Leeham News and Analysis
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Leeham News and Analysis
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Pontifications: Boeing needs massive reset, and not just with labor
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- CEO Kelly Ortberg’s “reset” plan is long overdue. But Boeing needs to do better for the IAM members, and the members need to give up on the defined pension plan.
By Scott Hamilton
Oct. 14, 2024, © Leeham News: The Friday afternoon announcements by Boeing CEO Kelly Ortberg of a 10% employee reduction, termination of the 767 commercial airliner in 2027, and recognition that commercial and defense programs need drastic surgery is long overdue.
When Ortberg became CEO on Aug. 8, he said one of his top priorities was to “reset” relationships with labor. So far, this hasn’t worked out. But it’s the entire company that needs a reset. And this has been a long, long time coming. I’ll detail this below. But first, let’s talk about the contract talks between the company and the largest union, the IAM 751.
Members, 33,000 of them, walked out on Sept. 13 at 12:01 am. Production of all commercial airliners except the 787 ceased. Production of the commercially-based P-8 and KC-46A also came to a halt, as have all deliveries from Washington State.
Negotiations broke off entirely last week and Boeing withdrew its Best and Final Offer (BAFO). Both sides blamed the other, and competing Unfair Labor Practices complaints have been filed with the National Labor Relations Board. (NLRB).
One of the key areas of dispute: the size of the wage increase. But other factors, such as health care, go into total compensation. Boeing’s total compensation not only lagged others in aerospace, it’s had negative growth since 2018.
Sweetened offer is not sweet enough
Boeing increased its wage hike offer from 25% over four years to 30%, among other changes to the contract that was rejected on Sept. 12. The union wants 40%. Boeing should grant this.
The original contract offer lifted the starting wage for an IAM worker to just over $21 an hour. In Washington State, there are legally required minimum wage levels. Some cities have minimums that are higher than the state’s. Boeing pointed out that the new starting wage produced an annual income of about $41,000 before taxes and overtime. The progression period to top out was reduced to six years.
But IAM members I talked to on the night of Sept. 12, while waiting for the voting results, were unimpressed. One IAM member pointed out that starting wages at area McDonald’s are around $19 an hour. Other, similarly less stressful jobs than those at Boeing that carry far, far less responsibility (e.g., flipping hamburgers vs building a $100m airplane carrying up to 200 passengers with all the safety and reliability requisites) also start around $19 or $20 an hour.
True, Boeing’s benefits package is better than McDonald’s and those choosing a lifetime career are more likely to choose Boeing than a hamburger joint.
Boeing also likes to point out that the average wages and compensation are higher than the national average. But to a worker struggling to put food on the table and pay rent, these comparisons are meaningless.
Cost of living
A starting annualized wage of $41,000 is barely enough to live in the greater Seattle area. A studio apartment in Renton, near the 737 factory, rents for $1,773 a month. Renting a one-bedroom apartment is $2,378 a month. Each may be higher. That’s $21,276-$28,538 a year before utilities, food, gasoline, insurance, etc., against the before-tax income.
Rents in Everett, near Boeing’s widebody factory, start at $1,700 for a studio and $1,788 for a one-bedroom apartment, in one example.
Want to buy a home? Everett, which is hardly an upscale community, has 1,500 sf homes listed starting at $550,000. A mortgage for 90% of the sales price ($495,000 in this example), plus real estate taxes and hazard insurance would cost about $32,000 a year.
Zillow shows listings in Renton have similar prices for a similar-sized house.
In the US, a standard rule of thumb is that housing costs should not exceed 28%-33% of gross income to even qualify for a mortgage.
Cost of retiring
In January 2014, by a 51%-49% vote, IAM members approved a concessionary contract that eliminated the Define Pension Plan in exchange for Boeing locating the 777X final assembly line in Everett. This was the second vote—the first rejected the contract amendment. The two campaigns were exceedingly bitter—and is the key to today’s demand to restore the pension, which was replaced by a 401(k) plan. Boeing provides matching funds to employee contributions.
