Forget for a moment the controversy around Boeing's defeat in the competition for the Air Force tanker contract. The GAO serving as the referee for Boeing's protest provides as fair and impartial an evaluator of the matter as one could hope to find with a public agency. The real worry should be continued problems with the 787.
Further delays in production and a less aggressive scaling up of the production will both harm the company's bottom line and mean less job growth at Boeing and its local suppliers.
The 787 is still an amazingly hot-sellling product and still seems set to be a stellar offering by Boeing in the end. But for now, this is not good.
Posted by Eric Earling at March 12, 2008 07:20 AM | Email ThisFewer people?
Less traffic on I-5?
What's the problem?
Posted by: John Bailo on March 12, 2008 07:19 AMIf you think I have a "beef" with Boeing then you weren't reading this blog over the course of the last year as I've cheered the 787's success in racking up orders and reveled in Airbus's problems with the A380.
The problem now is the drip, drip, drip of revelations of yet another postponement in the 787 is causing Boeing some real credibility problems, as comments from industry analysts and airline customers increasingly indicate.
Posted by: Eric Earling on March 12, 2008 07:48 AMThese two things would hypothetically imply a lot less family wage assembly jobs in the Puget Sound region. A region that has been recently patting itself on the back because we haven't see the kind of housing price crisis found in other parts of the country.
Remember that the age demographic is such that many many people are looking at retiring in the next 5 years or so. Add to that that many have marginal savings and that their home is the biggest block of equity saved for retirement.
Let's further add to that the local and State government have been spending money on "infrastructure," the "environment," and reducing our regions global warming foot print with very little thoughts as to the impact on the economy and who will pay for these things. Re-read some of the Seattle/State Viaduct debate over undergrounding the viaduct so that expansive views of the Seattle Waterfront will be available. Look at some of the cost projections for King County's Brightwater project or Sound Transits dreams of mass transit glory.
I honestly don't know what employment will be like in the Puget Sound area in 6 months or what housing prices will be in 6 months, but I fully expect that problems with the Dreamliner could stretch out a short painful loss of the tanker contract into something that causes protracted economic harm to the Puget Sound region. I am not sure that the State Budget has a contingency shortfall that envisions the political hell at the State level and at the local level such a situation would have on government tax collections and program spending.
I think some at Boeing have told this to politicians and some at Boeing are protesting the tanker decison so that when the future unfolds, they can try to cover themselves from the political and social fallout.
Whatever the future brings economically, it is in the hands of the "customers" of those that run the region's businesses. Politicians, taxpayers, and workers, need to start thinking about what "customers" want from local business, not about what locals want to extract from local business and those employed by local business.
It is a brave new world in terms of mindset and most politicians and special interst groups aren't up to the challenge.
Posted by: Rob on March 12, 2008 08:06 AMAs management has shipped jobs overseas to ever-increasingly moronic suppliers, folks who barely have indoor plumbing (and in several cases don't), lead times have gone through the roof. And repair-replace requirements have soared. Along w/ costs.
This ain't rocket science. But it does take more common sense than a feller who knows duct tape can bring to the table.
Us long time mechanics (believe me when I tell ya, it's a helluva lot more complicated building ANY aerospace product than the *new* BA management thinks) know what it takes to make rockets, missiles, or airplanes beyond parallel.
It is the MIT "making widgets" mentality that has invaded BA.
NO OTHER PRODUCT IN EVERYDAY USE IS AS COMPLICATED OR AS COMPLEX AS A COMMERCIAL JETLINER. Why, oh why would anybody focus on "cheap" when "better" and "quality" are the mandatory requirements.
Personally, I'd rather have the folks w/ decades of experience building aircraft as opposed to a start-up company in *pick-a-country*.
Posted by: cmiklich on March 12, 2008 09:08 AMWe just had to do another major modification due to the analysis work Boeing did on the dissipation of lightning in their new body type. They told us that they can not even start flight testing with the previous version that has been going through the safety of flight testing for the last six months. So we have to start the safety of flight testing over with the new modification and hardware does not get completed for this until the 20th of this month.
We had not finished the initial safety of flight testing that was due to be finished end of 2007. Unless Boeing gets their act together there are some big delays yet to be announced.
Way to upset Scotland, Wales and Ulster.
It's the United Kingdom since the year 1707 and just like in the US the defense contracts are distributed across the Kingdom.
Agree with your point though.
Posted by: ExPatBrit on March 12, 2008 11:57 AMWell stated. I couldn't agree with you more.
