Terrible title. Either I skimmed the end of the article or there was nothing about a bailout in there.
The Coming Boeing Bailout?
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Re: The Coming Boeing Bailout?
#12Boeing and the US government recently killed the Canadian aviation industry by putting on 300% duties on our main manufacturer because of a government bailout it received. See: https://www.theglobeandmail.com/report-on-business/us-issues... As a result Bombardier, Canadian's only large aviation manufacturer, was sold to AirBus: https://www.theglobeandmail.com/report-on-business/bombardie... The cause was a Canadian p…
The duties were also overturned in the end, but not before Bombardier gifted 50.01% of the C-Series program to Airbus so it had a chance of survival. The net result was Airbus rebranded the program the A220, committed to building US-destination A220 jets within the US to avoid tariffs anyways and while they significantly weakened one [small] competitor (Bombardier and by extension Investissement Québec) they massively empowered their real competitor (Airbus).
Ultimately, their plan backfired and forced them to acquire a large stake in Embraer to remain nominally competitive (I say that because the C-Series planes are much better than similar Embarer aircraft, both longer range and more comfortable) -- all while simultaneously empowering Airbus. They also significantly soured their relationship with the Canadian government jeopardizing both current and future military procurement opportunities.
This was an unmitigated failure on their part.
(EDIT) To be clear, Bombardier wasn't sold to Airbus, they gifted majority control of the C-Series program to Airbus. The new equity split is 50.01% Airbus, 31% Bombardier and 19% Invesissment Québec.
Re: The Coming Boeing Bailout?
#13While Boeing clearly participates in a duopoly... cash flow may necessitate a bailout. Cash on hand is going to get hammered by penalties for out of service planes and lost revenues due to the inability to deliver new planes. Outside of that, it will be interesting to see how endemic the issues were. Here is hoping that this was an isolated incident. The nightmare scenario would be multiple models suffering from a wi…
Why necessitate? Businesses sometimes go under, that’s how the system works. The government ought not pick winners and losers.
Re: The Coming Boeing Bailout?
#14Boeing and the US government recently killed the Canadian aviation industry by putting on 300% duties on our main manufacturer because of a government bailout it received. See: https://www.theglobeandmail.com/report-on-business/us-issues... As a result Bombardier, Canadian's only large aviation manufacturer, was sold to AirBus: https://www.theglobeandmail.com/report-on-business/bombardie... The cause was a Canadian p…
Both Boeing and Airbus have (somewhat credibly) argued the other is getting subsidies already. Would that really change anything?
Bombardier draw the short straw as it was smaller and wasn't able to combat the duopoly of Boeing/Airbus. (Embraer, Sukhoi and Irkut are also in the game but more in niche market shares).
Re: The Coming Boeing Bailout?
#15How did Boeing make miracles in civilian aircraft? In short, the the civilian engineers were in charge. And it fell apart because the company, due to a merger, killed its engineering-first culture Uhm, this makes me think about the engineering-first of Google. I wonder if Google will end in the same path...
Companies can come back after the HBS MBAs/bizdevs take over, they must return to product/engineering/creative focused though and it is tough, usually it takes a near failure for the problem to be recognized.
Apple survived when Jobs came back and focused on products/engineering/creativity.
Microsoft survived post-Ballmer after returning to product/engineering led decision making and power structures.
Amazon is top of their game due to their relentless focus on product innovation and research and development.
Google, I hate to say it, is Microsoft 2004-5, slipping away from product/engineering focus, using their position as business/marketing leverage rather than product/engineering/creativity focused leadership similar to how Microsoft made that same mistake.
Companies that don't realize that business and marketing should cede power to product/engineering/creativity and return more to the open mode over the closed mode, well they end in stagnation after the last bit of value is extracted and all grace and position in the market gone.
Companies that realize that product/engineering/creativity is most important and then their business/marketing teams boost those efforts in the marketplace, well those companies go on to live a long time and have well established research and development as well as risk taking adventures.
Companies that are led by product/engineering/creative respect the open and close modes you must enter so you don't force creativity but let it flow [1].
> We've become fascinated by the fact that we can usually describe the way in which people function at work in terms of two modes: open and closed.
> CLOSED MODE
> So what i can just add now is that creativity is not possible in the closed mode.
>Let me explain a little. By the "closed mode" I mean the mode that we are in most of the time when {we are} at work.
>We have inside us a feeling that there's lots to be done and we have to get on with it if we're going to get through it all.
>It's an active (probably slightly anxious) mode, although the anxiety can be exciting and pleasurable.
>It's a mode which we're probably a little impatient, if only with ourselves.
>It has a little tension in it, not much humor.
> It's a mode in which we're very purposeful, and it's a mode in which we can get very stressed and even a bit manic, but not creative.
> OPEN MODE
> By contrast, the open mode, is relaxed… expansive… less purposeful mode… in which we're probably more contemplative, more inclined to humor (which always accompanies a wider perspective) and, consequently, more playful.
