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Boeing Sales and Profits Plummet as 737 Max Crisis Continues
- geophile 7y agoIt should. And I hope it continues to hurt them. We keep hearing how bad corporate behavior happens because the cost/benefit analysis simply views bad outcomes as costing a certain number of dollars, and then you throw in the probabilities, and you can justify pretty much any appalling decision. The best possible outcome of the 737 Max disaster would be a legendary business school case study showing management of technical endeavours by bean counters is a terrible idea.
- grecy 7y agoI'm calling it now - the US Government will pass a law so Boeing can't be sued out of existence, or they will bail them out. Because "too big to fail".
- ortusdux 7y agoSteve jobs understood this back in 1995. https://youtu.be/ZBma82g3Uag https://youtu.be/ZBma82g3Uag
- ISL 7y agoThat case study should come along with case studies like the Superconducting Super Collider [1], where insufficient counting of beans may have led to the demise of an important scientific instrument. The Higgs could have been discovered in ~2000 had the instrument simply turned on. [1] https://en.wikipedia.org/wiki/Superconducting_Super_Collider https://en.wikipedia.org/wiki/Superconducting_Super_Collider
- tropo 7y agoThat one suffered from insufficient members of congress. It needed to be more like the Space Shuttle or F-35. Better locations: 1. It could have been in Arizona, Colorado, New Mexico, and Utah. 2. It could have been in Maryland, Pennsylvania, West Virginia, and Virgina. 3. With a slight size increase: Missouri, Kentucky, Tennessee, and either Illinois or Arkansas 4. With a big size increase: all 5 of Missouri, Kentucky, Tennessee, Illinois, Arkansas 5. With a big size increase: Kansas, Texas, New Mexico, Colorado, Oklahoma 6. With a big size increase: Texas, Louisiana, Arkansas, Oklahoma
- i_am_nomad 7y agoI came here to say something along these lines. Letting accountants drive engineering is a fatal mistake, but so is engineering without any thought to costs and profits. I’ve walked away from more than one startup whose business plan was, “Let’s design the thing, and only after that will we think about COGS and competitive pricing.” That way lies madness, and Juicero.
- geophile 7y agoJuicero adds another function to the discussion: marketing. Juicero was an example -- a very comical example -- of marketing over everything else: technology and bean counting. Yes, a balance among all three functions is necessary. However, the 737 Max case is definitely about letting bean counters dictate engineering choices: saving design costs by pulling the ancient 737 design off the shelf; the software fixes to the problem introduced by those engines on that frame; and then pretending that the plane was just like an old-school 737, hiding all the complexity and compromises from pilots to avoid recertification costs. And even the decision to charge extra for redundancy of the critical sensor driving the software.
- PhasmaFelis 7y agoJuicero may also have had the opposite problem: the dangers of letting engineers play unsupervised. It appeared to be, and maybe should have been, a cheapjack gizmo swaddled in marketing glitz to justify its ridiculous price. But someone did a teardown and discovered that it actually did contain a very expensive, precision-engineered, completely unnecessary two-ton press. To squeeze fruit pulp out of a tube.
- mikepurvis 7y agoThe legendary Juicero teardown: https://blog.bolt.io/juicero/ https://blog.bolt.io/juicero/
- OnlineGladiator 7y agoThis one is a lot more fun: https://www.youtube.com/watch?v=_Cp-BGQfpHQ https://www.youtube.com/watch?v=_Cp-BGQfpHQ
- dwoozle 7y agoWhat are the implications of the Higgs being discovered in 2000?
- ISL 7y agoHigh-energy particle physics would be more than a decade ahead of where it is now. Moreover, as SSC was planned as a 40 TeV machine, and LHC reaches 14 TeV now (at presumably much higher luminosity), SSC might have discovered something that still has not been observed.
- jchallis 7y agoThere is also an excellent chance that the standard model is the story up to 100TeV and these expensive programs take away attention from better science endeavors.
- papreclip 7y agoThis super-high energy stuff is generally a boondoggle. You could scale up the energies involved by another 2 orders of magnitude and get precise experimental data describing a new, even more ephemeral state of matter. Any practical benefit to the human race will be collateral damage ("we got better at building magnets and detectors because our toy demanded them")
- dredmorbius 7y agoBad accounting is bad.
