Boeing CEO says the company must fundamentally change
cnn.com
cnn.com
This is corporate speak for “I don’t have a real plan and probably won’t gut leadership and start over like I should.” I wish the board would force some bigger changes already.
If you want a short-term boost to share values and don't care about the long-term damage (as is demonstrably the case in Boeing), no.
The pivotal point to me was, when Airbus launched the A380, Boeing thought they would have an easy home run with the Dreamliner, Airbus would be doomed as competition as no one wants the A380, Boeing slacked off, and then Airbus came back, listened to the customers, changed the A350 to a new plane and had a runaway success (on top of the bread and butter neos).
2001: Seattle to Chicago: https://www.kiro7.com/news/local/on-this-day-boeing-moves-co...
2022: Chicago to Washington, DC area: https://www.seattletimes.com/business/boeing-aerospace/boein...
2024: Back to Seattle (maybe just the CEO and not the whole office): https://www.reuters.com/business/aerospace-defense/new-boein...
His podcast role is Chief Cynic but man I love listening to Ed Zitron's Better Offline. What I'm about to link is an extremely hard & direct a polemic, especially the second about the specific people at the largest companies, but damn. It was so enervating to hear.
The Shareholder Supremacy episode ties it all to Jack Welsh making everything awful forever everywhere, managing by number-goes-up. And then How Shareholders Are Destroying the Tech Industry is such a real shared anger against specific leaders, that undercuts how bad & ineffective & midling this age is, being lead by people with so little inspiration & touch with their products.
https://omny.fm/shows/better-offline/the-shareholder-suprema... https://omny.fm/shows/better-offline/how-shareholders-are-de...
This podcast series is definitely on my world treasures list, as a how-it-really-is "histories of today" account. Also, the Daily Show keeps having some real bangers... (Covering the media coverage of McDonalds vs Enemy Within was a deep cut.) It's cathartic as hell and often remarkably informative (but also sometimes less so too).
That is because one of those things is not true. It's not very cross-border. The vast majority of Airbus R&D and manufacturing happens in Toulouse and Hamburg with each city focusing on specific plane models.
Airbus is incredibly centralized and has been able to take advantage of that to deeply integrate R&D and manufacturing.
I will keep that in mind when seeing an Airbus Beluga again when in Hamburg.
btw: https://en.wikipedia.org/wiki/Boeing_Dreamlifter [ed. wrong link]
At least that's what I understand from a very layman view of their processes, would love to be corrected if I'm wrong.
My guess is this could only work in the airline industry where an efficient bureaucracy would be a competitive advantage.
A pretty significant part of R&D happens in Filton and Getafe too. And manufacturing is even more distributed.
Also, plants do not focus on specific models at all, but more on specific parts and systems, across all models.
First off, one of the things the UE does accomplish is reduce the obstacles that come with cross-border work, and European bureaucracy is massively overblown as a problem. Insofar as it is a problem, US-style lobbying amounts to as much of an obstacle. E.g. with no Intuit lobbying involved, I have literally not filed taxes once in the last ten years, it's just completely automated and a non-issue for me.
"Overregulation" is a sweeping generalisation, and pretty much irrelevant in this particular space: this is the aerospace industry we're talking about, it's one of the most tightly regulated industries worldwide. Airbus is not bogged down by any meaningful amount of red tape that Boeing is free from.
I see that they could do great good but instead work up very specific regulations that few companies fit. Those types of regulations instead of broad thinking about integration. They are narrowly focussed on implementation details. What I have seen in the past 2 years fits the exact fears my crazy uncle warns about.
This means sometimes the EU will pass regulations that are difficult or abstract to implement. And this means the US will miss obvious regulations because they can't gauge the business impact.
The current FTC is attempting to actually enforce some of these more obvious regulations now, and they're facing a lot of push back from the American private sector. Blocking huge mergers that monopolize the free market, disallowing one-sided contract clauses, banning outright lying to consumers... these are obvious, to me. It's been shocking just how much resistance they face.
