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View Diary: Boeing's outsourcing strategy in the spotlight as FAA grounds the Dreamliner (196 comments)

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  •  I honestly don't think... (34+ / 0-)

    'De-centralized' production is the root problem per se.  The Airbus 380 was built in several countries.  The problem is trying to build a sophisticated modern air-craft on the cheap - outsourcing everything to the lowest bidder - including intellectual property.  How do you hope to fix the problems if you don't even own the know-how to do it?  This the perfect example of Wall Street profit uber alles mentality.

    'Goodwill' between the GOP and the President is as abundant as unicorn farts - Me'

    by RichM on Fri Jan 18, 2013 at 07:56:44 AM PST

    •  Actually the 380 outsourcing was cut-back (16+ / 0-)

      drastically.

      Airbus Industries was going to have a large subcontracting bases for this as well.

      However as a result of the problem they drastically cut back on the subcontractor because of the delivery delays.

      They originally has 3000 subcontractors they cut it down to 500.

    •  Going back several years into the memory (23+ / 0-)

      banks for data stored about the more detailed articles about this out-sourcing and decentralization at Boeing, I think that decentralized production was a big part of the problem, IIRC.  The reason it was was that the company was not accustomed to that approach.

      They chose to make radical changes in their business and manufacturing model and chose to do that with an entirely new and technologically untested product.  If they had made the production changes and tried to build planes that they had already built, they would have been in a better position to manage the process.  Also, the loss of the experienced personnel let go as a result of the outsourcing had to have had an impact here.  

      As it was they went full on into a totally new design with totally new factories and personnel.  They were like a start up, in a sense and they are paying the price for having effectively ditched a lot of people and resources that had built Boeing's good reputation.

      Also, FWIW, Airbus had its fair share of problems with their decentralized production process.  It wasn't like Boeing didn't have any point of reference as to what pitfalls might be ahead when they made this change.

      •  Boeing had outsourced some parts to other (3+ / 0-)
        Recommended by:
        inclusiveheart, xaxnar, elwior

        companies that were either a Boeing facility (Spirit in Kansas) or somewhat local.  Once they bought MD and installed several of the key VP's into Boeing the outsource bug hit.  That is what put MD into trouble for many years...  Now that the last of them are leaving the insource bug is becoming vogue.

        "Death is the winner in any war." - Nightwish/Imaginareum/Song of myself.

        by doingbusinessas on Fri Jan 18, 2013 at 09:20:59 AM PST

        [ Parent ]

        •  Chicago based Boeing Company (0+ / 0-)

          The Boeing Company run by MD folks who didn't want to move to Seattle but wanted to get away from St. Louis for the Gold Coast on Lake Michigan seem to have lost control of the design and manufacturing skills.

          Spirit company bought Boeing's facilities, and I believe the management is ex-Boeing also. So Boeing could shed their labor liabilities. As for Asia there was a quote by some Mitsubichi Co. person saying that after designing the 787 wing they had the know-how to enter the composite market.

          Same with the company that designed the 737, 757, 767 winglet retrofit kits. Ex-Boeing, or maybe another attempt to shed labor? Or reward insiders?

          •  It's actually just big company (5+ / 0-)
            Recommended by:
            DarkestHour, judyms9, mmacdDE, KJG52, rbird

            management-think run amok.

            Boeing used to be run and managed by people that had cut their teeth flying airplanes and maintaining airplanes.  Now it is run and managed by "interchangeable CEO's" that know about running big corporations but nothing about the unique business of building airplanes that fly.

            As of this morning November 7, 2012 the Includers are ascendant, and the Excluders are in the minority. [samsoneyes]

            by FlamingoGrrl on Fri Jan 18, 2013 at 10:31:25 AM PST

            [ Parent ]

            •  Well it all looked good on the PowerPoint (3+ / 0-)
              Recommended by:
              a2nite, KJG52, rbird

              that the MBA's presented.  Yep.

              Most likely those MBA's are long gone to greener pastures, looking to fleece another industry.

              Democratic Leaders must be very clear they stand with the working class of our country. Democrats must hold the line in demanding that deficit reduction is done fairly -- not on the backs of the elderly, the sick, children and the poor.

              by Betty Pinson on Fri Jan 18, 2013 at 01:56:55 PM PST

              [ Parent ]

        •  the Boeing McDonnel merger (0+ / 0-)

          Is known internally as 'when Douglas took over' ; redneck management. Then came Mulally, not sure of he helped or not, but anyway he bailed for Ford before it started coming down. Anyone from Being to comment on this? The engineers union did a white paper in 2001 or so that predicted what would happen if the announced outsourcing plan was followed, and it pretty much did. Now they are near a strike over Boeing wanting to end pensions and go to 401ks for new hires. Personally I think I'll stick to automobiles for a while.

