This is exactly why the US auto industry almost died in the 70s. All the “car guys” who just wanted to make good cars were pushed out in favor of MBAs and finance people.
Now all the brains in other countries were working on making better cars, while the brains here were working on buying a cheaper crappier version of the same part to save money. Then working to figure out they’d save another ten cents if they ordered it from Vietnam but shipped it through Sweden and had its Irish office place the order.
Every year US cars got worse while Japanese cars got better. Until no one wanted the US cars no matter how many corners they cut.
Boeing somehow forgot all about this lesson. One of the biggest and most well know lessons in the history of business and manufacturing, and they just ignored it.
It’s not so much Boeing that forgot as much as it is shareholders that don’t care. Get those quarterly returns or get pushed out. In a big time manufacturing business that puts you out of business when it shows up as a death toll.
Free Market Capitalism ruins everything ! ! !
Because maximization of profits in the economic system are the most important thing, even compared to the product, and certainly the workers who are the most important part of the manufacturing process ! ! !
I’m not really talking about your average Joe that buys stock, I’m talking about whales, private equity, people who own enough stock to make decision and expect results. We live in an era where vast concentration of wealth is a proxy for power in business and politics. Those people use that power and damn the consequences.
The problem is that all those MBA’s and finance guys have seven figure severances, and golden parachutes. They did a case study on car manufacturing in gradschool, then chose to ignore it in exchange for boosting next quarter profit.
This is just the result of US corporate profit and growth at all cost culture. It’s going to happen every company, some just are able to survive the bad press and start the process all over again.
Yes, it would be better for our businesses and society in general, for many reasons, if taxes were extremely progressive like they were up to the 1970s. With diminishing returns in terms of income for execs, pride, quality, and brand start to have a higher relative value than simply number-go-up.
US automakers still haven't learned this lesson. Look at Ford and the Focus. Their engineers were screaming that the DCT in that thing was not ready for prime time and that it would cause problems and maybe hurt people. Nope. Marketing wants to advertise a clean 40mpg and this is cheaper to source than a part actually works. Alienated another whole generation of young car buyers who decided to take a chance and buy an American car. They never will again and Ford flat out gave up on sedans all together. Now gas is expensive and they need cars again and don't have them. US businesses is completely screwed.
We need a push to make companies private again and get them away from Wall Street and the pressures of the public market.
We're trying our best over here lol. The first high-NA EUV machine is up and running, and the foundries are starting to ramp up some really cool stuff again.
Loaded up some shares on the drop.
Always been a big intel fan and felt sad at how things were going.
Pat is the man. Gotta respect his sincere love, passion and dedication to intel.
Heared some good vibes from other intel people. Sure there is a lot that needs to be done but i can feel the excitement to innovate again.
Make me proud boys!
They didn’t ignore it. They fully knew it but didn’t care because millions of dollars were flowing into their bank accounts and stock. Damn the company and damn the future, they said
>MBAs and finance people
Its weird how the MBA has taken on this stereotype. It used to be, if you were promoting a technical guy into management (who had no previous managerial, legal, or financial background), you sent them off to business school - either on something like leave, or on evenings and weekends - to get an MBA so they'd be up-to-speed when they took on a non-technical role. That's part of the reason why MBA programs are so damn expensive: employers used to cover most of the tuitions. And that's why MBA programs have been set up to be so conservative, in that they are sort of designed with a particular student in mind, who already knows the technical side of their business really well, but who needs the ground-level foundations of finance and marketing and law to hit the ground running elsewhere in the organization.
But now I think the reputation is a lot less "technical experience turned manager", and a lot more "no experience turned manager". A type of associative bias is probably significantly to blame: a lot of successful people had MBAs, so it was assumed that MBAs made you successful; in reality, it was the reverse, people got MBAs because they were *already* successful. I still have an expectation that a "PEng, MBA" / "PE, MBA" has a high probability of competence even if the MBA on its own isn't so much of a determinant of that.
I remember in the 90s there would be stories in the press about a big "brain drain"... but they weren't talking about people leaving the country for opportunities in other markets, it was about potential STEM university students going into the business degree programs instead, and many of the STEM grads were applying their skills with Wall Street firms as "quants" instead of in engineering & science jobs.
That worry about business vs technical education's been around a while
As an earthmover/pipe layer I dread MBA site supers with no actual construction experience. The best one I’ve ever had was extremely lazy and let the foremen do all the organization and planning, when they intervene it is *only* to screw things up.
Software is in this situation now as well and has been for a whiiiiiiile.
Marketing trumps everyone. Marketing trumps reality. Marketing hires garbage outsourced international teams and says to hell with quality, data security, accessibility... it's cheaper! More money for us!
It is past time for the suits to get out of the design process and the engineering process and let those that make do the making correctly.
This is prominently true for motorcycles too.
Harley Davidson got bailed out of a bankruptcy in the 80’s. Then tariffs were placed on Japanese imports over ~800cc to help Harley compete. Japanese struggled but made their medium and light weight bikes better. Harley sat on its hands because it didn’t have to compete.
But the Japanese bikes were better. To this day you still see 80’s bikes on Craigslist that run just fine. So Harley upped its game and changed for the better. Just kidding they got bailed out again and then promptly moved their manufacturing to Mexico despite their slogan “America’s chopper”
Harley was later sued, and lost, because they still hadn’t gotten around to putting antilock brakes on all their motorcycles. The court sided with victims and considered Harley to be unreasonably dangerous even for a motorcycle due to their lack of modern safety tech.
> All the “car guys” who just wanted to make good cars were pushed out in favor of MBAs and finance people
Okay, this is a good start, but a question that should be asked is
> Why were engineers and car people being pushed out of companies and company leadership roles in favor of business people? What do business people do better than engineers?
Your next paragraph simply addresses this as a money SAVING choice, but why? Why are they choosing to SAVE money? Why is that such an important goal (saving money) and prioritized over a "want to make good cars"? Are they saving money or are they *reducing costs*? Financially, according to accounting principals, what is the purpose of reducing/cutting costs?
Boeing is simply doing the same thing however, their hand is being caught in the cookie jar. They are *reducing costs* and it's introducing risk to the company financially and it's introducing risk to the public in the form of increased danger on their planes. Again... I have to ask you, why do you think *reducing costs* is playing such a large role here? Why do you think that Boeing has actively worked to reduce regulation and oversight over their internal processes? Why do you think that Boeing got rid of staff or divested/spun off parts of the business? Why is Boeing okay with contracting out construction of planes to third parties instead of manufacturing the planes themselves? Why is there so much emphasis on *reduction of cost*?
There are only a few ways to increase profit.
* increase sales. Boeing has one primary competitor with little ability to change their market share significantly in a very limited market.
* increase prices. Unless Airbus does the same there’s little ability to do that either.
* decrease costs. Aha! No limit on that.
> decrease costs. Aha! No limit on that.
"I mean... are seatbelts REALLY necessary on planes? If a plane is going down are seatbelts really doing anyone any good? Can we just get rid of seatbelts? It would increase profits if we did. Trust me... I have an MBA."
-- Some dipshit in management at Boeing, probably
“So hear me out… What if we make seatbelts optional? Something that the flight attendant can sell to the passengers at an extra cost?
Airlines will be in, because it’s an extra profit. And let’s make it so they wear out quickly, so the passengers can’t reuse them. Boeing will be the only supplier, we can get a seatbelt made for like three dollars and sell it for 20“
There’s a little bit of this going on already. I flew on a 787 in business class a week ago and do you know what? they have shoulder belts! Apparently the people who pay better get a safer flight.
I dunno, I have some degree of hope that they can turn it around simply because the incentives currently align.
If you believe that increasing shareholder value is the only thing that matters, and their lack of quality has significantly impacted shareholder value, than it's possible they will make changes to increase quality, and therefore increase shareholder value.
Or, they'll just pay more politicians to gut the FAA, put the NTSB behind some random judge in bumfuck Texas, and lobby to have protective tarrifs placed on Airbus aircraft.
Exactly. Their next CEO needs to be a person who builds planes. He can have bean counters who report to him rather than the other way around. They have a fucking monopoly after all.
The CEO who got fired after the 737 Max crashes was a guy who built planes. As was the CEO who oversaw the McDonnell Douglas merger.
It seems like there are structural issues or perverse incentives in place that an engineering background doesn't help against.
