Are Boeing’s problems beyond fixable?
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Just another day in corporate America. Obscene executive comp, stock buybacks, short term mentality and incurring debt to pay for it all. While letting the goose that funds it all go to hell.
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Boeing has a management culture problem not a culture problem. Until Ortberg fires every manager between the C-Suite and 3 or 4 layers down, he will never fix the culture problem. He needs to tell Wall Street things will get fixed on Boeing's timeline not the street's. He's also gonna have to make some pretty big decisions to either cancel some major programs or sell off some divisions to stop some of the red ink.
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The only way that Boeing can recover is to recruit and re-hire the engineers who retired or left for other companies in disgust when the McDonald Douglas merger ruined everything. To be successful at that, there will need to be much more than lip service paid to fixing the toxic corporate culture presently in place.
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Many problems.
But up until the strike, it was still making money on planes. Hence an argument the plane workers were making.
Space stuff not so much.
But up until the strike, it was still making money on planes. Hence an argument the plane workers were making.
Space stuff not so much.
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I don't think that's feasible. That was almost 30 years ago. Many have retired or died at this point.
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"Boeing has 'no business being in Arlington, Virginia,' where the company moved its headquarters in 2022."
Other than Boeing's largest customer is based in Arlington, Virginia. It's maybe not the best choice for headquarters, but it's not "no reason".
Other than Boeing's largest customer is based in Arlington, Virginia. It's maybe not the best choice for headquarters, but it's not "no reason".
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I suspect for a lot of folks that the name Boeing used to mean quality. That doesn't feel to be the case any longer. On a personal note, I sleep a little better on my flights when I see Airbus on the safety card.
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One may argue that less commercial travel would be beneficial to the ongoing climate crisis.
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Does boeing have the talent resources to build a new airframe ? No. Space LOL. 777 LOL. Tanker still sucks. Working for boeing? Spirit? LOL.
I love Boing. But than I am a short selling their equity.
I love Boing. But than I am a short selling their equity.
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Jack Welch and his acolytes of animal farm have ruined several companies
I'm glad the machinists haven't settled. Squeeze more pain from the corporate overlords. Make them lose enough money it erases any gains from the past few years of misadventure.
I'm glad the machinists haven't settled. Squeeze more pain from the corporate overlords. Make them lose enough money it erases any gains from the past few years of misadventure.
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They can recover if they accept the fact that their days of being allowed to self-regulate are over, and they refocus on safety and quality. Rather than worrying about what Airbus is doing and rushing new aircraft/systems to market without proper training, just focus on doing things the right way.
Their issues aren’t about the rank and file designing and building aircraft. This is about the incompetence and greed of their executive leadership. All of their problems can be tied back to profits being more important than product safety and training.
Their issues aren’t about the rank and file designing and building aircraft. This is about the incompetence and greed of their executive leadership. All of their problems can be tied back to profits being more important than product safety and training.
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He's not suddenly coming to his sense after years asleep at the wheel. He just became CEO in August, and it sounds like he had already determined that this basic concept is necessary before he took the position. That's kind of the point of the article. "New guy thinks he can save Boeing with a totally different management mentality than they've had for almost 3 decades."
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What are you talking about? The guy just started and this is the first thing he realized (or already knew beforehand) and it is the thing most experts agree on... So your conclusion is he needs to go because he didn't do this before he was at Boeing?
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I think it's interesting to compare and contrast the reverse takeover of Boeing by McDonnell Douglas in 1997 and the reverse takeover of Apple by NeXT which also happened around the same time.
Decades on they seemed to have diametrically opposite effects, at Boeing it resulted in poor leadership that led to the culture problems today. At Apple, it brought back Jobs who was able to provide leadership what was necessary to fix the broken culture and get the company back onto first a stable footing and then the successes in the coming years.
Of course Apple and Boeing are in very different fields but it shows that corporate culture always comes from the top and that it can take a long time to fix if broken.
Decades on they seemed to have diametrically opposite effects, at Boeing it resulted in poor leadership that led to the culture problems today. At Apple, it brought back Jobs who was able to provide leadership what was necessary to fix the broken culture and get the company back onto first a stable footing and then the successes in the coming years.
Of course Apple and Boeing are in very different fields but it shows that corporate culture always comes from the top and that it can take a long time to fix if broken.
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Boeing should have started a clean-sheet replacement for the 737 during the zero interest rate policy era. Arguably it was a generational mistake not to pull as much investment forward as they could when money was cheap.
Boeing has something like $45 billion in outstanding debt, not too highly leveraged, and a reasonable maturity mix. They have a product in monopoly-style demand and a backlog of orders of many years.
So obviously, they should piss off their workforce and customers repeatedly, right?
/s
If they can just build their main product reliably at a decent rate they should do just fine - a lot of companies in more competitive markets would love to be in that situation. Intel, for an example...
Boeing has something like $45 billion in outstanding debt, not too highly leveraged, and a reasonable maturity mix. They have a product in monopoly-style demand and a backlog of orders of many years.
So obviously, they should piss off their workforce and customers repeatedly, right?
/s
If they can just build their main product reliably at a decent rate they should do just fine - a lot of companies in more competitive markets would love to be in that situation. Intel, for an example...
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Ortberg is an engineer. So that is now happening.
Welch, the man who almost invented financial engineering at GM and who’s disciples crashed McDonnell Douglas and now IBM was en engineer.
The man who made Boeing an engineering company long ago was a lawyer.
Profession don’t mean shit. If you don’t pay attention to the people and the product, but only stock, you won’t have a lasting company, regardless of your background.