A 401(k) is subject to the ups and downs of the stock market. A Defined Plan is guaranteed payment. The latter is a huge financial burden on a company’s balance sheet and has been abandoned by most US corporations.
But even Defined plans aren’t absolute. If a company goes bankrupt, it can abandon the Defined plan. The Pension Benefit Guarantee Corp., a federal agency, can assume the plan, and it has. But as airline workers found out, the PBGC reduces payouts, sometimes by around 50%.
Boeing should also sweeten even more its pension plan structure for the 401(k). The union wants restoration of a Defined Pension Plan that they were coerced into giving up 10 years ago.
Boeing needs to do better on its compensation offers. The union needs to give up on the demand to restore the Defined plan.
Cutting the deadwood
Those of us who followed Boeing Commercial Airplanes (BCA) for decades believe that there’s a lot of deadwood in this division. (I’m far less cognizant of things at the Defense and Services units, and therefore not able to opine about these.) For years, BCA employees told us of Boeing’s practice of laterally transferring under-performing employees rather than dismissing them. Some of these have been high-profile executives (which, under Boeing’s organization, extends down to the Director title).
After 12,000 employees were shed during COVID-19 through attrition, early retirement, and layoffs, Boeing hired thousands in the post-pandemic era. Ten thousand new engineers were hired, as were thousands of others, including for the assembly lines.
But production rates are a fraction of the March 12, 2019, level—the day before the 21-month 737 MAX ground by the Federal Aviation Administration began. Boeing produced 52 new 737s a month and was months away from going to 57. Today, Boeing is lucky if it builds 20 new 737s a month.
There were 14 787s rolling out of the Everett and Charleston factories. Today the Everett line is closed, and Charleston is lucky to produce 3-4 a month.
The 777 Classic production line is now down to two freighters and one-half 777X a month. At its peak, 8.3 777 Classics were produced every month.
Boeing’s employment level, company-wide, is 170,000. It is over-staffed for today’s productivity. More to the point, the propensity to laterally move underperforming employees around, sometimes across continents or oceans, means that Boeing had deadwood to clear out, too.
Product Development
Ortberg’s biggest long-term challenge, after cleaning up labor, money-losing airplane and space programs, over-staffing, and the balance sheet (among many other issues), is fixing Boeing’s product line.
The last all-new airplane developed was the 787, a program launched in December 2003. The 737 MAX and 777X are derivatives of aging jets. As we’ve written many times, and told in detail in my book Air Wars, Airbus sagely maneuvered Boeing into launching the MAX instead of an all-new 737 replacement.
The result is there for all to see: airlines and leasing companies flocked to the A320neo family, mainly the largest model, the A321neo, while Boeing struggled to update the 737 NG. The 777X needed 60 more seats to compete on a seat-mile basis with the Airbus A350-1000. But 60 more seats are much more than most of the world’s airlines want. The 777-9 has the same seating capacity as a 747-8 in the typical layout. Market fragmentation, the thing that killed the 747-8 and the even larger Airbus A380, undermines the 777-9.
Boeing needs a 737 replacement, but it can’t afford one and new engines remain unavailable for now. Research and Development became an off-on-off exercise under Ortberg’s predecessor, David Calhoun. A fanciful Transonic Truss Brace Wing concept seemed to be Calhoun’s favorite—but airlines are skeptical.
For better or worse, and many think it’s the latter, Boeing is stuck with the MAX and 777-9, like it or not.
It’s LNA’s view that it will take Boeing a decade to fully fix its balance sheet, return to profits and positive cash flow, and 2019 production levels. Concurrently, Boeing needs to find a way to fund R&D on a new airplane. The minute a 737 replacement is announced, sales, profits, and cash flow of the MAX will decline.
Airbus will be ready
Airbus will be ready to match any new airplane program Boeing announces. Airbus could even become the first-mover, while Boeing is weak. Another competitor has an opportunity to emerge. Most people point to China’s COMAC as the potential party to break the Big Two duopoly. But there has been public speculation that Embraer could move up from its regional airliner roots to the mainline. The challenges Embraer faces to do so are immense, however.
