http://www.richardaboulafia.com/shownote.asp?id=373
This terrifying state of affairs for the Dreamliner, of course, was merely background for Boeing’s fourth quarter earnings call this month. The 787 fiasco wasn’t discussed, except that (a) the investigation was continuing and couldn’t be discussed and (b) 787 production was continuing full speed ahead, despite uncertainties about what needed to be done for the battery system, or any other aspects of the plane’s design. If these planes being built need major retrofit work in the future, well, that’s for the engineers to worry about.
Meanwhile, there was no contrition or soul-searching on the call about how the 787 could have gone this wrong, or what could be done within the company to make it right (once again, 787 program analysis was left to the journalists). Instead, the call emphasized some impressive sales and profit numbers. It was like a farmer showing off a great crop, but not mentioning that the tractor just broke, he fired the mechanic, and outsourced tractor maintenance to Bolivia. And that customers for next year’s crop had been promised penalty payments if the farm didn’t deliver.
Chicago’s view of engineering, as seen in management changes, union negotiations, product launch decisions, and design outsourcing moves, is that it’s a secondary consideration, far behind financial and market considerations such as Return On Net Assets (RONA). But clearly this strategy of downplaying engineering is starting to have a deleterious effect on the company’s financial performance, at least in terms of equities returns relative to the competition. Sure, investors may be scared by the high compensation costs associated with the 787’s woes. But it’s also possible that investors may be getting spooked by a company that seems to lack a proactive approach for dealing with a serious crisis. Even when the 787 gets back to service, it may face further difficulties. There’s also the likelihood that Boeing may be returning to the bad old days of 1998-2003, when it spent next to nothing on new product development.
In other words, Boeing’s problem isn’t just that the engineers have been nudged aside by the bean counters. It’s that the bean counters need to rethink the way they manage the company. Until that changes, investors may continue shifting
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