Edit: spelling
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What happened to Boeing is digusting. It truly used to be an exemplary American institution, which has been gutted over the last 30 years by the extreme corrosiveness and callous emptiness of the cult of shareholder primacy. The assholes who worked to cover up the deficiencies of the 737 Max are MASS MURDERERS and should spend the rest of their lives in prison and have all their money taken away and given to the families of those who lost their lives. As far as Boeing getting back to what it was? I doubt it. This is a deep rooted business culture problem. No one who runs big companies anymore knows how to run them according to an ideal of creating great products that customers want to buy. They only know “share price go brrrr.” And that’s a sad truth.
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Jobs was focused on trying to create great products. His theory was that profits follow a well engineered, quality product.
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The "Friedman doctrine" has been one of the most destructive ideas to hit the Western world. Arguing that generating shareholder value must and should be a corporation's primary focus is asinine: generating profits and shareholder value is a byproduct of actually creating something of value; whether that be a product or a service.
To make an analogy I know a lot of farmers, but can't think of any who optimize their operations for the production of manure.
To make an analogy I know a lot of farmers, but can't think of any who optimize their operations for the production of manure.
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I agree, he was an engineer.
I've seen this situation happen a number of times, where someone starts with a technical background, does it professionally for 2-4 years, then moves to business and does that for 20 years and becomes a CXO and eventually CEO.
Almost invariably it appears that they couldn't cut it as their original profession and switch to business. So they claim technical chops, but are business focused at heart. And they act and make decisions that are indistinguishable from a business person coming in with a business degree.
Witness Ortberg here - pissing away billions of dollars on this strike trying to nickle-dime his workforce that was treated like shit under previous leadership instead of giving them a good contract, which would over time cost a lot less than is being pissed away. Just like any other business-background CEO.
He keeps getting called an engineer, but I'm not seeing any engineering mindset and actions from him. Just give the union a good contract and get everyone back to work. Goodwill with workers, confidence from customers, and no longer bleeding cash. But no, have to keep labor costs to a minimum, no matter the cost to reputation and revenue, same as any other business background person.
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Rubbish
Boeing repeatedly screwed the pooch. If it wasn’t for their lock on much of the civil aviation market - no one else to fill the orders - they would be finished already.
Best way to destroy an organisation is to scream “NO PROBLEM” when the building is on fire.
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And if he’s successful his successor will drag it down again for a short term boost to the stock price and so the value of his bonuses.
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As a former Rockwell Collins engineer I can say Ortberg sold to us UTC and we were immediately lowered in pay, lost our bonus and company would no longer help carry our healthcare if we retired while managers bonus's were doubled.
Fairly certain Kelly allowed this as part of the "deal"
Kelly is a bean counter in engineers clothing. Boeing is probably screwed again.
Fairly certain Kelly allowed this as part of the "deal"
Kelly is a bean counter in engineers clothing. Boeing is probably screwed again.
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During COVID there was a trend to eliminate large numbers of workers over age 50. Many of those people voluntarily retired or were pushed into retirement. Other companies laid them off and then never brought them back. To the MBA types this was a good thing -- replace people towards the end of their career earning high salaries and benefits with new, younger workers at lower pay levels. The problem is that those over 50 workers had immense amounts of institutional knowledge in their heads and that knowledge left with them.
Any insights as to if this effect is now catching up with Boeing?
Any insights as to if this effect is now catching up with Boeing?
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I see nothing about the $40 Billion in stock buy-backs over the past decade in this article...
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You're making the classic mistake executives so often make. Boeing is a design and manufacturing company, not a sales company.
They need a sales office where their biggest customer is. They need their corporate headquarters where their manufacturing and design operations are.
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I think this article is too soft on Boeing.
Cory Doctorov has the right attitude:
"Boeing’s deliberately defective fleet of flying sky-wreckage"
View: https://doctorow.medium.com/https-pluralistic-net-2024-05-01-boeing-boeing-mrsa-2d9ba398bd54
tl;dr:
Boeing is, effectively, a government agency that is run for the benefit of its investors.
It performs its own safety inspections.
It investigates its own criminal violations of safety rules.
It loots its own coffers and then refills them at public expense.
So yes, probably beyond fixable.
Cory Doctorov has the right attitude:
"Boeing’s deliberately defective fleet of flying sky-wreckage"
View: https://doctorow.medium.com/https-pluralistic-net-2024-05-01-boeing-boeing-mrsa-2d9ba398bd54
tl;dr:
Boeing is, effectively, a government agency that is run for the benefit of its investors.
It performs its own safety inspections.
It investigates its own criminal violations of safety rules.
It loots its own coffers and then refills them at public expense.
So yes, probably beyond fixable.
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Bad management has momentum. It took decades for it to ruin Boeing, and it will take years to fix it. If Ortberg is the right man to right the ship, Boeing will need competent succession to continue the work.
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The article also failed to mention the truly egregious nature of the 737 MAX debacle. Only mentioning in passing the criminal charges and "sensor failure". While the sensor failure was the beginning of the chain during flights they were only a tiny percentage of the series of events that killed all those people. Pathetic excuse for journalism, which mirrors the pathetic excuse for justice in the case. Negligent homicide charges should have been filed against every C-suite exec involved.
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This becomes less true as your number of competitors goes down. Boeing has one in the large commercial airline sector, and maybe 2 in space travel if I’m being generous. If Boeing had a massive financial crunch à la the banking sector circa 2008, you can damn well bet politicians would volunteer taxpayers’ dollars to bail them out, probably by reflexively awarding a massive contract to produce spacecraft that don’t work.
In other news, I heard that Embraer is exploring entering the large commercial airliner market. What a great thing that would be.
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