Company reset
Ortberg’s desire to reset labor relations is but a small part of his challenges. I haven’t even touched on the Defense and Space side of the business. The entire company needs a dramatic reset. Some may blame the IAM for this. In my view, the blame rests with Harry Stonecipher, Jim McNerney, Dennis Muilenburg, and David Calhoun.
Leaders’ job is to lead. Management sets the goals and the tone for the business. In collective bargaining, that’s usually Article 2 of the contract – Management Rights.
The first step for leadership is to decide what problem they are trying to solve, then create a vision and a culture that motivates everyone to solve that problem.
Scott has laid out several problems that desperately need solving – the product line, crushing debt, brand damage, alienated workers, loss of tribal knowledge, precarious decline in market share, and a broken problem-solving culture.
On the plus side, Boeing workers retain a legacy of pride in workmanship – they want to make great products.
One thing that impressed me about Boeing leaders in the 80’s and 90’s, was their clarity of thought on leadership and problem-solving. They quickly, sometimes instantly, got to the heart of a problem.
It would help me a lot to hear Kelly Ortberg share some of that clarity of thought, sooner rather than later.
Scott has laid out some good points.
The one I think that is wrong is current production numbers. Those are supposed to be higher and should go higher.
So at a guess, at least plan on the 38 a month x MAX. I know there are plans to go higher but stay tuned.
The 787 is also in recovery. Boeing plans on much higher production rates than 3-4 a month. Hiring wise if you don’t want a meltdown of inexperience, you need to be hiring ahead of the plan to get them up to speed or if laid off, back up to speed. You do get rusty when not working.
Cost of living is nuts but I have seen that before. Oakland was so expensive, FedEx contract employees were coming in from Walnut Creek on BART. At least they had that option. One manager I knew was commuting 3 hours from up North which was the only area he could find to buy a house in (and he had company help).
The only mechanic on their crew that lived in the immediate area had been given his house by his folks. As he did not buy it his taxes were a lot lower.
I know Scott hates Moses Lake (Cowtown) but at least the cost of a house out there is not through the roof!
It would be good to get some figures from around Charleston.
The problem is that many of the 737’s yet to be delivered were priced with dependence on efficiencies from rates of 60+ being produced on 3 lines.
As to commutes, Boeing has forced workers into long commutes for decades, often compelling workers to involuntarily transfer between north and south, some having daily commutes of 150 miles or more round trip. Monkeying with shift start times without regard to the employees disrupted vanpools and carpools, and even those with the option can’t use public transit because it doesn’t synch with shift start/end. Add to that arbitrary overtime requirements and personal transportation becomes the only option.
As to Moses Lake, sure, homes are cheaper but there is no inventory. New or existing. Build out’s are limited to what the water aquifers can withstand.
Boeing inserts into it’s perdiem agreements that employees on temporary assignment may not purchase a home. If they do, they are terminated.
@TW: Yes, the *plan* is a production rate of 38/mo. The *reality* is 20 or less. And 38 is a far cry from the 52 in March 2019 before the grounding, the 57 that was planned for later in 2019 and 63 under study.
@Scott:
I get that. My question is what the realistic next 6 months rate is?
Can they reach 38 a month? If so then they need to staff to that level.
If not, then whatever the rate below that they can achieve.
I will be the first to admit (agree) I have not a clue as to what can be built with the required quality.
I do know that if you knee jerk it back and forth, then you for sure set a lower rate as your work force is hacked around.
Charleston in theory is different in that they are working to a higher build rate. They need to hire ahead of the curve of build up (assuming they can even make it). Charleston hit rate 7 at one point I believe.
No question that laid off people may be working for Micky D now and not coming back. Its a different area and I have yet to read anything about the 787 plant and its ups and downs in regards to employees. Its not like they have a Union to front for them.
Charleston is not supposed to be affected by Everett. No disagreement some of the 787 delivery is the we are still fixing them 787s that were being sent to or are in Everett.
I will admit I had hopes for Ortberg but those are dashed. Same oh same oh under a different name and a better personality maybe.