I do think the EU has a common vision. I'm sure if a common vision drives the USA. I think it's more chaotic until an incumbent establishes a critical mass. I believe the influence only lasts as long as the mass holds.
I think using competition regulation to create equity is misguided. I believe incumbents become dominant and focused on narrower goals. This narrowing of thinking is more likely in my eyes to cause a USA company to fall from dominance.
Microsoft and ATT the monopolists I was raised on were definitely dominant. I having being using computers since the 1970s and the only Microsoft OS based computer I have ever owned wasn an OrangePC 486DX2 card that lived inside a PowerMac G3. I used for probably close to a decade to compile software for windows distribution of Mac developed software. I of course stayed as far away from corporate America which was Windows crazy.
My point is that any creator that feels they are being held back by a platform vendor just needs to re-arrange their thinking until they are free of that thought. There are plenty of opportunities in the USA to do whatever you want market share be damned.
This means you can provide cheaper services by, say, stealing data. And you can protect yourself from lawsuits by making someone "sign" something. And, worse comes to worse and you're down on your luck, you can always aggregate the data and sell it to law enforcement for a pretty penny. While we're here, go ahead and implement the addictive tactics casino's use into your app.
> There are plenty of opportunities in the USA to do whatever you want market share be damned
Yeah, to a scary degree. I mean you can just make a company to collude on prices. That's what RealPage does, and they're getting away with it. Not just them though - every industry has one of those. Or you can just decide to give people music without a license. That's what Spotify did. Or maybe you can just sell ad space for political campaigns. Wait, aren't there laws on that? Apparently not - if you're a tech company, you can do whatever the fuck you want, whenever you want!
We haven't really decided if this is a good thing. The EU pre-emptively is saying "yeah not good". We're still mulling it over. So we're ahead now, but who knows if it will stay this way.
If it doesn't add up, maybe it's the other side of the equation that's the problem: Maybe the flaw or surprise in the equation is not Airbus but the other side - the beliefs about "EU based, cross-border, with all the overregulation, bureaucracy and obstacles" - maybe those aren't what you thought and don't have the impact you thought.
If the evidence doesn't match the theory, it's time to re-examine the theory.
I say that because those beliefs about the EU are a dogma of American big business and its fellow travelers, which prefers the US where they have so much power (and so little regulation or tax) rather than the more democratic power in EU.
What most people do not understand, most of the regulation in the EU is to make trade easier. That is the main focus of the EU commission (not the parliament though, which brings in pro-people regulation like food regulations or GDPR).
There is often the joke about the EU regulating bananas. People don't ask why this is regulated, they think it's "the idiots in the EU". The reason is easier trade. Because this way some dealer in Poland can buy a quality level of banana from someone in Spain and knows what they can expect to get. It's for easier trade.
It's like having a standard API and language (e.g. SQL) instead of everyone doing their own. It's like lanugages generating LLVM IR (the IR is "regulated") so they don't have to write their own backend. Think of EU regulation more like OAuth.
This is ahistorical.
When Airbus announced the A380, Boeing tried to respond with their own version, the 747X [1]. The 747 is arguably the most successful aviation platform in history and was hugely profitable for Boeing for 40+ years. But the industry changed to wide-body 2 engine planes (eg 777, 787, A350) because they're more economical to run and engines have become so reliable that they'll generally last the entire service life of the plane.
The A380 needs 4 engines. The 747X would've too. Even with higher passenger count, running 4 engines instead of 2 is a huge economy issue. Basically you needed to fill ~550 seats to make a profit and not many routes could support that. It works great for the ME3 airlines and arguably a couple of Asian carriers (eg Sinapore Airlines) but not really anybody else and certainly not US airlines.
A way more pivotal moment was the A319neo. This was a complete surprise to Boeing and represented an existential threat to Boeing.
As you may already know, commercial pilots are generally certified for a single type rating at a time. They can train and certify for another type rating but generally speaking commercial pilots won't switch all the time between, say, a 787 and an A350 or even a 787 and a 737.
So airlines like Southwest keep costs low by maintaining a single type rating fleet, being the 737, an airline originally designed 50+ years. So that's both a blessing and a curse for Boeing. The curse being they lose that lock-in if they design a new cockpit. Airbus didn't have that problem.
