Boeing just posted it's first full-year loss since 1997. If you have to tell your investors bad-news, better to throw in all of the potential bad news that you were on the fence about than to have to make follow-up announcements. (Honey I totaled the car, and the other car may be out of gas, and all our toilets might be backed up.)
https://abcnews.go.com/Business/wireStory/boeing-posts-annua...
Boeing reports a $410M charge in case NASA decides Starliner needs another test
31–40 of 58 posts
Re: Boeing reports a $410M charge in case NASA decides Starliner needs another test
#32From today’s Orbital Index ( https://orbitalindex.com/archive/2020-01-30-Issue-49/ ): The Best Way to Make a Profit as an Aerospace Company is to Fail ( https://qz.com/1784335/the-space-military-industrial-complex... ), a compelling piece about how massive corporations like Northrop Grumman have little incentive to hit their contract budgets and are arguably incentivized not to. “Northrop Grumman […] won the James We…
Sitting by and doing nothing is a sucker's game. I've always put money in NOC, LMT, and BA. They'll always go up because the government is easy to sucker and the people are easy to sucker. You just give them the latest spiel about who's a threat and bam, the people love it, and the government loves spending the people's money. Every one of them 5x-10x over the last decade.
Can't wait to hear how the Raider program takes forever haha. The US military is already way overpowered anyway, so the way I see it, I'm just getting the money I put in taxes back here plus a little from all the guys who don't play the game. And if you complain I can just seed something on Twitter about it being outsourced engineers who made the mistake. Then you'll rage for a few minutes and give me money.
Thanks, my dudes. Index funds are for losers.
Re: Boeing reports a $410M charge in case NASA decides Starliner needs another test
#33From today’s Orbital Index ( https://orbitalindex.com/archive/2020-01-30-Issue-49/ ): The Best Way to Make a Profit as an Aerospace Company is to Fail ( https://qz.com/1784335/the-space-military-industrial-complex... ), a compelling piece about how massive corporations like Northrop Grumman have little incentive to hit their contract budgets and are arguably incentivized not to. “Northrop Grumman […] won the James We…
I worked at Northrop Grumman a decade ago on a contract that was missing it's deadlines. It was pretty choatic, and management was not very good (every new thing became a #1 priority). To try to get things done we were allowed to work as much overtime as possible. They even had white board showing who had worked the most hours (the top several people people worked over 2000 extra hours during a 12 month period). I al…
> every new thing became a #1 priority
I know this well, this seems to be common in large software companies.
Re: Boeing reports a $410M charge in case NASA decides Starliner needs another test
#34From today’s Orbital Index ( https://orbitalindex.com/archive/2020-01-30-Issue-49/ ): The Best Way to Make a Profit as an Aerospace Company is to Fail ( https://qz.com/1784335/the-space-military-industrial-complex... ), a compelling piece about how massive corporations like Northrop Grumman have little incentive to hit their contract budgets and are arguably incentivized not to. “Northrop Grumman […] won the James We…
I worked at Northrop Grumman a decade ago on a contract that was missing it's deadlines. It was pretty choatic, and management was not very good (every new thing became a #1 priority). To try to get things done we were allowed to work as much overtime as possible. They even had white board showing who had worked the most hours (the top several people people worked over 2000 extra hours during a 12 month period). I al…
I briefly worked for a large federal contractor, far away from stuff like aerospace per se,* but I got the distinct impression that all the dysfunction and waste was inherent in the lack of communication between the government and the employees of the contractor. All around me were normal people trying to do a good job, but a lot of people seemed to be employed to prevent information from getting back and forth to the customer. You probably couldn't point to anyone specifically having malicious intent, but the feedback loop was so painful and convoluted that there must have been an enormous implicit cost.
*but oddly some major aerospace contractors had their fingers in the pie anyway.
Re: Boeing reports a $410M charge in case NASA decides Starliner needs another test
#35Earlier quoted context omitted.
I never understood why there aren't performance requirements in government contracts. Same thing with infrastructure construction here in DC... new offices go up in a year, but changes to the intersection in front of said office take 5 years and cost multiple of the office itself. [hyperbole, but only just]
There used to be a lot more defense contractors during the cold war. Also, more accountability. So there was competitive pressure to be seen as an organization that could reliably deliver projects. Over the years, many of the major companies merged, then shifted strategies to geographically dispersing their jobs to bolster congressional support. Take the Joint Strike Fighter / F-35 for example: 4 bids. Lockheed won t…
What I find humorous is a few years ago I observed apparently the federal government wanted to outsource some legal services and document management, and they went with one of these airplane makers (I forget which one). Who do you think of when you think of paperwork? The aerospace industry!
Re: Boeing reports a $410M charge in case NASA decides Starliner needs another test
#36Earlier quoted context omitted.