Didn’t you say it takes like six years to train a machinist?
A company that has no more money to pay its workers can afford to move to Moses Lake?? Too early for … dreams.
I think delusions in my case would be more accurate.
I just felt Boeing could make adjustments in locale and stay in Washington State. But that is well passed. Call it nostalgia if you want to be kind.
Of course Everett is underutilized and that is why they were moving a MAX line there.
No reason to if you are not building at a rate to justify it of course.
I don’t know how you square an area with such a high cost of living and running a plant in that same area. The sure do not have BART.
Regarding the 787, Boeing delivered 36 aircraft in the first nine months of this year, an average of 4 per month. But when inventory deliveries are removed from the total, the monthly average drops to 2.3. Since resuming deliveries after suspending them in 2020-22, Boeing has yet to demonstrate that it can produce 787s at a rate faster than 3-4 per month while meeting production specifications.
more than fair point.
Rate 5 there should be doable but its relevant to what you said, can they deliver at what rate that passes inspection. In theory they should be able to but I am no longer surprised by anything.
Of course there are a lot of unemployed machinists in the Seattle area you can draw on for contract labor.
Is “rate 5” similar to “building 5 aircraft per month”?
Yep, that is the terminology aircraft builders use.
Surprised you did not know what.
As a 33 year employee of the company, the blame is 80% on Dennis Muilenburg. He drove the company into the ground and walked away with millions. The other 20% is DEI.
It’s a shame.
What is the difference in employment costs between Washington state and somewhere like Witchita? Can someone do the maths? I don’t think Boeing can afford to do too much business in the northwest anymore.
$100 billion (more likely much more)is meaningless for the government of the mighty USA,it’s way past time for them to intervene in this vital strategic industry . The Chinese and even the Russians must be laughing their heads off
I think both of those countries have their own problems but its probably a wry amusement item to start meetings.
Agree Wichita is relevant data but unless Boeing is ready to abandon Everett?
Airbus works in a *higher-cost environment*, yet is making a profit
while producing cutting-edge aircraft, doing solid R&D, and setting
aside 10 bn Euros or so for a rainy-day fund.
Why can’t the pathetic also-ran US outfit do the same?
Not sure “starve further the proles!” is the answer..
$10 billion dollars doesn’t get you through a sunny day with a couple of showers,ask Boeing.Airbus is in an unprecedented market position ,they should be raking in cash and their suppliers certainly shouldn’t be going bust
@Vincent:
I tend to think you are from Europe but I could be wrong.
The dynamic between US, Unions and Business has been contentious from the start. Business would hire goons and try to break up a Union who had seized a plant. People were killed.
Our Teamsters killed off the one bright spot we had in a German owned Brewery because they could not get them to unionize. On strike they were slashing tires and burning vehicles. My folks needed a supply run, 3 of the brothers showed up with their rigs and two stayed with the rigs and one managed the loading. We were armed. Very Jimmy Hoffa like.
Its got nothi8nhg to do with low or high cost, it has all to do with greed. business want all the money and control. They don’t want collaboration. McNeneary said it perfectly, Cowering Workers.
Europe is more collaborative. But you also see in France where it gets violent when something is being taken away.
One of my Poster Childs was a Rubber Boot line (Goodyear Extra Tough) that was the go to for people who worked (fisherman, labors in the mud etc). It got bought out, sent to China. Same price (quality went down as it had become a fashion statement and many did not use it per int net). They made ridiculous amounts of money and did not care what they had done to the US Jobs or quality.
So US Businesses look to the ends of their nose and if they don’t Wall Street makes sure they hear about it and try to force them to adhere to money is all.
In the end Boeing is the end result of that process, no product and they make huge amounts of money (ooops)
Trans
Customers get what they paid off. Footwear companies source according to what their customers look for, they source cheap mainly because their customers don’t care. Of course many small & medium sized businesses were bought up by LBO, laden with heavy debts to reward their new owners.
