Boeing Depleting Intellectual Capital With Suppliers?
Michael Mandel, concerned about knowledge capital depreciation due to transfers to developing countries, points to a December 2009 Harvard Business Review blog post by Dick Nolan about how Boeing has transferred key airplane design knowledge to potential future competitors.
To finance the development of the 787 and secure global orders, Boeing agreed not only to outsource an unprecedented amount of the plane’s parts to partners in Europe, Japan, and China, but also to transfer to them unprecedented know-how. Before the 787, Boeing had retained almost total control of airplane design and provided suppliers precise engineering drawings for building parts (called “build to print”). The only exception was jet engines, which have long been designed and manufactured by suppliers such as GE, Rolls-Royce, and Pratt & Whitney.
The 787 program departed from this practice. Boeing effectively gave Tier 1 suppliers a large part of its proprietary manual, “How to Build a Commercial Airplane,” a book that its aeronautical engineers have been writing over the last 50 years or so. Instead of “build to print,” Boeing provided suppliers with performance specifications for parts and components and collaboratively worked with them in the design and manufacturing of major components such as the wing, fuselage section, and wing box
Airbus caved in to Chinese government mercantilism even more than Boeing.
Both Boeing and Airbus continue to share know-how for building advanced airplane parts with Chinese suppliers. And while Boeing has resisted transferring the system-integration knowledge needed to perform final assembly to the Chinese, Airbus has caved: It recently completed a jointly owned final assembly plant in China.
So the Chinese will become low cost builders of commercial aircraft. One of the few areas where the United States runs a big trade surplus will end up going the same route as so much of American industry. Sigh.
Mandel sees more rapid knowledge spread as slowing Western economic growth. Retired Intel CEO Andy Grove says manufacturning outsourcing is costing us a long term competitive advantage. The scale of the technological challenge posed by the Chinese has not sunk thru to US policymakers or the US public. We need to raise our game.
Aircraft are the single biggest category of US exports accounting for about $75 billion in exports in 2009. Given that the United States runs a very big deficit the US needs continued success in aerospace exports. The Wikileaks of US diplomatic cables show the US State Department is heavily involved in negotiating aircraft sales to assorted nations around the world.
I am tired of all the economic negative news. I think the reason the economy sounds bad has less to do with an actual recession than media sensationalism and doomsday pessimism. Everyone was in a panic in 2008 because the price of oil was rising, but the sky did not fall. I don’t think the media should lie about a high unemployment rate, but I would like to hear more positive news stories.
I did some research and found that there is plenty of good news out there:
The recession officially ended in June 2009:
The stock market has risen 53% recently and is still cheap:
Wells Fargo, Apple, Ford, SkyWest, Adidas, Men’s Wearhouse, Kroger’s, General Mills, AutoZone, CarMax, Walgreen, Dell, and Disney are some of the many companies to have declared profits recently:
US housing starts have increased:
Business confidence has risen:
Factory orders have increased:
Consumer confidence has risen:
Consumer spending is up:
North Dakota has an unemployment rate of just 3.7%. South Dakota and Nebraska have unemployment rates of less than 5%. Unemployed people who move there will find work and need to buy homes, food, and services creating more jobs. If you don’t have a job, move. If you can’t sell your house at the price you want, you shouldn’t have paid so much for it. If you don’t want to move and make trade-offs, I guess that you aren’t that desperate for work.
The United States will face a labor SHORTAGE in the next few years as millions of baby boomers retire. There are 76 million baby boomers, but Generation X only has 46 million people.
If you really want to stay where you are and haven’t found a job, think of a way to make money from your hobbies. Find a need and fill it. Do you like to cook? Are you good at fixing things? Do you like to paint? I strongly believe that if you do what you love, the money will follow. Just because someone says there is a recession, doesn’t make it true. Just because most people used to believe the world was flat, did that make it true? If you are feeling negative, I highly recommend the book “You Can Have it All”:
You might also feel less sorry for yourself or the economy if put your life in perspective. Would you rather live in Zimbabwe where the GDP per capita income is $200 per YEAR?
Even if things are really bad for you and you become homeless, there is a safety net of food banks, shelters, general relief, and food stamps. You could join a commune or a monastary.
America needs a good pep talk instead of negativity. I really think Obama would be more helpful to the economy by talking about the positive sides instead of pushing expensive stimulus programs. People should live within their means to avoid crashing the economy, but even when overextended, the United States has managed to pay the massive debts of the Depression and WWII.
Americans need to think more like immigrants. Politicians are too afraid to say it, but Americans should stop whining, get up, take responsibility, lower their standards, bite their lips, tough it out, and get busy. Americans should stop buying SUV’s and McMansions they can’t afford and pay off their debts. I have no sympathy for the sheep who went in debt to buy expensive restaurant meals, clothes, vacations, cars, and overpriced homes when times were good instead of saving for a rainy day. Buy LOW and sell HIGH. If people had put their money in the bank instead of wasting it they would still have it. The United States is capitalist not Communist. There is social Darwinism and survival of the fittest here. If Americans want a handout, they should move to Sweden. I have seen refugees from places like Vietnam immigrate to the US with NOTHING and own houses and cars five years later, while some lazy Americans who haved lived in public housing and on welfare for GENERATIONS complain about how poor they are. Why can a third world immigrant who doesn’t speak English make more money in five years than some Americans who have lived in the US their entire life?
The negative thinking about “tough times” and the supposedly “decline of the US” kills me. The USA is by far the richest and most powerful country in the world. Who invented the assembly line, telephones, movies, light bulbs, airplanes, air conditioning, elevators, skyscapers, television, the atomic bomb, the pill, calculators, microwaves, lasers, the Internet, mobile phones, the space shuttle, and landed on the moon? What country wins the most medals at the Olympics despite having only 5% of the world’s population? If the United States is dying, why do so many people want to immigrate there?
I think the best years of the United States are ahead of us, not behind us. I would be shocked if the USA won’t be the first country to put a person on Mars, invent mass-produced hydrogen and solar cars, and cure cancer. Americans who worry about the future are ignoring the facts and aren’t doing anyone any favors.
While I am not blind to the difficulties that may exist in the present economy, I just think people should be more optimistic and look at the good sides. I remember when I was in middle school in the mid 1980’s and had a teacher who asked my classmates whether the USA was on the way to the peak of power, at the peak, or on the way down. I was the only student who said the US hasn’t reached the peak yet. A few years later the Soviet Union collapsed, the Japanese economy crashed, and America was the only superpower.
I am not sure if there is a recession, but if there is one, I think it will be over soon.