- jgon 7y agoRight, but in one case hundreds are dead and in the other case we made a physics discovery 15 years later. Not sure if this is the bullet-proof equivalency you think it is.
- scarejunba 7y agoWe don't know the counterfactual world. Maybe we spend $12 b building it, then we don't run the DARPA AV challenges and the world is behind on CV instead. Maybe that's better, maybe that's worse.
- empath75 7y agoMost likely outcome is a government bailout.
- rad_gruchalski 7y agoHow is that going to fly with wto? Asking because of the recent case against airbus.
- asdfman123 7y agoCool, the opposite of a fine!
- elif 7y agoI think direct restrictions by the government, stricter regulations/inspections, loss of contracts, etc. would be more powerful and direct impactors than a handful of quarters in red ink with an asterisk. Capitalism is not the only or best tool to guarantee safety.
- Merrill 7y agoIt appears that the critical decisions on the Max design were made during Raymond Conner's tenure as head of Commercial Airplanes. He was a sales executive. His successor, Kevin McAllister was also a sales executive, and worse, was ex-GE. No doubt he was hired during James McNerney's stint as Boeing CEO. McNerney was also from GE under Jack Welch. https://en.wikipedia.org/wiki/Raymond_Conner https://en.wikipedia.org/wiki/Raymond_Conner https://en.wikipedia.org/wiki/Kevin_G._McAllister https://en.wikipedia.org/wiki/Kevin_G._McAllister https://en.wikipedia.org/wiki/James_McNerney https://en.wikipedia.org/wiki/James_McNerney
- PhantomGremlin 7y agoMcAllister was just replaced. The bad news is he was replaced with Stan Deal, a sales executive. The good news is he's not just a sales guy, he's held a number of jobs. He also has a bachelor's degree in aerospace engineering. So there's some hope. https://www.bizjournals.com/seattle/news/2019/10/22/5-things-boeing-bca-airplanes-max-ceo-stan-dea.html https://www.bizjournals.com/seattle/news/2019/10/22/5-things...
- CryoLogic 7y agoGood. Corporations should be punished when corporate greed leads to negligence which leads to the loss of human life en masse in exchange for short term profit. I don’t see how this is a bad thing for the market, if anything there will be more pressure to make safe aircraft.
- nolta 7y agoShareholders, the board, and upper management should be punished. But the company should not. In a horse race, if the jockey is terrible you don't shoot the horse.
- christophilus 7y ago> Shareholders If you own an S&P 500 fund like SPY, you are a shareholder. A lot of folks have BA in their retirement accounts. Litigating against shareholders in a case like this would serve no purpose that I can see.
- CogitoCogito 7y agoIf the profits were ill begotten by these shareholders, I don’t see why it matters if it occurred passively or actively.
- christophilus 7y agoI guess where I was going is that it’s likely that you yourself or your parents or your siblings are shareholders. If you have a 401k with an index fund, you probably own a piece of BA. should you be prosecuted?
- CogitoCogito 7y agoThis thread of comments began with CryoLogic saying this: > Good. Corporations should be punished when corporate greed leads to negligence which leads to the loss of human life en masse in exchange for short term profit. I read CryoLogic's usage of "punished" as meaning "losing money due to drop in stock value" (which is what occurred in this case). Regular people holding shares in Boeing absolutely should lose money due to the dropping stock prices. They take risks making investments and they must accept that. So no I don't mean that regular shareholders should be prosecuted. I don't think anyone here has argued for that.
- TazeTSchnitzel 7y agoHow long until US government state aid?
- ibejoeb 7y agoI suppose if you count defense spending, it's status quo.
- duaoebg 7y agoDefense spending is a perpetual state aid to Boeing
- baddox 7y agoTrue, but that doesn't mean they wouldn't be happy to get more.
- adwww 7y agoMore like, Boeing wins a contract for a new military aircraft the Airforce didn't know they needed.
- alistairSH 7y agoLike punishing Bombardier for selling an airplane in a market segment Boeing didn't even have a plane? Or massive subsidies from Washington state? Boeing already enjoys massive government aid.
