Will Boeing move to Beijing?
Filed under: Company News, Boeing
Boeing (BA) CEO Jim McNerney is eager to move the company to China. Whether moving Boeing to China means shifting its headquarters from Chicago to Beijing is up in the air. But Boeing already has $600 million in supplier partnerships with China -- such as a deal with Shenyang Aircraft Corporation to build an assembly for the 787's vertical fin. And Stan Sorscher, who spent 20 years at Boeing before taking a post at the Society of Professional Engineers in Aerospace (SPEEA) in 2000, told me that engineers he spoke with believe that McNerney is hooked on the idea of shifting more of Boeing's aircraft development to China.
Sorscher told me that McNerney recently hosted a meeting with a group of engineers to discuss how Boeing should build its next aircraft. The conclusion of the meeting was that McNerney is comfortable with the way the 787 was developed but thinks it could use a bit of tweaking -- and he'd like to shift more of the design and manufacturing of future Boeing aircraft to China.
This would leave Boeing as a systems integrator which outsources product development to China and other countries. According to Sorscher, the engineers were very nervous in their presentation -- perhaps fearing that they would be punished for bringing McNerney the bad news that they believed Boeing should never repeat what it has done in the design and manufacturing of the 787. The engineers reportedly believe that in the future Boeing should take far greater authority and responsibility for aircraft design.
During the meeting, the engineers thought that McNerney was relaxed and that he agreed with them. Sorscher said that the engineers even told him that McNerney was talking through their slides for them. But months later, the engineers realized that McNerney was just seeing what he wanted to see in their presentation.
According to Sorscher, McNerney wants to partner with China rather than compete. He likes the idea of outsourcing the design and manufacturing of future aircraft there and -- with some minor tweaks -- is comfortable with shifting future aircraft design and manufacturing work to suppliers as Boeing did with the 787.
Who's right, McNerney or the Boeing engineers? McNerney might argue that outsourcing limits Boeing's financial risk, gives it access to more global talent while cutting its labor costs. Sorscher is suggesting that McNerney's approach threatens Boeing's engineers by giving them less to do. But if Sorscher is right, Boeing needs to return to the problem-solving approach that worked for the company in 1995 with its successful 777 program.
I'd argue that if Boeing can quickly overcome the problems with the 787 that have been publicized in places like the Wall Street Journal -- such as structural problems where the wing and the fuselage join and fuselage wrinkling -- along with problems that have yet to be formally acknowledged -- such as failures in the 787's Environmental Control System (ECS) and Electrical System (ES) -- then McNerney will be proven right.
But at this point, it appears that McNerney may be suffering from confirmation bias -- an approach to processing information that stifles inconvenient truths while embracing news that paints the picture that the decision-maker wants to see.
And for the 787 -- which has 850 orders and a $154 billion backlog -- this style of decision-making could be costly.
Peter Cohan is a management consultant, Babson professor and author of eight books including, You Can't Order Change. Follow him on Twitter. He has no financial interest in the securities mentioned.
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Reader Comments (Page 1 of 29)
8-31-2009 @ 12:37PM
clapple said...
American CEO's , like this out sourcing turd, should be tried for treason. The total destruction of our manufacturing base will leave of at the mercy of our enemies! And Islam has no mercy!
As B.O. says, "We are not at war with Islam." We are under attack by Islam; but we are not at war with them?
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8-31-2009 @ 3:44PM
bailoutsos said...
In a few years we will not even have a government, it will be outsourced to China after they call in all the debt America owes them in treasury bills.
8-31-2009 @ 4:13PM
Marsha said...
China is only 1% Muslim per CIA, you dweeb. That's not much more than we have in the US.
8-31-2009 @ 7:02PM
KNUTE9 said...
Maybe we should outsource our federal government to China, India, or Mexico. The money we save could get reinvested in to the economy.
8-31-2009 @ 11:00PM
bailoutsos said...
If this is a global economy, please can someone tell America what is being sent from other countries to be manufactured in America?
9-01-2009 @ 8:01AM
Larry Carroll said...
AMEN!! We are going to trust the people who poison children with their callous dis-regard for safety of their products to build aircraft???????
9-01-2009 @ 8:07AM
Catie said...
I think these people are insane. Why the heck are you outsourcing jobs that are perfectly fine here? What ever hapened to American pride? It's really freaking sad when the dollar sign is the determinant but tis the obamanated society we live in today.
9-01-2009 @ 8:36AM
refuse2lose said...