> It's a mood in which curiosity for its own sake can operate because we're not under pressure to get a specific thing done quickly. We can play, and that is what allows our natural creativity to surface.
>But let me make one thing quite clear: we need to be in the open mode when we're pondering a problem but once we come up with a solution, we must then switch to the closed mode to implement it. Because once we've made a decision, we are efficient only if we go through with it decisively, undistracted by doubts about its correctness.
>Humor is a natural concomitant in the open mode, but it's a luxury in the closed {mode}.
>But here's the problem: we too often get stuck in the closed mode.
>Under the pressures which are all too familiar to us we tend to maintain tunnel vision at times when we really need to step back and contemplate the wider view.
Businesses that develop products, especially in entertainment, that kill the open mode will kill the company. But default, the HBS MBA and bizdev metric focused production as if resources are mere parts, kills the open mode first, because it isn't quantifiable.
The moment you see a research and development department killed or sapped you know that it is just a matter of time for that company unless they can return to the right focus, with business and marketing as the secondary supportive force to a solid product/engineering/creative focus.
This is also mentioned in 'How Software Companies Die' which is almost law now:
> "The environment that nurtures creative programmers kills management and marketing types - and vice versa." [2]
I wonder when this knowledge will make it back to HBS MBA business school, there are plenty of examples in the market.
Business and marketing should be the multiplier of your value, they are not the value creators, the product / engineering / creative / research / development / design departments and the people you have are the value creators.
[1] https://genius.com/John-cleese-lecture-on-creativity-annotat...
[2] http://www.call-with-current-continuation.org/rants/how-comp...
Re: The Coming Boeing Bailout?
#16Governments should have predatory practice towards shareholders in these cases.
If company can't be allowed to fail (strategically important or government regulated sector like banking) there should be 'fluid bankruptcy' option. When they default or fail their obligations, the next day the government owns them without operations being disrupted. Shareholders lose everything overnight and any private debt would have standard 50% haircut (lenders would know this beforehand). Government would then sell the stocks back to the market within 10 years or so.
Bailouts are subsidies for risk.
Re: The Coming Boeing Bailout?
#17or let the free market and invisible hand take swift care of it
Re: The Coming Boeing Bailout?
#18Boeing and the US government recently killed the Canadian aviation industry by putting on 300% duties on our main manufacturer because of a government bailout it received. See: https://www.theglobeandmail.com/report-on-business/us-issues... As a result Bombardier, Canadian's only large aviation manufacturer, was sold to AirBus: https://www.theglobeandmail.com/report-on-business/bombardie... The cause was a Canadian p…
Both Boeing and Airbus have (somewhat credibly) argued the other is getting subsidies already. Would that really change anything? Bombardier draw the short straw as it was smaller and wasn't able to combat the duopoly of Boeing/Airbus. (Embraer, Sukhoi and Irkut are also in the game but more in niche market shares).
> Bombardier draw the short straw as it was smaller and wasn't able to combat the duopoly of Boeing/Airbus.
It was able to compete though on the merit of its products before the duties came into play. The duties were designed to kill its momentum and it did -- look at the loss of orders in 2017 compared to 2016. But once the issue is resolved, the orders in 2018 are huge.
https://en.wikipedia.org/wiki/List_of_Airbus_A220_orders_and...
This was a classic case of stifling threatening competition via government regulation.
Re: The Coming Boeing Bailout?
#19Boeing and the US government recently killed the Canadian aviation industry by putting on 300% duties on our main manufacturer because of a government bailout it received. See: https://www.theglobeandmail.com/report-on-business/us-issues... As a result Bombardier, Canadian's only large aviation manufacturer, was sold to AirBus: https://www.theglobeandmail.com/report-on-business/bombardie... The cause was a Canadian p…
Bombardier was not sold to airbus, but major share assets of one type of its airplane, the CSeries to airbus. Bombardier the company still holds 30% of the CSeries, while other types of planes not affected by the deal.
Re: The Coming Boeing Bailout?
#20Boeing and the US government recently killed the Canadian aviation industry by putting on 300% duties on our main manufacturer because of a government bailout it received. See: https://www.theglobeandmail.com/report-on-business/us-issues... As a result Bombardier, Canadian's only large aviation manufacturer, was sold to AirBus: https://www.theglobeandmail.com/report-on-business/bombardie... The cause was a Canadian p…
Both Boeing and Airbus have (somewhat credibly) argued the other is getting subsidies already. Would that really change anything? Bombardier draw the short straw as it was smaller and wasn't able to combat the duopoly of Boeing/Airbus. (Embraer, Sukhoi and Irkut are also in the game but more in niche market shares).
The duties were overturned, but by then it was too late and the Airbus deal was done. [1]
[1] https://www.cbc.ca/news/business/bombardier-boeing-tariffs-1...