Crises at Boeing and Intel Are a National Emergency - Greg Ip WSJ

[question everything]

A generation ago, any list of America’s most admired manufacturers would have had Intel and Boeing near the top. Today, both are on the ropes. Intel has suspended its dividend, slashed jobs and capital spending, and is a takeover target. Boeing has been hobbled by investigations into crashes and a midair mishap, production delays and a strike. A breakup or bankruptcy are no longer unthinkable.

In the past five years the combined market value of the two has fallen by half. More than just an ordeal for shareholders, this is a potential disaster for the nation. The U.S. is in a geopolitical contest with China defined not just by military power but economic and technological prowess. Leaders from both U.S. political parties say they are on the case, pushing for tariffs and subsidies.

Whatever their merits, these measures don’t address the fundamental problem that Boeing and Intel represent. The U.S. still designs the world’s most innovative products, but is losing the knack for making them. At the end of 1999, four of the 10 most valuable U.S. companies were manufacturers. Today, none are. The lone rising star: Tesla, which ranked 11th.

Intel and Boeing were once the gold standard in manufacturing groundbreaking products to demanding specifications with consistently high quality. Not any longer. Neither fell prey to cheap foreign competition, but to their own mistakes. Their culture evolved to prioritize financial performance over engineering excellence, which also brought down another manufacturing icon, General Electric.

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The loss of either company would have industrywide repercussions. Each supports a multilayered ecosystem of designers, workers, managers and suppliers. Once that ecosystem moves offshore, it is almost impossible to bring back...So, much as national leaders would like to ignore these companies’ woes, they can’t. National security dictates the U.S. maintain some know-how in making aircraft and semiconductors.

(snip)

Both political parties have bought into the idea that manufacturing is special and thus deserving of public support. That raises the question: which manufacturing, and what kind of support? The goal of manufacturing strategy shouldn’t be just producing jobs but great, world-beating products. Washington can help by encouraging the world’s best manufacturers to put down roots in the U.S. That forces American companies to raise their game and nurtures the workforce and supplier network that serves all companies.

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https://www.wsj.com/business/crises-at-boeing-and-intel-are-a-national-emergency-093b6ee5?st=zW2NjE&reflink=desktopwebshare_permalink

[lostnfound]

1. Some Boeing insiders expressed their dismay back 15 years ago or so

The Boeing insider didn’t say much, but muttered quietly to me in the hallway about some design elements, and about the culture, or how the brave new world was going to work out. I was caught off guard and didn’t know what to say, didn’t know of what he was speaking. I’ve never forgotten it, it unnerved me, and I regret not trying to dig deeper. Another leader there, a wonderful wonderful man, not an engineer, had a roll of the eyes, a shake of the head in a conversation about the direction of the company.

I loved that company, viewed it was a bastion of American leadership and strength. Looking out over a factory of people with pride in their work, a culture that respected engineering and supported their customers, I thought “this is America’s strength”. The leadership they showed, the respect they had earned, and the fact that the world could have confidence in their engineering integrity and their systems discipline? That was power. They were the standard.

I expected it to last forever. And as an engineer with some interactions with the FAA, I respected the way the industry and the FAA worked together as professionals to constantly improve the safety of the traveling public. Unlike other industries that “capture” their agencies or else disable them, the aviation relationships were cordial but effective. The engineering community that I saw from the early 1990s through 2005 or so was in charge and they shared a vision across airlines, across Boeing, across the FAA to make aviation safer.

The loss of Phil Condit at the top was huge. Boeing culture was damaged with mistrust amid fundamental change, massive reliance on computer models and subcontractors combined with focus on profits all took their toll. But the erosion of the FAA as THE oversight body — squarely in the hands of a GOP-driven agenda to shrink government by shedding all functions that “could” be done by private industry — might be the biggest factor. The FAA had been a safety net for a company that took care of its safety problems as soon as they emerged. You don’t need a safety net — until you fall. The FAA had been a safety patrol who stands around LOOKING USELESS until the morning that a careless mood takes over among the youth, and the safety patrol pushes the kid out of the street and says “LOOK BOTH WAYS BEFORE YOU CROSS!!! PAY ATTENTION!!”

The safety patrol is an extra set of eyes, always looking for the risk in a situation. The 13th man — “have you thought about this??”