Maybe if Obama wasn't so anti-American these companies would not be moving!!!You evidently know nothing about running a company.
9-01-2009 @ 10:43AM
Troy said...
Thank Obama and his tax evading officals for all that is unfolding. And if you want to blame Bush as most STILL DO- 1) no one EVER balmed Clinton for anything that happened while Bush was in Office and 2) the House AND The Senate were controlled by the Dem's since 2006. Course, Carter AND Clinton had a hand in crashing the housing market (AS WELL AS Obama- for prosecuting banks for not giving loans to- well, those that CANNOT AFFORD A MORTGAGE IN THE FIRST PLACE!)
And now Boeing is going to leave...hmm...anyone wanna be a translator when I leave this God-forsaken country?
9-01-2009 @ 10:50AM
mnymkr said...
Of course they are moving. They are not the first and wont be the last. Thsi DUMBA$$ Obama regime is charging OUTRAGEOUS taxes to big corporations. Just as the rich are moving residences to states with lower taxes, companies are moving to different countries. This has been proven NOT to work over and over but Obama thinks he can make a difference. WAKE UP ALL YOU STUPID SHEEP AND SEE WHAT HE IS DOING TO US!!!!!!
9-01-2009 @ 11:35AM
Sherman said...
Good Grief!!! Did we have Messerschmit make our planes for us in WW2 ? ? What insanity is this? Charge this idiot with treason and hang him!!
9-01-2009 @ 7:01PM
willy said...
and Islam has something to do with Boeing being a greedy company and outsourcing to china?
9-01-2009 @ 1:26PM
Jim said...
Someone hasn't read the Koran...yes it is "Islam" who is taught to kill the infidel...You are the infidel....we are the infidel...If someone adheres to the Islamic doctrine they believe you should be absorbed or killed...
And yes we should all not fly on any Boeing aircraft or do business with anyone who owns Boeing stock if they do this move thing
9-01-2009 @ 7:03PM
Joe Smith said...
Why anybody would believe the BS from a union guy bent on spreading fear to justify why the engineers need a union to protect them. The comments are unreal...and the guy who wrote the article is a joke
8-31-2009 @ 12:50PM
Iridium said...
Will you feel safe flying in an aircraft made in China?
Won't it be fun to visit Seattle if Boeing manufacturing closes shop?
Thanks greedy corporate CEO. Maybe after 12 planes crash in the first year you'll regret your decision. Perhaps not becuase you'll be too busy counting your cash.
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9-01-2009 @ 8:40AM
Killer said...
The most amazing thing about the article is that the lose of manufacturing jobs through the exporting of 787 operations and the infered shift of corporate to China was not even considered or mentioned. It discusses on going parts manufacturing in China and that partnership Boeing has. I believe this is outrageous. When Americans need more than ever one of our largest corporation leaves to cut cost and evade taxes no doubt. Will someone explain how this proper? We gave that corporation the freedom to grow profitable in a safe environment that the United States has had. Do you trust the Chinese to do what is right? Is this the new America way. Our forefathers are spinning.
8-31-2009 @ 1:06PM
Gary Allen said...
I thought in January 2009, President Obama's had been campaigning promising to add jobs in the U.S. not transfer our major manufacturing facilities to other countries? When is this going to stop?
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8-31-2009 @ 11:02PM
bailoutsos said...
If this is a global economy, please can someone tell America what is being sent from other countries to be manufactured in America?
9-01-2009 @ 9:26AM
vaughnvdg said...
This trend is gonna stop when companies get the taste of DUMBYA BUSH STYLE OUTSOURCING out of their mouths.
9-01-2009 @ 10:44AM
mich said...
Yeah, he's adding jobs alright ...to everyone ELSE from OTHER countries within our country and MOVING our companies there as well. We are headed for the New World Order VERY soon! This has been planned since the early 1900's. Did you also see that in Evansville, Indiana (home to the biggest refrigeration company) is now closing up (taking jobs away from US citizens and moving the company to MEXICO. This is only one of many! The government is responsible for all this, hence why they keep letting in more and more ILLEGALS and giving them OUR benefits, but yet OURS are dwindling! Let me tell you in the south (I'm in FL) these are the ONLY people that are being given jobs (don't believe the BS about *them doing the jobs that other people won't do*) and more and more white people are having THEIRS taken away! Pretty soon we will be in concentration camps, but people are too stupid to SEE this. Swine Flu is JUST the beginning! WAKE UP, people!