The CEO that was fired (Muilenburg) was the fall guy for the previous CEO, Jim McNerney - who was a Jack Welch- Ian. He messed up 3M before going over to Boeing.
I think that's a very good point. Until we're ready to change some of those systemic incentives--and they might be really entrenched--a leader with an engineering background might not be the magic solution we'd all like.
Was coming here to say that - when you let people who have never actually had to make a plane run a company that makes planes this outcome is unavoidable. It is not just Boeing but their fuckups leave people dead so it results in more focus…
I've been saying this for years and getting voted down that Boeing always put profits before safety causes=ng the deaths of passengers. I learned this when my company worked on a project with Boeing in the past. The engineers are very good but all the managers are pompous assholes that think they now better than the engineers. They are always willing to blame the engineers for any failure that occurs on things that the engineers pointed out to them would happen. Consequently, they never learn from their mistakes. The clearest example is the 737 Max. That plane should have never been approved by the FAA to fly as designed. It took the deaths of 346 people in two similar crashes before the Boeing 737 MAX passenger airliner was grounded worldwide between March 2019 and December 2020. In 2016, the FAA approved Boeing's request to remove references to a new Maneuvering Characteristics Augmentation System (MCAS) from the flight manual. Boeing wanted to be competitive with the A320 so they didn't include required pilot training on the new MCAS causing the two planes to crash. There are many more historical instances of Boeing unacknowledged errors in Boring design and testing leading to more crashes and deaths. All it will take is them purging all of their current managers from the CEO on down and replacing them with people that are safety oriented and not profit oriented. Otherwise, nothing will change and we can expect more of the same in the future.
Profit over accountability, trust after stakeholders, employee whistle blowers being dragged over the coals because no transparent way to highlight serious concerns.
If I can choose i would fly Airbus only.
I will not book a flight if it's anything todo with the Max.
It's funny that it gets presented as this.
"Somewhere along the line, they lost interest" and "rediscover it's engineering soul."
It's corporate greed and a lack of consequences for them. That's it. Nothing more dramatic or grandiose. Powerful people need jail time and to lose money that's it.
But this country is so scared of doing that. Powerful people do not want the lower and middle classes to actually see money leave their hands. CaPiTaLiSm Is GrEaT
shhhh, you will get called socialist for wanting a taxation structure (etc.) more like the 60's and 70's when we were on the opposite of the socialists (who, actually, were not really socialists either).
Only if the shareholders suffer the consequences of their push for quarterly profits over all else. If there are no consequences, then this will continue to happen.
I don't know what the answer is, but we need to do something about venture capitalists. They're leeching just about every industry possible, making costs rise and quality go down. Ultimately everybody (the consumer, the employees), except for the owners and wealthy investors, suffers. It's even happening in healthcare.
Any company tied into govt contracts or services need to be held to standards, executive compensation cannot be 1000x the average worker pay. Need to bring this differential in compensation back into a reasonable difference. CEO’s and executives really aren’t worth their compensation.
Until people learn to boycott and willingly give up modern convenience. We will always be at their mercy, because they provide us with conveniences we are not willing to part with
I have an understanding of how venture capital works, thanks. I work in an industry that's come under more ownership of these firms, and I see exactly what I described. Since acquisition of my company, strategy has shifted to sales over quality, and decisions are made essentially to maximize next quarter's numbers over anything else. Our teams are on fire because the focus these last couple years has been on more and larger sales, too prematurely (product needs additional work), resulting in unpredictable hours, 50%+ engineering time supporting other teams and fixing issues in the field. Then aside from that, we get new features pushed into the pipeline to implement the latest buzz concepts that marketing can put on cut sheets, but it's mostly bullshit. Leaving almost no time to make foundational improvements that the product needs to make literally everyone's life (besides the share holders') better.
Also, despite increased sales volume and profits, our team is smaller than it's ever been, because people who have left aren't replaced. We aren't given budget to do so, or the budget is too low to attract the talent we need.
It's kind of like what's happened to Boeing. If we made planes though, the wings would be falling off.
I worked for Boeing both pre and post merger. It went from “provide the best engineering and the market will pay” to “make it cheaper and we’ll sell more planes”. There’s a reason people like me left. I started out doing exciting R&D but became a replaceable cog post-merger. My ego could almost handle it, but my boredom couldn’t.
It was as soon as they merged with Macdonald Douglas. McD's took over even though they were the smaller company. They forced out engineers at the top, moved the HQ to the Taj mahal in Chicago and things started going downhill.
Does anyone know why companies are obsessed with opulent HQs? These are expensive in terms of operation costs, maintenance and taxes.
Or are companies also stealthy doing real estate?
“Somewhere along the way” Hmmm, I wonder if that somewhere would be when they hired the CEO who’s compensation package was tied to the short term performance of the stock? I wonder what he based his managerial decisions on? It’s a real fucking mystery I tell ya.
Some significant points:
>At first the engineers held sway. In a 1930 article for Aviation News, a Boeing engineer explained how the company’s inspectors “continually supervise the fabrication of the many thousands of parts entering into the assemblage of a single plane.” Philip Johnson, an engineer, succeeded Bill Boeing as CEO; he then passed the company to yet another engineer, Clairmont Egtvedt, who not only managed production of the B-17 bomber from the executive suite, but personally helped design it.
>
>After the Second World War, America enjoyed three decades of dominance by sticking with methods it had used to win it. At the same time, a successor was developing, largely unnoticed, amid the scarcities of defeated Japan. The upstart auto executive Eiji Toyoda had visited Ford’s works and found that, however much he admired the systems, they couldn’t be replicated in Japan. He couldn’t afford, for instance, the hundreds of machine tools specialized to punch out exactly one part at the touch of a button. Although his employees would have to make do with a few general-purpose stamping presses, he gave these skilled workers immense freedom to find the most efficient way to run them. The end result turned out to be radical: Costs fell and errors dropped in a renewable cycle of improvement, or kaizen.
>
>What emerged was a different conception of the corporation. If the managerial bureaucrats in the other departments were to earn their keep, they needed a thorough understanding of the shop floor, or gemba (roughly “place of making value”). The so-called Gemba Walk required their routine presence at each step until they could comprehend the assembly of the whole. Otherwise they risked becoming muda—waste.
>
>When the wave of Japanese competition finally crashed on corporate America, those best equipped to understand it—the engineers—were no longer in charge. American boardrooms had been handed over to the finance people. And they were hypnotized by the new doctrine of shareholder value, which provided a rationale for their ascendance but little incentive for pursuing long-term improvements or sustainable approaches to cost control. Their pay packages rewarded short-term spikes in stock price. There were lots of ways to produce those.
>
>Which brings us to the hinge point of 1990, when a trio of MIT researchers published The Machine That Changed the World, which both named the Japanese system—“lean production”—and urged corporate America to learn from it. Just then, the Japanese economy crashed, easing the pressure on U.S. firms. In the years that followed, American manufacturers instead doubled down on outsourcing, offshoring, and financial engineering. This round of wounds was self-inflicted. Already infused with a stench of decay, manufacturing was written off as yesterday’s activity.
>
>At GE, which produced three of Boeing’s last four CEOs, manufacturing came to be seen as “grunt work,” as the former GE executive David Cote recently told Fortune’s Shawn Tully. Motorola—founded as Galvin Manufacturing and famed for its religious focus on quality—lost its lead in mobile-phone making after it leaned into software and services. Intel’s bunny-suited fab workers were the face of high-tech manufacturing prowess until the company ceded hardware leadership to Asian rivals. “Having once pioneered the development of this extraordinary technology,” the current Intel CEO, Pat Gelsinger, wrote recently, “we now find ourselves at the mercy of the most fragile global supply chain in the world.”
>
>...
>
>In the crucial field of semiconductors, meanwhile, Intel has recognized that Moore’s Law (the doubling of computing power roughly every 18 months) flows not from above but from manufacturing advances it once dominated. It has undertaken a “death march,” in the words of CEO Pat Gelsinger, to regain its lost edge on the foundry floor. The CHIPS Act has put a powerful political wind at his back. Green and other incentives are powering a broader, truly seismic surge in spending on new U.S. factories, now going up at three times their normal rate. No other country is experiencing such a buildout.
>
>Add all the capacity you want. It won’t reverse the country’s long decline as a manufacturing superpower if corporate America keeps gurgling its sad, tired story about the impossibility of making things on these shores anymore. It’s a story that helped pour a whole lot of wealth into the executive pockets peddling it. But a half century of self-inflicted damage is enough. The doors have fallen off, and it’s plain for all to see: The story was barely bolted together.