- metanoia 7y agoThe Bombardier saga played out extremely well for Boeing, given Airbus picked up an amazing new plane for the sum of $1 (Canadian $, probably!) ...
- bishnu 7y agoIt's not just Boeing, airlines that relied on the Max are losing money too (Southwest in particular is suffering harshly). There's a 5+ year backlog for new A320s, so switching suppliers simply isn't an option.
- BitwiseFool 7y agoI don't know about you, but I never want to fly on a 737 Max -Even after they re-certify it.
- SirensOfTitan 7y agoI’m with you, I’ll go out of my way to avoid the max after this. I just don’t trust that plane is safe to fly.
- bdamm 7y agoWhy? If anything, it's going to become the most intensively analyzed airplane with the most widely broadcast flight envelope in aviation history. I personally hope that the Max gets back in the skies soon. I can't wait to get on board one, and enjoy the better connections and cheaper tickets that this economical airplane brings.
- natch 7y agoIt’s been analyzed by people who have proven themselves untrustworthy.
- JohnFen 7y agoBecause everyone failed (I suspect intentionally, in some cases) to properly vet the plane in the first place. I have no reason to trust that the same people will do a better job the second time around. I won't avoid the plane forever -- but I will certainly give it a few years before I fly in one. Better safe than sorry.
- soared 7y agoIts good that a company is hurt because of its negligence. Its bad when an industry dominated by two players has one of those players hurt and the market can't replace them. You can't start a competitor to Boeing because it would cost over $100Bn, so the larger outcome is bad for aviation.
- pastor_elm 7y agolook to fly the Sukhoi Superjet
- wahern 7y ago$100 billion doesn't seem like much of an impediment in a world with $300 trillion of investable assets. It's only an impediment if you can't recoup the investment, which is much more difficult if revenues are split 3 ways rather than 2.
- trhway 7y ago>Its bad when an industry dominated by two players has one of those players hurt and the market can't replace them. it is the best opportunity for a new maker to emerge and shake, if not break, the duopoly. Boeing for the years ahead wouldn't have a plane to replace 737 MAX while the market will be squeezed by Airbus.
- selectodude 7y agoAsk Lockheed Martin how that went :)
- trhway 7y agoI'm not that familiar with the story here, and simple googling brings that https://en.m.wikipedia.org/wiki/Lockheed_L-1011_TriStar https://en.m.wikipedia.org/wiki/Lockheed_L-1011_TriStar and it doesn't sound that bad.
- Litmus2336 7y ago
- loulouxiv 7y agoIs it possible for a company like Boeing to go bankrupt because of such a crisis ?
- evanriley 7y agoPossible? Technically. Will it? Probably never, it's too much of a tool used by the US Government to ever go bankrupt.
- skissane 7y ago> Will it? Probably never, it's too much of a tool used by the US Government to ever go bankrupt. Of course, the US government would never allow Boeing to go out of business completely, as in a chapter 7 bankruptcy. But a chapter 11 bankruptcy, in which Boeing the business survives but its current stockholders lose everything? Not inconceivable it might happen some day, and I can't see why the US government would feel it necessary to stop that. Customers only care about the firm's products and services still being available to purchase at a reasonable price, if the stockholders lose everything that's not their problem.
- evanriley 7y agoHmm, I actually feel like you're right here. I could see them letting it go through Chapter 11. Out of curiosity, do you think they wouldn't let it even get that far to make sure they stay competitive vs Airbus?
- skissane 7y agoIn Boeing's current state, I don't think chapter 11 would achieve much. Their total debts aren't that large compared to their overall revenue and assets. Boeing's real current problems are poor management leading to poor corporate culture, and chapter 11 won't necessarily do anything to fix that. (I'm not sure how good Airbus' culture is either, but evidence suggests it may be better than Boeing's.) Even though 737 MAX is a big expensive mess, Boeing makes so much money on the rest of its businesses (its other commercial aircraft models, defense contracts, space, etc) I'm sure they can survive those losses. So I don't think Boeing will be filing for chapter 11 any time soon. But in 5, 10, 15 years from now? Anything could happen. Maybe they'll turn the corner from this episode, and their business will have a very bright future. Maybe they get stuck in the doldrums, and then chapter 11 might slowly become more plausible as an ultimate outcome.
