Boeing: Whiner Extraordinaire

Somehow the entire month of February slipped by without us having something to say about Boeing.  Regular readers know that for the last two or three years we've been pointing out the lean conundrums within that company.  Great technology, great lean manufacturing efforts in some areas... but then they go and lay off tens of thousands of experienced people in the northwest to outsource major airplane components overseas.  A supply chain that was only a few miles long became thousands of miles long, requiring such contraptions as the Dreamlifter to ferry it all back to the final assembly location.  Supposedly new plane projects like the 787 Dreamliner are too big and too complex for a single company to undertake.  Supposedly political realities also required offshore outsourcing in order to "convince" other countries to purchase the new planes.  Supposedly.

Then boom!  Boeing loses a lucrative refueling tanker contract to a partnership between Northrup Grumman and, egads, Airbus!  The horrors!  It's somehow ok and in the best interests of national security for significant components and technologies of the most advanced commercial airliner to be built overseas, but not what is basically an existing airliner with a fuel tank substituted for the seats.  I didn't even know where to start with this story, but luckily Steven Pearlstein of The Washington Post beat me to it with a brilliant article a couple days ago.  Hat tip to Mark over at the Lean Blog for pointing it out to me.

So it's rather disappointing to watch as the company [Boeing] and its loyal crew of Washington allies resort to jingoism, protectionism and outright hypocrisy as they seek to overturn the Pentagon's decision to choose another team to build a badly needed fleet of refueling tankers for the Air Force.

Disappointing, yes, but not surprising. For over the years, Boeing has also developed a reputation as the one of the biggest corporate whiners in Washington, incessantly complaining about how the playing field is tilted unfairly against it but that all would be rectified if the government could demand an end to foreign subsidies, or award it one more contract or tax break or trade treaty, or give it permission to buy up one more competitor.

Yet, no matter how much Washington does for it, no matter how much money it is making, how large its backlog or how big its market share, Boeing keeps coming back for more.

Yes, as Boeing busily figured out ways to lay off a very experienced and loyal workforce and forged relationships with overseas suppliers that one day could become competitors, they still believed that the U.S. government owed them any new defense contracts.  For that is the American thing to do.  Even if it costs more.

The latest complaint from Boeing & Friends is that the Air Force had the temerity to conclude that taxpayers could get more for their money by awarding the $40 billion tanker contract to the team of Northrop Grumman and Airbus, Boeing's major rival in the commercial airplane industry.

And even if they weren't exactly playing by the rules to get the contract in the first place.

Only later, thanks to the persistence of Sen. John McCain, did we find out that Boeing had wired the whole thing from the inside, first by having the Senate Appropriations Committee lay down criteria that only Boeing could meet and then by offering a plum job to the Air Force's top procurement official. Once it all came out, the chief executive of Boeing had to resign, the procurement czar was sent off to jail and the tanker contract was put out for competitive rebidding.

Suddenly everyone is patriotic and sensitive to advanced technologies and manufacturing methods being sent overseas.  Suddenly everyone is aware that there is knowledge, creativity, and experience in the brains of laid-off workers and that the worker is a national asset.

Now that the decision has been made, Boeing's congressional allies, who for months vigorously defended the sweetheart lease agreement, are suddenly deeply concerned about the integrity of a selection process that looks to this former defense contracting reporter as clean and open as any in Pentagon history.

They are outraged that Boeing -- a global company that relies on exports for much of its business and now outsources a good chunk of its production to foreign plants -- might actually have to compete in its home market with importers and outsourcers.

And although Boeing routinely profits by selling its military hardware and technology to U.S. allies, its boosters are suddenly gravely concerned that by importing wings and fuselages from Spain , France and Germany, the Air Force is creating a grave threat to national security.

Sorry Boeing.  As much as I respect many, many aspects of your company and wish the best for your success, your actions and strategies have brought this day on you.  Instead of complaining, I'd start thinking about how you're going to deal with your new and some still unknown competitors you've created.

Comments

[Mark Graban]

This is a less a battle between the U.S. and France as much as it is a battle between Washington state and Alabama. 59% of the Northrop/EADS tanker will be U.S. parts and labor content and it's estimated to create about 25,000 U.S. based jobs. So when you hear "we're sending jobs to France", pay attention if the senator or rep is from Washington or Kansas (Boeing country) or otherwise.

[Ken]

Dude, you got quoted in the Wall Street Journal!! Nice job!!

http://blogs.wsj.com/marketbeat/2008/03/10/boeing-experiences-drag/