Boeing cutting more than 12,000 U.S. jobs with thousands more planned

https://www.reuters.com/article/us-boeing-jobs/boeing-laying-off-6700-u-s-workers-with-thousands-more-planned-idUSKBN2332EP

by hhs • 6 years ago

588 465 6 years ago

reuters.com

eric_khun• 6 years ago

Bad news for the economy. Market is going to new highs today

Iwan-Zotow• 6 years ago

great news for people flying around

sharkweek• 6 years ago

pRiCed iN.

I joke, but also, I throw my hands into the air and say, "damn, I honestly have no idea how this all works, best just stick to target date mutual funds."

bcrosby95• 6 years ago

Free money has to be put somewhere.

markus_zhang2• 6 years ago

the worse the economy is the more Fed will intervene and the higher the market will?be. same thing happened back in previous QEs.

rrmm2• 6 years ago

I will continue to refrain from looking at anything the Fed might be doing. I already have enough on my plate to worry about.

baq• 6 years ago

less jobs == less cost

MattGaiser4• 6 years ago

Boeing is in the worst-performing segment of the economy for the foreseeable future.

munificent2• 6 years ago

Market is going to new highs today

The top 1% in American own more than 50% of the securities. Using the stock market as any sort of proxy for aggregate quality of life for all Americans is like saying "Everyone must be doing great, caviar sales are through the roof!"

SV_BubbleTime• 6 years ago

There is zero rationality in the market right now. Making good money on short term options but man this doesn’t seem “right”.

Just looked at the stock and options for Boeing. Going to sit this one out. I would normally be ordering a put/short with this news, but the way things are going wouldn’t be surprised to see their stock rise.

Nothing makes sense.

MattGaiser4• 6 years ago

Aviation is going to be the last thing to recover so this is unsurprising. I could easily see it being years before new aircraft are ordered as there are just so many parked right now.

rrmm2• 6 years ago

And Boeing wasn't really on a winning streak going into all this.

nickff5• 6 years ago

In some ways, this may have taken some pressure off them, and given them some time to catch up, though it seems likely this recession will just hurt Boeing less than Airbus (as the latter was in a better sales position going in).

misiti3780• 6 years ago

hopefully flights will be cheaper too, but i doubt that will happen.

MattGaiser4• 6 years ago

No they wouldn't as the only people who are flying are going to be those who need to fly, not those who decided to hop down to Mexico for a week as it was cheap.

Avalaxy• 6 years ago

Even cheaper?! If anything I think prices should be tripled. It's ridiculous how cheap it is to fly nowadays. Often cheaper than way more environmentally friendly ways of travelling.

SpicyLemonZest2• 6 years ago

I unfortunately think that flights are likely to end up at a more expensive equilibrium. There’ll be a lot less pressure to cut costs and a bit more pressure to improve the experience, now that all the lifestyles revolving around regular air travel have been disrupted.

kube-system• 6 years ago

You get low ticket prices when the air is full of big efficient planes, consistently full of passengers, being used around the clock, in competition with many other airlines.

We should expect an increase in ticket prices over the coming years.

nostromo• 6 years ago

Flights will get more expensive as there will be less competition after the shakeout.

The same thing happened after 9/11: fewer carriers, fewer options, and higher prices.

mark-r• 6 years ago

For the short term they are definitely cheaper, the airlines are desperate to get people back in the habit of flying. My son is going to a camp halfway across the country later this summer, and their original plan was to take a train. After checking the plane fares a couple of weeks ago they changed their mind and are going to fly.

wongarsu5• 6 years ago

An Aircraft's lifetime is mostly determined by how often it starts, because of the stress of going to low-pressure high-altitude and back. All these aircraft not flying will seriously cut the rate of new orders even in the months after airlines recovered.

markrages• 6 years ago

From article:

The company announced in April it would cut 10% of its worldwide workforce of 160,000 by the end of 2020.

From boeing.com:

The company employs approximately 145,000 employees across the United States and in more than 65 countries.

90% of 160 is 144. The math checks out.

hhs2• 6 years ago

That Boeing website you note may be referencing old data. Based on their 2019 annual report, on page 18 under item 6, Boeing cites that they had a year-end workforce of 161,100 employees. The annual report is available here: https://investors.boeing.com/investors/financial-reports/def...

So, the article is roughly correct.

wongarsu5• 6 years ago

The company announced in April it would cut 10% of its worldwide workforce of 160,000 by the end of 2020

With production halted for indefinite time for the 737 MAX, and no new orders for other planes due to covid that seems reasonable.

Still, even if planes don't do well right now and they had a few setbacks in their space business (Starliner delayed, and Boeing's moon lander proposal losing to competitors), they are still one of the largest defense contractors. They will be just fine.

pyromine• 6 years ago

It's not so much with regards to whether boeing will be fine, it's more about how the general state of the economy as a whole.

rhizome• 6 years ago

Wars are a cost center. The US is eventually going to have to start redirecting tax revenue back to taxpayers, away from the military.

sachdevap• 6 years ago

Says who? If history is any proof, I highly doubt this will happen.

Antecedent2• 6 years ago

A draft would do wonders for the unskilled unemployment rate.

rayiner3• 6 years ago

U.S. governments spend almost $7 trillion annually. Federal defense spending is a bit over 10% of that. Does 90% not count as "redirecting tax revenue back to taxpayers?" At what point does it count?

munificent2• 6 years ago

They will be just fine.

Except for the thousands of people that are now unemployed.

sixstringtheory• 6 years ago

With production halted for indefinite time for the 737 MAX

I just saw this: "Boeing resumes production of its troubled 737 Max airplane " https://www.theverge.com/2020/5/27/21272478/boeing-737-max-r...

hellogoodbye• 6 years ago

Meanwhile SpaceX is launching a manned flight today

wongarsu5• 6 years ago

Which is relevant insofar as Boeing's Starliner was on track to be the first American vehicle to deliver astronauts to the ISS in nearly a decade, but after their pretty bad test flight SpaceX overtook them and are now getting that sweet PR instead.

khuey• 6 years ago

It's been a bit of a horse race. SpaceX was kind of in the lead for a while but then their capsule's thruster blew up in a ground test which set them back several months. Then Boeing failed their test flight which let SpaceX get back in the lead.

imglorp• 6 years ago

Especially sour because ULA/Boeing is not expected to try again until October (unmanned) for their commercial crew ISS mission, first manned in 2021.

rubicon33• 6 years ago

Reminder for those with Oculus Rift / Oculus Quest:

You can view the event in VR using Bigscreen! Today at 1:30 PST

Pop on your Quest, search for "Bigscreen" (it's called Bigscreen (Beta)) ... Then show up at 1:30!

danans3• 6 years ago

How is this relevant at all? Boeing's cuts are being caused by a collapse of its commercial airplane business brought on by the pandemic. SpaceX doesn't compete in commercial aviation at all.

If you're referring to SpaceX winning the launch contract over Boeing, that happened a while ago, and has no connection to the pandemic or this layoff.

Congratulations to SpaceX for their accomplishment today, but it's neither here nor there for the topic of this article.

wongarsu5• 6 years ago

Boeing's Space branch hasn't been doing well in general. Starliner delays lost them a big PR opportunity, their Delta IV rocket is getting increasingly fewer launches due to Falcon 9 being a serious competitor, and their moon lander proposal lost to much less well established competitors.

Their problems in commercial aviation are undoubtedly worse and the bigger reason for this layoff, but another major division struggling certainly didn't improve Boeing's situation.

mcv3• 6 years ago

I feel sorry for the people who lose their jobs because of this, but I think less air travel would in many ways be a good thing for the world.

fermienrico3• 6 years ago

Agreed. Furthermore, traveling is overrated - yes I said that. Traveling to other places IMP is not as fun as going to national parks and exploring nature right here at home. Just my personal take on it - I’ve travelled extensively and I don’t enjoy it anymore.

hyperbovine• 6 years ago

I’ve travelled extensively and I don’t enjoy it anymore.