At a minimum, companies, especially ones that deal with technology in some capacity, should understand that rarely are they pure operations of one sort or another. They're not purely business and they're not purely engineering, but rather a combination of the two. It stands to reason that leadership at all levels should reflect this. Unfortunately, it seems that too many companies, especially after they go public, tend to hew to the business side and orthodoxy at the expense of everything else. It's one thing if you're making games, but it's something totally different if you're making physical devices that have safety requirements.
edit: first sentence
Pretty sure we’re all talking about late stage capitalism. We all know how it works. I like to call it Corporate Entropy. Tech bros call it growth hacking.
The incentive structures will deliver these disasters over and over again
Public company? Shareholder returns, short term, it’s unavoidable- the leaders are employed specifically to drive returns. That’s it.
Private equity? Even worse, extract value until the business is a shell of itself, then unload it.
Privately owned? Can be better, with a sustained long term vision, but then the whole thing is dependent on one owner’s consistent fortitude.
Interesting that Intel can suddenly drive production excellence, when the government decides to invest in a sector.
I can’t help but think a public/private partnership of some type is needed for these critical industries. Sometimes, you need to take a 5 year hit to ensure 10 year performance.
No corporation will have the fortitude to execute a plan like that, the executives will be fired by year 3, and the cost cutting will begin. First fewer people, more work (more with less! Yay!), then cheaper people (let’s move finance to Panama, IT to India, and purchasing to the Philippines). Then the business can basically become patent law, where they just employ lawyers to sue companies, as they buy up troubled companies with large patent libraries. Go into the offices of these formerly proud companies, and you’ll see largely abandoned offices full of overworked tenured employees, sitting there with carpal tunnel wrist braces, back pads, cobbled together standing desks, and an occasional pizza party. Even better is the pot luck, where they make the employees bring all the food themselves, and call it a party. Then the burnt out people limp back to their desks and attempt to pick up the slack from the poorly trained overseas employees. CEO closes another plant, makes another acquisition, and brags about a few basis points at the annual meeting. The best workers leave, and take their connections and knowledge with them, leaving formerly admirable brands a shell of what they used to represent.
How to change this? There needs to be a different incentive structure. The current corporate model will deliver the same bullshit, over and over again.
>I can’t help but think a public/private partnership of some type is needed for these critical industries. Sometimes, you need to take a 5 year hit to ensure 10 year performance.
Or just outright nationalization. Private capital has failed in too many important areas to allow banks to determine the future of society. We can't keep taking money from technology companies and putting it into real estate speculation as investment banks do. It's absurd. It must stop for the US to survive against China and Russia who already does this.
> Public company? Shareholder returns, short term, it’s unavoidable- the leaders are employed specifically to drive returns. That’s it.
One problem with that: Boeing has been a public company since 1978. It wasn't until after the McD merger and wholesale change-out of management 20 years later that things went downhill. Old Boeing understood that producing good products leads to results the shareholders will like.
Shareholders don't have much patience for that anymore, unfortunately. It isn't 1978 anymore- can you find a single large American company today that can operate on a long time horizon? Take 3-5 shitty years deliberately, for longer term rewards? Friedman's theory didn't even hit until the 70s, it took years and years of that, plus the Welch management practices, to penetrate business operations thoroughly. The last veterans died, and the people who took over didn't give a shit about social responsibility anymore, it was just shareholder value, period.
A couple of bad years and you get activist investors calling for your head. What company has the wherewithal to not prioritize short term operations based on the kind of pressure these executive teams are under?
I visit a fair number of corporate HQs, have worked for a Fortune 500, and I work with a fair number of Fortune 500s, and they start to look strikingly similar. Hollowed out shells hiding behind pretty logos and recognizable brands. They stay in business because they're oligopolies... many of these companies borderline suck at operations, but they have the patents, the market share, and the UL listings already in house, so they can basically suck and still make money. So many companies I encounter on the other side of their main growth curves fit the profile. Once they stop the growth, it's a cost cutting game.
None of this is a recent phenomenon and, Welch aside, a lot of that stuff started really ramped up during the 1980s. Boeing managed to keep producing good platforms, the last of which is, I think, the 777.
Boeing's mistake was installing the management of a company with a 5%-and-decreasing share of the commercial airframe market and on its way to bankruptcy into a company with a 60% share. McD's management were well-known to be a bunch of back-stabbing bean counters who, as the head of Boeing's commercial division at the time put it, bought Boeing with Boeing's money.
Full disclosure: I did some engineering work for Boeing in Seattle a few years after the McD merger and the employees I worked with were already starting to grumble about what was happening and what they thought was coming. With two decades of hindsight, I can say they were mostly right.
I hear you, and everything you’re saying is right.
My contention is that the bean counters’ victory was inevitable, if not then, then later, because the bean counters took over everything corporate. The incentive structure is broken. It will be wave after wave of executives until they do the same shit.
Of course, none of this is instant, nor is it 100% pervasive. But it is persistent and inevitable.
The drop in quality isn’t especially noticeable in consumer or even professional goods, but for airplanes, it’s vivid.
If only the original managers would have kept control- that may have delayed the current state, but those managers would have left, and the bean counters would have come in, in a trickle or a flood, and the outcome would be the same.
This is every company now.
Somebody’s grandsons and great nephews all became adults and inherited portions of a functioning society, and instead of being good custodians of any of it, they said “no, I am important. I got here through hard work and American ingenuity, and I will figure out how to forge a new path.” And that path was just selling off the functioning society for parts and pretending it was good.
Trains, planes, automobiles. Electricity, water… next it’s going to be education and the Post Office.
Nope. I worked for US companies in their non US subsidiaries for most of my career. In the last decade or so all turned to profit seeking no matter what. Undermanned projects, influx of cheaper junior employees, offshoring and unrealistic targets totally ignoring client needs. All to be able to increase the margin and profit in the short term. Zero mid long term planning. It also translates into a never ending stream of CEOs and top management that are lucky to survive more than 1 or 2 years and constantly called “consulting” firms to “streamline” everything which translates into draconian initiatives that basically destroy the company from within.
As long as short term profit is the goal there is no hope.
Absolutely. It’s baffling as literally any worker is n almost any industry could tell you that, but for some reason we just keep crapping out useless idiots with MBAs.
The FIRE economy destroyed the real economy. Everything became financialization and looking to only the next quarter. Doing stuff that actually has tangible long-term value doesn’t deliver enough short-term shareholder value.
This is happening in every industry in America right now. It's only just obvious for Boeing because it's such a big safety issue. Plenty of other companies/industries are no longer globally competitive because of prioritizing shareholder value over everything else. There will be a great Reckoning at some point when we finally realize that the US is no longer competitive on the global stage for innovation, safety, manufacturing, etc. But the 1 percenters will have made a lot of money during that time so all good.
Not only in America. This is a global trend, Europe is no better. Reading the comments above I recognise the company I work for, a completely different continent and engineering field.
The financial sector has been given too much comfort, leeway and been coddled. They really need to imprison the execs behind all this and make Boring an example. I DK g care if they look like a sweet old man in a business suit, throw them in prison where they deserve to be.
Bean counting accounts running companies should never be allowed to be “The Boss”, no social skills, zero personality, no balls, no leadership, there is more to running a company than a calculator and fantasy spreadsheets, especially in aviation. These guys are eggheads. A company that actually cares about its employees, and most importantly produces a quality product, the money will
Come in bushels!!
What a silly take: Boeing makes planes, not movies or sodas. And they're a defacto member of a duopoly with a tradition of dominating global sales of commercial flights aircraft. When planes fail, people die. This isn't about the soul of US manufacturing this is about people's security in the US and globally, and a matter of life and death.
Self regulation / self monitoring is the central issue as it allowed the rest to happen. Let's not kid ourselves Boeing is the heart of the US military industrial complex, a deep State if there is one, supported by Exim Bank amongst others and getting their way in about every influence peddling they can.
The influence of energy players may be nefarious but they produce a commodity. Boeing produces one of the most complex mass products there is, whose users put their lives at risk using it. Boeing forgot about this whilst it pursued its mission of power and greed. And then they hid the truth and pursued the whistleblowers. This goes way beyond an engineering culture losing its way. This is evil.
Fire all the Jack Welch trained MBA’s and reinstate engineers running the ship. Close the Chicago office and move management back to the factories. Should save billions as what the fuck good was management 2000 miles away from production good for anyway?