People often don’t know what they’re talking about if they associate the country of origin with quality of the product:
https://x.com/dieworkwear/status/1847542534626816117
-> “In 1965, Robert Schooler conducted an experiment. He gave 200 university students swatches of the same beige fabric—a plain weave made from a 80/20 mixture of cotton-linen. The swatches were identical except in one regard: the country of origin label.
-> One swatch was labeled “made in Mexico,” another said “made in Guatemala,” and the others bore names of other Latin American countries (e.g., Costa Rica, El Salvador, etc). Students were asked to evaluate the quality of these fabrics.
-> The swatches were cut from the same cloth, so they were identical. But as you can guess, students read differences that were not there, often born from prejudices of these countries. Schooler’s findings were published in an academic journal and spawned a new area of research.
This account has good knowledge about menswear and knows what’s going on.
-> “A friend of mine is a bespoke tailor, Senior Vice President of one of the largest US suit factories, and the president of a trade organization for designers and tailors. He had this to say about Chinese production in 2011:
https://x.com/dieworkwear/status/1847542565694033962/photo/1
I’ve read many posts here and on other threads saying BA/BCA can’t afford the northwest anymore.
A few thoughts:
To make America Poor Again is the motto of many here?
All US corporate should follow the $$$ and continue to hollow out the institution and communities to chase the past buck?
Look yourself in the mirror, how are you any different than say Stonecipher, McNerney or Muilenburg?
Bloomberg:
Boeing’s 737 Max Software Outsourced to $9-an-Hour Engineers
-> “Increasingly, the iconic American planemaker and its subcontractors have relied on temporary workers making as little as $9 an hour to develop and test software, often from countries lacking a deep background in aerospace — notably India.”
-> “The Max software — plagued by issues that could keep the planes grounded months longer after US regulators this week revealed a new flaw — was developed at a time Boeing was laying off experienced engineers and pressing suppliers to cut costs.”
-> “In offices across from Seattle’s Boeing Field, recent college graduates employed by the Indian software developer HCL Technologies Ltd. occupied several rows of desks, said Mark Rabin, a former Boeing software engineer who worked in a flight-test group that supported the Max.”
-> “Rabin, the former software engineer, recalled one manager saying at an all-hands meeting that *Boeing didn’t need senior engineers because its products were mature*. “I was shocked that in a room full of a couple hundred mostly senior engineers we were being told that we weren’t needed,” said Rabin, who was laid off in 2015.
-> “Boeing was doing all kinds of things, everything you can imagine, to reduce cost, including moving work from Puget Sound, because we’d become very expensive here,” said Rick Ludtke, a former Boeing flight controls engineer laid off in 2017. “All that’s very understandable if you think of it from a business perspective. *Slowly over time it appears that’s eroded the ability for Puget Sound designers to design*.”
-> “US-based avionics companies in particular moved aggressively, shifting more than 30% of their software engineering offshore versus 10% for European-based firms in recent years, said Hilderman, an avionics safety consultant with three decades of experience whose recent clients include most of the major Boeing suppliers.”
-> “Rockwell Collins, now a unit of United Technologies Corp., won the Max contract for cockpit displays, and it has relied in part on HCL engineers in India, Iowa and the Seattle area.”
-> “Rockwell Collins, which makes cockpit electronics, had been among the first aerospace companies to source significant work in India in 2000, when HCL began testing software there for the Cedar Rapids, Iowa-based company. By 2010, HCL employed more than 400 people at design, development and verification centers for Rockwell Collins in Chennai and Bangalore.
Oh sorry. The first image should be this:
https://x.com/dieworkwear/status/1847542563697545644/photo/1
-> “The call outs of bad quality always highlight to me just how little most people know about what real quality actually looks like.”
https://x.com/dieworkwear/status/1847542565694033962/photo/1
https://x.com/dieworkwear/status/1847542565694033962/photo/2
https://x.com/dieworkwear/status/1847542565694033962/photo/3
https://x.com/dieworkwear/status/1847542565694033962/photo/4
From one of the screenshots above:
“… These places have invested insane amounts of money and hours to develop a[sic] incredible, consistent product. Their washing techniques are unrivaled. I’ve said this repeatedly, but in Italy I tried and failed for 5 years to replicate things we did at RL in Asia.”
