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Jon Talton

Analysis and commentary on economic news, trends and issues, with an emphasis on Seattle and the Northwest.

July 22, 2009 at 10:00 AM

Shareholders and customers may have questions for Boeing on 787

Top of the News: The stunning story today by the Times’ Dominic Gates about the 787’s structural problem being significantly more complex than originally stated by the company raises a fundamental question: What did Boeing know, when did it know it, and did shareholders and customers receive adequate disclosure?

The story says the problem where the wing meets the fuselage “showed up as a ‘hot spot’ in Boeing’s computer models before the delamination in the wing bend test — but for some reason it was never addressed.”

Boeing is a sprawling company, but a big part of its appeal to investors — and its cred on Wall Street — has been the coming of the Dreamliner. The cred has been hurt by repeated delays. But shareholders and customers now might be asking if the company has been fully forthcoming on material information on the program.

Boeing told the Wall Street Journal this morning “it has identified a technical solution to the problem” that delayed the first flight of the 787, but declined to set a schedule for the takeoff. This doesn’t address the issue raised in the Times story. It’s not one that can be blamed on union workers and the “awful business climate” in the Seattle region (not that some won’t try).

Midweek Briefing: Former Fed Governor Lawrence Meyer tells Bloomberg it will be at least six years before the U.S. returns to “full” employment — at or below 5 percent. “We’re staring in a hole; we’re going to start from a 10 percent unemployment rate,” Meyer said. “The unemployment rate is going to come down very slowly.”

–In Oregon, a first-of-its-kind biogas plant has been launched by Stahlbush Island Farms. It’s supposed to provide twice the power needed by the farm and food processing plant.

–The Harvard Business Review looks at what CEOs and managers are talking about now. Cost cutting has given way to looking for opportunities in the downturn. The challenge: Executing and sustaining a strategy in such tough times.

–MIT Professor William Wheaton argues that housing prices are about to hit bottom and may resume rising again. I say: Location, location, location. The worst hit parts of the country will have the hardest recovery.

Today’s Econ Haiku:

Starbucks brews profits

Of course shareholders will say

Make it a venti

Comments | More in Aerospace/Boeing

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