- rdiddly 7y agoThe company has an opportunity to revamp their culture in a way that makes safety a core tenet again. Seems like that's the only way to not only survive the fallout but someday look back on this as the costly lesson that it is. "Back when we were that, we used to do that, which is how we learned this, and now instead we're this, and we do this."
- alexis_fr 7y ago...we’ve learnt that his manager commits fraud, that manager commits perjury”... 5xWhy leads to the question “Why are managers under such pressure”, the answer is two-fold: “They want to have a family and a cost of living is high, and they’re ready to die themselves at their desk to make enough money, so they actually care more about the lives of others than their own, which is ironic”, the other is “Because Boeing is fundamentally on older tech than Airbus, so no matter how they press the lemon, they can only squeeze that much.” See, Boeing was built before Airbus. Airbus benefited from starting at the electronics age, with lessons learnt from Boeing. It had an impact on the design: Airbus is fly-by-wire, Boeing isn’t. Probably all the tech stack of Airbus slightly newer, with slightly newer management methods too (legacy is a curse to get rid of) and easier for them to iterate and upgrade. That alone could explain why each generation of Boeing plane was rushed to the market, including the explosive batteries circa 2010, the broken airframes by Ducommon for 4.7% planes, helped by FAA delegating self-certification of their planes to Boeing itself, and the coup de grace, planes that literally want to aim for the ground in 2019, all of that in 8 years. Ironically they’ve bought McDonnell 20 years ago which was pro at sneaking past FAA regulations. Maybe they’ve “learnt” from MD. But there are so many others in hiding that we have to throw away the last 20 years of engineering: For example the MCAS had only 1 processor, when all other systems are required to have 2 to 3. We can’t risk 100 lives for each lie Boeing did in the past 20 years. I’m not sure there is actually a lot to learn that we didn’t know: The FAA shouldn’t delegate Boeing certification to Boeing, managers should not ask employees to drill new holes when the original holes were drilled 3 inches apart and don’t fit, because it endangers the structural integrity, one should not use a hammer to change the shape of the airframe by a full inch, collapsing the I-beam by folding it, compromising the structural integrity, they shouldn’t have lied about changing the features of the MCAS, and the market should have been nicer with their revenue. Every bankruptcy is sad and unfair. It’s disheartening to fire people who certainly have given all they could to compete with a better competitor. But it’s time to cut the loss, because their failure is ingrained in their engineering and management, and is costing real deaths in real world.
- droithomme 7y agoThey won't stop playing games which doesn't inspire confidence. Sociopaths in control is a common dark pattern for big companies. Once entrenched generally impossible to get rid of them, any more than one easily deposes a tyrannical dictator who has acquired the power to silence and quash all internal dissent.
- campfireveteran 7y agoMaintaining corporate capture of the political and socio-economic structures requires management capture by talented jerks to continuously deliver for stockholders short-term results that forsake everything else. However, like most anarcho-capitalist utopian failures since time immemorial, large risks will not be mitigated for the least long-term harm to the public because unlimited greed and consequences of externalities "will solve everything in the markets." Maximizing profit apart from all else and lacking functional public protections that have been co-opted by the trough of corporate influence pedaling will inevitably lead to omnicidal and suicidal outcomes if nothing is done to intervene.
- viburnum 7y agoBoeing stock has done incredibly well over the years. Shareholders didn’t care about engineering and financialization then but maybe now they will.
- meddlepal 7y agoDoubtful. Boeing stock has barely been hurt by this MAX crisis. It also cannot be replaced and the US government is not going to let it go under or be bought by a non-US company.
- asdfman123 7y agoYeah, the stock looks like it's just bounced around for the last year and is about where it was this time in 2018. That's not exactly punishing. It looks like any potential government bailout has already been priced into the stock.
- jwildeboer 7y ago#ouch
- _bxg1 7y agoThere's a little bit of justice in the world.
- dwoozle 7y agoThis doesn’t affect the game theoretic optimal decision making for other companies, since the executives who made these decisions were paid a long time ago and rode off into the sunset. We need to punish individuals for the decisions they make. Create a legal framework to claw back 10x the money they were paid, leaving them in a studio apartment eating ramen noodles. You don’t have to burn people at the stake to create a deterrent level of punishment, but the company suffering doesn’t matter since the execs responsible have long since fled.
