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management performance

May 11, 2014

Is an ideological agenda destroying the future of Boeing?

This is not a story about Boeing versus Airbus. It's about the view in management schools that an unhappy, insecure and more anxious society is better for capital than one that is happy, cooperative and mutually reliant on common objectives

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The most perplexing thing about Boeing for those watching its affairs from the ‘outer darkness’ of the rest of the world is the intensity of the ideological hatred from its management for its Washington state based workforce.

That may not of course, really matter here in Australia, unless it becomes apparent that the alleged nastiness over there becomes more widely fostered in this country.

A recent example of such corporate behaviour is claimed in this article to be Boeing’s announced agenda to shift its major engineering and research and design resources out of Washington state to low wage states.

The core problem is the experience and design culture that made Boeing great can’t be ‘transferred’. It is being terminated, for ideological reasons, and Boeing is already in deep trouble because of the sub standard quality of work done in South Carolina, for example.  Something Boeing is addressing at no small expense by sending the incomplete work back to Everett near Seattle to be fixed, and which was no doubt a factor in its decision to keep the work on the 777-X family primarily in Washington.

Inside the 747 line at Everett 2002, when Boeing was its most American

Will management’s perceived and no doubt at least in part justified gripes with unions really be served by breaking what remains of its longer term engineering and design excellence?

This is not a story about Boeing versus Airbus at any level. It’s more about the view in management schools that an unhappy, insecure and more anxious society is better for capital than one that is happy, cooperative and mutually reliant on common objectives and fostering cultures of excellence and innovation.

This is the core of Tom Hull’s argument.

Boeing closing an opportunity path

I don’t know whether to laugh or cry over Boeing’s plans to move 1,300 engineering jobs from Washington state and California to low-wage, crony-capitalist states such as Alabama and South Carolina (April 30 Business Today), but that’s because I’m not directly affected. I don’t work for Boeing, own stock in it or plan on flying much in the future.

Boeing may be able to replace experienced factory workers with underpaid novices. But engineers are different, and without good engineers Boeing will soon have nothing to sell.

What saddens me about Boeing’s shortsighted move is how it undermines one of few opportunity paths my generation had. My father worked in Boeing’s Wichita factory, and he managed to buy a home, send his kids to college and retire early. I became an engineer and did even better.

But Boeing’s devaluation of engineering work threatens to close that opportunity path. And when young people see there’s no future in engineering, who will keep the technology we depend on working?

The core of this hack’s concern, as a half American who nearly ended up working for Boeing almost 50 years ago, is that I have seen America become a more unhappy, more poverty stricken and more unequal land than back then. It doesn’t value scientific leadership nor curiosity as much as it once did, indeed all that seems to matter anymore is short term stock valuations.

This is not what I expected when I got off the Qantas V-jet 707 on Memorial Day in San Francisco nearly half a century ago, when Mars was do-able before the turn of the century, and I’d live to see the first starship set forth.

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24 thoughts on “Is an ideological agenda destroying the future of Boeing?

  1. Glen McDonald

    Just a couple of minor edits, if you don’t mind, Ben. Substitute the word “Boeing” for “Qantas” in the first few paragraphs, and to rephrase the latter part of the article “…almost 50 years ago, is that I have seen AUSTRALIA become a more unhappy, ” ….. ” Poorer and more unequal land than back then. It doesn’t value scientific leadership nor curiosity as much as it once did, indeed all that seems to matter anymore is short term stock valuations.

    This is not what I expected when I ” Saw a”……” Qantas V-jet 707 on Memorial Day in San Francisco nearly half a century ago, when Mars was do-able before the turn of the century, and I’d live to see the first starship set forth.”

    Our present day Australia is aspiring to be as miserable, morally impoverished, uncaring ‘entitled’ and greedy as America under Bush.

    How can Qantas aspire to quality when the leaders we permit to inhabit Australia’s mind-set have become so self obssessed, miserly (they never mention the ‘society’, the ‘people’, the ‘nation’,our ‘culture, or our ‘future’ only ever “the ECONOMY” or “The Bottom Line”. – something to which they must raise their eyes to even glimpse!)