But that's because there are so many other travelers. Conditional on survival, travel is looking more appealing post-COVID.

ch4s39• 6 years ago

So because you don’t enjoy ANYMORE, other people shouldn’t be able to enjoy in the first place?

vmception• 6 years ago

Yeah not all of us travel to compare national parks and nature. Bird watching in the Aleutian Islands would be a drag for most of us.

On the other hand, events with friends, lovers, annual festivals (yacht weeks, film festivals, music festivals), getting immersed somewhere else so long that you take classes and go about the day to day with others in the class, actually enjoying taking cross country trains because they are a fast and viable form of transportation. Can't wait till that is viable again! Many of those things are possible in the US, many of the events are just not in the US and their original locations are better for it, there are also lots of people not interested or capable of coming here, who I like to be around.

st1ck• 6 years ago

Even if I agree with your argument, not everyone lives near nature and national parks. Many people live in cities without sea, mountains, canyons, forests etc.

ch4s39• 6 years ago

but I think less air travel would in many ways be a good thing for the world.

This seems overly myopic to me. Aviation accounts for at most 2% of global juman CO2 emissions during normal years. I think you could come up with dozens of arguments for why it’s a net good. For example, tourism has income allows small island nations to better financially prepare for rising sea levels far in excess of aviations contribution to sea level rise. Not only that, but travel exposes citizens of wealthy nations to the real living conditions of people in developing nations, which can have a number of positive political effects.

adrianN2• 6 years ago

Aviation has a relatively low percentage of total emissions only because globally almost nobody can afford to fly. For a rich person like you and me, a transatlantic trip is a good way of doubling your emissions for the year.

blululu• 6 years ago

2% of CO2 emissions is a lot when you consider the number of people who produce it. For anyone who flies regularly it will typically make up the lion's share of their carbon footprint.

leetcrew• 6 years ago

2% is not negligible. that's about a fourth the emissions share of cars, which are much more essential to daily life where they are used. we don't have the emissions budget for any sacred cows; we need to see a big cut from every source of CO2.

the arguments you gave are not that compelling. air travel doesn't need to disappear entirely, but the environment would benefit from having it be a good bit more expensive. part of this could be increased airport fees to help the island nations recoup some of the revenue.

Not only that, but travel exposes citizens of wealthy nations to the real living conditions of people in developing nations, which can have a number of positive political effects.

maybe so, but I doubt you could measure this with enough confidence to use as a basis for policy.

sodafountan2• 6 years ago

Yeah that's not how it works, people losing their jobs and others being unable/unwilling to experience the world and travel is a very bad thing for the world.

toomuchtodo4• 6 years ago

There are other jobs, and I would like to see objective evidence that those wealthy enough to fly international derive more value from "cultural experiences" than not putting those metric tons of CO2 into the atmosphere.

kyuudou3• 6 years ago

Less military activity, air and otherwise, would be exponentially more effective. No one wants to kill their golden goose, though.

hhs2• 6 years ago

This is the letter from the Boeing CEO: https://boeing.mediaroom.com/news-releases-statements?item=1...

DC-34• 6 years ago

This is just the start of the trouble for Boeing. They are technologically quite substantially in arrears to Airbus, and with none of their products able to pull in particularly hefty profits anymore they don't have the funds to make the necessary investment in R&D to close the gap. The double-punch combo of the 737 MAX scandal and the pandemic will have left them in serious strife.

JumpCrisscross• 6 years ago

They are technologically quite substantially in arrears to Airbus

I thought Boeing’s composites tech is way ahead of Airbus’s.

the_mitsuhiko3• 6 years ago

In which way?

KingOfCoders2• 6 years ago

No, but it probably depends on your definition of "way ahead".

Gibbon13• 6 years ago

Course Boeing outsourced a lot of that technology to save money. Which didn't save money and now the tech is available to their competitors.

noir_lord• 6 years ago

US Gov will bail them out (even if optically it doesn't look like a bail-out), boeing is a huge defence contractor.

SpicyLemonZest2• 6 years ago

Certainly, but Boeing stripped down to just its defense contracts would be a huge fall.

danans3• 6 years ago

The article is about the jobs disappearing, not Boeing disappearing.

Any such bailout isn't going to be enough to bring back jobs in the commercial aircraft business, which is likely where most of these job cuts are coming from.

dougmwne• 6 years ago

Yes, but there's more than one way to save Boeing's defense business and recent scandals have left them with less political capital then they would have otherwise had. There's no guarantee post-bailout Boeing would be the same company as pre-bailout Boeing or even remain a single company.

alharith• 6 years ago

Then they can focus on just being a defense contractor. But there's nothing that requires them to bail out the commercial airline business, and it wouldn't be the first time a major aerospace and defense company made this pivot. When Lockheed merged with Martin Marietta, they stopped making commercial airliners.

rcpt• 6 years ago

Something like 70% of Boeing revenue is commercial jets

xtian• 6 years ago

If they get bailed out, the US public should get an ownership stake.

2OEH8eoCRo02• 6 years ago

I'm not so sure about that. Contracts are routinely picked up by others if one fails. Not only this but even if they fail they could partially fail and kill the commercial aircraft arm of the company but keep the juicy defense arm.

hajola2• 6 years ago

They are technologically quite substantially in arrears to Airbus

Could you expand on that?

CydeWeys7• 6 years ago

For starters, their highest selling plane, the 737 series, is a six decade old obsolete fly-by-mechanical-cable design that sits too low to the ground to fit large modern high efficiency jet engines.

Airbus and Embraer both make substantially better planes in the same/similar segment.

the_mitsuhiko3• 6 years ago

I think the better way to describe this would be that Airbus has more of their plane models be on a modern base. All of Airbus models are fly by wire and almost all share the same type rating.

Specifically the 737 and 757 are based on very old designs.

DC-34• 6 years ago

Airbus has the A320 line, which is a quantum leap ahead of the 737, and the A220 line, which is another leap ahead of that. The latter, which for my money is the best commercial jet in the world right now, also benefits from not being subject to import duty in the US, which was previously the main reason besides patriotism for US airlines to buy Boeing narrowbodies. In addition, although Boeing's widebodies are not obsolete in the same way as the 737 is, the A350 is probably the best long-haul jet in the world right now. In the past, Boeing used to make massive profits on 747s because no-one else was selling super-high capacity planes, but the A380 squeezed their margins to the extent that they had to pursue the sticking-plaster MAX instead of a clean-sheet replacement.

SilasX4• 6 years ago

Off topic, but: I had never heard that usage of "in arrears", and it sounded off because it doesn't even work metaphorically with the usage I do know, so I looked it up and ... "It's a secondary definition, sir, but it checks out."

2. (of a competitor in a sports race or match) having a lower score or weaker performance than other competitors.

‘she finished ten meters in arrears’

https://www.lexico.com/en/definition/arrears

susodapop• 6 years ago

FWIW I grew up in Alabama in the 90’s and this expression was not uncommon. Often used to express late child-support payments.

ryguytilidie3• 6 years ago

That's funny. I was aware of the secondary usage, but not the primary.

CydeWeys7• 6 years ago

Arrears is derived from an old French word that literally just means behind. I've seen it used in English with that meaning in ways that are more generic than specifically referring to payments.

ddingus• 6 years ago

Word of the day is always fun. I see this one used in accounting frequently.

This use here is spot on, but not common.

I like uses like this one. Gives a bit of texture to the conversation.

DC-34• 6 years ago

I'm slightly surprised to see that this definition is considered obscure. Perhaps I've been disproportionately exposed to it through my slight obsession with motor-racing :-) Having said that, Boeing's situation is closer to the first definition of 'debt' than you might imagine, if you consider the idea of 'technical debt', a concept that (at least in a software context) most of the HN crowd will be familiar with. The 737 is in a recognisable state of technical debt - if it were a software product, its innards would be written in FORTRAN.

Aloha4• 6 years ago

I dont really agree with your assertion that Boeing is unable to fund future development - they have a big bucket of cash, they appear to have no trouble borrowing, and they have profitable military programs. They should be able to fund a new narrow body jet with ease. Heck, a modernized 757 would be fairly cheap to design/build and its effectively still a pretty modern airframe too.