- JohnFen 7y ago> the company suffering doesn’t matter since the execs responsible have long since fled. Yes, it does matter. If the company suffers enough, perhaps they will be more cautious about this sort of thing in the future, even if the individuals directly responsible are gone.
- tzs 7y agoMy understanding is that one of the major selling points of this plane was that pilots of previous 737 models would need very little additional training for the 737 MAX. I think it was something like an hour of reading and they were then considered good to go. It is also my understanding that IF pilots were fully informed of everything MCAS does and its failure modes, and were trained in how to recognize and handle those failures, and maybe also if the plane has the optional AoA features (display from both sensors, AoA disagree light) which could help recognize when MCAS is using faulty data, then the MAX would be fine. Question: doesn't there come a point where it is cheaper for Boeing to give up on the very little additional training thing, and go ahead and eat the costs of retraining all the pilots to fully understand MCAS and installing the optional AoA features on all 737 MAXs?
- paulmd 7y agoThey also need to either add a manual MCAS cutout (separate from the power-trim cutout) and probably add a third AoA sensor too. The airplane will not be safe as long as the only way to exit a nose-high MCAS runaway situation is to cut out the power trim and move a wheel that physically cannot be moved while the aircraft remains in the nose-high situation. And without a third AoA sensor the chances of a failure remain unacceptably high.
- vilda 7y agoAs the plane is headed down, it increases its speed. At a certain point, due to aerodynamic forces, pilots cannot stabilize the plane with the stabilizer trim wheel in the cockpit. The situation is unrecoverable. This is explained here: https://www.seattletimes.com/business/boeing-aerospace/boeings-emergency-procedure-for-737-max-may-have-failed-on-ethiopian-flight/ https://www.seattletimes.com/business/boeing-aerospace/boein...
- phire 7y agoAll the pilots needed to do was identify the problem as MCAS, use manual electric trim buttons to neutral and then turn electric trim off. But Boeing never trained pilots how to identify the problem, and told them the old procedure was the correct way of dealing with it. The old procedure told pilots to turn electric trim off, never turn it back on and return stabilizes to neutral with manual control, which turns out to be impossible. That's not one, but two pilot training issues with Boeing's official training materials. A related problem is that because of the no extra training requirements, Boeing explicitly designed MCAS to be near impossible to disable, because if it was disabled then the plane now had different flight characteristics, which the pilots weren't trained to handle. And this is also the reason why MCAS only used data from one sensor. If the sensors disagreed and MCAS disabled itself, then that would require pilot training. The whole system would have been designed differently, and more safely if it wasn't for the "no extra training" requirement.
- adrr 7y agoCan’t believe they left the CEO in charge and just removed him from the chair of the board. Ultimately it’s his culture that made it possible for this issue.
- fsh 7y agoHe became CEO only half a year before the first flight of the 737 max.
- campfireveteran 7y agoI was just watching the blancolirio channel (a 777 pilot), who previously brought up the 737NG pickle fork crisis that the mainstream media isn't reporting on. Combined with the 737 Max and 2010 737NG Ducommun critical structural parts deficiencies and burying of the internal Boeing blue-ribbon panel's findings, it's only cognitive dissonance and profiteering that keeps a rational person from concluding extensive and pervasive regulatory capture hasn't damaged the quality and fitness of Boeing's products and services designed, manufactured, overhauled or repaired in the past 20-25 years to an unknowably broad and deep systemic level that is fundamental uncertain to know the extent of the risk that lurks because of "self-certification" and other lax practices. Kicking out a couple of managers isn't going to fix much of anything that is already happened, like substandard spars lurking in 737NG's waiting to fail on hard landings, runway overruns and possibly heavy turbulence, leading to fuselage breakups. I also think there's a bit of the Upton Sinclair effect in play where some Boeing pilot Youtubers including blancolirio and MentourPilot are overconfident and overestimate the quality and reliability of the equipment they fly out of sunk costs and income dependence biases. Boeing is too big to fail, too big to jail and too big to derail. One or two products may have some minor software patches applied, but they won't ever be told to recall unsafe or defective products because they own the regulators and have outsized influence based on national strategic interests, and lots of lobbyists and campaign contributions.