But the A319neo was so efficient and coule potentially suit US airlines that Boeing ahd to respond and make the 737 more efficient, which of course led to the whole MCAS debacle.
That wasn't the first time Boeing had issues either. Back in the 90s the 737NG had an issue (that caused crashes) with the 737 rudder getting stuck in flight. That took years to resolve.
There were issues for Boeing as a company with the 787. That's when Boeing tried to savagely cut costs with layers of subcontractors and it was a disaster that delayed delivery by years. That's continued with the 737MAX issues like the door panels not being bolted in.
The A380 is from 2007, the A319neo is from 2016.
So not the turning point. 2007 is the point in time when Boeing thought they had won, not 2016. From that point on it went down, with Boeing hybris.
If you look at the sentiment from the times,
"Battle for the future of the skies: Boeing 787 Dreamliner v Airbus A380", Guardian 2013
or
" The market for big planes has fragmented and there is simply not enough demand for jets the size of the 747 or bigger to justify the huge development costs of an all-new jet such as the A380, according to the Boeing view. So it has bet its future on a midsize jet, the 787 Dreamliner. [...] Now, critics say Airbus made the wrong bet on the A380." [0]
[0]: https://www.aviationpros.com/home/news/10384535/huge-mistake...
[0] https://en.wikipedia.org/wiki/Boeing#Merger_with_McDonnell_D...
Most other success stories involve first going bankrupt (ex. GM, Delta).
Had Jobs kept Apple only in the computer business trying to sell colorful expensive iMacs as alternative to cheap gray PCs, they would have long been bankrupt and their carcass devoured by Dell or Lenovo by now.
Boeing doesn't have any other new untapped markets they can enter and dominate. Come to think of it, neither does Apple now. They tried with the Vision Pro VR helmet thingy but that was a massive flop compared to the iPod and iPhone, coupled with the the shut down of their rumored secretive EV program, so they're left keep trying to milk that 30% AppStore fee as long as they can get away with.
Yeah, but that slice of the market is in decline for them.
"According to Stocklytics.com, iPhone revenue dropped $2.7 billion year-over-year, totaling $85.2 billion in H1 2024."
Makes sense since everyone and their dog already has an iPhone and keeps them for longer than ever meaning selling more iPhones now is more challenging compared to monetizing all the stuff people buy and do on them.
It's where all the revenue growth is at Apple right now. All their hardware businesses are enormous and safe, but basically stagnant. That the majority of revenue is from hardware doesn't mean the future of the company doesn't lie in its ability to extract ever more blood from a stone.
Technology is where autonomous flying cars, for example, are mostly constrained by regulatory and major capital.
Less ambitious would be things like sleeper planes for long haul red-eyes.
General aviation is a smaller industry, but also ripe for distribution by someone with capital and regulatory connections. It's stuck in 1970-era technology.
I can name dozen of other things Boeing could pull off, if lead by someone like Jobs -- someone with both vision and the ability to execute.
This just sounds like fantasy wishful thinking like Elon's Hyperloop or FSD Model 3 Robotaxis that have been constantly around the corner in the next 6 months for the past 6 years.
>are mostly constrained by regulatory and major capital.
Ah yeah, those pesky regulations about *checks notes*… not killing people. Just like that millionaire "innovator" that got himself and others killed with his carbon fiber submarine who thought he could innovate his way around regulations and engineering process build around decades of accidents and deaths at sea.
Maybe stuff like this shouldn't be left to the move-fast-and-break-things crowd.
This is even more true in zoning. There are much better ways to build homes possible, but not when a regulation is phrased in terms of distance between wooden stuffs, rather than safety and durability.
Economies of scale continue to mean that entrenched technologies get used.
Pilot licensing is especially onerous, where control systems allow flight to be a lot simpler, and a lot of very hard-to-fly technologies (like autogyros) can't be brought to mass scale not due to technology but simply due to regulation.