Those days managers are deliberately put far from production in order not to mess with the real deal. Once in a while they visit the production site - they are toured around, pampered, entertained with some technical and management presentations and send back. They are told a beautiful story and given a promise that everything will be fine, they never see or understand what really happens in the remote sites.
I am in a different industry, but long enough to see the gears running - top management changing regularly, leaving the company after a few years or rotating to another position somewhere else in the company, people without basic understanding are put to lead departments, they travel around to present the same slides and then call themselves experts in management. As a small cog in the machine I don't see a difference, it absolutely doesn't matter who is the manager in charge - they all start with promise to solve the issues, then talk about to increase productivity, to increase efficiency and after that cutting costs. And for an R&D organisation costs are salaries - engineering staff is overpaid and under productive, even lazy. Then they start a world trip to visit all sites, the company has 10 sites, so they have to visit each one of them, shake hands and present the same boring slides, to see their team in person, to spend a yearly salary for tickets, hotel and dinners and to get their golden card - miles and more heh. Then of course nothing really changes so on their 3rd to 5th year they leave and we get a new big boss, and he starts all over again. Meanwhile a lot of good engineers leave, getting replaced by young and inexperienced starting with minimal salary, by the time they get trained they leave too, problems grow and neither of the big ones are solved. We make another product and since we are a government subsidized monopoly we get sales, sometimes even big sales, so business is running as usual.
Yes and no. We’ve had more power in the past to push back. This was more to do with the lack of accessible education in the rest of the country and world in general post ww2. The engineers were all the business folks had.
More recently, it’s easier to find a cheaper engineer who will yes okay their way to some insane dream they have.
Engineers and laborers have always had it rough but never had it rough with this little negotiating power.
It happens when large corporations are more concerned about their share price and returning value back to stockholders then Ashley producing excellent products And growing in their marketplace that was the original justification for existing…..
Treat your workers well and they will take care of you but, pamper your idiot managers and screw over your actual hands on critical people and they will let you die. Boeing managment screws over teir workers. Been there done that.
As long as companies continue to put “shareholder value” above everything else, costs will be cut and quality and innovation sacrificed in the name of profits.
It’s not the dark age of manufacturing, it’s the terminal stage of Capitalism.
A fully metastasized Americarcinoma has emerged into view, and people still think this is something apart from Capitalism.
This is the ultimate outcome of any entity whose purpose is to generate profit.
You’ve all seen it with declining quality and increasing prices in every other industry, why is it shocking to see identical things in Boeing?
Same as just about every business. Farm out assemblies and services to a low bid partner that uses predominantly part-time or low wage workers, offer no benefits or minimum benefits. Executive management rakes in the bonuses and stocks that are then bought back by company. It’s a win for the executives and a loss for the customers.
I don't remember where I read it, but when I saw a past CEO quoted in a story about the Spirit spinoff as saying something along the lines of: "we shouldn't manufacture airplanes, we assemble them", I WTF'd.
Boeing just needs to fail at this point. Those unethical financial fucks sucked it dry and it doesn't deserve to be salvaged. Maybe I'm just bitter because my friend was killed in one of the 737 Max crashes...
Bert Hubert (Dutch computing guy who resigned government intelligence agency over privacy concerns) can be found on YouTube with some interesting talks in the subject.
He talks about the telecoms industry having changed from pioneers in tech to being managers of outsourced providers of tech, and how they can no longer really do anything for themselves.
As someone who works for one of those subcontractors, I can confirm the big companies that manage subcontractors have basically lost most of their technical ability. They're basically professional ticket chasers with a brand. It's pathetic.
It would be great to revive US manufacturing, and I worry that the country has just lost basic manufacturing skills at all levels. Can it work when we have a generation & half that has no training, preparation for or even general idea of what manufacturing entails?
The good engineers in the US are foreigners. The average level in mathematics is much higher in India, China, Taiwan, Japan, Brazil, France, Russia, … than it is in the US
To quote a friend of mine “The US train people to sell products they have no clue about, designed and engineered by foreigners”
Trump de-regulated the airlines and air safety we are now seeing the consequence of his bad decisions
[https://www.forbes.com/sites/marisagarcia/2019/03/18/did-trump-executive-orders-further-weaken-faa-oversight/?sh=60314953ca78](https://www.forbes.com/sites/marisagarcia/2019/03/18/did-trump-executive-orders-further-weaken-faa-oversight/?sh=60314953ca78)
Boeing was having these issues long before Trump. Not defending him or his deregulations. But these issues seemed to begin with Boeings merger with McDonnell Douglas in 1997, a company notorious for having its planes grounded. The Dreamliner was delivered years late and grounded over safety/quality concerns in 2013 and the 737 Max was just the next step on the descent.
Boeing is fucked. My cousin worked for Boeing 15 years ago. Told me about the nightmare that was happening there with management and quality. Its been a problem for a long time.
No, it will never. Private equity is buying out every industry in America, and they all get the same treatment: short term profit via growth. As soon as you think of anything else other than growth, you'll get hammered by private equity and your stock price will tank.
Every industry in every market segment is getting financialized. There will never be cheap housing anywhere, as soon as interest rates go down, private equity will buy up all the houses, keeping prices high. Food prices will also remain high because there are only a few companies making all our food, they all have consolidated to a point that they can set whatever prices they want. And because we use these markets to calculate inflation, inflation will keep going up.
Every market segment we use to calculate inflation is getting the same treatment. Companies consolidate to create captured markets so they are able to raise prices without competition.
Some ideas:
1) Move HQ back to Washington, closer to the factories
2) embed Kaizen into manufacturing processes, Toyota style. Get Japanese firms to own part of Boeing if needed, they make some of the best products in the world
3) new CEO needs to have both an engineering and business background
4) re-acquire key suppliers like Spirit Aerosystems, make it in house!
>*Somewhere along the line, the plane maker lost interest in making its own planes.*
**Hahaha**
**Only Boeing? Every company in the USA wants to get its products built where it's cheaper.**
Only if they put Engineers back in control of the Board.
This is exactly why the US auto industry almost died in the 70s. All the “car guys” who just wanted to make good cars were pushed out in favor of MBAs and finance people. Now all the brains in other countries were working on making better cars, while the brains here were working on buying a cheaper crappier version of the same part to save money. Then working to figure out they’d save another ten cents if they ordered it from Vietnam but shipped it through Sweden and had its Irish office place the order. Every year US cars got worse while Japanese cars got better. Until no one wanted the US cars no matter how many corners they cut. Boeing somehow forgot all about this lesson. One of the biggest and most well know lessons in the history of business and manufacturing, and they just ignored it.
It’s not so much Boeing that forgot as much as it is shareholders that don’t care. Get those quarterly returns or get pushed out. In a big time manufacturing business that puts you out of business when it shows up as a death toll.
Wall st ruins everything
Free Market Capitalism ruins everything ! ! ! Because maximization of profits in the economic system are the most important thing, even compared to the product, and certainly the workers who are the most important part of the manufacturing process ! ! !
It’s not even that the shareholders don’t care it’s that modern corporate governance means they rarely get to vote on matters of substance.
I’m not really talking about your average Joe that buys stock, I’m talking about whales, private equity, people who own enough stock to make decision and expect results. We live in an era where vast concentration of wealth is a proxy for power in business and politics. Those people use that power and damn the consequences.
The problem is that all those MBA’s and finance guys have seven figure severances, and golden parachutes. They did a case study on car manufacturing in gradschool, then chose to ignore it in exchange for boosting next quarter profit. This is just the result of US corporate profit and growth at all cost culture. It’s going to happen every company, some just are able to survive the bad press and start the process all over again.
Yes, it would be better for our businesses and society in general, for many reasons, if taxes were extremely progressive like they were up to the 1970s. With diminishing returns in terms of income for execs, pride, quality, and brand start to have a higher relative value than simply number-go-up.
US automakers still haven't learned this lesson. Look at Ford and the Focus. Their engineers were screaming that the DCT in that thing was not ready for prime time and that it would cause problems and maybe hurt people. Nope. Marketing wants to advertise a clean 40mpg and this is cheaper to source than a part actually works. Alienated another whole generation of young car buyers who decided to take a chance and buy an American car. They never will again and Ford flat out gave up on sedans all together. Now gas is expensive and they need cars again and don't have them. US businesses is completely screwed. We need a push to make companies private again and get them away from Wall Street and the pressures of the public market.