          •  They are about || close to striking. (0+ / 0-)

            SPEEA rejected the latest "offer" the Boeing handed them.

            A good number of the engineers are very upset about what is going on (the outsourcing coming home to roost), not being used to design and engineer the 787, etc.  

            "Death is the winner in any war." - Nightwish/Imaginareum/Song of myself.

            by doingbusinessas on Fri Jan 18, 2013 at 09:40:12 PM PST

            [ Parent ]

      •  See (2+ / 0-)
        Recommended by:
        inclusiveheart, rbird

        Electing people who don't believe in government to Congress, is like installing an atheist as pastor of a church. If they don't believe in the institution or its goals, they won't care if it does a good job for its members.

        by Lefty Coaster on Fri Jan 18, 2013 at 12:44:18 PM PST

        [ Parent ]

      •  Now we agree (0+ / 0-)

        The root problem as I see it is Boeing's lack of diligence in considering the potential problems in changing the engineering and operating model, and I think they have admitted as much.

        "We underestimated". Yep.

        What about my Daughter's future?

        by koNko on Sat Jan 19, 2013 at 01:39:01 AM PST

        [ Parent ]

    •  I Worked At Kodak (19+ / 0-)

      In the early days of digital photography and printing.  I was intimately involved in printer designs and support.  

      During that time, Kodak built all its digital color printers. They all had Kodak built parts, Kodak designs, and Kodak color algorithms.

      Then, it came time to save money --  to outsource printer building and printing technology.  Kodak outsourced to Japan and to China, the lower the bid the better.  The offshore vendors took over the designs, inserted their own algorithms, and would not reveal the new algorithms to Kodak engineers who had the responsibility to calibrate those printers and to make the media (ribbons and paper) used in them.

      And, now that Kodak has filed for bankruptcy, the offshore vendors (who haven't been completely paid for their prior work) will not cooperate to make ongoing improvements in the printers.

      It seems that offshore vendors (especially those in Japan) have no concept of the US bankruptcy law.  All they know is that they have not been paid, and they want no more to do with Kodak. So getting spare parts and engineering changes will be a very dicey business.

      It's no surprise that Kodak, the inventor of digital photography, is selling off all their camera and printer business, and their patents in a fire sale, and even their printing kiosk business.

      •  I was working in the medical division at this (5+ / 0-)
        Recommended by:
        snoopydawg, xaxnar, elwior, ladybug53, Just Bob

        time (Diagnostics group)...  I remember it well.  We were moved from the old building on the east side of Rochester to the new plant in Greece and we started development of the 5000 test/hr machine when we got the word we were up for sale.  Kodak would retain the test slides but sell off the test machine group.  I left about that time, but from what I heard Hitachi was looking in earnest at them.  

        I have no idea what eventually happened to that group.

        "Death is the winner in any war." - Nightwish/Imaginareum/Song of myself.

        by doingbusinessas on Fri Jan 18, 2013 at 09:27:26 AM PST

        [ Parent ]

      •  Kodak is bankrupt... (3+ / 0-)
        Recommended by:
        wader, BachFan, squarewheel

        ...because they were a film chemistry company in the time that digital cameras gutted and destroyed the film chemistry business. They were sort of like Microsoft that way; my understanding is that they kept trying to attach film items to their digital pictures business and simply did not grok the fact that digital was going to obsolete film chemistry almost in its entirety other than for specialized uses.

        I'm sure that the issues you describe didn't help, but...

        (-5.50,-6.67): Left Libertarian
        Leadership doesn't mean taking a straw poll and then just throwing up your hands. -Jyrinx

        by Sparhawk on Fri Jan 18, 2013 at 09:36:13 AM PST

        [ Parent ]

        •  Well, yes to an extent (3+ / 0-)
          Recommended by:
          elwior, Just Bob, rbird

          Their copiers were a decent quality for awhile, but they lost a good deal of contracts to more nimble and capable rivals as their own products lost the edge and serviceability as their own interest in that space waned.  Then, they sold off most of that division just when they could have grown the digital publishing business rather handily, given their background and resources.

          They had a series of problems with leadership in the past twenty years, IMHO.

          http://nightowltrader.blogspot.com/...

