminal in other contexts? If management has to justify its actions to people who share the risk and the blame, it's going to pay a lot more attention to consequences.
    - neffy 7y ago
      Two additional datapoints - shares are used as part of the incentive structure for senior management, and can dwarf salary. Share gains are also taxed less. It's a simple feedback loop. It gets pretty silly when you look at the share buyback plans many companies operate, huge sums are "invested" in the company's shares for a relatively small - a few million - return to individual management.
  - markdown 7y ago
    Was the current leadership in charge throughout the development of the MAX?
    - schrodinger 7y ago
      It doesn’t matter; they allowed it to be released.
      - markdown 7y ago
        Sure. But the question still stands, hopefully someone who actually knows the answer comes along.
      - drcross 7y ago
        And if they've creatively made a way so that no one is responsible for sign off, that entire level of executives needs to go.
- kevin_b_er 7y ago
  Pierce the corporate veil and go after the management. When there are consequences for their beancounting at the expense of human lives, maybe they'll think twice about profit over people.
dhbanes 7y ago
If the plane isn't safe and can't be made safe then it's necessary. Also, the claim that Boeing halting 737 Max production will cause a recession seems like FUD to me.
- spookthesunset 7y ago
  > Also, the claim that Boeing halting 737 Max production will cause a recession seems like FUD to me. Aerospace is a sizable part of the US economy. It really isn't FUD at all.
  - Bjartr 7y ago
    There's more to the aerospace industry than Boeing alone. Aerospace is 1.8% of the GDP, whereas Boeing is 0.6% of the GDP. Damn impressive to be sure, but considering hundreds or thousands of lives lost are the cost to avoid a slump in that area, I'm pretty sure it's the right choice.
- WrtCdEvrydy 7y ago
  > Boeing halting 737 Max production will cause a recession Oh shit, let's bail them out!
  - aaronbrethorst 7y ago
    Nationalize them.
  - seltzered_ 7y ago
    This has been recently discussed: https://mattstoller.substack.com/p/the-coming-boeing-bailout https://mattstoller.substack.com/p/the-coming-boeing-bailout https://news.ycombinator.com/item?id=20353342 https://news.ycombinator.com/item?id=20353342
- DuskStar 7y ago
  The US's economy is projected to grow 2.1% in 2019 - reducing that by 0.6% would wipe out a major portion of that. And I am inclined to believe that number - 52 planes / month for 12 months at $100m is $62.4 billion directly, and the US economy is ~$20T - 0.6% of that is $120 billion. (so with knock-on effects, I find 0.6% a very reasonable estimate for the cancellation of a year's production. Probably not so reasonable for the 5 months left in 2019, though)
draw_down 7y ago
Come on.
downrightmike 7y ago
This feels more like the issue we had in the 80's, where companies would source from the lowest cost regardless. And then they paid for that in the 90's, NEC is a good example of this. The companies that can improve quality without cutting corners should be the winners. Airbus should really push on their advantage.
- spookthesunset 7y ago
  > Airbus should really push on their advantage. This is assuming that airbus isn't doing the same things that Boeing was doing....
abc_lisper 7y ago
Wait, I remember hearing this before. “Too big to fail”, more like “too big to fly!”
slenk 7y ago
I don't care if Boeing gets hurt for their reckless decisions - I just worry this will pressure the FAA putting the Max back into service to protect Boeing (as they seem wont to do)
the_duke 7y ago
0.6% of the growth rate, which is very different from 0.6% of GDP...
- DuskStar 7y ago
  Boeing's 2018 revenue was ~0.5% of US GDP. Assuming that the 737 Max is a sizable percentage of that revenue, and that there's a decent GDP multiplier (Boeing pays employees who themselves spend money, etc) it could very easily be 0.6% of GDP, not of the growth rate. Impacts to GDP growth are almost always measured relative to total GDP, not to expected growth.

allengeorge 7y ago

Alternatively, I’d like to see companies like Boeing feel the effects of cutting corners recklessly.

