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> By now I think we’ve learned that products made in factories owned by PE firms should carry warning labels. They are proactively anti-quality organizations, f

by foofie 3y ago

> By now I think we’ve learned that products made in factories owned by PE firms should carry warning labels. They are proactively anti-quality organizations, focused on extracting the maximum cash out in the short term at the cost of long term value. I'd say basically the same thing but from a different perspective. Outsourcing is used to simplify management, as it allows companies to shift away from building quality organizations into the easier task of using coersion towards external organizations to drive down cost and avoid any liability due to loss of quality. Outsourcing is a cheat code for managers, and one which invariably causes serious harm to the company while shielding any decision-making exec from being held liable for nuking the company.

gumby 3y ago
> Outsourcing … invariably causes serious harm to the company while shielding any decision-making exec from being held liable… OK I posted that spinning off a portion of your manufacturing is bad, but I think your statement overstates the issue. Ford used to be so vertically integrated that they raised sheep for the wool in their seats! It makes sense to buy bearings from companies that specialize in the metallurgy and precision of good bearings. Focus on what you’re good at and what really makes the difference to your customer. I once visited a home generator factory in India. They bought billets of aluminium and copper and manually machined the two stroke engines, drew the wire and made the generators, and so on. They hadn't updated their design since the 80s. If they’d sourced the engine from an engine company and the generator from a generator company the two could have advanced separately based on the demands of a larger customer base.
- foofie 3y ago
  > OK I posted that spinning off a portion of your manufacturing is bad, but I think your statement overstates the issue. I was addressing the statement of "(...) selling the factory to a private-equity firm would let Boeing focus on final assembly (...)", which corresponds to outsourcing manufacturing of everything and anything used in a plane, up until the last step of the manufacturing process. It's one thing to leverage existing third-party products in your own product line. It's an entirely different thing to aim for an Ikea-like approach of buying everything and just put the thing together once you get all the parts.

by foofie 3y ago

gumby 3y ago

> Outsourcing … invariably causes serious harm to the company while shielding any decision-making exec from being held liable… OK I posted that spinning off a portion of your manufacturing is bad, but I think your statement overstates the issue. Ford used to be so vertically integrated that they raised sheep for the wool in their seats! It makes sense to buy bearings from companies that specialize in the metallurgy and precision of good bearings. Focus on what you’re good at and what really makes the difference to your customer. I once visited a home generator factory in India. They bought billets of aluminium and copper and manually machined the two stroke engines, drew the wire and made the generators, and so on. They hadn't updated their design since the 80s. If they’d sourced the engine from an engine company and the generator from a generator company the two could have advanced separately based on the demands of a larger customer base.

foofie 3y ago
> OK I posted that spinning off a portion of your manufacturing is bad, but I think your statement overstates the issue. I was addressing the statement of "(...) selling the factory to a private-equity firm would let Boeing focus on final assembly (...)", which corresponds to outsourcing manufacturing of everything and anything used in a plane, up until the last step of the manufacturing process. It's one thing to leverage existing third-party products in your own product line. It's an entirely different thing to aim for an Ikea-like approach of buying everything and just put the thing together once you get all the parts.