ProAm• 6 years ago

Defense contractors never go out of business, the US government will save this company.

dannyw2• 6 years ago

They have no trouble borrowing because the Fed essentially signalled they’ll pull out all stops to help Boeing bonds.

Havoc2• 6 years ago

a modernized 757 would be fairly cheap to design/build

A bit like they modernized their 737?

dcolkitt• 6 years ago

they appear to have no trouble borrowing

In the sense that they can still access liquidity from credit markets, yes. But they're paying a pretty hefty interest rate of 4.50% over the risk-free rate.[1]

That kind of borrowing cost, when compounded, starts to become pretty crippling for any sort of long-term R&D or product development. Compared to a high-grade corporate, a project with a 10-year payback time is 50% more expensive at Boeing's current cost of borrowing.

[1] https://www.marketwatch.com/story/boeing-lands-25-billion-de...

Xixi4• 6 years ago

My opinion only:

The 757 is out of production, although the tooling is in storage somewhere. Restarting production would be a huge undertaking by itself, not accounting for modernizing the airliner. It's all blueprints on sheets of paper. And Airbus could quite easily answer with a rewinged, slightly longer A320 (the long-rumored A322) that they admitted to have worked on... Although so far Airbus seems content with just the A321NEO-XLR: cheap to develop, and good-enough to replace most 757 out there (more or less, depending on the model of 757 and the route).

A modernized 767, on the other hand, could be a winner: it's still in production as a freighter and has been modernized for its military variant (KC-46A Pegasus). It's smaller than the 787-8 so wouldn't canibalize sales too much. On the other side the only Airbus competitor is the A330-800 which is too long-range optimized (and thus large/heavy/expensive) to be competitive against a hypothetical medium-haul optimized 767. Really the A330-800 is not even competitive against the A330-900, Airbus shouldn't have built it at all, if you ask me...

redisman3• 6 years ago

Won’t Airbus be hit very hard by covid for the next 5 years too? Airlines are probably not too eager to order new planes for a long time

hadrien01• 6 years ago

If the market shrinks, they'll be hit just like Boeing, but there's also the current lockdown hit where Airbus has an advantage and can wait a bit more before announcing layoffs:

For now, Airbus is relying on government-backed furlough schemes in France, Germany and Britain to reduce staff costs after earlier asking employees to take 10 days’ leave.

yread2• 6 years ago

What? In the widebody market they are soundly winning. Airbus only has a warmed over a330neo to compete with 787

gmac• 6 years ago

https://en.wikipedia.org/wiki/Airbus_A350_XWB?

ryguytilidie3• 6 years ago

Completely disagree. You forgot the A350, which appears to be a better plane than the 777x. I also disagree that the A330 neo is inferior to the 787. Its cheaper, more reliable and the fuel burn isn't much different. To say they're "soundly" winning in the widebody market isn't correct, and it also leaves out the fact that the A220/A3XX is outselling the 737 like crazy.

101404• 6 years ago

And they were not considered by NASA for the moon lander project.

And they lost the race against SpaceX for crew transport to the ISS (with no ETA for certification for their crew transporter).

coliveira2• 6 years ago

Boeing will not go out of business because the government will not let it happen. All the aerospace industry starting from Boeing and ending with SpaceX is built on the pockets of tax payers. But, of course, the profits are private.

linuxftw• 6 years ago

Boeing will go out of business, it's inevitable at this point. They've outsourced too much of their core engineering competencies, core manufacturing operations, and are mostly a financial re-packager of other people's products. They can't innovate, they don't know how, they can only cut costs.

The workers they're laying off, that's the remainder of your operational knowledge walking out the door. They didn't train a new crop of engineers to replace the aging ones.

I think we'll see Lockheed or Northrup acquire whatever components the DoD needs, and the commercial aviation division will be acquired by another conglomerate.

DC-34• 6 years ago

Yeah, the saving grace for them is definitely their incestuous relationship with the US Government. But while that can save them from total collapse, it can't prop up their civil aviation activities on its own.

AnthonyMouse2• 6 years ago

The double-punch combo of the 737 MAX scandal and the pandemic will have left them in serious strife.

They're probably just redundant. The 737 MAX debacle meant they weren't going to sell those planes this year, but the coronavirus meant they weren't going to sell those planes this year. Same result from one as both.

willhslade• 6 years ago

That's... not what canceled out means.

bobthepanda4• 6 years ago

The 737 MAX was one line of aircraft. COVID is killing demand for all the other ones (777s, 787s, etc.)

foolfoolz• 6 years ago

this is not true about boeing being behind airbus. boeing saw the point to point rise and decrease of hub and spoke years earlier and invested in the 787. while airbus has poured billions into the a380, now slated for permanent production shutdown, which may have never been profitable for the company

benhurmarcel2• 6 years ago

This is history. Airbus now has the A350 which competes well against the larger 787 and smaller 777X.

riffraff• 6 years ago

Wasn't the dreamliner a great success compared to Airbus's bet on the A380? (I.e. longer point-to-point routes won over giant planes with stops).

Boeing messed up the 737-MAX but I don't remember Airbus as a huge source of innovation recently.

But I'm no aviation buff, I'd be happy to learn more.

useerup• 6 years ago

The A-320 was a runaway success which threatened to shut Boeing out of that segment. Boeing needed to do something, and fast. Hence the 737-MAX as a stop-gap until they could come up with a better competitor.

Yes, the A-380 (different segment) did poorly. Boeing actually had a nice thing going for them with the 787.

option• 6 years ago

this is a good time for Boeing to invest into R&D so that when aviation does recover (a while from now) Boeing would be ready with a novel high quality offering.

Antecedent2• 6 years ago

Happy I studied engineering in university at times like this.

lfrmgnd• 6 years ago

If markets continue to behave as they have, this job cut is a signal that BA is going to soar in the next few days.

Frost1x• 6 years ago

I suspect you're, unfortunately, going to be correct.

https://www.nasdaq.com/market-activity/stocks/ba

It's interesting how the common narrative uses metrics like low unemployment rates during certain touted "economic highs" and claim correlates, yet the popular narrative casts aside the correlation during times like this and jump into ambiguities and positive outlook for justification during certain "economic downturns."

It really, IMHO, helps illustrate just how disconnected many of these metrics are from economic prosperity for the vast majority of Americans.

hinkley2• 6 years ago

Boeing kinda does this though. The fact that Boeing benefits accumulate based on time employed and not duration of employment is a nod to this.

They have a reputation for building a 'company within the company' for new plane models, which basically means there's a lot of vertical integration that goes on, and you will know a great deal about one airplane but maybe not much about any of the others. At the height of each cycle they have far more people than they can sustain. They seem like a huge company but they're market cap isn't that high. Yes, they have a bigger market cap than Detroit, but it's also been over 10 years since Apple had enough money its war chest to buy Boeing for cash.

So when a plane hits pre-production they start to get an itchy trigger finger. They get rid of the idiots and the non-essential people, and the non-essential people can hop onto the next thing in a couple of years.

There's a graph in this article that illustrates:

https://www.seattletimes.com/business/boeing-aerospace/in-go...

They hired like mad for the 787, then did a round of R & D layoffs a while after the first flight. If I'm not mistaken the rampup of staff after that was to build all of the -8 planes which were basically redesigning their other planes with 787 tech.

So it seems the new triple-7 flew in January, so yep, time to trim again. Meanwhile all of those people on the 737-Max are probably furloughed, or retraining on another assembly line, and there would not be an infinite supply of those even without Covid.

It might be more noteworthy to look at how many people haven't been laid off in a lockdown situation. A long time ago, the powers that be in Washington state looked at traffic patterns around Puget Sound and realized that Boeing commuters were a large percentage of this traffic. Boeing has offices all over King County, but the project you work on might be at an office across town, and you might pass several offices on your way to work.

So they made a tax deal with Boeing to divert traffic rather than building more roads. My understanding is that as part of that Boeing allowed people to work from other branch offices, and while working from home wasn't encouraged, some bosses would let you get away with 1 day a week telecommuting. And I'm not sure when 4x10 and 9x9 schedules (four day workweek, 10 hours a day, or 9 day fortnight, 9 hours a day) came in, but those helped too.