- TylerE 7y agoHyperbole much? We have ample evidence...there are thousands of the things flying every day. The 737NG has one of the best safety records of any airliner in service, EVER.
- krn 7y ago> Hyperbole much? I don't think so: https://www.youtube.com/watch?v=IaWdEtANi-0&t=36m16s https://www.youtube.com/watch?v=IaWdEtANi-0&t=36m16s
- bkor 7y ago4.7% percent with structural cracks seems awfully high. I thought planes were regularly and thoroughly inspected. Source https://en.wikipedia.org/wiki/Boeing_737_Next_Generation#Structural_defects https://en.wikipedia.org/wiki/Boeing_737_Next_Generation#Str...
- thefounder 7y agoRemember when the CEO, and many others (FAA, some on HN as well) were saying Max is safe and should not be grounded?
- asenk 7y agoWorse than that: Even after the plane was basically grounded by all other significant regulators, FAA was made to take a show flight on board the aircraft, and Trump directly discussed the matter with the company. Grounding was then announced by Trump. Didn't exactly give confidence of FAA acting independently.
- frozenlettuce 7y agoPoor Embraer - they were bought by Boing recently, their private jets are some of the best. I hate seeing decaying big players buying smaller "fresher" companies just to see them squeezing any profit/value until the acquired company is ruined.
- meddlepal 7y agoBoeing stock feels like a great buy if the bottom falls out. There is simply no way the US Government is going to let the only major domestic commercial aircraft business go under. On the other hand this fiasco has not really hurt the stock price too much so perhaps investors already have decided this is true as well.
- starpilot 7y agoYeah, this seems like it could be a great buying opportunity. Reminds me of Toyota's unintended acceleration debacle which led to the largest auto recall in history. Very similar emotional feel. I had a coworker saying she would never ride in a Toyota again. How's Toyota doing today? Just fine.
- aggie 7y agoNot sure how widely this is known, and thus how much it impacted stock prices, but the unintended acceleration panic was not a real mechanical issue, and thus Toyota was not at fault [1]. The 737 Max is/was a real problem and is/was Boeing's fault. 1 - https://en.wikipedia.org/wiki/Sudden_unintended_acceleration#Sudden_acceleration_in_Toyota_vehicles https://en.wikipedia.org/wiki/Sudden_unintended_acceleration...
- Redoubts 7y ago> the unintended acceleration panic was not a real mechanical issue Wasn't it software? Isn't that just as "real"? > Toyota was not at fault Uh... A subsequent investigation[47] by Safety Research[48] of the NTHSA/NASA report along with information from Barrs report[49] and Koopmans report[50] revealed that bad software design, antiquated ECU hardware fueled by a poor company culture were the likely cause of the SUA in the Toyota Camry incidents. In April 2013, Betsy Benjaminson, a freelance translator working for Toyota to translate internal documents, released a personal statement about Toyota covering up facts about the sudden unintended acceleration problem. This leak of internal documents fueled a criminal investigation by the FBI and the Justice Department that had been ongoing since 2010,[52] and on March 19, 2014, the DOJ issued a deferred prosecution agreement with a $1.2 billion criminal penalty for issuing misleading and deceptive statements to its consumers and federal regulators, as well as hiding another cause of unintended acceleration, the sticky pedal, from the NHTSA.[41] This fine was separate from the $1.2 billion settlement of a class action suit paid to the drivers of Toyota cars who claimed that their cars had lost value as a result of the SUA problems gaining publicity in 2012, and was at the time the largest criminal fine against an automaker in US history.[53] Toyota was also forced to pay a total of $66.2 million in fines to the Department of Transportation for failing to handle recalls properly and $25.5 million to Toyota shareholders whose stock lost value due to recalls. Nearly 400 wrongful-death and personal injury cases were also privately settled by Toyota as a result of unintended acceleration.[53]
- nautilus12 7y agoThis is how capitalism is supposed to work in this type of situation. Companies getting around this result is been a big source of pain for our economy.