NO OTHER PRODUCT IN EVERYDAY USE IS AS COMPLICATED OR AS COMPLEX AS A COMMERCIAL JETLINER. Why, oh why would anybody focus on "cheap" when "better" and "quality" are the mandatory requirements.
I used to write software for the Boeing 767/737 EFIS and EICAS glass cockpit displays. At the time, there were over 300 computers in each of these glass cockpit airliners. As you say, it's an incredibly complex feat to put an airliner together.
The problem is Boeing is being run by Wall Street "The Earth is Flat" types who don't know a plane from a pencil. The same type of people who want to outsource our jobs have outsourced the Boeing jet construction because the earth is flat, and labor is cheaper overseas. We're seeing the stupidity of such decisions with the Boeing 787 delays so far, with probably more to come. And when Eric talks about the credibility of Boeing, he should also be talking about the credibility of the idiots on Wall Street who pushed Boeing to make these changes just because it looks easy on paper.
Posted by: Richard Borkowski on March 12, 2008 05:39 PMNow THAT'S a 570 AM!!
Posted by: KFIBryan on March 12, 2008 06:29 PMThe finance department uses the following maxim: "We are going to save money no matter how much it costs."
And us goons say "The chart boys running the show are presiding over the demise of a once great and proud company that impacted world history."
Posted by: Another James on March 12, 2008 09:19 PMHow evil of them to support the health of such a large employee (or should we say evil big corporation). What do the dems in this country want? 35% corporate tax on income, then another 35 to 50% tax on the dividend income, maybe a little bit of a B&O tax, howabout an employee bill of rights that requires Boeing to pay it's union employees more money than anyone in the world and top it off with an absurd benefits package and oh by the way, subsidize their social security and medicare by paying a payroll tax on half of that.
Seems to me that the least a government can do that is interested in creating jobs is maybe, oh, treat their businesses fair.
The GAO will deny Boeing's appeal and Republicans everywhere should be crying foul over the way our businesses are treated.
Posted by: Doug on March 12, 2008 10:49 PMDemocrats are already beating the protectionism drum on the campaign trail. Wouldn't it just be perfect for the Democrat-run congress to grant Boeing's appeal, award the contract to Boeing and then hit the campaign trail in late summer trumpeting how they saved thousands of good union jobs?
You watch...they'll milk this for all it is worth. Everybody knows that the economy is going to be the biggest issue in November. This is their ace in the hole.
I sure hope the Ron Paul contingent can get the Republican platform changed enough that the ticket is about economic freedom, sound money, and fiscal responsibility. If McCain runs on the war, he'll lose without a doubt. If he tries to be a Democrat fiscally, he'll lose. His only hope is to adopt Ron Paul's anti-taxation and sound money message.
I'm actually happy McCain got the nomination this time. He's sure to lose and we'll never hear from him again. The economy is going to punish the Democrats over the next 4 years. The midterm elections are going to be another 1994 if the economy gets worse and the Democrats increase taxes.
Posted by: blindman on March 13, 2008 12:13 AMOh really? While they are complex machines, they pale in comparison to an aircraft carrier, sub, or most US Navy ships.
So? The 787 is a very complex system to put together. I don't see what your point is.
Posted by: FreedomLover on March 13, 2008 09:52 AMTrue, but they hardly ferry around several hundred thousand people millions of miles on a daily basis. How often do these complicated machines you cite get complete engineering overhauls and design changes? Seems the items you cite change at much slower pace than something like a commercial airliner.
There was also the sentiment expressed by a submariner who transferred to aviation.
When asked why, he replied, "Well, what goes up must come down, but the opposite isn't necessarily true."
Posted by: ewaggin on March 13, 2008 11:43 AMBoeing should have undercut the Airbus bid by 20%, perhaps its time Boeing should think of moving to a cheaper less Socialist state, someplace cheaper to build airplanes than Washington.
Posted by: Smitty on March 13, 2008 07:24 PM
Boeing should have undercut the Airbus bid by 20%, perhaps its time Boeing should think of moving to a cheaper less Socialist state, someplace cheaper to build airplanes than Washington.
Posted by: Smitty on March 13, 2008 07:25 PM
Sorry, but your comments are not supported by the facts. Boeing lost because the AF changed the evaluation criteria after the final RfP, in order to help the Airbus tanker.
For the facts, see my comments (85, 87) at:
http://soundpolitics.com/archives/010309.html