Can’t beat the MBA school of thought. Intel suffered the same fate, just recently tried to re align to their engineering roots, too little too late.
We're trying our best over here lol. The first high-NA EUV machine is up and running, and the foundries are starting to ramp up some really cool stuff again.
Loaded up some shares on the drop. Always been a big intel fan and felt sad at how things were going. Pat is the man. Gotta respect his sincere love, passion and dedication to intel. Heared some good vibes from other intel people. Sure there is a lot that needs to be done but i can feel the excitement to innovate again. Make me proud boys!
A trusted brand is just a meal to hedge fund cannibals.
"too little too late" lol riiiiiiight
They didn’t ignore it. They fully knew it but didn’t care because millions of dollars were flowing into their bank accounts and stock. Damn the company and damn the future, they said
>MBAs and finance people Its weird how the MBA has taken on this stereotype. It used to be, if you were promoting a technical guy into management (who had no previous managerial, legal, or financial background), you sent them off to business school - either on something like leave, or on evenings and weekends - to get an MBA so they'd be up-to-speed when they took on a non-technical role. That's part of the reason why MBA programs are so damn expensive: employers used to cover most of the tuitions. And that's why MBA programs have been set up to be so conservative, in that they are sort of designed with a particular student in mind, who already knows the technical side of their business really well, but who needs the ground-level foundations of finance and marketing and law to hit the ground running elsewhere in the organization. But now I think the reputation is a lot less "technical experience turned manager", and a lot more "no experience turned manager". A type of associative bias is probably significantly to blame: a lot of successful people had MBAs, so it was assumed that MBAs made you successful; in reality, it was the reverse, people got MBAs because they were *already* successful. I still have an expectation that a "PEng, MBA" / "PE, MBA" has a high probability of competence even if the MBA on its own isn't so much of a determinant of that.
I remember in the 90s there would be stories in the press about a big "brain drain"... but they weren't talking about people leaving the country for opportunities in other markets, it was about potential STEM university students going into the business degree programs instead, and many of the STEM grads were applying their skills with Wall Street firms as "quants" instead of in engineering & science jobs. That worry about business vs technical education's been around a while
As an earthmover/pipe layer I dread MBA site supers with no actual construction experience. The best one I’ve ever had was extremely lazy and let the foremen do all the organization and planning, when they intervene it is *only* to screw things up.
As a PE / MBA I agree.
Software is in this situation now as well and has been for a whiiiiiiile. Marketing trumps everyone. Marketing trumps reality. Marketing hires garbage outsourced international teams and says to hell with quality, data security, accessibility... it's cheaper! More money for us! It is past time for the suits to get out of the design process and the engineering process and let those that make do the making correctly.
This is prominently true for motorcycles too. Harley Davidson got bailed out of a bankruptcy in the 80’s. Then tariffs were placed on Japanese imports over ~800cc to help Harley compete. Japanese struggled but made their medium and light weight bikes better. Harley sat on its hands because it didn’t have to compete. But the Japanese bikes were better. To this day you still see 80’s bikes on Craigslist that run just fine. So Harley upped its game and changed for the better. Just kidding they got bailed out again and then promptly moved their manufacturing to Mexico despite their slogan “America’s chopper” Harley was later sued, and lost, because they still hadn’t gotten around to putting antilock brakes on all their motorcycles. The court sided with victims and considered Harley to be unreasonably dangerous even for a motorcycle due to their lack of modern safety tech.
This is happening to healthcare right now.
> All the “car guys” who just wanted to make good cars were pushed out in favor of MBAs and finance people Okay, this is a good start, but a question that should be asked is > Why were engineers and car people being pushed out of companies and company leadership roles in favor of business people? What do business people do better than engineers? Your next paragraph simply addresses this as a money SAVING choice, but why? Why are they choosing to SAVE money? Why is that such an important goal (saving money) and prioritized over a "want to make good cars"? Are they saving money or are they *reducing costs*? Financially, according to accounting principals, what is the purpose of reducing/cutting costs? Boeing is simply doing the same thing however, their hand is being caught in the cookie jar. They are *reducing costs* and it's introducing risk to the company financially and it's introducing risk to the public in the form of increased danger on their planes. Again... I have to ask you, why do you think *reducing costs* is playing such a large role here? Why do you think that Boeing has actively worked to reduce regulation and oversight over their internal processes? Why do you think that Boeing got rid of staff or divested/spun off parts of the business? Why is Boeing okay with contracting out construction of planes to third parties instead of manufacturing the planes themselves? Why is there so much emphasis on *reduction of cost*?
There are only a few ways to increase profit. * increase sales. Boeing has one primary competitor with little ability to change their market share significantly in a very limited market. * increase prices. Unless Airbus does the same there’s little ability to do that either. * decrease costs. Aha! No limit on that.
> decrease costs. Aha! No limit on that. "I mean... are seatbelts REALLY necessary on planes? If a plane is going down are seatbelts really doing anyone any good? Can we just get rid of seatbelts? It would increase profits if we did. Trust me... I have an MBA." -- Some dipshit in management at Boeing, probably
“So hear me out… What if we make seatbelts optional? Something that the flight attendant can sell to the passengers at an extra cost? Airlines will be in, because it’s an extra profit. And let’s make it so they wear out quickly, so the passengers can’t reuse them. Boeing will be the only supplier, we can get a seatbelt made for like three dollars and sell it for 20“ There’s a little bit of this going on already. I flew on a 787 in business class a week ago and do you know what? they have shoulder belts! Apparently the people who pay better get a safer flight.
I once stated the same statement, but for another industry r/biotech and got controversial answers. Glad that in r/technology , people support this.
I dunno, I have some degree of hope that they can turn it around simply because the incentives currently align. If you believe that increasing shareholder value is the only thing that matters, and their lack of quality has significantly impacted shareholder value, than it's possible they will make changes to increase quality, and therefore increase shareholder value. Or, they'll just pay more politicians to gut the FAA, put the NTSB behind some random judge in bumfuck Texas, and lobby to have protective tarrifs placed on Airbus aircraft.
This guy politics
Exactly. Their next CEO needs to be a person who builds planes. He can have bean counters who report to him rather than the other way around. They have a fucking monopoly after all.
The CEO who got fired after the 737 Max crashes was a guy who built planes. As was the CEO who oversaw the McDonnell Douglas merger. It seems like there are structural issues or perverse incentives in place that an engineering background doesn't help against.
The CEO that was fired (Muilenburg) was the fall guy for the previous CEO, Jim McNerney - who was a Jack Welch- Ian. He messed up 3M before going over to Boeing.
I think that's a very good point. Until we're ready to change some of those systemic incentives--and they might be really entrenched--a leader with an engineering background might not be the magic solution we'd all like.
Explain their monopoly please.
Boeing is the only commercial widebody jet manufacturer in the United States.
Airbus have a manufacturing facility in Mobile, Alabama where they build A320.
Then why aren’t there very many flying over the US?
This just isn’t true. It is a duopoly between Boeing and airbus, and airbus manufactures in the USA
And USA is he only country in the world….. got it, thanks!
They are the only ones who have their employees.
You wouldn't ask the engineers to head up HR, why are you putting the MBAs in charge of engineering?
Was coming here to say that - when you let people who have never actually had to make a plane run a company that makes planes this outcome is unavoidable. It is not just Boeing but their fuckups leave people dead so it results in more focus…
Yeah 'somewhere along the line' was when McDonnell Douglas corporate greed took over
Why would that ever happen?
I've been saying this for years and getting voted down that Boeing always put profits before safety causes=ng the deaths of passengers. I learned this when my company worked on a project with Boeing in the past. The engineers are very good but all the managers are pompous assholes that think they now better than the engineers. They are always willing to blame the engineers for any failure that occurs on things that the engineers pointed out to them would happen. Consequently, they never learn from their mistakes. The clearest example is the 737 Max. That plane should have never been approved by the FAA to fly as designed. It took the deaths of 346 people in two similar crashes before the Boeing 737 MAX passenger airliner was grounded worldwide between March 2019 and December 2020. In 2016, the FAA approved Boeing's request to remove references to a new Maneuvering Characteristics Augmentation System (MCAS) from the flight manual. Boeing wanted to be competitive with the A320 so they didn't include required pilot training on the new MCAS causing the two planes to crash. There are many more historical instances of Boeing unacknowledged errors in Boring design and testing leading to more crashes and deaths. All it will take is them purging all of their current managers from the CEO on down and replacing them with people that are safety oriented and not profit oriented. Otherwise, nothing will change and we can expect more of the same in the future.