What Steve Jobs did that saved the company was put the hatchet to everything that didn't have an inkling of making cold hard cash. He killed the Newton, destroyed the convoluted product line, and most importantly put the whole company under one P&L statement. That's what saved Apple.
That he then was able to quickly herald a return to portable devices with the iPod is what allowed Apple to become the behemoth it is today. It's useless to pretend to know exactly what would have happened had Apple not made iPod.
You're forgetting a 150 mil from Microsoft.
> In the quarter the iMac shipped, Macintosh computer sales grew year-on-year for the first time since late 1995, and saw the Mac grow its worldwide market share from 3 to 5 percent. Apple went from losing $878 million in 1997 to making $414 million in 1998, its first profit in three years.
People want what Boeing sells: airplanes. They just need to make better products, like Apple did.
I think a bankruptcy restructuring would do a world of good for Boeing, the sooner the better. The longer it keeps in this state, the further behind it gets.
Wondering what consequences all that mean for FAA and its international recognition.
We lost commercial ship yards, and or navy is on a long, slow march to obsolescence. That's messy decades it -- we have a huge lead -- but it's the path we're on.
I don't know the solution here.
A lot of the "important names" in industrial manufacturing that wound up getting bought by the various industrial conglomerates of the mid 20th century wound up getting sold off when the conglomerates fell apart.
For example IH's agricultural equipment (now a part of CaseIH), construction equipment (now owned by Komatsu) and truck lines (owned by VAG) all more or less continued development and production despite being through a couple owners at this point.
I personally hope it gets split up and Ford winds up buying the passenger airline stuff so we can get a revival of the trimotor nameplate because I like it when reality is funny that way.
Does Embraer have a program in the works? I like what they build.
Admitting to it is the first step towards fixing it.
Why do the top 50% fund nearly all of the government (97% of all taxes)? The top 25% pay around 90% of all income taxes. Why does the US have an aggressively progressive taxation system if it's so utopian for the rich? That's quite obviously not how the rich would choose to arrange things at all. The top 1% take in 26% of income and pay 44% of all income taxes. The top 1% pay the highest average tax rate of any group (26%), over double the median figure.
Medicaid + SS disability + all state and local healthcare programs cost over a trillion dollars per year and are free for the poorest 1/4.
The US Govt alone (not including local or state) spent $200 billion on all of its food assistance programs in 2022.
These programs go toward people who contribute almost nothing in taxes.
That's a flat out lie - that's not "all taxes", that's only one tax - Federal income. That's only about half what the IRS takes in (https://www.pewresearch.org/short-reads/2023/04/18/who-pays-...), and then there's stuff like state, local, and non-IRS taxes like gasoline.
> The top 25% pay around 90% of all income taxes.
Guess what percentage of the wealth they hoover up.
https://www.federalreserve.gov/releases/z1/dataviz/dfa/distr...
The top 0.1% holds 1.76T in wealth; the bottom 50% holds 0.71T. The top 10% hold more wealth than the remaining 90%.
As one of the top 25%, that doesn't automatically make it unfair. What is their total share of earned income? How much of the wealth do they hold?
> These programs go toward people who contribute almost nothing in taxes.
Because they make almost no money. If you want people to pay more income tax, you need to start paying them more.
A solid indication the level of taxation for that bracket is too low. Maybe it needs to add brackets up to the trillions, because there is a world of difference between 1M, 100M, 1B and, soon, 1T of net worth.
Remember - if you can't control money's political power, you need to control money itself, or the wealthy will have political power without the backing of votes.
And, yet, you can't even ensure decent free healthcare to everyone (even if limited to those who can't pay).
> These programs go toward people who contribute almost nothing in taxes.
Like Jeff Bezos?
A startup CEO probably gets a salary of like $250k, not much different from a senior SWE. However, the CEO has stock options worth hundreds of millions.
And those are ISOs, which are subject to favorable tax treatment...
...if you could exercise them for pennies, which is exactly what the CEO gets to do, because he gets the options before they ramp the valuation.
Rich people do not make high incomes. Incomes are taxed. Rich people keep their money.
USPS is very good, better and cheaper than UPS or FedEx.
