Top of the News: So let me get this straight. Boeing’s head shed is replacing the boss of the commercial airplanes unit, including the Much Delayed 787 Dreamliner program, with the man who presided over assorted blunders at its defense unit, including the loss of a tanker contract that continues to haunt the company. New boss Jim Albaugh is also supposed to return the critical division to its engineering roots, but his degree is in civil engineering. At least he liked watching contrails as a kid.
Nicely played. This is why shareholder advocates go crazy about entrenched management, self-dealing and insulated from accountability. Not surprisingly, Boeing shares are in negative territory today, admittedly in a larger market downdraft.
It’s blaspheme to say this in Seattle, but Boeing is one or two steps from being a Troubled Company. Not a General Motors. Not an AT&T circa 1990. No, troubled in its own special way.
Mr. Albaugh has a very short window in which to turn this around. And he’s been dealt a bad hand. Boeing jumped into the Dreamliner with a risky strategy of highly advanced design, a do-it-on-the-cheap global supply chain (including that messed up South Carolina subcontractor, now part of the company), and executives who consistently tried to deflect accountability and take half-steps when leaps were necessary.
Continuing to bring defense executives into the commercial airplanes unit shows this loopy logic continues. Executives are mere interchangeable parts. The expertise of real commercial air people is not necessary. Thou sayest…
The Back Story: Economists Barry Eichengreen and Kevin O’Rourke have some interesting data comparing the recession to the Great Depression. The worst may have been sidestepped. But, like the Depression, the current downturn is global and conditions are worse than the U.S. in many countries. And, by many measures, the world economy is posting worse conditions than in the 1930s.
Today’s Econ Haiku:
Bernanke take two
The first chapter was scary
Bank on more to come