    If they had ANY imagination, they would create aviation and aerospace jobs, (IT and engineering etc.) – or rail and track engineering from the soon to be empty car factories – to help accommodate all these ‘parasitic’ (their words) welfare recipients from draining money from the ever dwindling employment opportunities we are seeing evaporate quicker than fixed excise petrol.

    Looks like they wait to see what Boeing does next before they defer the decision to a committee of ‘experts’.

  2. Allan Moyes

    Glen
    I couldn’t agree more!

    I’m glad I’m of an age where hopefully I will be gone before we see Australia as a land divided between those who sit sipping their lattes or (insert other exotic coffee name here) and those who serve them. Certainly nobody will be manufacturing anything. The non-baristas will be in PR, marketing or real estate.

  3. George Glass

    Very sad. During my brief professional engagment with Boeing they were some of the most professional ,competent and smart people I have ever worked with.

  4. Frequent Traveller

    We’d thought the perennial protection of (precious, hard-won, propietary, exclusive ?) corporate Engineering Know-How would be the last Bastion of the Nostalgics … but Boeing top Executives at evidence opinion differently : “Engineers” have outgrown their own utility, turning into a parasitic Mafia extorking pay pretensions higher than warranted.

    “Churchyards are full of the tumbs of irreplaceable Engineers, RIP”, Boeing say, pointing at CATIA and similar CAD-CAM systems to demonstrate that Aircraft Design in 2014 is within reach of any reasonably gifted, Windows-7 capable, summer trainee, ie that our fathers, the great Engineers, actually sawed off the branch upon which their sons the young Engineers could be comfortably seated when (inadvertently or ill-advised) they trusted – disappropriating themselves – their own privileged IP and Know-How to computers …

    Presently, “Engineers” are dispensable.
    F**k Engineers, say Boeing executives, at the top !

    Did I reformulate correctly Tom Hull’s point ?

  5. Glen McDonald

    (George, they probably still are – just shackled by non-creative, unimaginative management)
    Allan – the people in PR, Marketing and real estate are the ” Baristas” you see offering the espresso macchiato made with *nt**nation*l roast, condensed milk and tap water! Politicians employ them by the dozen to ‘gauge the public’s sentiment’
    We have SO much potential in this country and so few visionaries – let’s all go work for Boeing!

  6. keesje

    I was under the impression Boeing was moving non 787 service engineering jobs to preserve a aerospace knowledge base in not so low cost California. Obviously I missed out on a more damaging background strategy.

  7. Tango

    I would call the writer as putting out an informed opinion piece that is a look into the real world of what is going on vs the Chicago Mafia (Boeing management which moved to Chicago) PR.

    What they tout is the 100 million dollar savings. If any of their basis was true or fact it might have merit (though destroying something that worked and going with total unproven is simply stupid).

    However, lets look at what Boeing has done.

    787: Years behind schedule, mangled management, parts debacles, schedule delays and bad innumerable case of bad quality parts and sections by outside contractors that cost 20 billion + in damages. None of it was engineering of build, it was all management decision to both outsource the work and an all new construction. None of which had been tried. Blame, to the union workforce that managed to put the mess they were given together, and get a semblance of a build line working so they could iron out the rest of the messes.
    Please note the issue with the Batteries as this comes back to it latter in the Do Not Fly list. Said battery system was put together by something called (Aircraft security systems?). They had never done a battery, let alone integrated one, they installed security system on private jets. It was all cobbled together in Arizona (where they burned up the first one tested and burned down the building!). So, they integrate a battery from Japan, a detection system from Europe and build the charger themselves and never had done anything close because Boeing game them the contract!. No oversight, nada. Most explosive battery chemistry you can find and never updated or upgraded it to better ones. Test method was to drive a nail into the battery (oppps, that does not tell us what we need to know but its a test and …..)

    747: Outsource to Russian because they had no engineers to spare as the 787 was in trouble. 2 years late, Billions over cost and it all had to be redone because the Russian engineers (one of Boeing centers of excellence) hosed their work up and it had to be redone. Who saved it? US Seattle Boeing engineerss.