backtobecks 7y ago
I am a sharerholder, but I think management is at fault and should be sacked with no severancee
- btmiller 7y ago
  That'd be a good start. One thing, however, that bothers me lately is the pursuit shareholder value above all else. The commentary always arrives at that end (shareholder value) in order to justify the means every time a company's direction might not translate so nicely for customers: YouTube ads, Uber rate increases, Boeing cutting corners, etc. Being a profitable company is one thing, but I can't help but watch and think, I don't feel any sense of compassion for shareholders losing a few bucks because they were impatient or made a bad investment. Of course Boeing's shareholders want <insert new Boeing thing> delivered yesterday, but the "bloody ROI"[1] can't be what drives Boeing development. [1] https://www.forbes.com/sites/stevedenning/2014/03/07/why-tim-cook-doesnt-care-about-the-bloody-roi https://www.forbes.com/sites/stevedenning/2014/03/07/why-tim...
  - TheOtherHobbes 7y ago
    This should be easy to change. Make shareholders culpable for management failures. Balance this with an oversight structure that gives shareholders a direct influence on corporate ethics, with the power to investigate and terminate management malpractice and systemic abuse. Of course the whole point of public share ownership is profit without responsibility. The distancing of benefit from external consequences is considered sacrosanct. So this suggestion is the the worst kind of heresy. But why should share ownership somehow magically excuse consequences that would be considered criminal in other contexts? If management has to justify its actions to people who share the risk and the blame, it's going to pay a lot more attention to consequences.
  - neffy 7y ago
    Two additional datapoints - shares are used as part of the incentive structure for senior management, and can dwarf salary. Share gains are also taxed less. It's a simple feedback loop. It gets pretty silly when you look at the share buyback plans many companies operate, huge sums are "invested" in the company's shares for a relatively small - a few million - return to individual management.
- markdown 7y ago
  Was the current leadership in charge throughout the development of the MAX?
  - schrodinger 7y ago
    It doesn’t matter; they allowed it to be released.
    - markdown 7y ago
      Sure. But the question still stands, hopefully someone who actually knows the answer comes along.
    - drcross 7y ago
      And if they've creatively made a way so that no one is responsible for sign off, that entire level of executives needs to go.
kevin_b_er 7y ago
Pierce the corporate veil and go after the management. When there are consequences for their beancounting at the expense of human lives, maybe they'll think twice about profit over people.

dhbanes 7y ago

If the plane isn't safe and can't be made safe then it's necessary. Also, the claim that Boeing halting 737 Max production will cause a recession seems like FUD to me.

spookthesunset 7y ago
> Also, the claim that Boeing halting 737 Max production will cause a recession seems like FUD to me. Aerospace is a sizable part of the US economy. It really isn't FUD at all.
- Bjartr 7y ago
  There's more to the aerospace industry than Boeing alone. Aerospace is 1.8% of the GDP, whereas Boeing is 0.6% of the GDP. Damn impressive to be sure, but considering hundreds or thousands of lives lost are the cost to avoid a slump in that area, I'm pretty sure it's the right choice.
WrtCdEvrydy 7y ago
> Boeing halting 737 Max production will cause a recession Oh shit, let's bail them out!
- aaronbrethorst 7y ago
  Nationalize them.
- seltzered_ 7y ago
  This has been recently discussed: https://mattstoller.substack.com/p/the-coming-boeing-bailout https://mattstoller.substack.com/p/the-coming-boeing-bailout https://news.ycombinator.com/item?id=20353342 https://news.ycombinator.com/item?id=20353342
DuskStar 7y ago
The US's economy is projected to grow 2.1% in 2019 - reducing that by 0.6% would wipe out a major portion of that. And I am inclined to believe that number - 52 planes / month for 12 months at $100m is $62.4 billion directly, and the US economy is ~$20T - 0.6% of that is $120 billion. (so with knock-on effects, I find 0.6% a very reasonable estimate for the cancellation of a year's production. Probably not so reasonable for the 5 months left in 2019, though)

draw_down 7y ago

Come on.

downrightmike 7y ago

This feels more like the issue we had in the 80's, where companies would source from the lowest cost regardless. And then they paid for that in the 90's, NEC is a good example of this. The companies that can improve quality without cutting corners should be the winners. Airbus should really push on their advantage.

spookthesunset 7y ago
> Airbus should really push on their advantage. This is assuming that airbus isn't doing the same things that Boeing was doing....

abc_lisper 7y ago

Wait, I remember hearing this before. “Too big to fail”, more like “too big to fly!”

slenk 7y ago

I don't care if Boeing gets hurt for their reckless decisions - I just worry this will pressure the FAA putting the Max back into service to protect Boeing (as they seem wont to do)

the_duke 7y ago

0.6% of the growth rate, which is very different from 0.6% of GDP...

DuskStar 7y ago
Boeing's 2018 revenue was ~0.5% of US GDP. Assuming that the 737 Max is a sizable percentage of that revenue, and that there's a decent GDP multiplier (Boeing pays employees who themselves spend money, etc) it could very easily be 0.6% of GDP, not of the growth rate. Impacts to GDP growth are almost always measured relative to total GDP, not to expected growth.