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Jon Talton

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

December 20, 2010 at 10:00 AM

Boeing, Boeing…gone?

After a good long time of bashing workers in the Puget Sound region, Boeing’s Chicago executives are now depending on them to fix the unfolding disaster of the Long Delayed 787 Dreamliner. If you missed the astonishing article by the Seattle Times’ Dominic Gates, be sure to read it.

As Boeing prepares to announce yet another delay for the 787 Dreamliner — at least three months, possibly six or more — the crucial jet program is in even worse shape than it appears. The problems go well beyond the latest setback, an in-flight electrical fire last month that has grounded the test planes.

And

The global supply chain is at a standstill, and outside the Everett factory the rows of partly finished jets will take many months to complete. To deliver the 20 Dreamliners built since the six flight-test planes, mechanics will have to complete more than 100,000 tasks.

Ironically, the troubles are providing a backstop for local aerospace employment at a time when Washington’s modest jobs recovery has stalled. An increase to 777 production will also help. But that doesn’t take away the ominous truth that Boeing has bet the company on the Dreamliner and now faces cost overruns of $12 billion or more. Yes, that’s billion with a “B.” Lesser troubles have sunk venerable companies. Boeing shares are down nearly 3 percent this morning.

At the least, the experience of doing the 787 on the cheap with a globalized supply chain should shake the foundations of “Welchism,” the brutal management style, intimidating anti-employee bias and mania for quick results of retired General Electric chief executive Jack Welch. Yes, the one once foolishly lionized as the best CEO in history and whose influence has ruined countless companies. GE itself has quietly backed away from many Welch ideas gone sour, not least the financial services play that became part of the global banking panic. Boeing’s executive suite is populated with Welch disciples who long poo-pooed Boeing’s historic careful, engineering-based culture.

Boeing is running out of time to ensure its “game changer” doesn’t change the game permanently in favor of Airbus and new competitors. Otherwise, Neutron Jack, still peddling his “Welch Way,” will have done even more damage.

Today’s Econ Haiku:

Keep up the perp walk

But Ernst & Young is small fry

As banksters go free

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