    Lattest Muck Up: In order to get Charlotte working the hired “contract workers” Read that as experienced aircraft assembly mechanics who had worked for Boeing, Lockeed, MD etc.
    You cannot hand someone a drill and expect them to make the hole right, they need experience.
    Boeing Seattle has has 100 years of experience handed down from one generation to another, Charlotte for all their work ethic and efforts do not have that and you cannot replace it (so no, you cant just throw and assembly line anywhere, experienced mechanics are as important as Engineers)
    Result: when there was a supposed lull between the 787-8 going smoothly and the 787-9 coming on line they FIRED all the contract workers.
    Next Result: The fuselage assembly operation fell apart. They actually DROPPPED a section and damaged it so badly it had to be re-built . Work quality went into the toilet and the entire thing rippled to Seattle as the travel work went up hugely. You can’t stop the line, you have to push it on. All those fuselage sections go to both operations (Charlotte was less affected as their production rate is still way below Seattle as they are still learning and they fixed them on the line).
    That cost many more hundreds of millions but they gave Charlotte their catch up bonus because they hired BACK the fired contract workers. Seattle had to fix the sections and build aircraft which is where the mess was reported.

    So, Charlotte had far more workers than Seattle producing fewer aircraft. Of course this is efficient even though all those extra workers drive the cost of the aircraft higher than the union operation in That cost of course is swept under the management rug

    Anywhere else in the world after all those foul ups that has cost Boeing (and the shareholders) something around 30 billion, those people would have been canned. Nope, business as usual because the good old boy network is not about ROI, its about padding the pay for each one of them as they all sit on each others boards.

    Suppliers: Not mentioned is Boeing has declared war on its suppliers, they call it the Do Not Fly List.
    We call it Blackballing. If a supplier does not meet Boeings demand, they cut them off and give the control to someone else (remember the battery problems, its going to get worse).

    The poster child (currently ) is the 777X landing gear will be attempted to be built by a small Canadian firm who builds gear for small jets. Never done a big jet. Want to guess who Boeing will bail out?

    So, we have more looming debacles as those will have to be bailed out.

    So, welcome to American where its all about padding the executives salaries and paybacks (golden parachutes etc) and not about putting a good product first which is what made Boeing great (and others) They then blame the unions and cut costs and incurs more billions through their incompetent management.

    If you think I am wrong google Mcneneary and his war on the US Social security system where he and a group of his like minded cronies want to destroy the last vestige of any safety net.

    We have indeed fallen into the pit of Robber Barons of yesterday. Who needs the Maffia when you can legally bilk billions and blame someone else.

  8. Glen McCabe

    What is really sad about this is that the winners (apart from the executives with the bloated pay packets) will not be the Boeing company, any particular region of the U.S., or the U.S. economy as a whole.

    It will be Boeing’s competitors, Airbus of course, and other companies that emerge as competitors in the years to come.

    I just wonder how much having bought out their remaining U.S.-based passenger aircraft competitor in the 90s made subsequent Boeing management think they were in an unassailable position…

  9. GeorgeD

    I wonder (with absolutely no idea) how much talent migration is likely to occur. Airbus (incl ATR), Bombardier, and Embraer are all competitors with expansion aspirations and particular sets of needs. So do the outsourced suppliers who now compose a huge part of the industry, and who manufacture for everybody.

    But Boeing may have sewn the contracts tightly, and these engineers may not be able to work elsewhere.

  10. Geoff

    Perhaps Boeing have realised that in the future their competition will be coming, not from democratic nations, but from “unhappy, insecure and more anxious societies” typified by countries such as China and Singapore. In both places the population are herded by megalomaniac oligarchies into factories and offices where it is their patriotic duty to work hard and vote to keep the oligarchy in power when ordered. The US is quickly becoming such a place, as are we.

  11. Dan Dair

    Geoff,
    The strange thing is, most of the blue-collar citizens of these “unhappy, insecure and more anxious societies typified by countries such as China and Singapore” actually aspire to the lifestyles epitomised in the ‘golden-era’ of 50’s-60’s America.