Wish antigovernment types didn’t lie and had actual complaints.
That is debatable. What was the last war it won?
> USPS is very good, better and cheaper than UPS or FedEx.
Indeed, it's a lesson on how all universal services should be managed by democratically elected governments according to clear charters that ensure universality and affordability.
In exchange for that they have to attain some service levels others would consider unprofitable. Remember they need to be absolutely universal, however inconvenient for them.
https://thehill.com/opinion/congress-blog/3993213-the-implod...
"While state government workers and teachers have their pension and retiree health funds invested in a mix of stocks, bonds, and other quality assets, USPS, by law, can invest only in government bonds. USPS had $298 billion in such assets at the end of fiscal year 2022. Its inspector general estimated it could have had up to $1.2 trillion if it had diversified its investments as states do for government workers."
So USPS is $900b short because of laws Congress passed, and now needs $100b in taxpayer assistance.
Iraq in 2003. Trivially stomped what was left of the Iraqi military and Saddam's entire government. There's a difference between a war and attempted nation building. And worth noting that nation building Iraq has not failed as of yet 20 years later. Iraq's GDP per capita is higher than Vietnam, Indonesia, Jordan, Egypt, Philippines, India, etc - which isn't horrible given what they have been through.
What was the last war it lost? It didn't lose in Vietnam; it won every major engagement and along with South Vietnam held ~85% of territory when the US and South + North Vietnam signed a peace treaty and the US left. North Vietnam promptly ignored the treaty and resumed its conquest. Funny to pretend the US lost a war years after it left. It didn't lose in Afghanistan, the primary mission was to destroy bin Laden's Al Qaeda in Afghanistan (which was fully accomplished and bin Laden was killed). Nation building failed in Afghanistan, although the US was able to easily hold the core of the country with sub 30,000 soldiers and could have technically stayed forever (but it was pointless).
Did the North win the Civil War? In 1865, that answer was fairly clear. In 2024, perhaps less so. I suspect 1870s Americans would be a little surprised that Confederate flags and monuments pop up all over in the 20th and 21st centuries.
I wonder whether conclusive victories against the worst of our natures isn’t feasible.
The US hasn't won a war ever since WW2, and our top-of-the-world military has always lost to guerillas armed with nothing more complicated than an AK-47 and a Toyota pickup. Our best jet fighter's sole kill is a fucking balloon.
No, the US's track record is French levels of trash and I fear more for ourselves than the enemy in an actual peer war where they will be armed with something better than AK-47s and balloons.
[1]: https://apnews.com/article/us-navy-yemen-houthis-israel-war-...
[2]: >“This is the most sustained combat that the U.S. Navy has seen since World War II — easily, no question,” said Bryan Clark, a former Navy submariner and a senior fellow at the Hudson Institute. “We’re sort of on the verge of the Houthis being able to mount the kinds of attacks that the U.S. can’t stop every time, and then we will start to see substantial damage.
[3]: https://www.telegraph.co.uk/news/2024/08/24/red-sea-houthis-...
[4]: >There isn’t a Prosperity Guardian ship within 500 miles. Back in May when the carrier USS Dwight D Eisenhower was present, the US had 12 warships on station providing a mix of missile picket and escorting duties. Now they have zero. ... There can only be one conclusion: that the US has given up on Operation Prosperity Guardian. It wasn’t deterring the Houthis and it wasn’t reassuring shipping so they might as well go and do something else.
Maybe that's a good thing. Can you name any military that won a guerrilla war without resorting to concentration camps and total war against the entire populace?
I'm serious, our absolute best loses to some AK-47 manufactured over half a century ago that's seen shit and a beater Toyota pickup that's seen more sand than sense, operated by someone shouting something about chocolate bars. We have 11 nuclear aircraft carriers and we can't protect a single shipping lane.
>Maybe that's a good thing.
Be very careful what you wish for. When Pax Americana ends, whatever succeeds it won't be kind to us.
> Be very careful what you wish for.