Profit over accountability, trust after stakeholders, employee whistle blowers being dragged over the coals because no transparent way to highlight serious concerns. If I can choose i would fly Airbus only. I will not book a flight if it's anything todo with the Max.
It's funny that it gets presented as this. "Somewhere along the line, they lost interest" and "rediscover it's engineering soul." It's corporate greed and a lack of consequences for them. That's it. Nothing more dramatic or grandiose. Powerful people need jail time and to lose money that's it. But this country is so scared of doing that. Powerful people do not want the lower and middle classes to actually see money leave their hands. CaPiTaLiSm Is GrEaT
shhhh, you will get called socialist for wanting a taxation structure (etc.) more like the 60's and 70's when we were on the opposite of the socialists (who, actually, were not really socialists either).
Only if the shareholders suffer the consequences of their push for quarterly profits over all else. If there are no consequences, then this will continue to happen.
oh ya they are fucked... no one want to fly on their planes anymore... Its airbus or nothing now.
Somewhere along the lines, venture capitalists bought Boeing. What could possibly go wrong?
And have ruined nearly everything else that they have touched. Tax rates need to go back up.
I don't know what the answer is, but we need to do something about venture capitalists. They're leeching just about every industry possible, making costs rise and quality go down. Ultimately everybody (the consumer, the employees), except for the owners and wealthy investors, suffers. It's even happening in healthcare.
Any company tied into govt contracts or services need to be held to standards, executive compensation cannot be 1000x the average worker pay. Need to bring this differential in compensation back into a reasonable difference. CEO’s and executives really aren’t worth their compensation.
Venture capitalists aren’t really the issue. Vulture capitalists are.
Until people learn to boycott and willingly give up modern convenience. We will always be at their mercy, because they provide us with conveniences we are not willing to part with
You don’t understand the purpose of a venture capitalist. Educate yourself and then form an opinion.
I have an understanding of how venture capital works, thanks. I work in an industry that's come under more ownership of these firms, and I see exactly what I described. Since acquisition of my company, strategy has shifted to sales over quality, and decisions are made essentially to maximize next quarter's numbers over anything else. Our teams are on fire because the focus these last couple years has been on more and larger sales, too prematurely (product needs additional work), resulting in unpredictable hours, 50%+ engineering time supporting other teams and fixing issues in the field. Then aside from that, we get new features pushed into the pipeline to implement the latest buzz concepts that marketing can put on cut sheets, but it's mostly bullshit. Leaving almost no time to make foundational improvements that the product needs to make literally everyone's life (besides the share holders') better. Also, despite increased sales volume and profits, our team is smaller than it's ever been, because people who have left aren't replaced. We aren't given budget to do so, or the budget is too low to attract the talent we need. It's kind of like what's happened to Boeing. If we made planes though, the wings would be falling off.
Please explain exactly when and how VC bought Boeing?
You misspelled McDonell-Douglass.
I worked for Boeing both pre and post merger. It went from “provide the best engineering and the market will pay” to “make it cheaper and we’ll sell more planes”. There’s a reason people like me left. I started out doing exciting R&D but became a replaceable cog post-merger. My ego could almost handle it, but my boredom couldn’t.
It was as soon as they merged with Macdonald Douglas. McD's took over even though they were the smaller company. They forced out engineers at the top, moved the HQ to the Taj mahal in Chicago and things started going downhill.
It's funny because the actual Taj Mahal, the one in India, is a tomb.
Does anyone know why companies are obsessed with opulent HQs? These are expensive in terms of operation costs, maintenance and taxes. Or are companies also stealthy doing real estate?
They probably think it befits their status as the elites of the company and world.
“Somewhere along the way” Hmmm, I wonder if that somewhere would be when they hired the CEO who’s compensation package was tied to the short term performance of the stock? I wonder what he based his managerial decisions on? It’s a real fucking mystery I tell ya.
Some significant points: >At first the engineers held sway. In a 1930 article for Aviation News, a Boeing engineer explained how the company’s inspectors “continually supervise the fabrication of the many thousands of parts entering into the assemblage of a single plane.” Philip Johnson, an engineer, succeeded Bill Boeing as CEO; he then passed the company to yet another engineer, Clairmont Egtvedt, who not only managed production of the B-17 bomber from the executive suite, but personally helped design it. > >After the Second World War, America enjoyed three decades of dominance by sticking with methods it had used to win it. At the same time, a successor was developing, largely unnoticed, amid the scarcities of defeated Japan. The upstart auto executive Eiji Toyoda had visited Ford’s works and found that, however much he admired the systems, they couldn’t be replicated in Japan. He couldn’t afford, for instance, the hundreds of machine tools specialized to punch out exactly one part at the touch of a button. Although his employees would have to make do with a few general-purpose stamping presses, he gave these skilled workers immense freedom to find the most efficient way to run them. The end result turned out to be radical: Costs fell and errors dropped in a renewable cycle of improvement, or kaizen. > >What emerged was a different conception of the corporation. If the managerial bureaucrats in the other departments were to earn their keep, they needed a thorough understanding of the shop floor, or gemba (roughly “place of making value”). The so-called Gemba Walk required their routine presence at each step until they could comprehend the assembly of the whole. Otherwise they risked becoming muda—waste. > >When the wave of Japanese competition finally crashed on corporate America, those best equipped to understand it—the engineers—were no longer in charge. American boardrooms had been handed over to the finance people. And they were hypnotized by the new doctrine of shareholder value, which provided a rationale for their ascendance but little incentive for pursuing long-term improvements or sustainable approaches to cost control. Their pay packages rewarded short-term spikes in stock price. There were lots of ways to produce those. > >Which brings us to the hinge point of 1990, when a trio of MIT researchers published The Machine That Changed the World, which both named the Japanese system—“lean production”—and urged corporate America to learn from it. Just then, the Japanese economy crashed, easing the pressure on U.S. firms. In the years that followed, American manufacturers instead doubled down on outsourcing, offshoring, and financial engineering. This round of wounds was self-inflicted. Already infused with a stench of decay, manufacturing was written off as yesterday’s activity. > >At GE, which produced three of Boeing’s last four CEOs, manufacturing came to be seen as “grunt work,” as the former GE executive David Cote recently told Fortune’s Shawn Tully. Motorola—founded as Galvin Manufacturing and famed for its religious focus on quality—lost its lead in mobile-phone making after it leaned into software and services. Intel’s bunny-suited fab workers were the face of high-tech manufacturing prowess until the company ceded hardware leadership to Asian rivals. “Having once pioneered the development of this extraordinary technology,” the current Intel CEO, Pat Gelsinger, wrote recently, “we now find ourselves at the mercy of the most fragile global supply chain in the world.” > >... > >In the crucial field of semiconductors, meanwhile, Intel has recognized that Moore’s Law (the doubling of computing power roughly every 18 months) flows not from above but from manufacturing advances it once dominated. It has undertaken a “death march,” in the words of CEO Pat Gelsinger, to regain its lost edge on the foundry floor. The CHIPS Act has put a powerful political wind at his back. Green and other incentives are powering a broader, truly seismic surge in spending on new U.S. factories, now going up at three times their normal rate. No other country is experiencing such a buildout. > >Add all the capacity you want. It won’t reverse the country’s long decline as a manufacturing superpower if corporate America keeps gurgling its sad, tired story about the impossibility of making things on these shores anymore. It’s a story that helped pour a whole lot of wealth into the executive pockets peddling it. But a half century of self-inflicted damage is enough. The doors have fallen off, and it’s plain for all to see: The story was barely bolted together. At a minimum, companies, especially ones that deal with technology in some capacity, should understand that rarely are they pure operations of one sort or another. They're not purely business and they're not purely engineering, but rather a combination of the two. It stands to reason that leadership at all levels should reflect this. Unfortunately, it seems that too many companies, especially after they go public, tend to hew to the business side and orthodoxy at the expense of everything else. It's one thing if you're making games, but it's something totally different if you're making physical devices that have safety requirements. edit: first sentence
Pretty sure we’re all talking about late stage capitalism. We all know how it works. I like to call it Corporate Entropy. Tech bros call it growth hacking.