          "So, please stay where you are. Don't move and don't panic. Don't take off your shoes! Jobs is on the way."

          by wader on Fri Jan 18, 2013 at 09:58:18 AM PST

          [ Parent ]

        •  Kodak blew it (5+ / 0-)
          Recommended by:
          ladybug53, la58, mmacdDE, Just Bob, rbird

          the sensors for the up scale cameras are or were Kodak. So management sold the licenses. Way to go MBA business pros.

          The US needs to adopt the old German mentality, we don't sell our companies to outsiders. They can buy the product but you don't sell the facilities. Or stop protecting the patents, once the name changes.

          •  The German Mentality also includes... (3+ / 0-)
            Recommended by:
            mmacdDE, rbird, hashby

            ...a philosophy of making the best product they can. It is ingrained in their culture. The point is to make the best thing - to market and profit from whatever you are making are separate functions of the company. The dictates of making the best product determine how marketing and design work. Those German companies which have strayed from this have failed (Braun)

            VW (which includes Audi), Porsche, BMW, Mercedes - You won't find a manager with influence at any of those top auto makers who would claim that the purpose of their company was to "maximize shareholder value". The purpose of their companies is to make the best vehicle possible in each of the segments they are active in.  

            As others here have implied, Boeing has already jumped the shark. In a way, they were trying to emulate the EADS model - but they failed to understand that communication between, say, Italy and France is a far different thing from communication between Italy and Japan. THe differences are both cultural and physical. You can pop over to Italy from France to fix a budding problem differently and more conveniently than you can travel between Italy and Japan and the US. I'm sure managers think: "Hmm, I've got these modern communications..." Sorry. Hands on project management is still essential - cultural alignment is essential when trying to coordinate between different (out)sources of different parts of your project.

            I've been following the Dreamliner since it was first presented to the public - it must be some 10 years or more now. Lufthansa employees laughed at the concept - the attempt to "mirror" the EADS model - which was born of EU necessity (all those egos and coffers to fill). Boeing had problems from the very fist deliveries.  Their incompetent management did nothing. They are still having some of the same problems they did at the beginning of the establishment of the assembly process.

            This is a US corporate failure. Board-level bullshit -  everything is SNAFU, so no worries, ey?

        •  I don't think that's entirely accurate (0+ / 0-)

          they made a very big push into CCDs, but couldn't quite seem to make a business of it.

          I'm sure that in part you're right - they just couldn't let go of film, but I think they tried.

          big badda boom : GRB 090423

          by squarewheel on Fri Jan 18, 2013 at 08:34:59 PM PST

          [ Parent ]

        •  and by the way (0+ / 0-)

          they made very good ,very high quality CCDs which might have been the problem.

          since it was not mass market they simply couldn't make enough money to sustain the business.

          big badda boom : GRB 090423

          by squarewheel on Fri Jan 18, 2013 at 08:36:54 PM PST

          [ Parent ]

      •  US corporations have forgotten (5+ / 0-)
        Recommended by:
        a2nite, mmacdDE, Just Bob, midwesterner, rbird

        how to be really competitive.  They're so accustomed to a favorable business environment here in the US where they have no real competition and lots of protection in the courts.  

        They naively believe that foreign corporations will play by the same rules. They don't. They're much more cutthroat and feel no need to honor US laws. Why should they?

        Our corporate leaders have gotten fat and lazy.  That they're now being exploited by the same foreign companies they stupidly outsourced everything to is not surprising.  

        Perhaps they'll learn some important lessons. Or not.

        Democratic Leaders must be very clear they stand with the working class of our country. Democrats must hold the line in demanding that deficit reduction is done fairly -- not on the backs of the elderly, the sick, children and the poor.

        by Betty Pinson on Fri Jan 18, 2013 at 01:53:44 PM PST

        [ Parent ]

        •  Really it is more about showing quarterly (0+ / 0-)

          earnings that is killing the US corporations more than anything else.  They are sort of in perpetual fire sale mode trying to impress Wall Street.

          They do things like launch new products in order to impress investors whilst ignoring core business that keep the companies going and end up losing it all.  

          One of the great examples of the short-sightedness of current business models with respect to labor was Circuit City.  That retailer was doing really well and their success against competitors was attributed to the fact that they had a knowledgeable and experienced sales force.  The people selling and their high level of competence was considered to be a real driver in their sales numbers.  Then the CEO and the board decided to fire every one of their experienced (and more expensive) sales force and replace them with cheap and inexperienced sales people.  I think it was less than 24 months before the company was in trouble and eventually they went bankrupt.  

          People make a difference.  Experience and qualifications make a difference.  In the case of Circuit City we weren't even talking about people actually designing and building what they were selling.  

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