    Whilst ‘patriotic duty’ seems to cary a negative implication, it’s really just a different way of describing a ‘work-ethic’.

    Wealthier & better educated people from such economies will always aspire to still better things for their children.
    In 20 years time, with a preeminent economy, a highly educated population & global access to information for it’s citizens, how will China be able to retain its current ‘oligarchical’ style of Government.

    Boeing is screwing-up badly, but this is a symptom of an America which believes that it’s right to screw the ‘little man’.
    The opposite used to be true, America regarded its highly-motivated individuals with a strong work-ethic as being the backbone of its society.
    Now they’re just union lackeys, to be squeezed-out at the first opportunity.

    Remind you of anywhere closer to home.?

  12. keesje

    It’s seems the competition are unhappy, insecure and more anxious societies with one just goal: imitate our superiority.

    Maybe it is time to get down from our dusty thrones, face the real world and accept 50+ aerospace workers from the Seattle aren’t the only ones able to produce innovative aircraft.

    http://2.bp.blogspot.com/-JmvQdr_EYVg/UbuY1fNYJ6I/AAAAAAAAFNE/obIsbzGNKyA/s1600/image.jpg
    https://pbs.twimg.com/media/BmeQPSiCMAAI0N5.jpg:large

    Nothing unfair about it, just others doing excellent jobs.

  13. Geoff

    Dan,
    1. Ben has drawn attention to the lack of 50s-60s lifestyle in the US
    2. Work ethic is what highly motivated, well paid and happy workers have, patriotic duty is Orwellian speak for forced labour
    3. By putting “oligarch” in parenthesis you clearly do not believe the Politburo is not an old boys club where patronage gets you the top job. How will they retain power? By turning themselves into that other thriving chinese state I mentioned
    4. Boeing is just another US company.
    Last question – Yes!

  14. Achmad Osman

    Ben,
    To work out where it is going wrong is to look at the roller coaster that is Apple and Google. When you read the story-lines of those two companies, have a look at the outputs when entrepreneurs ran the company and the outputs and when accountants took over. At one stage Apple was broke and had to be bailed out by Bill Gates- Steve Jobs came back and rescued the company and have a look at the change in fortunes. The malaise that Boeing and Qantas is in- is a direct result of when the accountants took over.

  15. Dan Dair

    Achmad Osman,
    I agree completely.

    Accountants are vital to the operation of any large business,
    but,
    Having people at the top who understand the difference between
    Price & Value
    is even more important.

  16. Ray Goforth

    The average YEARS of company service of the engineering employees Boeing is firing is:

    Boeing Research & Technology: 18.32 years
    Boeing Commercial Airplanes: 15.66 years

    So, for BR&T, internal documents show that they intend to make job offers to 110 people out of 1300 layoffs.

    1,300-110 = 1,190 x 18.32 (average years of service) = 21,800 employee YEARS lost. That’s nearly 22,000 YEARS of experience Boeing is throwing away.

    If we assume a similar ratio for the CAS job losses (they haven’t announced figures but have said it will be a little over 1000 positions) we get 1000 – 85 = 915 x 15.66 = 14,328 YEARS lost.

    With these two moves, Boeing is flushing away 36,000 YEARS of engineering experience in its workforce. Only the bean-counters who dreamed up the 787 business model could think this is a good idea.

    These paper savings will cripple the company but not before the executives pushing them see their compensation jacked up in reward for the “savings” found by laying off 95% of experienced workers.

    The last time Boeing did something like this, lives were lost:

    http://articles.latimes.com/2003/jul/31/nation/na-shuttle31

  17. Dan Dair

    IF Boeing is slowly going down the tubes, by its own hand,
    all the other smaller players in the market, (Bombardier, Embaraer, the Russians, Japanese et al) must be rubbing their hands in glee.?
    There’ll be no room for sentimentality as these companies strive to fill the gaps left should Boeing really cease to be a market-leader.

