After Laying off Thousands, Boeing CEO Says Offshoring Work to China Won’t “Directly Harm” US Jobs

“We know as we’re investing there, we’re also creating a competitor.”

Boeing, the largest US exporter by dollar value, faces a tough environment for commercial jetliners. In 2016, net orders dropped 13% from 2015 and 53% from 2014, to just 668 planes, the lowest level since 2010! Through June 6, 2017, Boeing has just 208 net orders.

The company is under pressure to cut costs. So there has been wave after wave of job cuts through voluntary buyouts and involuntary layoffs last year and this year. Its payroll has shriveled by about 30,000 workers over the past five years. At the end of May it was down to 145,000.

So Boeing is moving some work to China and other locations overseas, CEO Dennis Muilenburg explained to the Wall Street Journal in an interview. He has been calling the business climate in the US “uncompetitive,” according to the Journal. Boeing is building some plants overseas. One of them is near Shanghai that will complete aircraft made in the US. Workers will paint the planes and install the interiors, such as seats and other fittings. That’s the first step.

It has a Chinese partner, which is required in China to do business in China. There will be technology transfers, which is also required. The Chinese partner is state-owned Comac, which is leading China’s efforts to become an aerospace giant to compete with Boeing and Airbus. Comac already supplies Boeing with parts for its aircraft. Comac’s own jetliner, the C919, which is the size of Boeing’s 737, completed its maiden flight a month ago.

Muilenburg, who has no illusions about this, said: “We know as we’re investing there, we’re also creating a competitor.”

This is the same process that high-speed train makers from Japan, France, and Germany went through. China bought some train sets and other equipment from each. There were joint ventures, technology transfers and the like. And now China, having gained what it needed from these companies, is cranking out its own high-speed train sets and other equipment that it is not only using in China but also selling around the world, in direct competition with the Japanese, French, and German companies where much of this technology originated.

The CEOs were hailed at the time for opening the door to China. And why would they be willing to create competitors in China? That question arose a lot. The answer was that the high-speed train makers in Japan, France, and Germany would innovate and stay ahead of the Chinese, and that their technology would always be better, which would protect their market share.

Now these CEOs have moved on. And the new CEOs are struggling with competition from Chinese train makers every time a country is looking at building a high-speed rail system – and there are now a lot of them, including the US, where a number of states are deeply into it.

Automakers have gone through the same process, as have other sectors. Now it’s time for aerospace companies.

China has 1.3 billion people it needs to fly around. So China needs to have a lot of planes. It’s a huge market. Muilenburg said that over the next 20 years, 6,800 planes will be sold in China. So Boeing is going to invest in China, create jobs in China, and transfer technology to a state-owned company in China in order to play in China.

But he said that completing planes in China will not affect Boeing’s manufacturing workforce in the US and that these plants Boeing is building overseas aren’t, as the Journal paraphrased him, “directly harming US jobs.”

“My goal over time is to add manufacturing jobs, but these will be different kinds of jobs,” he said.

Boeing is “transforming” how it manufactures planes, Muilenburg said. He is pushing for more automation, innovation, and new technologies in in manufacturing to lower costs. That’s where the biggest benefits may come from. The opportunity of how the company manufactures planes “is even greater than some of the product innovation that we’re going to bring to the table,” he said.

Innovative methods of getting costs down, offshoring some of the work to countries where labor is cheaper – which Boeing is already heavily relaying on via its global supply chain for components – and more waves of layoffs… It sounds like a plan shareholders will appreciate. Throw in a $14-billion share-buyback announcement, and it makes for a nice basket of goodies, though not necessarily for the workforce at Boeing.

Shares of US Defense Contractors not amused. Read…  “Largest Single Arms Deal in US History” Turns into “Fake News”

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  111 comments for “After Laying off Thousands, Boeing CEO Says Offshoring Work to China Won’t “Directly Harm” US Jobs

  1. Sporkfed says:

    Anything to boost the stock price and therefore executive compensation.
    Short sighted but necessary due to Free Trade.

