Saturday, February 19, 2011

Boeing Gets It's Comeuppance? Has U.S. Business Figured Out How To Do the Same?

At least one major supplier didn't even have an engineering department when it won its contract, according to an analysis of the 787 by the European consortium Airbus, Boeing's top global competitor. Boeing executives now admit that the company's aggressive outsourcing put it in partnership with suppliers that weren't up to the job. They say Boeing didn't recognize that sending so much work abroad would demand more intensive management from the home plant, not less.

I was laid off in the early 90's after the collapse of the Soviet Union and the end of the Cold War from a company that did business with Boeing, Raytheon, Northrop, Grumman, Lockheed, Martin and many others. I was among the last to be let go as I was told that they needed to keep someone around in case they got another contract for real work and needed someone to run it. On my last day, the Deputy Manager of my division came to my desk and told me that they couldn't figure out how to keep me any longer as they no longer needed technical managers because they were getting much cheaper ones from their new business model which relied on outsourcing work and management overseas. They were also going to bring in lots of H1-B personnel to do the internal tasks. Cheaper, you know. It only took the complete downfall of our economy to publicize what has really happened since. I can hardly be gleeful. But you can see now how management deserved such huge salaries and bonuses for this incredibly creative "management."

Right? From Susie Madrak at Crooks and Liars:

Outsourcing, as anyone who's ever had to manage a project staffed in another country will tell you, is rife with all kinds of pitfalls - and it's almost never cheaper, no matter what Tom "The World Is Flat" Friedman would like you to believe. Boeing learned the hard way:

The 787 has more foreign-made content — 30% — than any other Boeing plane, according to the Society of Professional Engineering Employees in Aerospace, the union representing Boeing engineers. That compares with just over 5% in the company's workhorse 747 airliner. Boeing's goal, it seems, was to convert its storied aircraft factory near Seattle to a mere assembly plant, bolting together modules designed and produced elsewhere as though from kits. The drawbacks of this approach emerged early. Some of the pieces manufactured by far-flung suppliers didn't fit together. Some subcontractors couldn't meet their output quotas, creating huge production logjams when critical parts weren't available in the necessary sequence. Rather than follow its old model of providing parts subcontractors with detailed blueprints created at home, Boeing gave suppliers less detailed specifications and required them to create their own blueprints. Some then farmed out their engineering to their own subcontractors, Mike Bair, the former head of the 787 program, said at a meeting of business leaders in Washington state in 2007. That further reduced Boeing's ability to supervise design and manufacture.

At least one major supplier didn't even have an engineering department when it won its contract, according to an analysis of the 787 by the European consortium Airbus, Boeing's top global competitor. Boeing executives now admit that the company's aggressive outsourcing put it in partnership with suppliers that weren't up to the job. They say Boeing didn't recognize that sending so much work abroad would demand more intensive management from the home plant, not less.

Want to hear the Rethuglican strategy? You know, the one that makes them think that guys like Boner and McRascal and "serious" women like Mrs. Pail(n) Imposter will lead them to glorious victory over fools who think they are playing fair. There really is one. And it's winning so far.

Yes. It seems nonsensical, but the plan must go - first, destroy your country's economy . . . (emphasis marks added).

They hope to deflect attention from the increasing share of total income and wealth going to the richest 1 percent while the jobs and wages of everyone else languish.

Republicans would rather no one notice their campaign to shrink the pie even further with additional tax cuts for the rich - making the Bush tax cuts permanent, further reducing the estate tax, and allowing the wealthy to shift ever more of their income into capital gains taxed at 15 percent.

. . . Republicans would rather go after teachers and other public employees than have us look at the pay of Wall Street traders, private-equity managers, and heads of hedge funds - many of whom wouldn't have their jobs today were it not for the giant taxpayer-supported bailout, and most of whose lending and investing practices were the proximate cause of the Great Depression to begin with.

Last year, America's top thirteen hedge-fund managers earned an average of $1 billion each. One of them took home $5 billion. Much of their income is taxed as capital gains - at 15 percent - due to a tax loophole that Republican members of Congress have steadfastly guarded.

If the earnings of those thirteen hedge-fund managers were taxed as ordinary income, the revenues generated would pay the salaries and benefits of 300,000 teachers. Who is more valuable to our society - thirteen hedge-fund managers or 300,000 teachers? Let's make the question even simpler. Who is more valuable: One hedge fund manager or one teacher?

Seems clear to me. ________________

4 comments:

MRMacrum said...

Out sourcing to other countries and contractors in the private sector is exactly what "privatization" is in government. Having many friends who have lived the life in the DC beast as cubicle bureacrats, I have heard way too many tales of the costs of privatization sometimes being up to 50% higher than when it used to be done in house. The true costs are hidden through the smoke and mirrors of off budget expenses.

We are indeed being sold out. I used to wish people would take notice. But no. They would rather buy that new flat screen from WalMart.

The Ex-Wiz said...

Yes, it's interesting isn't it?

Privatization, the "conservative" catch phrase turns out to mean giving your means of production to foreigners who have paid you handsomely for it, and reducing your own population to slavery in order to maintain your "conservative" lifestyle.

I've said for over a decade that the terms "liberal" and "conservative" have switched meanings.

Those "conservatives" have no trouble with liberally taking anything of value in the country for their own selfish uses.

Liberals (a term that first had to be redefined to mean "stupid" or "evil" by the bought-and-paid-for MSM) have become the conservative keepers of the country's heritage (while trying to increase the justice quotient doled out to the inhabitants of that passed-down heritage).

Go figure - how long it must have taken those in "charge" to dumb down the schools before they knew they could sell this easily to the masses.

Because sell it does.

And very well.

Love ya,

S

Tom Harper said...

I doubt if Boeing or any other company will learn anything from past mistakes. When their own house of cards collapses because of too much outsourcing, they'll just get another bailout from the taxpayers.

The Ex-Wiz said...

You can bet on it, Tom.

HARD cash on the nail.

And it will come when "they" finally decide (after cutting all the safety net programs to zero) to do something about all those hidden toxic assets that actually leave the banks bankrupt(!)

They'll just take the rest of the taxpayers' money and save them all again.

Love ya, baby.

S