    How can the culture within such an iconic company have so changed, that what looks obvious to outsiders, is invisible (or must not be spoken of) within the company.?

    Maybe, as Boeing did with its own US competitors, Airbus may yet purchase the Boeing assets & continue to manufacture the aircraft it considers to still have a future by that time.?

  18. Delores Kirkwood

    Not only does Boeing devalue its workers, most corporations in America do the same. Greed began to trickle in in the 1970’s when labor laws began to insidiously slip by without most of America knowing corporatations were weakening, and removing worker protection from legislation. Today, it nearly too late and we teetering on “the great depression” again.

    Funny thing is this: Those same paid off Congressmen, and corporate hot shots who get so many tax breaks (and pay less income tax than the average worker percentage wise to income) are the ones screaming “How are we going to pay down the national debt with all those people on public assistance?”.

    Do they REALLY think the countries they outsourced American jobs to will pay income tax on the income they are make to America when they are working in China, India, Thailand, Malaysia,,,etc?

    What does it take to run a country? Apparently, idiots.

  19. gdt

    GeorgeD, your concern is justified. A contract is a fixed-term beast, knowledge transfer outlives any contractual arrangements.

    Just look at cycling. The large US brand Schwinn outsourced manufacturing to an unknown Taiwanese firm named Giant. The large UK firm Raleigh outsourced manufacturing to an unknown Japanese firm named Panasonic and later to an unknown Taiwanese firm named Merida. The firms felt secure in this: those non-English speaking companies didn’t have a hope of competitively marketing their bicycles to the US and the UK, especially where the differentiation at the high end is 99% marketing.

    Where are Schwinn and Raleigh today? Oh, they had their lunch eaten by the outsourcers.

    Giant is now the largest bicycle retailer in the world, and mostly responsible for the death of Schwinn and Raleigh. Panasonic was so successful at marketing that it left the bicycle industry altogether for the higher margins of consumer electronics. Merida have recently seen the light and are selling bikes under their own name.

    The notion that the outsourcing firms could keep the technology in-house was popped when Giant simply paid a world-class English designer to design their new top-end road bike. The resulting Giant TCR defined the modern carbon road bike and it forced every other manufacturer to redesign their carbon road bike to be competitive.

  20. keesje

    Would you move if a new competitor offered you a job far away from your family, in a place you’ve never been?

    What if they pay you 25% more, give you family health ensurance, an already guaranteed pension, tickets home and study financing for up to 3 kids?

    Ask those bright 30-40 yr old engineers around you.

  21. Dan Dair

    gdt,
    I didn’t know any of that…..
    But now I do.!

    Cheers.

    (Nothing to do with aircraft,
    it’s amazing the stuff you pick-up from here & there)

  22. Ray Goforth

    Boeing found GUILTY of illegal intimidation and surveillance against engineering employees.

    http://mynlrb.nlrb.gov/link/document.aspx/09031d458171835c/c1123952ebb35a6952d1f8bd92ba6493e70896f/document.aspx

  23. Denny Blaine

    The “moonshot” on the 787 was not the composite body. There are a lot of companies building composite products: Gulfstream has been building composite airplanes for decades. The “moonshot” was the decision to outsource the design and build of wings, body, and most of the rest of the airplane along with the battery. That decision is what has caused trouble for the 787.

  24. Dan Dair

    Denny Blaine,
    I’d look at all that you’ve said (& essentially agree with)
    but arrive at a different conclusion.!

    Construction companies ‘buy-in’ components all the time.
    They expect them to fit together first time, everytime because they know that the quality control on tolerances will be there 99.9% of the time.

    The issue to me is not that Boeing outsourced this important component work.
    It is that insufficient quality control was exercised to ensure that these parts were;
    The exact size,
    The correct quality,
    Meeting design specifications.

    Additionally, Boeing itself has apparently been guilty of fudging a number of issues, relating especially to the ‘safe-life’ of the battery/charging circuit system.

    These don’t seem to be the actions of a company in control of its processes, either in-house or outsourced.
    More one driven by a requirement to get its product to market, flaws & all.?

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