Conference call software de rigeur, and whole disk encryption since before it was cool. There are a lot of quite old building blocks in place for at least some departments to keep working without being in the same room.

KptMarchewa2• 6 years ago

Boeing benefits accumulate based on time employed and not duration of employment

What does that mean? What's the difference between "time employed" and "duration of employment"?

hinkley2• 6 years ago

Leaving Boeing stops the benefits clock instead of resetting it.

A lot of old companies had benefit carrots designed to keep you from leaving, so those benefits come on work anniversaries, rather than cumulative years of service. If you leave at 4 years to start your own company and then get bought or come back, tough luck, you start over.

If you worked at Boeing off and on for your whole career you'd still be in the pension program, even if you kept leaving every 4 years to do something else.

Avicebron6• 6 years ago

Now maybe we can acknowledge the US shouldn't have axed development of a robust high speed train system.

zitterbewegung2• 6 years ago

Which would be unusable due to the same conditions?

Avicebron6• 6 years ago

temporarily, but under the guise of defense/critical infrastructure it's imaginable there would still be jobs available building the system.

redisman3• 6 years ago

Well we got some ideas for further stimulus for this and next year

jrockway2• 6 years ago

I think the fears that are keeping people off airplanes are also going to keep them off high speed trains.

I am dreading New York City reopening because everyone is just going to drive to the city instead of taking public transportation. And it was already overrun with cars.

toomuchtodo4• 6 years ago

Raise tolls, promote remote work unless you absolutely need to be in the city. Use economic incentives to destroy demand for unnecessary vehicular travel.

rayiner3• 6 years ago

Why is that? Bailing out Boeing every now and then is almost certainly cheaper than bailing out a rail operator to the tune of tens of billions of dollars every year, and still having them teeter on the verge of insolvency: https://skift.com/2018/03/05/frances-rail-system-is-falling-...

Underused stations on expensive tracks are one of the many reasons France’s vaunted rail system is insolvent, subsisting on life support from the state. Rail operator SNCF runs an annual deficit of 3 billion euros despite receiving 14 billion euros of public subsidies annually—just under half the defense budget. Its debt, at 45 billion euros, equals the national debt of New Zealand.

pen2l• 6 years ago

Uh, please stop downvoting rayiner. He didn't say anything wrong or kooky, on the contrary he provided an interesting, substantiated counter-point not often heard around these parts. Do you people _want_ HN to become an even worse echochamber?

Secondly, it makes it hard for me to read because it's light-colored text on light background. So knock it off.

simias2• 6 years ago

It's important to point out that it's low speed, aging infrastructure that's a big problem for French rail. Bullet trains make a lot of money and in general people complain because as a result the SNCF invests a lot more into the high-speed infrastructure than to maintain the old, slow, regional lines.

The high-speed axes like Paris<->Marseille or the Paris<->Bordeaux are definitely not underused and the tickets are quite expensive, often more so than plane tickets but trains are generally a lot more comfortable and convenient (and about as fast or even faster door-to-door).

More broadly the problem is whether you consider that the SNCF should be run uniquely for-profit (in which case they'd probably end up closing all the small regional lines and only run the bullet trains) or if it's a public service that can lose money if it provides an important service for the citizens (in which case it makes sense to maintain the local lines even if they lose a lot of money).

dangus4• 6 years ago

I want high speed trains as much as the next person, but they don’t work for the United States in the same way that flying does.

High speed rail would work on the coasts and in specific intercity regions. There most definitely should be high speed rail between nearby large cities - Texas, the Midwest, and California could really use high speed rail systems.

But the lack of these routes aren’t necessarily a disaster at present, especially when Americans generally need a car at their destination anyway (thanks to irreversible city planning from the past).

What high speed rail can never compete with are flights across the huge country.

The world’s largest high speed rail network in China doesn’t have to deal with United States sized distances. All Chinese cities are relatively close to the eastern coast.

And all Chinese cities are easy to traverse and live in without owning a car. The whole concept of the automobile-based single family home detached suburb doesn’t exist there.

Even with these advantages, a high speed train from Beijing to Shanghai (about 5 hours) barely competes with a flight on a low cost airline. It’s slower and not even very much cheaper.

Beijing to Shanghai is about 640 miles by plane. That distance wouldn’t even get you from New York to Chicago. Now imagine trying to get from New York to Orlando (940 miles) or Denver (1600 miles).

A high speed train simply can’t go fast enough to compete on price nor time (remember: more time in transit means more salaries paid to crew).

markus_zhang2• 6 years ago

Train beats airplanes by other factors e.g. easy transition to subways so people spend much less time going to the train station than airports; also airplane especially the cheap ones tend to delay for X hours without notice while trains are usually on time. Also trains are much more comfortable.

hanniabu• 6 years ago

It's probably for the best. Would have costed 10x as much as trains in other countries at 1/4-1/3 the speed. You're paying for a lamborghini and getting a honda civic, and you won't get it for a decade.

blaser-waffle2• 6 years ago

Perhaps. I recall articles about how expensive NYC Subway projects are...

OTOH how much more expensive is running international aiports, airplanes, and jet fuel?

Plus flying sucks, even at the business and first class. Amtrack wasn't amazing but I had way more seat space with a basic ticket and didn't have to get irradiated and searched just to get on a plane.

Someone12342• 6 years ago

I find it all frustrating as heck.

The hardest part about building a railway is the land-rights. You need a straight path from A->B, wide enough for at least two lines and fence. But once you have that then re-using that corridor as railway technology improves is very cheap proportionately (e.g. train densities, train speeds, etc).

The problem is that no generation wants to take on the initial "buy in," even if it gets more and more expensive as time goes on (since there's more property/interested parties along the route).

bgorman• 6 years ago

The problem is that politics are so corrupt/inefficient in the US that the projects go 4x over budget/time with no consequences for the politicians/bureaucrats/contractors who let things like this happen.

Just look at the Honolulu Rapid Transit Projects and California High Speed Rail projects.

adrianmonk• 6 years ago

Maybe so, maybe not, but what's the relevance? We're discussing something generally transportation-related, so let's discuss trains vs. planes too now?

It seems like you're trying to make a connection here, but it's not clear what it would be.

__abc2• 6 years ago

I'm too lazy to look this up, and probably a bit too cynical, but how much stimulus money did they receive?

CubsFan1060• 6 years ago

I believe $0: https://www.cnbc.com/2020/04/30/boeing-raises-monster-25-bil...

__abc2• 6 years ago

Ah, thanks. See, too cynical :)

hn_throwaway_992• 6 years ago

Really feel for those employees in a time like this. I mean, if you're a web software engineer and you get laid of, there are literally many thousands of companies who would have a need for your skills. If you're an aerospace engineer, how many options are there really besides Boeing and a couple of other big guys?

Curious what folks in the aerospace community think.

jw887c• 6 years ago

Ex-aerospace engineer here, now software developer. This is one major reason why a lot of younger folks at Boeing leave (at least the ones with a more broader view of their industry).

A lot of "engineers" at Boeing are actually project / program / product managers and can pivot to similar roles at tech firms. The stress engineers have it a lot tougher.

raverbashing4• 6 years ago

The stress engineers have it a lot tougher.

Well, there's always automotive, aerospace, manufacturing, etc.

For mechanical engineers, market is not great, but not too bad I guess.

aerospace_guy• 6 years ago

Fortunately, there are a lot of aerospace companies still hiring. Look at the aerospace hubs (Seattle, Houston, Huntsville, etc.), the defense and space side is still booming.

downerending• 6 years ago

I knew an engine mechanic at TWA when it folded up. He switched to auto transmissions and heavy drinking. :-(

momokoko3• 6 years ago

Software engineering has almost zero transferable skills and as developers in high wage countries are about to find out, very easy to move to cheaper markets.

I wouldn’t be worried if I was in Poland as a web software engineer. I would be very worried if I was doing that in the United States right now.

