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That is correct. However MDD was manufacturing key military products (F-15, F-18) and it was doing bad financially, going bankrupt and jeopardizing the fighter
by AdrianB1 3y ago
That is correct. However MDD was manufacturing key military products (F-15, F-18) and it was doing bad financially, going bankrupt and jeopardizing the fighter plane production and maintenance was a "national security" problem that forced the Boeing acquisition of MDD.
- akira2501 3y agoWeird how you can be a "key manufacturer" yet "go bankrupt." Perhaps they should have just been auctioned off and other investors given an opportunity to create new lines of business out of the incompetent mess they had become. Taking the mess and wholesale buying it into another company and then keeping the management that created the problem in the first place is astronomically dumb.
- JumpCrisscross 3y ago> Weird how you can be a "key manufacturer" yet "go bankrupt." We massively drew down defence spending at the end of the Cold War.
- jethro_tell 3y agoAlso, all the money in the world doesn't mean you spend it on things that make money later. If you spend your manufacturing budget on strippers, you won't have anything to sell later.
- tcmart14 3y agowoah woah now, someone has to put those young ladies through college and the manufacturing budget has to be spent.
- mattmaroon 3y agoUmm, no we didn’t. We spent less as a percentage of GDP. But total spending barely shrank by the late 90’s. We hadn’t even started to shift spending away from piloted jets by then either. https://www.macrotrends.net/countries/USA/united-states/military-spending-defense-budget https://www.macrotrends.net/countries/USA/united-states/mili...
- pi-e-sigma 3y agoNowadays the reduction of the increase of military spending is called 'budget cuts'. Not the actual budget reduction, just increasing the budget slower than in previous budget somehow is a 'cut'. That's the reality we live in now.
- callalex 3y agoBut at least we have thorough audits that tell us where each of our dollars is spent…
- philwelch 3y agoIf you change the endpoints on that graph to 1985 and 2000, the drop in spending in the 1990’s is a lot clearer. 325 billion to 287 billion is a sizable decrease—about 11%—, especially in non-inflation-adjusted dollars. It only looks small compared to the post-9/11 increase in spending, and a larger share of that spending was operations rather than procurement.
- JumpCrisscross 3y agoAlso real, versus nominal, dollars.
- mattmaroon 3y agoRight, but he said “massively drew down”. 11% would not qualify. It was relatively brief during a period of normally low inflation, so even in real dollars, it was not a steep decline.
- philwelch 3y agoAt this point you’re just making a semantic argument about the word “massive”. The impact of that 11% cut in spending was massive; between 1990 and 1998, manpower dropped from 2.18 million to 1.59 million and the total number of active ships in the Navy dropped from 570 to 344. The total budget didn’t drop by a similar proportion because there are a lot of expenses that are much less flexible; it’s not simply a matter of employing fewer personnel and buying less equipment.
- dclowd9901 3y agoI almost couldn’t believe this statement so I looked it up. Sure enough you’re correct. As a factor of GDP, it dropped by about half. Incidentally, however, as a factor of gdp, it had gone down 50% since the Korean War before that too. I think all this means is that military spending isn’t outpacing gdp growth (a good thing) rather than we’re actually cutting spending.
- jacquesm 3y agoActually, spending was cut in an absolute sense as well, especially if you factor in inflation. https://en.wikipedia.org/wiki/Military_budget_of_the_United_States#/media/File:U.S_-_China_-_Russia,_Military_Spending.svg https://en.wikipedia.org/wiki/Military_budget_of_the_United_... But it is - obviously - on the rise right now.
- dclowd9901 3y agoWith relation to inflation?
- jacquesm 3y agoIn part, but not all of it.
- philwelch 3y agoEven in dollar terms it actually did go down. https://www.macrotrends.net/countries/USA/united-states/military-spending-defense-budget https://www.macrotrends.net/countries/USA/united-states/mili... Late 1989 was the fall of the Berlin Wall and the end of communism in most of Eastern Europe and 1991 was the end of the Soviet Union itself. There’s a drop between 1990 and 1991, a slight increase in 1992 (replenishment after Desert Storm?) and then a gradual decline in nominal dollars throughout the 1990’s. Also remember that federal budgets were usually passed ahead of time; this was before the government normalized all the government shutdowns and other monkeyshines we have grown accustomed to today, so budget changes might be a year behind current events. Adjusting for inflation the drop in spending would be even more. Spending does start to increase after 1998. I’m not exactly sure why, but a lot of things started happening in 1998 and 1999, ranging from Bin Laden’s attacks on American embassies, the Kosovo conflict, Saddam Hussein ejecting UN weapons inspectors from Iraq, the discovery of Chinese interference in the 1996 elections and China stealing nuclear secrets. Also, at the end of the Cold War, there were a number of systems that were in the late stages of design and development that were either radically cut back or canceled outright. These included the F-22, B-2, and Seawolf class submarine, just to name a few big ticket items. This saved a lot of money and made sense at the time since these were all designed specifically for Cold War missions that no longer seemed relevant. But eventually the older hardware still needs to be replaced; instead of replacing the Los Angeles class submarines with the Seawolf class starting in the 90’s, you end up replacing them with the Virginia class starting in the 00’s. Other cutbacks during the post-Cold War period included closing military bases (which was fraught with political difficulty; no congressman wants the base in his district to be closed!) and reducing the number of US forces permanently stationed in countries like Germany. Dollars aren’t the only measure, either. One of Reagan’s goals was a 600 ship navy. It takes time to build ships so it wasn’t until 1987 that the US Navy reached a peak size of 594 ships. Currently the US Navy has 238 ships. Sometimes a higher defense budget means you’re building a larger military but sometimes it means health care has gotten more expensive or you need to buy more fuel and ammunition to support operations. This also explains the drop after Korea.
- mihaaly 3y agoWhat is even weirder to me is how could you be key manufacturer, go bankrupt, cause forcing a merger, then being promoted to Boeing to 'carry on!' ...
- AdrianB1 3y agoThat is the definition of "failing upwards". It's the fashion of the past 50 years in business.
- lobochrome 3y agoThe reason Boeing had to buy them was that nobody was willing to do so otherwise. Now whether doing a full blown merger vs an asset deal would have been more advisable can be debated.
- times_trw 3y agoWell now we can add all the planes Boeing manufactures to the list of things which the inevitable bankruptcy will jeopardise.
- AdrianB1 3y agoAll the manufacturers of key pieces of military advanced weapons are on that list. Fighter jets are on the very top. When corporate America is now more about "business" than engineering, making a good plane is very expensive. It's just business :|
- lostlogin 3y agoHow was MDD going bankrupt Boeings problem? If it’s a national security issue, that’s the governments problem to fix, surely?
- coliveira 3y agoBoeing is in its position only because of a close relationship with government. They didn't get rich because of their brains. They will do anything for government to maintain the current benefits.
- jacquesm 3y agoThey did get rich because of their brains. But they then replaced those brains with accountants and since then it is a steady downward trajectory, which if it were any other company would likely result in controlled descent into terrain.
- AdrianB1 3y agoThey both acted in the same area. In case an important company is going under, you can merge it into a similar company to keep it running.
- marcosdumay 3y agoThat's when the government goes, "buys" the design for some price it decides, and distributes for other companies to manufacture.
- jethro_tell 3y agoYeah, but that won't help my buddies at MDM that have been buying me lunch and beers on the golf course
- tempname2 3y agoAka privatize profits, socialize losses.