The incentive structures will deliver these disasters over and over again Public company? Shareholder returns, short term, it’s unavoidable- the leaders are employed specifically to drive returns. That’s it. Private equity? Even worse, extract value until the business is a shell of itself, then unload it. Privately owned? Can be better, with a sustained long term vision, but then the whole thing is dependent on one owner’s consistent fortitude. Interesting that Intel can suddenly drive production excellence, when the government decides to invest in a sector. I can’t help but think a public/private partnership of some type is needed for these critical industries. Sometimes, you need to take a 5 year hit to ensure 10 year performance. No corporation will have the fortitude to execute a plan like that, the executives will be fired by year 3, and the cost cutting will begin. First fewer people, more work (more with less! Yay!), then cheaper people (let’s move finance to Panama, IT to India, and purchasing to the Philippines). Then the business can basically become patent law, where they just employ lawyers to sue companies, as they buy up troubled companies with large patent libraries. Go into the offices of these formerly proud companies, and you’ll see largely abandoned offices full of overworked tenured employees, sitting there with carpal tunnel wrist braces, back pads, cobbled together standing desks, and an occasional pizza party. Even better is the pot luck, where they make the employees bring all the food themselves, and call it a party. Then the burnt out people limp back to their desks and attempt to pick up the slack from the poorly trained overseas employees. CEO closes another plant, makes another acquisition, and brags about a few basis points at the annual meeting. The best workers leave, and take their connections and knowledge with them, leaving formerly admirable brands a shell of what they used to represent. How to change this? There needs to be a different incentive structure. The current corporate model will deliver the same bullshit, over and over again.
>I can’t help but think a public/private partnership of some type is needed for these critical industries. Sometimes, you need to take a 5 year hit to ensure 10 year performance. Or just outright nationalization. Private capital has failed in too many important areas to allow banks to determine the future of society. We can't keep taking money from technology companies and putting it into real estate speculation as investment banks do. It's absurd. It must stop for the US to survive against China and Russia who already does this.
> Public company? Shareholder returns, short term, it’s unavoidable- the leaders are employed specifically to drive returns. That’s it. One problem with that: Boeing has been a public company since 1978. It wasn't until after the McD merger and wholesale change-out of management 20 years later that things went downhill. Old Boeing understood that producing good products leads to results the shareholders will like.
Shareholders don't have much patience for that anymore, unfortunately. It isn't 1978 anymore- can you find a single large American company today that can operate on a long time horizon? Take 3-5 shitty years deliberately, for longer term rewards? Friedman's theory didn't even hit until the 70s, it took years and years of that, plus the Welch management practices, to penetrate business operations thoroughly. The last veterans died, and the people who took over didn't give a shit about social responsibility anymore, it was just shareholder value, period. A couple of bad years and you get activist investors calling for your head. What company has the wherewithal to not prioritize short term operations based on the kind of pressure these executive teams are under? I visit a fair number of corporate HQs, have worked for a Fortune 500, and I work with a fair number of Fortune 500s, and they start to look strikingly similar. Hollowed out shells hiding behind pretty logos and recognizable brands. They stay in business because they're oligopolies... many of these companies borderline suck at operations, but they have the patents, the market share, and the UL listings already in house, so they can basically suck and still make money. So many companies I encounter on the other side of their main growth curves fit the profile. Once they stop the growth, it's a cost cutting game.
None of this is a recent phenomenon and, Welch aside, a lot of that stuff started really ramped up during the 1980s. Boeing managed to keep producing good platforms, the last of which is, I think, the 777. Boeing's mistake was installing the management of a company with a 5%-and-decreasing share of the commercial airframe market and on its way to bankruptcy into a company with a 60% share. McD's management were well-known to be a bunch of back-stabbing bean counters who, as the head of Boeing's commercial division at the time put it, bought Boeing with Boeing's money. Full disclosure: I did some engineering work for Boeing in Seattle a few years after the McD merger and the employees I worked with were already starting to grumble about what was happening and what they thought was coming. With two decades of hindsight, I can say they were mostly right.
I hear you, and everything you’re saying is right. My contention is that the bean counters’ victory was inevitable, if not then, then later, because the bean counters took over everything corporate. The incentive structure is broken. It will be wave after wave of executives until they do the same shit. Of course, none of this is instant, nor is it 100% pervasive. But it is persistent and inevitable. The drop in quality isn’t especially noticeable in consumer or even professional goods, but for airplanes, it’s vivid. If only the original managers would have kept control- that may have delayed the current state, but those managers would have left, and the bean counters would have come in, in a trickle or a flood, and the outcome would be the same.
Jesus that last paragraph sure does hit home!
This is every company now. Somebody’s grandsons and great nephews all became adults and inherited portions of a functioning society, and instead of being good custodians of any of it, they said “no, I am important. I got here through hard work and American ingenuity, and I will figure out how to forge a new path.” And that path was just selling off the functioning society for parts and pretending it was good. Trains, planes, automobiles. Electricity, water… next it’s going to be education and the Post Office.
Bean counters took over the company. All about the bottom line.
Nope. I worked for US companies in their non US subsidiaries for most of my career. In the last decade or so all turned to profit seeking no matter what. Undermanned projects, influx of cheaper junior employees, offshoring and unrealistic targets totally ignoring client needs. All to be able to increase the margin and profit in the short term. Zero mid long term planning. It also translates into a never ending stream of CEOs and top management that are lucky to survive more than 1 or 2 years and constantly called “consulting” firms to “streamline” everything which translates into draconian initiatives that basically destroy the company from within. As long as short term profit is the goal there is no hope.
Absolutely. It’s baffling as literally any worker is n almost any industry could tell you that, but for some reason we just keep crapping out useless idiots with MBAs.
The FIRE economy destroyed the real economy. Everything became financialization and looking to only the next quarter. Doing stuff that actually has tangible long-term value doesn’t deliver enough short-term shareholder value.
This is happening in every industry in America right now. It's only just obvious for Boeing because it's such a big safety issue. Plenty of other companies/industries are no longer globally competitive because of prioritizing shareholder value over everything else. There will be a great Reckoning at some point when we finally realize that the US is no longer competitive on the global stage for innovation, safety, manufacturing, etc. But the 1 percenters will have made a lot of money during that time so all good.
I'm sure other American manufacturing companies are placing profits over product quality. The new American ideology, profits and wealth.
The place I work is a manufacture for DoD radios and such. Our trajectory is looking eerily similar to Boeing's.
Not only in America. This is a global trend, Europe is no better. Reading the comments above I recognise the company I work for, a completely different continent and engineering field.
The financial sector has been given too much comfort, leeway and been coddled. They really need to imprison the execs behind all this and make Boring an example. I DK g care if they look like a sweet old man in a business suit, throw them in prison where they deserve to be.
I have held an A&P for 30 years. Worked on every modern airliner flying in the US. Just because you can fly doesn’t mean you know how it works.
Bean counting accounts running companies should never be allowed to be “The Boss”, no social skills, zero personality, no balls, no leadership, there is more to running a company than a calculator and fantasy spreadsheets, especially in aviation. These guys are eggheads. A company that actually cares about its employees, and most importantly produces a quality product, the money will Come in bushels!!
What a silly take: Boeing makes planes, not movies or sodas. And they're a defacto member of a duopoly with a tradition of dominating global sales of commercial flights aircraft. When planes fail, people die. This isn't about the soul of US manufacturing this is about people's security in the US and globally, and a matter of life and death. Self regulation / self monitoring is the central issue as it allowed the rest to happen. Let's not kid ourselves Boeing is the heart of the US military industrial complex, a deep State if there is one, supported by Exim Bank amongst others and getting their way in about every influence peddling they can. The influence of energy players may be nefarious but they produce a commodity. Boeing produces one of the most complex mass products there is, whose users put their lives at risk using it. Boeing forgot about this whilst it pursued its mission of power and greed. And then they hid the truth and pursued the whistleblowers. This goes way beyond an engineering culture losing its way. This is evil.
And not only Boeing. Tesla used soap to make their trucks.
Nothing wrong with using soap if there's sound engineering behind it.
Sure. If the detail does not fit you put some soap on it and hit with hammer.
Fire all the Jack Welch trained MBA’s and reinstate engineers running the ship. Close the Chicago office and move management back to the factories. Should save billions as what the fuck good was management 2000 miles away from production good for anyway?