Customers get what they paid for*
.. to chase the last* buck?
@Vincent
The great RONA populated by the cult of Welch.
I find the idea of demands for the Machinist union members to drop their desire for the return of thier pension amusing.
Why are all the critics, the anti-union types, the pundits, the media, and the analysts saying they should give up on the pension goal?
It’s well known that Boeing wants to reduce it’s pension obligations. This is one reason for the buyout offer going to those who still have vested years. (yes, they will do it, contract or no contract)
And Boeing still shows all the money in the pension funds as an asset of it’s balance sheet.
The reality is, the BCERP STILL EXISTS. It was just suspended for IAM members in 2016.
Many executives still to this day accrue vesting years. Why is this important?
Because if the pension plan were frozen for all eligible plan recipients, the plan could then be wrapped up and sold to a major insurance company, to be paid out as an annuity. Just like many who might bite on the buyout offer would paid.
I expected that to happen between 2016 and now, but it didn’t……..
WHY?
Why do all these media personalities say they need to give up the idea of a pension, WHEN BOEING COULD GET RID OF IT ENTIRELY, ANY TIME IT WANTED TO?
Further, why doesn’t Boeing simply contract with an insurance company and contribute directly to an annuity program for it’s employees?
The answer is, they don’t want to give them ANYTHING. And they certainly don’t want to give them anything that doesn’t pour money directly into the fire of the equity markets.
Remember, Boeing thought so highly of itself it bought it’s own stock, using assets from it’s pension plan. to further prop itself op like a fentanyl zombie might use a lamp post.
Thanks for this comment, and thanks to Leeham for opening this post.
Well said!
I don’t think this is a viable option for Boeing at the moment.
Boeing is a business ; its need cash inflows to reciprocate outflows either in payment of workers, pension or even capital expenditure.
In the last 8years , Boeing has been on the downfall, high deficits in loans and business losses due to safety incidents.
One may argue, how is that the responsibility or cause of union workers.
We must remember, we all function as a unit, both engineering , leadership, union worker e.t.c. The failure of one unit affects all.
Currently , we cannot afford to get into a contract that will put the business more towards a downward slope. Capital funding is needed, the business needs to keep running and competing.
Conclusively ; I do not think pensions are ideal. What is good for the goose is good for the gander.
If union workers advocate for pension, it would in the future be sort by all. An outcome I believe is not sustainable.
@Alvan:
You are spot on that a company at least is supposed to function with cohesiveness.
But when management not just takes but sells the company out from under itself, well that is a lot like a Marriage. At its hear, a Marriage is a two party contract. One of those two parties can break it and its not for the other party to take the responsibility.
Arguably since Stonecipher, Boeing has broken that contract. In good times it was you have to take a hit and in bad times.
McNenearney was not only trying to tear the union down, he was with a project that was trying to kill Social Security which is the only safety net in place.
I worked for Honeywell for 4 years, lost my vestment when they killed the division and black listed the former employees of that division (kind of a hint there)
And I agree, the Union is not making it better but they also did not cause this in the first place. It was all the cost cutting and money going into stock buy backs, huge exec salaries and payouts when they lost money.
I have no answer, but I don’t blame nor expect the Union to save Boeing. At best I believe its headed to Chapter 11. Sans that I can see a breakup with LM and NG grabbing off BDS portions.
Only China would want the failing BCA.
As Scott noted, Pensions get thrown out on Chapter 11 (well paid out at far less and the tax payer winds up holding that bag – which is the ultimate fall back, the tax payer and that is not Boeing)
But we have a legal system that is bought and paid for to the benefits of the Rich and Corporations like Boeing. Nothing says the benefits I paid cannot be transferable, it was not employees that set it up that way.
Boeing is doing a great job of killing itself off and its got nothing to do with the Union or even the other employees.