We’ve seen many times already how fast software jobs dry up in high wage countries when the economy changes.

hn_throwaway_992• 6 years ago

This is simply ludicrous. I was around in software during the .com bust in 2000, and again during the financial crisis in 2008-9. At both times there were plenty of chicken littles saying all software dev would be outsourced to India and China. Both times software dev positions came roaring back with even higher salaries than before.

coliveira2• 6 years ago

Boeing will survive on the backs of the government, but GE is going to have to do a lot more to survive this. Every time people mentioned that GE is going belly up they said: no, GE is still the leader in aviation engines. Also, GE has billions of dollars in loans that need to be repaid, and they were counting on selling some of their business to make the payments. Some people thought that they were in great shape for "recovery".

aluminussoma• 6 years ago

A lot of Boeing's current dilemma is the failure of executive management. A commonly written story is that the competent executives at Boeing, who were focused on solid engineering, were pushed aside by the political McDonnell Douglas executives.

McDonnell Douglas was purchased almost 25 years ago, so perhaps it may be a little unfair to ascribe all of Boeing's current problems to that one event. Still, as an engineer, I can't help but notice executive management operate in similar politically-bent ways at some tech companies I've worked at.

Analemma_• 6 years ago

McDonnell Douglas was purchased almost 25 years ago, so perhaps it may be a little unfair to ascribe all of Boeing's current problems to that one event.

Planes have a very long development cycle. If the foundations at Boeing started rotting on the day of the McDonnell-Douglas acquisition, it makes sense that we'd only start seeing it fall apart now.

subzidion• 6 years ago

"McDonnell Douglas bought Boeing with Boeing's money" as the saying goes...

tjohns• 6 years ago

I'm curious if this impacted the Foreflight development team, since they were recently acquired by Boeing.

I'm really hoping not, since Foreflight is my favorite app for aviation and up until now has been doing a great job of adding new functionality.

ccostes• 6 years ago

Totally forgot that Boeing owned them. They have been on fire lately with all the new features and I hope this doesn't impact them.

marcus_holmes8• 6 years ago

This is what happens when you let the accountants run the business.

First the research goes. Then the product engineering drops. Then there's mass layoffs. Then the whole thing falls apart.

To an accountant, a drop in costs is as valuable to the business as a rise in revenue. To everyone else, this is obviously not true. Risking future profits to cut current costs is a great move according to an accountant. For everyone else, it's corporate suicide.

Edit: I realise COVID. But that's the excuse, not the reason.

toomuchtodo4• 6 years ago

I cannot agree more, and yet it’s hard to keep these people out of going concerns.

Avicebron6• 6 years ago

I find it amazing how much good companies will sacrifice for a good quarter or so of "growth". Great R&D can be unprofitable for a long time until it's suddenly Bell Labs. That doesn't happen without some infrastructure, but an accountant rocks up and suddenly the company is a husk, time and time again.

CreRecombinase• 6 years ago

Even Bell Labs wasn't suddenly Bell Labs though. Even when Bell Labs was "Bell Labs", was it ever profitable for those who were footing the bill (as opposed to society at large, which it obviously was)?

Ididntdothis2• 6 years ago

Almost nobody who has a say has any incentive to think long term. For a CEO the next few years are important, shareholders can jump ship anytime. It’s a total alienation of somebody’s actions from the long term consequences.

type-2• 6 years ago

How many accountants are making these executive decisions?

corebit• 6 years ago

The CEO of Boeing graduated with an accounting degree. He is literally an accountant.

ksj21142• 6 years ago

I've worked on many cost cutting projects in the past, in consulting and private equity where cost-cutting was the norm. These statements very easy to say in retrospect.

Many studies show that private equity owned companies, which typically run businesses the leanest, actually perform better.

chucksmash• 6 years ago

For which measure of better?

burkaman2• 6 years ago

Can you link to any of those studies?

dustingetz• 6 years ago

It's not the accountants' fault. The only force binding together the thousands of people that make up a corporation is the accounting (accountability). Before the advent of accounting, there were not corporations, as any concentration of capital would be immediately diffused through fraud. It would be great if society could figure out how to be accountable to metrics other than profit and revenue, but so far we haven't figured out how to measure anything else, so we can't optimize for it.

samatman• 6 years ago

The person you're replying to isn't saying not to have accountants. That would be absurd.

They are saying, clearly: don't let the accountants run the business.

rchaud3• 6 years ago

This is what happens when you let the accountants run the business.

You're shooting the messenger when the core issue is that Boeing, like all publicly traded companies do not have medium to long-term views for their business. It is always quarter-to-quarter. That is what management is judged on, because their job and their compensation is tied to maximize shareholder returns.

manquer3• 6 years ago

While generally true, The medium term view is why they need to let go in the first place .

I am guessing aircraft manufacturing is going to severely depressed in the medium term. Customers are delaying deliveries, canceling orders etc. Demand will likely not return to pre covid levels in even one year. Even if it does, airlines are not in any financial position to make significant purchases for few years. On top of it 737-MAX issues and resulting hold in manufacturing of that line has not left Boeing in a great shape.

brobdingnagians• 6 years ago

This is one of the best arguments I can think of against having large corporations with "corporate person hood". It does enable large capital accumulation over time, but that capital accumulation eventually becomes so de-personalized in how it gets used that it becomes detrimental to society. A single private owner tends to care and have more purpose, more personal stake in real long-term growth, and can take the real risk of investment. Corporations, as we see more and more, get huge amounts of capital and then start gaming the system for short term executive bonuses.

BurningFrog• 6 years ago

If large companies didn't plan beyond the quarter, a lot more of them would be failing all the time.

You can't even build a factory in a quarter.

In reality larger companies usually prosper for many decades, because they do plan long term.

chaostheory• 6 years ago

Quarterly pressure from Wall Street is not a good excuse. That just means that the CEO and other C-level execs are just ineffective leaders. People who are too far removed from the product, i.e. bean counters with little passion for the technology and industry, tend to make bad leaders for firms like Boeing.

tryptophan• 6 years ago

like all publicly traded companies do not have medium to long-term views for their business

Why do people keep repeating this garbage over and over and over? It just isn't true.

Amazon literally didn't make profits for 10 years. Many other tech companies haven't made a cent yet, but investors are looking 5-10 years into the future for those.

Some businesses just make bad decisions, others make good decisions. Overall the free market/public corporation system is a resounding success. Just because boeing messed up doesn't say anything about the rest of the system.

ChuckMcM• 6 years ago

In my experience at the executive level of a company this was never the case. There were always 1 year, 3 year, and 5 year plans in place.

Long range plans get re-evaluated periodically because things change, both technology and markets but I have never experienced them being either ignored or thrown out in pursuit of the quarterly 'numbers.'

That said, if your senior management doesn't understand all aspects of your product value, they will make poor choices both in the short term and for the long term.

_bxg14• 6 years ago

I think it would be more accurate to say this is what happens when you let the shareholders who are too far removed from the business itself run the business. Those are the people who'd like a company to be a simple growing-asset in their portfolio, who specifically don't want to be bothered with its nuances or long-term health, and who have the leverage to impose their ill-informed will on everyone else.

I have a pet theory that a large portion of the decay in our society can be traced back to the layers of abstraction between stakeholders and the things (and people) they have power over. Usually this kind of thing doesn't happen before a company has gone public.

cls59• 6 years ago

Or who don't even care about the long-term health. Extract all you can today and dump the remains. Having a company that remains healthy and prosperous for generations is not an outcome that some investors seem to be optimizing for.

oaiey• 6 years ago

To the point. Thanks. Modern capitalism is not good for companies, people and society as a whole.

pjmorris• 6 years ago

I have a pet theory that a large portion of the decay in our society can be traced back to the layers of abstraction between stakeholders and the things (and people) they have power over.

My pet theory is a specific instance of yours: MBAs wielding spreadsheets (and, more generally, analysts wielding databases) is the abstraction layer.

michaelt2• 6 years ago

If you're interested in corporate governance, you might enjoy reading the book "Pay without performance"

One of the points it makes is that shareholders have very little power in practice, as even if you own a million dollars of Apple shares, that's only 0.00007% of the company. Not exactly enough to force through a motion on your own.

