Boeing Makes Excuses for Poor Earnings

Boeing (BA) reported earnings (Call Transcript) and of course blamed the machinist strike for a drop in revenues and of course profitability. This was expected. Boeing needs to wrestle down the high labour costs in the Portland, Seattle and Wichita Plants. The short term pain should be treated as an investment for improved economics in the future. Do not settle until the numbers are good.

However they also keep mentioned supplier problems. Read this quote:

For the first nine months, BCA revenues decreased 3 percent to $23.7 billion on lower deliveries due to the strike and galley shortage.

 And this quote right in the first paragraph of the earnings release:

...and supplier production challenges on customer-furnished galleys for certain wide-body airplanes.

The third party supplier challenges continue to be vexatious. When will Boeing have the supply chain figured out? The company cannot drive on square wheels forever. Part of the machinist strike is about management’s ability to contract out work that was previously done in house. Financially sound, but Boeing may need to step up some operational practices to ensure smooth production in the future.

Disclosure: None

Comments

[notsosmart:]

sadly-just more mismanagement.give the ceo a raise.

2008 Oct 23 10:51 AM

[You Bet:]

By the time Boeing figures out that their "Affair" with oursourcing is destroying the fiber of the company... it will be too late! They already have all the tools, facilities and workers they need to be profitable for the next 50 years. "Pride goes before destruction - Ego before a fall" is a quote from a very old book and should not be ignored...

2008 Oct 23 01:28 PM

[notrichrepu...:]

labor unions should not run the company. period.
In this recessionary environment the union better wake up. Boeing is going to be one of a select few companies with work going forward.
How about a few stock options for labor workers like home depot did years ago?

2008 Oct 24 07:51 AM

[Chucky Darwin:]

I work at Boeing. I can tell you from first hand observation that it's not the union that's causing Boeing's supply chain problems. It's mismanagement. The right hand doesn't seem to know what the left hand is doing. Lots and lots and LOTS of money is wasted. They start a new program then scrap it, they install new machines, then move them or scrap them. None of this is the union's fault.

2008 Oct 24 10:26 AM

[PeteK:]

Workers at Boeing are now following the same path as GM's.
Want to be like Detroit. In 20 years, the name Boeing maybe just
history.

2008 Oct 24 07:40 PM

[drawing ret...:]

Piling on Government interference and Corporate greed, the men and women who actually build product get the short shrift of the profit they create. Always remember the Boeing Corporation executives want to be seen as "a large system integrator", and the men and women who again actually have hands on contact with design, material, and flight, want to build airplanes. From my vantage point, and it ain't much of an advantage, those two viewpoints cause confusion and division among the whole of the Company. It is the difference between loving and taking responsibility for a product line and being removed and imagining airy thoughts and ideas without consequence. Remember it was executives, Druyen, Sears, Condit, Stonecipher and others that ran this great company into the gutter with selfish, and self obsessed fetishes of ill conceived and ill gotten gains. It was not machinists, it was not technical or engineering people. It was management that cut their production capacity too drastically while undertaking an unproven, untested, new airplane technology. And when their outsourcing could not meet those new technology paradigms the company was lacking in capacity to pick up those failings. Flight is art in motion, and if this company continues to disregard Peter Drucker's admonitioning equally fair treatment for the three supports of the operation, i.e., customers, employees, and investors, it will continue to produce an unbalanced, unhealthy, uninspiring environment for all of those three components of success. Here is a company, a corporation, that has a near monopoly in it's field and yet it is not great enough to honestly recognize and fairly compensate those who love to build ideas into flight. For the execs polishing the mahogony it must seem like a game with only the one goal of profit, for those who are hands on product it is the full monty of product, profit, and customer. This company does many, many things in great fashion. It fails to embrace with equality the partners with aluminum dust, machine oil and now graphite on their clothes.

2008 Oct 25 01:48 PM

[Michael Pine:]

I work at the Boeing portland site and see managment as being a key to huge huge waste. They make mistakes and then blame the union members. The problem with the strike is it plays into Boeing Hand. They are using the union to cover up the fact that the outsourcing is killing the 787 program. The strike is to cover up the fact that that there global partners cant make good parts on time and the I.A.M. is having to fix there work all the time. We dont deserve the 22 million that James McCerney gets every Year we just want to be treated with respect. We in the I.A.M.helped earn those huge profits by working very very hard to improve this company.
Michael Pine

2008 Oct 26 12:24 PM

[kruser:]

right on wake up corprate america, pride comes before a fall.

2008 Oct 29 10:50 PM