Top of the News: If it gives Boeing any comfort, it hasn’t yet reached the threshold of history’s biggest business blunders.
Those would include the Edsel, a car perversely named after Henry Ford’s much abused son, which cost Ford $400 million to develop. There was the $2 billion Mukluk dry hole drilled off the coast of Alaska in 1983 by Sohio, Diamond Shamrock and partners, which showed the U.S. was indeed past its peak and no amount of “drill, baby, drill” would change it — price tag: $2 billion. And the disastrous Penn Central merger, where managers of the New York Central and Pennsylvania railroads battled each other while the company burned.
Did I mention New Coke?
Sometimes companies recover from such costly missteps — sometimes not. The Mukluk disaster, for example, led T. Boone Pickens to start the shareholder revolution against big oil, resulting in consolidation of the industry. “They are cannibalizing their capital,” he told me at the time. His big peeve: Imperial managers who faced no accountability for their failures.
Nota bene to Boeing (and that’s not the name of a cheap Italian supplier).
The Midweek Briefing: If you missed the Times Q&A on executive pay you can check it out here. There’s a lively debate on the subject at the Harvard Business Review. John Landry explains why exec comp exploded (e.g., plentiful workers thanks to weak unions) and what President Obama might do to tip the balance back.
–For the record: The World Bank expects a tepid recovery of 2 percent in 2010 and a better 3.2 percent in 2011. Unemployment and disinflationary pressures are expected to linger to 2011.
–WakeUpWalMart, the site critical of the giant retailer, has an interesting item on Wally’s importation of drugs from a controversial Indian pharma company. It’s a bookmark must for all concerned about the company’s practices.
–As Boeing struggles with the Dreamliner, Airbus rolled out the first plane assembled at its China factory, an A320.
–Nervousness about the long-term health of the dollar continues. Britain’s Telegraph reports on smugglers caught with $134 billion in U.S. bonds — and the speculation they were Japanese finance ministry agents trying to sell them off. The Washington Post has a useful primer on the buck’s challenges.
–Hair-curling time: BoingBoing has this graphic on all one-time U.S. expenditures compared with the costs of the Wall Street bailout.
–What does the end of the recession look like? Foreign Policy offers a potential glimpse. China comes out a big winner. Recovery in the U.S. will be hesitant.
Today’s Econ Haiku:
Arrives in container ship
Port cities can thrive