- neonate 7y agohttp://archive.is/dNYHa http://archive.is/dNYHa
- johngalt 7y agoBoeing is going to be the case study of what happens when you let 'business people' take over an engineering company. A bunch of MBAs deciding to move numbers around on paper and losing sight of the bigger picture. The 737 MAX and all the issues with the 787 isn't what happens when engineers are in charge, it's what happens at the end of a long line of non-technical people saying "well we can just do ______ right?" Cutting corners and working on influence rather than excellence. Article detailing the debacle with the 787. From which zero was learned. https://www.forbes.com/sites/stevedenning/2013/01/17/the-boeing-debacle-seven-lessons-every-ceo-must-learn/ https://www.forbes.com/sites/stevedenning/2013/01/17/the-boe... In 2001 there was an engineer that carefully analyzed the path Boeing was taking and detailed why it would cause nothing but increased risks and costs. A bunch of business guys outsourcing everything and not understanding why they don't have a working plane underneath all the contract language. http://seattletimes.nwsource.com/ABPub/2011/02/04/2014130646.pdf http://seattletimes.nwsource.com/ABPub/2011/02/04/2014130646... They had a goose laying golden eggs and they killed it to save the money on feeding it this quarter.
- munk-a 7y agoMaybe? But that case study has already happened time and again, yet these sorts of folks are allowed to slowly creep into working systems and break them still. I think it's just the classic aging business problems, most people are averagely competent, many companies fail, a company that happens to have an over abundance of particularly skilled people will succeed, but over time the average skill of those people will decrease and the company will flounder. There are ways to keep standards moderately high, and there are ways to tank it by allowing nepotism, encouraging CYOAism & turf wars, cutting salaries on highly skilled individuals relative to market rates (or laying them off to replace them with college grads)... I think companies (in line with the larger market) are just naturally cyclic and that incredibly long lived companies are quite the exception to the standard life cycle.
- TeMPOraL 7y agoI understand GP to be talking about something different - about consequences of putting behind the wheel people who don't care whether the company is making planes or toilet paper, but view it as a vehicle to turn money into more money. Goodhart's law states that "when a measure becomes a target, it ceases to be a good measure" - because people then start optimizing for the value of the measure, instead of what it's a proxy for. It seems that we've created a class of specialists, whose entire job is to do such optimizations. And we let them run companies, leading to predictable results.
- cyberferret 7y agoI can't read the article because of the paywall, but have they also factored in the future cost of lawsuits and compensation payouts to airline operators of the 737 MAX for loss of revenue from the grounded jets? The loss of passenger seat revenue, along with long term storage fees for the grounded fleets, plus the costs of getting those aircraft airworthy again, not to mention costs of leasing alternative aircraft to fill route demand... the costs would be staggering, and Boeing will have to foot some, if not all, of it.
- gandalfian 7y agoYet a cursory glance suggests the share price is up 300% in three years?
- CivBase 7y ago2002 - Goodrich Corporation acquires TRW Aeronautical Systems. 2005 - United Technologies Corporation (UTC) acquires Rocketdyne from Boeing and merges it with subsidiary Pratt & Whitney. 2007 - Raytheon acquires Sarcos. 2008 - Rockwell Collins acquires Athena Technologies. 2009 - Raytheon acquires BBM Technologies. 2010 - Raytheon acquires Applied Signal Technology. 2012 - UTC acquires Goodrich Corporation and merges it with subsidiary Hamilton Sundstrand to form UTC Aerospace Systems (UTAS). 2013 - Rockwell Collins acquires ARINC. 2015 - Raytheon acquires Websense and Foreground Security. 2016 - Raytheon acquires Stonesoft from Intel. 2017 - Rockwell Collins acquires B/E Aerospace. 2018 - UTC (51 in the Fortune 500) acquires Rockwell Collins (415 in the Fortune 500) and merges it with UTAS to form Collins Aerospace. 2019 - UTC (46 in the Fortune 500) and Raytheon (114 in the Fortune 500) announce an intent to merge, forming Raytheon Technologies Corporation (RTC). --- Speculation time --- 2020 - UTC and Raytheon merge to form RTC. 2022 - RTC acquires Boeing.
- snow_mac 7y agoI hope the stock crashes, so I can buy some