I never understood why there aren't performance requirements in government contracts. Same thing with infrastructure construction here in DC... new offices go up in a year, but changes to the intersection in front of said office take 5 years and cost multiple of the office itself. [hyperbole, but only just]
The answer is the sunken cost fallacy. A government institution will view the sunken cost as too big, and solve that problem by throwing more money at it. The same thing that happens in Wall Street when they get into big problems.
Without actual knowledge, I'm certain your analysis is wrong, because it's too anthropomorphic. An institution isn't a person, and isn't subject to common fallacies, for better or for worse. Even if it appears to do things wrong that a person would do, the reasons aren't the same. You may say that there is a boss who is in control and to whom the explanation applies, but institutions don't work like that - they would never last if the leaders completely controlled them.
Re: Boeing reports a $410M charge in case NASA decides Starliner needs another test
#37Earlier quoted context omitted.
Yes. It is great that NASA is trying to get away from this model with the Commercial Crew Program. Boeing would eat this cost, just like SpaceX does when it has problems. Cost plus contracts, while maybe necessary in some situations, evolves huge cost bloat in defense, large public works, and health insurance sectors of the economy.
Unfortunately Boeing has petitioned for, and received amendments to its “fixed-price” contract to cover these extra costs in the past. Boeing making this number public, which they would have every reason to keep secret for competitive reasons if it was their own cost, is the first step in normalizing the customer to the added cost. Watch as they threaten to pull out as they have done before...
Is that really a priori the wrong way to run things?
You have a project, you estimate the cost, you have a contract, then the customer just HAS to add more stuff, so you negotiate about what to add at what cost in time and money.
So, fixed price with adjustments, why wouldn't that be normal (in a vacuum)?
Re: Boeing reports a $410M charge in case NASA decides Starliner needs another test
#38From today’s Orbital Index ( https://orbitalindex.com/archive/2020-01-30-Issue-49/ ): The Best Way to Make a Profit as an Aerospace Company is to Fail ( https://qz.com/1784335/the-space-military-industrial-complex... ), a compelling piece about how massive corporations like Northrop Grumman have little incentive to hit their contract budgets and are arguably incentivized not to. “Northrop Grumman […] won the James We…
Sitting by and doing nothing is a sucker's game. I've always put money in NOC, LMT, and BA. They'll always go up because the government is easy to sucker and the people are easy to sucker. You just give them the latest spiel about who's a threat and bam, the people love it, and the government loves spending the people's money. Every one of them 5x-10x over the last decade. Can't wait to hear how the Raider program ta…
Well, taking this as sincere, I would think your satisfaction would depend on them being benign tumors rather than turning out one day to be metastatic cancer. There's no way to have absolute security against that.
Re: Boeing reports a $410M charge in case NASA decides Starliner needs another test
#39Earlier quoted context omitted.
Sitting by and doing nothing is a sucker's game. I've always put money in NOC, LMT, and BA. They'll always go up because the government is easy to sucker and the people are easy to sucker. You just give them the latest spiel about who's a threat and bam, the people love it, and the government loves spending the people's money. Every one of them 5x-10x over the last decade. Can't wait to hear how the Raider program ta…
Well, taking this as sincere, I would think your satisfaction would depend on them being benign tumors rather than turning out one day to be metastatic cancer. There's no way to have absolute security against that.
Yeah, if the US military starts sucking that would be bad but I'm not too worried about that. And to be honest, if they're going to suck at this, they're going to do that whether or not I put another $300k so I'd rather be wealthy and in trouble than poor and in trouble.
Re: Boeing reports a $410M charge in case NASA decides Starliner needs another test
#40Earlier quoted context omitted.
The answer is the sunken cost fallacy. A government institution will view the sunken cost as too big, and solve that problem by throwing more money at it. The same thing that happens in Wall Street when they get into big problems.
Without actual knowledge, I'm certain your analysis is wrong, because it's too anthropomorphic. An institution isn't a person, and isn't subject to common fallacies, for better or for worse. Even if it appears to do things wrong that a person would do, the reasons aren't the same. You may say that there is a boss who is in control and to whom the explanation applies, but institutions don't work like that - they would…
Organizations are even more susceptible to making poor decisions because they don't have information about the other participants. Take, for instance, a choice you and I have to make and where the best choice is either the one that gets you all the benefit or one that gets me all the benefit. e.g. a project that could be done by either of our teams. Instead of doing it that way, we will both choose the third (and worst) option: both our teams do the work and split the work and coordinate in meetings. This way we both get credit. This way the organization gets the worst possible outcome.
Now take the same thing but reward any attackable situation. What you get if you cancel the big losing project: You just threw out $100 million of work. The first mistake you make, I will capitalize on that to say why I should be director instead.