Mulally: Global Boeing must share

The News Tribune ^ | 02/07/02 | John Gillie

[Dead Dog]

I think by "Goeing Global", corporations no longer call themselves "American", nor do they want to.

[Dead Dog]

If you think about it, all this can do is drive down the wages of domestic engineering. So engineers have three choices;

A). accept getting paid less then a high school dropout.

B). move to a third world country and join a growing middle class under a benevolent dictater, while being paid less then a high school dropout

C. Grow a pair, like some very wealthy college dropouts, and go into business for our selves. Some of us may become the next Jack Northrops and "Kelly" Johnsons.

[Dead Dog]

What he didn't say was "Why should we pay American workers a living wage, when the Red Chinese Army provides us with slave labor ??"

Living wage is a misnomer, I can live off minimum wage, just not prosper. It should be "free market price". In in true cost, Boeing isn't going to save any money buying parts overseas to feed assembly lines here. After all costs are considered, supporting "Just in time manufacturing" with suppliers at the other end of a 3 week boat ride is not cost competitive. However, it initially looks like a savings on the balance sheet. In Shareholder Value, perception is everything. Unfortunately, for buy and hold types, reality counts in the long run.

This is especially true for "intellectual capital", engineering, that accounts for less then 3% of program costs.

[L_Von_Mises]

However, in getting an MBA, I learned that Boeing messed up big time by not shifting, say some of the wing construction to the only European firm that could do it, essentially eliminating a necessary and strategic component from a startup called Airbus.

My understanding of this issue is that building the wing is the true "black art" of airplane construction. They wish to keep production that component in the US to ensure that no one else takes their engineering and applies it to their products.

Regarding oversees production, I believe that many countries have domestic content rules for certain purchases. Airplanes fall into this category, so in order to be able to sell them the planes they set up shop in those countries to produce enough of the content there to satisfy the requirements.

It makes for difficult decisions - either don't make the sales in those countries or produce some of the content there and make the sale. I believe that a large portion of the tailsections for Boeing's planes are made in China as a result of the large purchase the Chinese made a few years back.

Their main competitor - Airbus - is heavily subsidized and it is difficult to compete in a market where your competitor is playing by a different set of rules.