Which they could have built without outsourcing. They have never outsourced the wings or wing box before. Ever. This is 'last-gasp' one-trick-pony outsourcing of the technical expertise. The reason for the outsourcing is basically to enlist a set of countries to counter the anti-free-market EU conglomerate EADs/Airbus. The coalition is enticed in by the outsourcing...getting the technology, and the fabrication sales. A tremendous percentage of the total U.S. benefit to 'foreign' aircraft sales is thus lost right up front. Boeing gets customers with the induced countries, and financing which it could have gotten on the free market, but elected to skip, binding these countries more closely to the success of the project...and inducing yet more internal pressure in the countries for "back-scratching" orders.
This is a successful model...but one that is designed to fight fire with fire....and indeed...ups the ante.
State subsidies with state subsidies.
And the reason it is clobbering AirBus, which I think we can all salute...is that frankly, Boeing has vastly more and superior technology at its disposal than the pirates in France and Germany ever imagined...or as yet were able to steal. The 787 is the undenied recipient of a great deal of this treasure-trove. It is a technical marvel. Superior in all elements to anything Airbus has or will have. But now the technology therein, the comparative advantage, is being disseminated to "partners" who could just as easily in the future be competitors.
This opinion piece by Economist Alan Tonelson points to the fact that this has been observed before, and is in fact an axiom of trade history:
As McGill University political science professor Mark R. Brawley has argued in regard to the attempted establishment of international order, “the liberal rules [that] the leading state creates seem to diffuse economic power out of that country and into others, undermining the leader’s own position.” (Liberal Leadership: Great Powers and Their Challengers in Peace and War, Cornell University Press, 1993.) “Relative economic decline is explained through the success of the liberal leader’s capital-intensive sectors in exporting captial-intensive goods production and services,” writes Brawley, as this “allows capital to be accumulated elsewhere.” This is what is happening as American (and other foreign capital) flows into China to build production capacity, which is then supported by exports that destroy the home industries of the countries where the foreign capital originated.The decline of England has always been a favorite for this kind of analysis. As the prominent commercial lawyer and judge Lord Penzance warned in 1886, “The advance of other nations into those regions of manufacture in which we used to stand either alone or supreme, should make us alive to the possible future. Where we used to find customers, we now find rivals....prudence demands a dispassionate inquiry into the course we are pursuing, in place of a blind adhesion to a discredited theory.” The “discredited theory” to which Lord Penzance was referring is “free trade.” England had adopted this doctrine when it had a substantial lead in the Industrial Revolution and wanted to open foreign markets for its exports. But as conditions changed, its leaders clung to policies that no longer fit world affairs.
British historian D.C.M. Platt [Finance, Trade and Politics in British Foreign Policy 1815-1914, Oxford University, 1968] has argued that the leaders of Victorian England were so devoted to “free trade” that they were willing to sacrifice their direct interests to this intellectual ideal. Another British historian, Keith Robbins [The Eclipse of a Great Power: Modern Britain 1870-1975, Longman, 1983] has written, “To a few contemporaries, this devotion was perverse. It seemed obvious that the world was not following Britain’s Free Trade example. Germany introduced a measure of protection in 1879, France in 1882 and the United States in 1883 and 1900....But there was no British retaliation.”
The failure to adapt in a dynamic world is a central weakness of thinking bound by ideology; i.e., the belief that some doctrine is so perfect that it fits all times and places. Such blind faith can lead people to reject another idea they know will work, because it does not fit their misplaced “values.” For example, the Indian historian Partha Sarathi Gupta [Power, Politics and the People: Studies in British Imperialism and Indian Nationalism, Anthem Press, 2002] cites a 1915 memo from Ernest Low, secretary to the Viceroy’s commerce department, which acknowledged, “The public...have a policy [of protectionism] on the theoretical advantages of which a large section of them are unanimously agreed; which has been tried in many countries and can point to a considerable measure of success.” To head off the rising call for action, Low proposed a “committee of enquiry,” but one so rigged that “all questions relating to protection be ex hypothesi excluded....the enquiry will concern itself only with the examination of the alternative policies.”
Yes much of the body section and wings may be outsourced, but employment at the assembly plant in Everett has done nothing but gone up because of the huge sales of this popular new airplane.
I said it was a successful business model...but not for the long run. And it isn't anywhere near what we used to have when we were churning out 747s.
And how much of the success is the 'fight fire with fire' corruption of the free market, and how much would the foreigners have bought had the production all stayed in the U.S....a U.S. that finally forced a level playing field ala' Airbusted. We won't know, because it wasn't tried. The fire that Airbus brazenly represents...and even flaunts...has not been put out in the slightest. Indeed, even now they are openly being protected from even their huge mistakes, ala' the A-380 financial disaster. Subsidy after subsidy. And the U.S. Administration closes its eyes, and says nothing.
The study concluded that in 2004 as many as 406,000 jobs shifted from the U.S. to other countries.The true impact of outsourcing remains controversial. "There's mass confusion in the field on this one," said regional economist Scott Bailey of the state's Employment Security Department. Undeniably, Boeing, in seeking to stay competitive with Airbus, has dramatically reshaped airplane production as a global partnership with overseas suppliers of parts.
A spokesman said Boeing does not have data on how many of its layoffs could be attributed to outsourcing.
A January 2005 report by state economic analyst Alex Roubinchtein estimates that the aerospace-employment decline is one-third cyclical and two-thirds due to permanent structural changes — factors that include increased imports from outside the U.S. and increased productivity.
That means as many as two-thirds of the 51,000 local aerospace jobs that Boeing cut from 1998 through 2004 may have permanently disappeared.
http://seattletimes.nwsource.com/html/localnews/2002243920_postmanuside17.html