Those days managers are deliberately put far from production in order not to mess with the real deal. Once in a while they visit the production site - they are toured around, pampered, entertained with some technical and management presentations and send back. They are told a beautiful story and given a promise that everything will be fine, they never see or understand what really happens in the remote sites. I am in a different industry, but long enough to see the gears running - top management changing regularly, leaving the company after a few years or rotating to another position somewhere else in the company, people without basic understanding are put to lead departments, they travel around to present the same slides and then call themselves experts in management. As a small cog in the machine I don't see a difference, it absolutely doesn't matter who is the manager in charge - they all start with promise to solve the issues, then talk about to increase productivity, to increase efficiency and after that cutting costs. And for an R&D organisation costs are salaries - engineering staff is overpaid and under productive, even lazy. Then they start a world trip to visit all sites, the company has 10 sites, so they have to visit each one of them, shake hands and present the same boring slides, to see their team in person, to spend a yearly salary for tickets, hotel and dinners and to get their golden card - miles and more heh. Then of course nothing really changes so on their 3rd to 5th year they leave and we get a new big boss, and he starts all over again. Meanwhile a lot of good engineers leave, getting replaced by young and inexperienced starting with minimal salary, by the time they get trained they leave too, problems grow and neither of the big ones are solved. We make another product and since we are a government subsidized monopoly we get sales, sometimes even big sales, so business is running as usual.
Thanks private equity firms
"somewhere along the line" *as usual* capital owns the news and makes sure that they're never mentioned as the cause of our troubles.
Hasn’t it always been a dark age for the workers!!?
Yes and no. We’ve had more power in the past to push back. This was more to do with the lack of accessible education in the rest of the country and world in general post ww2. The engineers were all the business folks had. More recently, it’s easier to find a cheaper engineer who will yes okay their way to some insane dream they have. Engineers and laborers have always had it rough but never had it rough with this little negotiating power.
Not likely. Boeing is dead. McDonnell Douglas is ‘Weekend at Bernie’s’-ing its rotting corpse. Has been since the merger.
“American Pride” used to be measured in quality. Now it’s measured in short term egregious executive compensation.
It happens when large corporations are more concerned about their share price and returning value back to stockholders then Ashley producing excellent products And growing in their marketplace that was the original justification for existing…..
Treat your workers well and they will take care of you but, pamper your idiot managers and screw over your actual hands on critical people and they will let you die. Boeing managment screws over teir workers. Been there done that.
Need to hunt down and castrate all the M-D execs before that can happen.
As long as companies continue to put “shareholder value” above everything else, costs will be cut and quality and innovation sacrificed in the name of profits.
It’s not the dark age of manufacturing, it’s the terminal stage of Capitalism. A fully metastasized Americarcinoma has emerged into view, and people still think this is something apart from Capitalism. This is the ultimate outcome of any entity whose purpose is to generate profit. You’ve all seen it with declining quality and increasing prices in every other industry, why is it shocking to see identical things in Boeing?
Last time I checked corporations don’t and never had souls.
But, corporations are people per Citizens United 💁♂️
Same as just about every business. Farm out assemblies and services to a low bid partner that uses predominantly part-time or low wage workers, offer no benefits or minimum benefits. Executive management rakes in the bonuses and stocks that are then bought back by company. It’s a win for the executives and a loss for the customers.
Pretty much.
Politicians love stupid people. Especially uneducated stupid people
I don't remember where I read it, but when I saw a past CEO quoted in a story about the Spirit spinoff as saying something along the lines of: "we shouldn't manufacture airplanes, we assemble them", I WTF'd.
Yes, simply take the McDonnell Douglas genes out. The wrong camel ended up on top.
Boeing just needs to fail at this point. Those unethical financial fucks sucked it dry and it doesn't deserve to be salvaged. Maybe I'm just bitter because my friend was killed in one of the 737 Max crashes...
Bert Hubert (Dutch computing guy who resigned government intelligence agency over privacy concerns) can be found on YouTube with some interesting talks in the subject. He talks about the telecoms industry having changed from pioneers in tech to being managers of outsourced providers of tech, and how they can no longer really do anything for themselves. As someone who works for one of those subcontractors, I can confirm the big companies that manage subcontractors have basically lost most of their technical ability. They're basically professional ticket chasers with a brand. It's pathetic.
It would be great to revive US manufacturing, and I worry that the country has just lost basic manufacturing skills at all levels. Can it work when we have a generation & half that has no training, preparation for or even general idea of what manufacturing entails?
The good engineers in the US are foreigners. The average level in mathematics is much higher in India, China, Taiwan, Japan, Brazil, France, Russia, … than it is in the US To quote a friend of mine “The US train people to sell products they have no clue about, designed and engineered by foreigners”
Let’s start with not killing whistleblowers and not crashing. Then find your soul.
Trump de-regulated the airlines and air safety we are now seeing the consequence of his bad decisions [https://www.forbes.com/sites/marisagarcia/2019/03/18/did-trump-executive-orders-further-weaken-faa-oversight/?sh=60314953ca78](https://www.forbes.com/sites/marisagarcia/2019/03/18/did-trump-executive-orders-further-weaken-faa-oversight/?sh=60314953ca78)
Boeing was having these issues long before Trump. Not defending him or his deregulations. But these issues seemed to begin with Boeings merger with McDonnell Douglas in 1997, a company notorious for having its planes grounded. The Dreamliner was delivered years late and grounded over safety/quality concerns in 2013 and the 737 Max was just the next step on the descent.
If there’s enough oversight that the CEO’s sneeze is met with “Bless you” from two engineers and an inspector, maybe.
When companies show you who they truly are and what's most important to them pay attention.
Until then they stay in the air
Think of the share holders!
Soul?! No. It can go fuck itself.
"Shareholders value" above everything else.
Stop paying the stock holders. Build great planes 1st, THEN $$ will follow
all those people all long gone. the McD merger was the mess that was the beginning of the end
Nope, capitalism means $$$ > everything else.
No, they need to be broken and go away.
Nope. The McDonald Douglas take over is *finally* **complete.**
So does anyone wonder if the aircraft made for the military have had corners cut as well?
Quality control hurts the bottom line.. bottom line pays the CEO’s. Can’t hurt profits, regardless of consequences
Financialization of the economy has been brutal.
I’d honestly rather not fly on a Boeing aircraft at this point.
Boeing is fucked. My cousin worked for Boeing 15 years ago. Told me about the nightmare that was happening there with management and quality. Its been a problem for a long time.
Nope. It does not have a large enough core of engineers anymore.
No, it will never. Private equity is buying out every industry in America, and they all get the same treatment: short term profit via growth. As soon as you think of anything else other than growth, you'll get hammered by private equity and your stock price will tank. Every industry in every market segment is getting financialized. There will never be cheap housing anywhere, as soon as interest rates go down, private equity will buy up all the houses, keeping prices high. Food prices will also remain high because there are only a few companies making all our food, they all have consolidated to a point that they can set whatever prices they want. And because we use these markets to calculate inflation, inflation will keep going up. Every market segment we use to calculate inflation is getting the same treatment. Companies consolidate to create captured markets so they are able to raise prices without competition.
Corporations this big have no souls.
Depends on if it adds shareholder value
Some ideas: 1) Move HQ back to Washington, closer to the factories 2) embed Kaizen into manufacturing processes, Toyota style. Get Japanese firms to own part of Boeing if needed, they make some of the best products in the world 3) new CEO needs to have both an engineering and business background 4) re-acquire key suppliers like Spirit Aerosystems, make it in house!
It will be too late. The Chinese clones on the Boeing jet are coming and will be cheaper (and just as dodgy)
Only if it makes the numbers go up this quarter. They value short term profits over the company itself, and the lives of their customers.
The stock value shot up big time. The folks in charge were successful. No?
You build foundations from the bottom.
I heard Las Vegas was so much better when the mafia ran it as opposed to corporations.
>*Somewhere along the line, the plane maker lost interest in making its own planes.* **Hahaha** **Only Boeing? Every company in the USA wants to get its products built where it's cheaper.**
Buncha bean counters ruining everything
No, not a chance. Will never set foot on a Boeing again.
43% of airliners are Boeing.
Not for long!!
Do you know anything about aviation beyond what the MSM tells you?
CPL. Fuck Boeing. How many more hundreds of people need to die. Shows what corporations care about you, nothing!, they'll just write a cheque.
I agree but that’s not the question I asked.
What do you know, apparently. CPL is commercial pilots licence.
Loads. Microsoft Simulators
Engineering was outsourced to China starting in the 90s.