And if you think you'll build up a coalition to get a majority? Good luck doing that when you can't even find out the names of other shareholders.

Minority shareholder lawsuits? They're actually a negligible force; rare, unlikely to succeed, and low impact even when they do.

And that's without getting into 'preference shares' that grant CEOs outsized voting rights.

The book argues management can neglect shareholders' interests with impunity for these reasons.

mpalczewski2• 6 years ago

share holders? The same "passive investors" that are buying an index fund that includes Boeing.

It's not about leverage it's about taking time and figuring out what you are investing in. Everyone wants the free ride of "investing" nobody actually wants to pick stocks by doing research into which companies have sustainable businesses and good governance.

achillesheels• 6 years ago

Otherwise known as the "democratic means of production" which can be measured by how many US citizens own equities (almost 50%). And let's not discount the "managerial revolution" that has occurred as management:labor ratios have exploded over time (and noted by the Pulitzer Prize winning The Visible Hand by Alfred D. Chandler, Jr.)

Causality13• 6 years ago

Were it up to me I'd personalize all liability, including legal. No more corporate fines. Fines levied against corporations should come directly from the personal fortunes of shareholders and legal malfeasance should always result in prison time for the decision makers, even if it's as little as a single week in jail.

evandijk70• 6 years ago

In what way has our society decayed?

thehappypm• 6 years ago

Accountants? Really? Accountants just provide the reports and do the diligence. Executives are the ones making these calls.

deepspace2• 6 years ago

The problem is not with accountants per se but when accountants get promoted to executive positions. They will always run the business purely on a short term profit/cost basis, whereas operations and engineering managers who get promoted will know from experience that you need to spend money in the short term to make money in the long term.

TimSchumann• 6 years ago

As someone who lives in Seattle, and has several friends working for Boeing (I think still?), this comment hits the nail on the head.

ryanwaggoner2• 6 years ago

It is bizarre and disappointing to see this as the highest-ranked comment.

Do you have any evidence that “accountants” made this decision? Or that COVID is merely an excuse?

It is blindingly obvious that Boeing has been quite adversely affected by this pandemic and that global travel is unlikely to return to normal levels for at least 2-3 years. No amount of extra spending on R&D or product engineering is going to save your airplane company when people don’t want to get on the plane.

deepspace2• 6 years ago

Here is a great article that addresses the issue : https://www.theatlantic.com/ideas/archive/2019/11/how-boeing...

Boeing lost their way in the 90s when the MD merger turned them into an accountant-managed company whereas they were previously engineering-managed. The resulting 737MAX disaster is the main source of their problems today, not COVID.

drivebycomment• 6 years ago

I think this is yet another manifestation of online discussions amplifying shallow and simplistic "analysis" that appeals to human biases and stereotypes. So I'd say it's not bizarre, but another sign of our times.

taway902101• 6 years ago

Here is the software engineering equivalent:

- golf buddy convinces CEO of well-run software shop: your company is way too inefficient "your per-employee ratios are off the charts low!"

- golf buddy gets hired as Chief Strategy Officer, hires a bunch of high paid underlings

- they decide the freeze wages, reduces bonuses, reduces benefits for software engineers. Lots of savings to show! (unless you also count inflated salaries of new management)

- Software engineers demoralized, best ones move on to better jobs, adverse selection, more demoralization

- Golf buddy hires more project managers -- because obviously the answer to underpaid SWEs is to hire more managers. Beatings will continue until morale improves.

- Now the company really does have bad metrics. Decisions are made to offshore half the staff -- save 30%, but increase work for onshore staff. Offshore staff is great, but at a disadvantage due to distance and not having context/proximity to business.

- Golf buddy hires product managers to better define specs, more project managers to produce more reports.

- Gold buddy, his friends, ride off with their big paychecks to spoil the next company

specialist2• 6 years ago

Innovative CEO, a sales centric MBA who's never written a line of code, now overseeing acquired software company, imposes the golf buddy's investor pleasing "blended shore" model, the outsourcing of core knowledge work to noobs coupled with shipping the actual skilled labor to lowest cost locales, against the advice of everyone who's ever successfully shipped software, who are all now branded "seditious", and managed out of the company they built up from zero.

Been there, been done like that.

ksk2• 6 years ago

Your crude caricature relies on the existing CEO, and the board, to be incompetent and easily swayed by bogus numbers. If they were indeed incompetent, its not exactly a shock if the company implodes then is it?

asperous• 6 years ago

Based on the article it sounds like a lot of these are line staff and support staff which is a direct result of a decline in the number of orders. Unfortunately I think there's not much they can realistically do about that.

The sudden shift in staffing comes from the sudden shift in demand.

gamblor9565• 6 years ago

This is what happens when you let the accountants run the business.

This is so completely not true. Worked with the Finance Dept heavily at my last job. The accountants keep track of the expenses, and make sure everyone is sticking to the budgets...but the accountants don't make the budgets. Management does. The accountants are the ones making sure that the company can actually pay for everything.

To an accountant, a drop in costs is as valuable to the business as a rise in revenue.

This is also false. To an accountant, a drop in costs is literally the exact opposite of a rise in revenue. (For comparison, it would be like saying that to a software developer having a more powerful computer is the same as writing your software to be more efficient.) A drop in costs is only valuable to the accounting team if there's not enough money to pay for everything, because then the drop in costs makes it possible to pay for more of the bills that the rest of the company incurs. The Finance Dept would absolutely prefer to see more revenue over a drop in costs, because revenue is repeatable and sustainable, while reducing costs is not.

Management are the folks that only cares about the bottom line regardless of how it's reached.

Blame management.

pm903• 6 years ago

Blame management.

By "blame accountants" the OP was referring to management being accountants. Nobody sincerely believes that accountants have the power to do layoffs, but managements that were previously accountants won't see the long term destruction in value, only the short term profits.

ihumanable• 6 years ago

I don't disagree with the main point you are making, but I would consider this argument to be a bit weak "For comparison, it would be like saying that to a software developer having a more powerful computer is the same as writing your software to be more efficient."

There's a lot of companies out there that just throw some more hardware at a problem.

moosey• 6 years ago

I don't blame anyone. I want the world to evolve into one where our society puts human welfare first. Blaming does not help that happen at all.

It is easy to get caught in a trap thinking heavily about money. When thinking about things we own, the emotion and fear centers are aroused far more than when we think about other people. To avoid this, I believe our society must be trained away from neoliberal and 'greed is good' thought.

Blaming people for this state of events, or the addictive qualities of facebook, or the dangerous misinformation spread designed to take advantage of cognitive flaws of the human mind - these practices will get us nowhere. One thing that businesses started doing right was the blameless postmortem.

Find the problem, fix it. Move on.

icedchai• 6 years ago

Yep. When you're at a growth company that enters cost reduction mode, it's a good time to start looking for another opportunity. "Why is AWS going up? Get that cloud bill down. Do you really need all these monitoring services? Cancel them." They should be focusing on revenue, like you said.

autokad• 6 years ago

boeing is having really hard times. Even if it were not for a pandemic that directly effects them, the max issues were going to hurt. I dont know if they had to lay off those workers, but I am not surprised at all.

marcus_holmes8• 6 years ago

kinda the point. If they were still run by engineers they wouldn't be having those Max issues. They might be having other issues, of course, but making planes that can't take off without crashing wouldn't be one of them

ken2• 6 years ago

No, this is how Boeing has always operated. It's a cyclic industry. Google "boeing employment by year". The charts are practically a sine wave. "Hire 10,000 when demand is high, lay off 10,000 when demand is low" has been how they've operating since WWII.

There are many issues with Boeing management today (I used to work there so I love flaming them as much as anyone), but it's hard for me to imagine how any aircraft company could avoid this. All aerospace employers are laying off (or furloughing) workers by the thousands:

Airbus: https://www.reuters.com/article/us-health-coronavirus-airbus...

Bombardier: https://www.huffingtonpost.ca/entry/bombardier-layoffs-quebe...