I meant that every military that has successfully defeated a guerrilla resistance has done so by resorting to cruelty and mass human rights violations. The US military's relative lack of success in these conflicts could mean they haven't done that. Pax Americana is great but so is good conduct in war.
Currently, the "we'll liberate you, you're welcome" approach is not working.
The 1990-1991 Gulf War, and the US-backed campaign against the Soviets in Afghanistan were major armed conflicts that the US unequivocally won.
The conflict against ISIL ("AK-47s and Toyota pickups") was essentially won (the Daesh still exist, but the ISIL no longer exists as a territorial state). There've been several smaller lesser-known conflicts post-WW2 that Wikipedia considers to be US victories ("operational successes"), as well.
Because war is the continuation of politics by other means, the objectives of a war, and thus the criteria by which we can determine if it was won, are set by politicians.
Unless your country's politicians are the military this means that your military has no way to win wars unless politicians have chosen winnable criteria.
Corporate - the British operation to take back the Falklands is an example of a clear political objective, set by a politician (Margaret Thatcher, the UK Prime Minister) and achievable by military force. If the British kill millions of Argentinians, but must fall back and cede the island, Corporate fails. If the Argentinians shit themselves and run off once the carrier fleet sets sail, Corporate has succeeded with little loss of life. As it happens the British invaded the Falklands on foot, at considerable cost in men, but they won the day, the Falklands remains very much British.
When American politicians set vague objectives, or none at all, it is not the fault of the military when the war does not succeed.
But that's not the problem here. Boeing is no longer able to make high quality aeroplanes. And if you dump US taxes into that hole the hole just yawns wider. Which doesn't mean the US government won't try that, but it's expensive and won't work.
I bet they will, and yes, it won't work.
The core problem is the market demands ever-increasing profits and at a certain point the only way to achieve that is to cut costs. Executive compensation won't ever be cut. The management consultants will never be fired because they provide plausible deniability for the executives should anything go wrong.
The inevitable result here is that the financial people end up running the company, not the engineers. The old Steve Jobs Xerox quote [1] applies. No, Boeing wasn't technically a monopoly, but in a duopoly where it's supported by the captured US government, it really operates like one.
So you have a series of short-term decisions to increase profits that hurt the long-term viability of the company. Layers of subcontracting that add friction but marginally increase profits and lose quality control and institutional knowledge.
Boeing manufacturing has been butchered into several independent organisms and scattered across the US states that gives most tax benefits.
Meanwhile Airbus R&D engineers in Toulouse and Hamburg just have to walk a few minutes and they are in the factory hall that is manufacturing the parts they have designed.
'Universal Stainless, Set To Be Acquired, Behind Fatal Bell Boeing Osprey Crash' https://hntrbrk.com/usap/
Boeing has been killing US Soldiers with V-22 Osprey since 2007, 50 and counting.
That's the only thing they know.
Airbus is poised to win without contest if and when USAF goes for bids on a new tanker again. The KC-46A Pegasus still isn't in active service due to ongoing refueling problems; yes, a tanker that can't tank. Fuck Boeing and fuck the Government Accountability Office who threw out Airbus's winning bid. As a NATO resident, there is no national security concern with going Airbus.
Northrop Grumman has murdered Boeing in the new bomber programme, the B-21 Raider, after USAF finally got around to a successor for the B-52, B-2, and B-1. This was next to the Joint Strike Fighter programme in terms of how coveted it was.
SpaceX as you mentioned is putting everyone in space out to pasture, not just Boeing.
So really, the only replacement we don't have for Boeing is commercial airliners and military heavy cargo which Airbus could be but can't because their production lines are already full. Northrop Grumman could be interested, I guess.
The last dividend in 2020 should be the least of the losses
The only language Boeing understands at this point is bankruptcy.
I guess I can predict how that comes out.
None of them will need to.
Normally I'd suggest firing all of the experienced, well-paid staff and offshoring as much of the work as possible. It appears that may have already happened however.
In all seriousness - Boeing should be called McDonnell Douglas - the merger was encouraged by the Pentagon after the cold war.
Don't let bad management team infect your company - there's a reason why this company you want to buy is on a fire sale.
unlikely.