Aerospace Giant in Fight of its Life
'At least on the surface, Boeing seems to be in denial that AIRBUS will stop at nothing to ensure their removal from contention.' ---- Analyst
The world's largest manufacturer of commercial and military aircraft is reeling from recent revelations about its Enron-esque implied accounting practices, such as those noted in an extensive Business Week investigative analysis. Boeing's response vociferously denying the accuracy and the appropriateness of the assertions wasn't long in coming, and there was notable support from elements of the financial sector.
Be that as it may, the bad news for Boeing is coming so fast and furious in this form and of lost business in the billions to arch-rival AIRBUS -- the Joint Strike Fighter (JSF) is another discussion -- that we are wondering aloud if the company has been deliberately targeted as an extension of an intensifying shoot-out with its EU supported competitor.
Of course, this was a major contention of our analysis in March of last year, "Boeing Going?" wherein we stated bluntly that the EU was perhaps supporting predatory marketing practices for AIRBUS with the aim of unseating Boeing's dominance. And they're doing a darn fine job of it, too.
Unless Chairman Dr. Philip Condit shows brilliance in the art of endgamesmanship, they are out of the race for Europe-based no frills airline GO. It didn't help that they were almost a non-factor in the launch of JETBLUE, who decided that they liked the upgrade to A320 aircraft offered by AIRBUS at a cost way too close to Boeing's next rung 737.
Boeing's current competitive policy derives from the "new accounting transparency and cost containment strategies" co-developed by former CFO Deborah Hopkins, whose greatest capability seemed to be that of speaking her mind to the great consternation of Condit and Vice-Chairman Harry Stonecipher. The financial media and industry analysts loved her, but after a year, Boeing management decided that she "didn't quite fit into the culture", and there was a mutual parting of ways.
Nevertheless, and in a way not dissimilar to GM's retaining the supplier cost reduction strategies implemented with cold precision by former executive Dr. Jose Ignacio Lopez de Arriortua -- while deciding its champion had to go -- Boeing has maintained the Hopkins competitive austerity program. This, AIRBUS has exploited ruthlessly.
"At least on the surface, Boeing seems to be in denial that AIRBUS will stop at nothing to ensure their removal from contention," says one analyst who spoke on condition of anonymity. "I think we will soon see a shift in competitive policy that is reflective of the 'street fighter' approach of former McDonnell-Douglas chief Harry Stonecipher and his team. Our intelligence indicates that Stonecipher will emerge as master policy shaper in the war -- and it is war -- against AIRBUS. They're going to get 'down and dirty' in a way that Bill Boeing never imagined. But AIRBUS wasn't a factor then.
'Nevertheless, and in a way not dissimilar to GM's retaining the cost reduction strategies implemented with cold precision by former executive Dr. Jose Ignacio Lopez de Arriortua -- while deciding its champion had to go -- Boeing has maintained the Hopkins competitive austerity program. This, AIRBUS has exploited ruthlessly.'
"It is a major factor now, and one that won't go away and won't be denied its place. They have thrown down the gauntlet and it is imperative that Boeing not only pick it up, but hurls it back at them."
The problem is Boeing is not fighting on a level playing field, in fact, they are at a tremendous disadvantage. As one strategic defense policy consultant Dr. Sheila Ronis says forthrightly, "Boeing is competing as a company, and AIRBUS is competing as a country."
As we stated in last year's analysis, Boeing is capable, but not possessed of EU-type resources to fight this modern day War of the Roses on its own, let alone win. Indeed, it now more important than ever they are acknowledged as to who and what they are: a core component of the U.S. industrial, military and economic base.
This country is currently prosecuting a war against terrorism, but there exists another battle just as close to home and of near-equal import; a war of economic survival. And clearly, there is much truth in the strategic axiom "economic war is always waged first."
Boeing would do well to acknowledge the words of military theorist Sun Tzu (The Art of War) who said in essence: "If you know the enemy and know yourself, you need not fear the result of a hundred battles. If you know yourself but not the enemy, for every victory gained you will also suffer a defeat. If you know neither the enemy nor yourself, you will succumb in every battle."
Let the street fighting begin...
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