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I just get hung up on being an airplane company that doesn't manufacture the plane. How is that possibly not a core competency for the design and manufacture o

by x0x0 3y ago

I just get hung up on being an airplane company that doesn't manufacture the plane. How is that possibly not a core competency for the design and manufacture of airplanes?

rgmerk 3y ago
It’s a matter of degree. Are they supposed to run a chip fab to make all the chips that go into their plane? That said, fuselages do seem to be a core aspect of making planes!
- bluGill 3y ago
  Given the chip shortages of the past few years maybe they should have. For that matter given how often perfectly good chips go obsolete maybe they should just so they don't have to spend $$$ redesigning a perfectly good circuit.
  - drexlspivey 3y ago
    AMD and Apple don’t run chip fabs and Boeing will.. People in here will literally argue any point no matter how stupid
    - bluGill 3y ago
      What others do is not relevant. Intel does run their own chip fabs. There are pros and cons. How they fall out can be different for different actors. Boeing can probably accept the compromise that they are forever locked on an older process that can't scale to 500mhz.
- x0x0 3y ago
  That's not an apt comparison. Lots of people and companies use identical chips. Only boeing uses boeing airplane bodies.
- p_l 3y ago
  Funnily enough, one of the major avionics vendor (Honeywell), while they no longer own fabs, they do design their own CPUs for use in aircraft (a licensed version of AMD29050)
bluGill 3y ago
The trick is figuring out what is a core competency and what should not be. Boeing should obviously not make the light bulbs in their planes. Should they make the engines? How about the seats or carpet? What about the plastic bezels in the cockpit? At that point is something a thing they should do in house and when is it something to outsource? There is no easy answer, and often the best answer changes over time.
- x0x0 3y ago
  > The trick is figuring out what is a core competency and what should not be. Spirit in particular just feel like financial engineering bullshit. From a quick google, in 2020, the 730 max accounted for more than 50% of Spirit's annual revenue. I struggle to understand how it's good for Boeing or Boeing's customers for T Rowe Price and Vanguard to own a supplier like that.
  - bluGill 3y ago
    What is the difference between a division and an independent company? Eventually you reach a point where head of a division and CEO have about the same responsibilities so why not spin them off - by doing this the CEO doesn't have to exercise as much oversight on the operations of that division/supplier. The supplier can diversify a bit too which means if you have a downturn the suppler may have enough other business to survive while if they were in house they wouldn't look for that and thus make your financials worse when they are already nearing bankruptcy. It is very common for companies to exists where they have one major customer that is all or almost all of their business. What is right is a very complex question that can never be answered with 100% confidence. However your simplistic analysis isn't helpful in figuring this out.

by x0x0 3y ago

I just get hung up on being an airplane company that doesn't manufacture the plane. How is that possibly not a core competency for the design and manufacture of airplanes?

rgmerk 3y ago

It’s a matter of degree. Are they supposed to run a chip fab to make all the chips that go into their plane? That said, fuselages do seem to be a core aspect of making planes!

bluGill 3y ago
Given the chip shortages of the past few years maybe they should have. For that matter given how often perfectly good chips go obsolete maybe they should just so they don't have to spend $$$ redesigning a perfectly good circuit.
- drexlspivey 3y ago
  AMD and Apple don’t run chip fabs and Boeing will.. People in here will literally argue any point no matter how stupid
  - bluGill 3y ago
    What others do is not relevant. Intel does run their own chip fabs. There are pros and cons. How they fall out can be different for different actors. Boeing can probably accept the compromise that they are forever locked on an older process that can't scale to 500mhz.
x0x0 3y ago
That's not an apt comparison. Lots of people and companies use identical chips. Only boeing uses boeing airplane bodies.
p_l 3y ago
Funnily enough, one of the major avionics vendor (Honeywell), while they no longer own fabs, they do design their own CPUs for use in aircraft (a licensed version of AMD29050)

bluGill 3y ago

The trick is figuring out what is a core competency and what should not be. Boeing should obviously not make the light bulbs in their planes. Should they make the engines? How about the seats or carpet? What about the plastic bezels in the cockpit? At that point is something a thing they should do in house and when is it something to outsource? There is no easy answer, and often the best answer changes over time.

x0x0 3y ago
> The trick is figuring out what is a core competency and what should not be. Spirit in particular just feel like financial engineering bullshit. From a quick google, in 2020, the 730 max accounted for more than 50% of Spirit's annual revenue. I struggle to understand how it's good for Boeing or Boeing's customers for T Rowe Price and Vanguard to own a supplier like that.
- bluGill 3y ago
  What is the difference between a division and an independent company? Eventually you reach a point where head of a division and CEO have about the same responsibilities so why not spin them off - by doing this the CEO doesn't have to exercise as much oversight on the operations of that division/supplier. The supplier can diversify a bit too which means if you have a downturn the suppler may have enough other business to survive while if they were in house they wouldn't look for that and thus make your financials worse when they are already nearing bankruptcy. It is very common for companies to exists where they have one major customer that is all or almost all of their business. What is right is a very complex question that can never be answered with 100% confidence. However your simplistic analysis isn't helpful in figuring this out.