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us 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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