It was few years ago that our family traveled overseas on a Boeing 737MAX. I am not an enthusiast of air travel, but it was not an unpleasant experience.
Not long after our vacation, a couple of fatal crashes made news in 2018 and 2019. The disasters led to the worldwide grounding of the 737MAX.
Kind of concentrated the mind.
It was a blackeye to the reputation of Boeing, and maybe a surprise to the public, but should it have been?
A number of years ago, I saw a headline, Boeing Goes to Pieces: Aerospace execs sell their industry to Japan—one part at a time by Irish financial journalist and author Eamonn Fingleton. The article, first published in January/February of 2014 issue of The American Conservative and at his own website, documented the foolish manner in which Boeing management outsourced manufacturing to Japan.
It is a story about how no one is minding the store, or rather how the store managers were facilitating the shoplifting of the enterprise.
In the 2014 article, the author states that Japanese interests have been targeting Boeing and not unsuccessfully.
Fingleton notes:
"Yet, although the scale of Japan’s agenda is well understood in the industry, American aerospace executives have chosen not to raise the alarm. In what amounts to one of the most outrageous sellouts in modern business history, the U.S. industry is consciously cooperating in its own demise. Swayed by stock options, top U.S. aerospace executives are increasingly prioritizing short-term profits and outright financial finagling over the long-term health of their industry."
What do the Japanese offer?
"Although the details of U.S.-Japan aerospace deals are rarely disclosed, it is clear that a key dynamic is that, in return for transfers of American technology and manufacturing knowhow, the Japanese low-ball their prices in supplying an ever widening and more sophisticated array of components and materials."
There is much more in the article.
Of course, the Japanese can offer so much more when one considers the cheap labor differential.
Wrong.
Per Mr. Fingleton:
"For a start, in contrast to the standard case for outsourcing, Boeing’s increasing reliance on Japan can’t be explained as a search for cheap labor. The fact is that Japanese wages are notably high – probably, when all is said and done, higher than American levels. By the same token labor costs in several other nations where key Boeing suppliers hang their hats (Germany, France, and South Korea, for instance) are also high."
So here we are the "cheap labor" country and the expensive countries are eating our lunch.
An aspect of Boeing's behavior might be considered thievery, specifically of the American taxpayer:
"As Barry Lynn, a senior fellow of the New America Foundation, points out, not the least controversial aspect of this story is that Boeing’s policies seem at odds with its communitarian obligations. On the one hand Boeing has received considerable government support over the years. Meanwhile though the company claims that nearly 500,000 workers worldwide participate in its programs, most of those jobs are outside the United States. Certainly, jobs in the company’s civilian jet division have been cut by more than 20,000 in the last three decades.
Lynn comments: “Much of the technology that Boeing has transferred abroad was subsidized by the U.S. taxpayer and it was entrusted to Boeing to look after. Instead, Boeing has sold it off. There has been a substantial amount of cashing out and top executives have treated themselves extremely well.”"
Does anyone think anything has improved all these years later? Think about it the next time you are flying by the window seat on a 737MAX.
It is January, 2024 and the morning news seems to bring more revelations of Boeing incompetence daily.
As a nation, can we survive just giving away the manufacturing base. Mr. Fingleton has emphasized that we can't in his writing.
The entrepreneur Victor Kiam became famous due to his commercials for his Remington Shavers. He bought manufacturing back to the US and turned the company around. Sixty Minutes did a segment on him.
It was a great piece, but what I remember most was the beginning when he told the interviewer that as a country, we could not just sit around selling each other insurance. We actually have to make stuff.
That might be the epitaph on our national gravestone
I highly recommend Richard Morchoe's Substack titled The Long Hill Institute. I've been a fan of Richard's writing and analysis for many years and strongly suggest you consider following him.