As I understand it, institutions hold 75% of Boeing stock. Chapter 11 makes sure they enjoy the pain for a change. While an individual shareholders can not affect a company, the Institutional ones can and they have elected to kill the Golden Goose.
Trans
BA is mostly suffering from self-inflicted wounds, by the same (short-sighted) ideology from the Welch cult that vaporized shareholders’ value and destroyed (the old) GE.
From Condit, Stonecipher, McNerney, Muilenburg to Calhoun (and those circled around them), none of them (AFAIK) are foreign agents or acted for the interest of a foreign state, they acted for self-interest, the American way! And don’t blame them, they didn’t set up the reward system, they happened to be there, able to reap the benefits as they played along.
To point finger at others is as laughable as telling tales of scarecrow as a boogeyman.
Oh BTW let me remind you who tried to kill the nice little plane from Canada.
@Esteban:
Great point. I worked for a company that had a secret plan setup for the top tier types. One of the next tier down was working some data when he spotted it.
I forget if he got fired or not but he at least was told to shut up or be fired.
I always felt that any company I worked for got a special health insurance rate for the uppers for steering the whole company medical to the door of X medical insurance company.
The only safety net we get is from the Roosevelt era and they would kill that if they could.
So, nothing for the people of the US in 85 plus years! But then we elect those people.
“… the blame rests with Harry Stonecipher, Jim McNerney, Dennis Muilenburg, and David Calhoun.”
It is certainly true that post-merger CEOs bear much blame, but tracing all of Boeing’s current problems back to the 1997 merger risks being misleading and historically incorrect. Boeing was losing market share even before 1997, while many of the practices typically blamed on post-merger CEOs (offshoring and outsourcing, massive job cuts, favoring derivatives over new aircraft models, cost-cutting, etc.) also began well before 1997.
All of those you mention have long been a part of American work reality.
What we can clearly see is the fall off on new aircraft after the 777. So while there were aspects of ebb and flow, Boeing prior to 97 was not trying to liquidate itself.
No question Airbus was making inroads, but post the 777, Boeing tops did not want to do a new aircraft.
The only reasons we got the 787 was because of a sales job that the uppers were too stupid to realize they had been played. The old flim flam of you can get something for nothing goes to the heart of those types. Click bait personified.
Boeing never did the logical move and come out with a 737 replacement, it was eeeked along while Execs pretended there was a future.
In the end backed into a corner and its been derivatives ever since.
COMAC and Embraer have a nice advantage for the moment in that they can probe the big boys’ (for now) obvious weaknesses.
My guess is that both of those outfits will do quite well over time.
Another guess is that the liquidation of Boeing in its current form has been preordained for awhile. A falsifiable prediction.
Unless they are ready to come out with cutting edge structures, even Boeing will beat them (or could will see what happens post strike if there is post strike).
Embraer has made all the moves other than a composite fuselage. Thy still do not have a Trans Con US aircraft with the capacity of a 737 or A320.
Airbus can beat or match them at any point no matter what they do. COMAC did not even go composites on the C919 and that aluminum form is old tech.
The 929 is not to be and the 939 is pure pie in the sky though Russian in desperation may sell them the composite tech.
I agree liquidation of Boeing has been what the CEO/COB and the boards has been doing for a long time. It may have enough momentum.
Liquidation is not what would happen next, that has occurred though not in the Chapter 7 meaning (think that is right, 7/11/13) next would be Chapter 11.
If it can be managed there is still huge amounts there to work with, but that assumes capable management.
Chapter 11 gives huge relief. Creditors loose, shareholders loose and all those deserve it.
Scott, thanks for making this article available for non-subscribers, very good analysis.
Its been said once but agree with it and worth saying again.
I spent 32 years with Boeing starting with the first 747 on 1967 when I graduated from High School. After service in Vietnam, I returned to Boeing and came up through the ranks, retiring as an operations Director. The current problems at the company are of their own creation. The only way they can be resolved is for people who knew the corporate culture of the company, the history of the company and the values of the pre MCD merge can help resolve the current problems. The problems are self-inflicted and may take a generation to resolve.