Gulfstream: https://www.wtoc.com/2020/05/04/gulfstream-lays-off-employee...

No word from Embraer yet, but since their deal with Boeing fell through, I imagine it's only a matter of time.

pcurve• 6 years ago

Embraer is cutting 4000 jobs too :(

jussij2• 6 years ago

No, this is how Boeing has always operated.

While I have no doubt Boeings business has been cyclical, many of the problems they face today can also be attributed to bad management.

These problems can be linked back to when Boeing merged with McDonnell Douglas, resulting in it's loss of engineering focus:

https://www.msn.com/en-za/money/news/how-the-mcdonnell-dougl...

If you read the wiki page for McDonnell Douglas it reads a lot like the modern day Boeing:

https://en.wikipedia.org/wiki/McDonnell_Douglas

This gives a hint as to how that merger help to infect Boeing (no pun intended) with it's current bad management culture.

VWWHFSfQ• 6 years ago

Airbus cut 2,500 jobs in February.. I don't know how many more they cut since then. The reality is that the commercial airline industry is in a freefall and it's nobody's fault.

It's just the virus.

bogomipz2• 6 years ago

No this is not how Boeing has always operated. Boeing had a great engineering culture for most of its' history. A fundamental shift happened around the time that the company merged with McDonnell Douglas, a merger that was shepherded largely by the Department of Defense. Around this time began the "Financialization" of Boeing. The following is a good read on the shift within the company and how that new culture enabled the Dreamliner and the 737 Max debacles.

https://newrepublic.com/article/154944/boeing-737-max-invest...

Matt Stoller also talked about this cultural shift that enabled Boeings problems in an article a year ago.

https://mattstoller.substack.com/p/the-coming-boeing-bailout

karaterobot• 6 years ago

No, this is how Boeing has always operated. It's a cyclic industry.

Do the cyclic layoffs generally occur right when they're supposed to be building hundreds of planes? I think what's unusual about this round of layoffs is that it was caused by all their orders being cancelled.

If Boeing isn't alarmed by this situation -- if they chalk it up to an historic pattern -- I think that in itself is a sign of bad management.

jedberg• 6 years ago

I mean, that kind of makes sense. But instead, why not hire 5,000 when times are good, stash away the rest of the cash, and then just keep all the great people you have when business is down?

It seems like retaining people instead of hiring up a bunch of new people and possibly losing some of your best people would be a better approach.

Sure, the other guys might get ahead of you a bit during the boom times, but you'll get a good jump during the bust and be much better positioned to take advantage of the next boom.

thrower123• 6 years ago

What do you do when two of your biggest products flop as badly as the 737-MAX and the 787 have?

marcus_holmes8• 6 years ago

Hire more engineers and let them make decisions

sushshshsh• 6 years ago

Tell that to Amazon? Frugality is one of the top principles of the company.

Do more with less, learn how to solve hard problems so you don't have to pay other people who maybe won't actually fix those problems.

paulcole3• 6 years ago

Serious question: Has a company run by engineers ever failed?

_dark_matter_• 6 years ago

Seriously? By the tens of thousands.

marcus_holmes8• 6 years ago

Companies that focus on doing the thing they do well tend to do well. Companies that focus on messing about with their finances to keep the investors happy tend to fail.

Vysero• 6 years ago

"I realise COVID. But that's the excuse, not the reason." I would tend to agree. From what I understand Boeing has spent some 70%+ of their free cash flow on buybacks for the past 10 years; some 40+ billion dollars worth. They spent so much money trying to boost their own share prices (legal market manipulation?) it's no wonder they have no money.

esoterica• 6 years ago

I realise COVID. But that's the excuse, not the reason.

Demand for planes has cratered due to COVID. That's a 100% valid reason to cut jobs, not an "excuse".

marcus_holmes8• 6 years ago

it cratered for Boeing's planes before that because of the Max disaster

specialist2• 6 years ago

The financiers, not the accountants. To wit, Boeing was doing stock buybacks while also "cutting costs" and shaking govts down for more cheddar.

It's received wisdom that MD did a reverse takeover of Boeing, that Condit got snookered by Stonecipher.

Have many friends, family, neighbors who've worked at Boeing, from 1960s thru this year. This version of the post mortem is a good starting point.

https://www.theatlantic.com/ideas/archive/2019/11/how-boeing...

Hutzpah is begging the court's leniency, claiming to be an orphan, after murdering one's parents. Or eating the seed corn and then being surprised by the famine.

You get the idea.

I have zero sympathy for the wrecking crew who destroyed an American icon and rage on behalf of all the workers, families, and taxpayers who paid the price.

missedthecue5• 6 years ago

Boeing has been run by engineers for decades. I'm tired of us accountants getting the blame for every downturn.

fred_is_fred• 6 years ago

Slight correction: "To an accountant, a drop in costs is MORE valuable to the business as a rise in revenue." This is because an increase in revenue of 1M does not increase profits by 1M, but a cost cut of 1M can.

megablast2• 6 years ago

Ok. So they don’t have the orders. What should they do, keep paying those people for nothing?

pascalxus• 6 years ago

i think the boeing executives are better equiped to measure future demand. i'm sure they wouldn't be cutting costs unless they knew there would be future decline in demand.

darksaints• 6 years ago

That's not how any accountant I know behaves. That's prime MBA territory right there.

Gibbon13• 6 years ago

I know a bunch of accountants. Yeah they aren't as stupid as MBA's or economists.

totaldude87• 6 years ago

May 7th: Boeing has raised $25 billion in a massive debt sale, allowing it to avoid tapping a $17 billion coronavirus bailout fund meant to shore up businesses critical to national security.

https://metroairportnews.com/boeing-passes-on-accepting-fede...

[edit]

"That stance concerned lawmakers from Washington state, who urged Calhoun in a letter to “consider utilizing the economic assistance provided by the Cares Act to safeguard thousands of jobs at Boeing in Washington State and across the country.”"

These corporate only care about bottom line

seanmcdirmid• 6 years ago

Boeing busts aren't a new thing in the Seattle area. My dad was involved in one in 1969 or so...that bust is where "will the last person leaving Seattle please turn out the lights" came from.

balls187• 6 years ago

Exactly. I've been in the PNW since the mid-80's and Boeing issues are not unusual.

They are one of the largest military contractors (who supplies the country that spends the most on military), and it the only National aircraft manufacturer.

I feel for the people affected by this, but I don't doubt that Boeing will turn things around.

https://www.latimes.com/archives/la-xpm-1998-dec-02-mn-49854...

bastardoperator3• 6 years ago

Seeing Boeing engineering practices first hand gave me anxiety and concern for the safety of air travel and US defense. Boeing is basically 100's of siloed companies living under a broken umbrella. Everyone is reinventing the wheel. Sharing code is not possible. No inner sourcing. Tons of duplication everywhere. It's crazy the amount of waste. I watched nothing happen for 3 years other than catastrophic failure and honestly I'm glad to be gone and not working with them.

Military projects have it the worst. Depending on the program and funding, they either have access to modern tooling or such little funding that it prevents them from using something made in the last century. This company probably has one of the most impressive development tool catalogs a company can have, but most developers can't even take advantage of it. They have everything and a lot of the teams I worked with just couldn't use the stuff so the licenses sit on shelves burning cash. They renewed software we migrated away from, just in case... for auditing purposes. WTF?

They always had a crazy security protocol for why they cant do something too. I get it, defense is important. They tell me they want an air gapped system for X, cool here is the link to software X and MD5 from our authorized site/customer area. They're not allowed to download it, I still get it. Looks like I'm traveling to Colorado to hand over a USB stick. Without a second thought, I watched the SRE plug it right into his machine. Dude no. WTF? This would have been safer to download. Countless screen shares with people exposing private keys and passwords. The list just goes on and on and on. It's security theatre.

This company is also in love with the H1-B program. I don't mind H1-B at all, but when companies exploit humans from other countries so they don't have to pay American wages, that's where I draw the line, it's bad for everyone except Boeing. They are specifically gouging people from India. Couple this with their time tracking policies which I wont cover, their business practices are fairly absurd and rather disgusting.

