Boeing Is Killing It by Squeezing Its Suppliers

So much goes into the development of a commercial aircraft—billions of dollars, millions of work hours, rivers of sweat—that when a new model is finished, the designers like to throw a party. At Boeing Co.’s rollout of the 777 in April 1994, an event orchestrated by Dick Clark Productions, music swelled while the slogan “Working Together” appeared on a 285-foot screen before thousands of employees gathered at the doors of a massive hangar in Everett, Wash.

The phrase was the organizing principle of Boeing’s engineering team and even the name of the first airplane, painted in cursive under the cockpit window. “Because we realized,” a narrator intoned, “that only by working together as a team—with our customers, our suppliers, and each other—would we build a truly great airplane.”

Boeing extended its embrace of globalism with its next airplane, the 787 Dreamliner, introduced in 2011, relying on a far-flung network of suppliers that not only built but also designed many of the parts.

These days, the spirit of togetherness goes only so far. Under Dennis Muilenburg, who took over as chief executive officer in 2015, Boeing has turned unapologetically hard-nosed. Even amid the greatest sales boom in aviation history, he’s insisting suppliers cut prices—while he angles to take over their most lucrative repair and maintenance work. This cost initiative is called Partnering for Success; some of its targets call it Pilfering from Suppliers.

Muilenburg drew yet more backlash by pressing a dumping claim last year against Bombardier Inc., a much smaller aircraft maker backed by the Canadian government. In January, the U.S. International Trade Commission unexpectedly rejected Boeing’s claim, and that wasn’t the only public rebuke. The case caused frictions with some customers, put $20 billion of fighter orders from Canada in jeopardy, and pushed Bombardier into a partnership with Airbus SE, whose CEO, Tom Enders, called Boeing a nationalist bully “ruthlessly surfing the America First wave.”

Just about every constituency is upset except Boeing’s shareholders. (end of excerpt)

Click here for the full story, on the Bloomberg News website.


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