Purchasing, holy balls. Every team purchases software differently. There is no consolidation or money saving practices. This has to do with funding, but someone could do this more intelligently. I tried having the conversation with them. Boeing, we want to give you back 250K in savings a year by not having 45 pieces of paper, it's a burden for us too. They don't care. Nothing matters over there. You follow the policy or look for a new job/vendor. It made me really sad having to work with them. I was so excited too, and it quickly faded with all the stupid stuff they've imposed on themselves which has led to lives being lost and costing people jobs.

kyuudou3• 6 years ago

I don't mind H1-B at all, but when companies exploit humans from other countries so they don't have to pay American wages, that's where I draw the line, it's bad for everyone except Boeing. They are specifically gouging people from India. Couple this with their time tracking policies which I wont cover, their business practices are fairly absurd and rather disgusting.

Lot more to it than that, I'd say.

https://www.brightworkresearch.com/enterprisesoftwarepolicy/...

screye• 6 years ago

This company is also in love with the H1-B program.

What ? That rings completely counter to everything I know about the aerospace field.

I spent my whole undergrad (Indian citizen) building planes and the big reason I left it was that no one in the airplane industry would hire engineers without security clearance. H1B engineers were legally impossible.

One of my aunts (US citizen) was a top level exec in GE Aviation, and she straight laughed in my face at the possibility of non-permanent residents / citizens getting jobs at any company deeply involved in defense. I have interviewed (2019) with Pratt and Whitney, and they too made it clear they won't apply for H1bs but they would apply for EB1 Green Cards...until which point (first 2-3 years) I would have to work on the small subset of non-defense projects. My friends who went to US top 10 universities for their masters in Aerospace literally returned to India because no one would hire them and another of my friend who was a scientist at ISRO (and more prestigious Indian defense programs he can't even state on his resume) hasn't gotten any call backs for job applications at Aerospace companies in the US because of being Indian. He has now pivoted to Applied Math as his graduate education.

As an Indian, I literally do not know a single person in the US with a job in the aeronautics industry. (Bar one that works at NASA-JPL in robotics and got his PR on hire, but he is literally one of the smartest and hardest working guy I know)

Now I understand that you aren't lying. But I would actually love to know more about the type of roles these H1Bs fulfill and how they get past these very real security issues.

bastardoperator3• 6 years ago

Easy, they bring most of the people in through the front door aka Boeing of India (https://www.boeing.co.in/). Do a Linkedin search. I will admit most of H1-B is on the commercial side of the house which doesn't interact with the defense side at all.

eternauta3k• 6 years ago

This company is also in love with the H1-B program. I don't mind H1-B at all, but when companies exploit humans from other countries so they don't have to pay American wages, that's where I draw the line, it's bad for everyone

My perspective as a non-American: I'd gladly work for less than "American wages" (which is still more than I earn in my country) in exchange for a shot at a green card.

bastardoperator3• 6 years ago

That's now how it works though. You're going to make half what an American makes but have the same expenses. So basically you're broke, struggling to maintain abroad while being chained along with the promise of a green card.

When year 4/5 rolls around and it becomes time to pay the green card piper, they just fire you instead because legal paperwork is expensive and everything you struggled to build for yourself in America is instantly gone. Want that green card? Start the process over, 5 more years of indentured slavery.

It's not sustainable for anyone. I'd prefer they pay you what Americans make if they're going to ask you to live and work in America.

oarla• 6 years ago

https://www.myvisajobs.com/Visa-Sponsor/The-Boeing-Company/7...

94 LCAs for H1B from 2015-2017 22 LCAs in 2018 25 LCAs in 2019

Doesn't look like too much love for H1Bs at The Boeing Company

euix• 6 years ago

What's going to happen to all the highly skilled and specialized labor of building aircrafts? Where would they go? I wonder if we won't see a situation like the early 90's when suddenly all the top scientific and engineering talent of the USSR migrated to the US looking for work. If China was smart they would try to poach as many of these guys as possible. Layoff the propaganda and pay the top guys well. You could be looking at massive knowledge transfer in the years to come.

Securing IP and existing tech within borders is much easier then preventing people from moving around.

tschellenbach• 6 years ago

This is one of the hardest things as you scale the business. Make sure that the company's hiring effort isn't captured by politics, but stays aligned to the mission and rewards those who are competent. In a startup it's easy. You have direct market feedback. In a big company it's one of the most difficult problems to solve.

Feel pretty sure that in those 12k people fired were some of the most competent people at Boeing, while some of those better at politics were retained.

wiremine• 6 years ago

Edit: I realise [sic] COVID. But that's the excuse, not the reason.

Not sure how it's not the reason? (Or, at least a major reason?)

I think there's two things going on:

1. The long-term vision at Boing: the investment in R&D, etc.

2. The short-term cashflow issues.

No amount of vision is going to save you from the cashflow crunch that a 96% drop in air travel is going to cause. [1]

[1] https://www.cnn.com/2020/04/09/politics/airline-passengers-d...

To put this a different way: How could Boing have positioned itself to handle a dramatic drop in orders?

cs702• 6 years ago

No matter how you look at it, Boeing's business appears to be in terrible shape. The Atlantic has a decent article on how the company lost its way: "a company once driven by engineers became driven by finance."[a]

However, from "the stock market's perspective," everything at Boeing is honky dory -- the stock is up +2% today.

[a] https://www.theatlantic.com/ideas/archive/2019/11/how-boeing...

skny• 6 years ago

Stock being up 2% today is myopic and meaningless. Look at the performance over the last year. FWIW, Wall St isn't a bunch of morons trying to financially engineer an airplane to take off.

https://imgur.com/a/lv0yYq9

gamblor9565• 6 years ago

Note that this article squarely lays the blame on finance executives...that were once engineers...

MKais• 6 years ago

The same day SpaceX launches two astronauts to the ISS. How ironic.

amarant• 6 years ago

It's funny these news are published the day spaceX launches their first crewed mission

m0zg• 6 years ago

Yeah, unless that vaccine everyone is working on _really, really_ works I don't see demand for airplanes (or other forms of public transportation, for that matter) coming back to anywhere near the level it was before C19. FWIW, whatever travel I do this year will be by car.

And chances of that vaccine working _reliably_ are pretty slim: we do not have vaccines for any other coronaviruses, and they mutate. Our vaccines against the flu (which is not a coronavirus, but which also mutates) leave a lot to be desired.

smithza• 6 years ago

I know someone in data analytics as Boeing. As of Sunday he had a job. Obviously Boeing is in multiple sectors and don't have all of their eggs in the 737-Max basket, working in other areas of aerospace and rocketry (see ULA).

IOT_Apprentice• 6 years ago

Boeing spent $43B on buybacks last decade - 74% of free cash flow. Got record $8.7B subsidy from WA state, then cut 17,000 jobs there Fired its CEO over 2 plane crashes/jet grounding & gave him $80.7M on the way out

ccktlmazeltov• 6 years ago

and market still going up!

dsuarez4• 6 years ago

Boeing has been bloated for a while. Seems likes covid was just a good excuse to lay off.

nelaboras• 6 years ago

Can someone explain to me how this works? Weeks ago they had a backlog of several thousand orders, getting a plane takes years of waiting.

Airbus says they still habe a queue of 7000(!) planes to deliver, with only a few cancellations.

https://www.airbus.com/aircraft/market/orders-deliveries.htm...

How is there a need to fire people if there is still so much demand?

netjiro• 6 years ago

Let it die. Free up lots of skilled engineers to work in smaller more productive enterprises. E.g. the Nokia collapse [1]. The growth a few years after the dinosaur death is significantly better for society than keeping the beast alive on life support.

[1] https://venturebeat.com/2019/05/10/surviving-nokia-how-oulu-...

mensetmanusman• 6 years ago

I wish I could fast-forward 5 years and see how America has responded to the pandemic.

Will America’s economic system have finally met its match with COVID, or will they be churning along with lower unemployment numbers than the EU as they have post-2007/8 pre-COVID?

Boeing cutting more than 12,000 U.S. jobs with thousands more planned

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