    • Suzie Alcatrez says:

      How is it ‘Free Trade’ when the government of China mandates a local partner and a full technology transfer??

      • realist says:

        Please, do not ask such obviously pertinent questions! They might make every advocate of “free trade” all the way back to Adam Smith blush.

      • Wolf Richter says:

        This has been one of my big pet peeves for a long time. Why can’t the US, Germany, Japan and some others get together and tell China that if it wants access to these markets, it needs to observe “reciprocity.” That means non-Chinese companies can start a plant in China or buy a company in China without a local partner and without technology transfer. It was on Merkel’s agenda for a moment. But Trump didn’t pick up on it. And Japan never likes to stir up tempers in China. So nothing is happening in that respect. And China keeps getting away with it.

        • Duane Snyder says:

          Japan and Germany don’t practice free trade either, look at the balance of trade numbers, the main practitioners are short sighted US multinationals. Most Americans could care less as they don’t work in manufacturing anymore and are being placated by cheap consumer goods. But in the long term the mammoth, world record breaking, US trade deficit will continue to weaken our economy. It is the 600 pound elephant in the room that nobody talks about. But hey its great for the stock portfolios of the well to do professional class.

        • Mark says:

          Wolf,

          I love your articles, but this one needs an update: why would CEOs transfer technology? Because the US corporate economy is one massive “pump and dump” scheme. Between offshoring and buybacks, it’s all one big scam to enrich CEOs in the short term and destroy the company in the long term.

          Why would the US government interfere in this scam? Our Congressmen are completely bought off by these people.

        • kam says:

          Free transfer of technology to your competitor and enemy. History has never seen such folly.

        • kevin says:

          Wolf, your article already hinted on an answer. Its really just simple human nature of “Eat now for me, me, me and anyway, I won’t be around to face the consequences later”, in combination with the classic Prisoner’s Dilemma.

          Just picture this, if a US/German/Japan CEO tells his shareholders, “we ain’t going to do tech transfer to those Chinese”, he will look stupid and he will miss out on the growth opportunities. Additionally, he also can’t guarantee other company CEOs will not rush in before him, right?

          Any one of the CEO willing to hustle with the Chinese (or any other major market for that matter) and the rest will inevitably have a new competitor. All it takes is ONE of them to say “heck, I’ll work with the Chinese”.

          The first mover will get to eat the tasty cake NOW and get his fat cat bonus and compensation NOW. He will be fondly remembered… hell, he might even become a management legend (like Ray Kroc or Bill Gates or Tim Cook etc.) if he makes his company shares shoot to the sky during his tenure. CEOs got to survive the next quarter earnings, so who cares about breeding the new competitor over the next 30 years?
          No ones gonna live forever and besides, whos to say my replacement CEO won’t do the same damn thing I just contemplated? So I might as well be the one to be rich and famous before I retire, right? ;-)

          It is also not a uniquely “Chinese” problem. The Japanese were stealing American technology back in the 50s/60s before they became a global consumer electronics powerhouse, and it was American CEOs that generously gave them the keys, even though USA had dropped 2 atomic bombs on them barely 20 year prior.
          As the cliché goes: Its not personal, its Business. And business is all about money NOW for me, me, me.

          And let’s not blame the sneaky Chinese. Everyone is stealing a little from everyone else in the course of business. Tell me Microsoft didn’t “steal” some technology, idea or patent from Apple or vice versa? Furthermore, if the CEO don’t engage with the Chinese, you think his employees will not be poached away soon enough?

          Lets be honest, if you had specialized knowledge about aircraft systems and a Chinese company was willing to pay you USD 1 million to join them, would you? I would. lol. Most US companies can’t guarantee your continued employment or retirement payouts anyway.

          Look…the global economic order today is no longer about race, creed or nation against another. It is about the money first and foremost. If you’re rich, you’re welcomed in any country and if you’re not, you’re still discarded by your own country. Its harsh and I’m not saying its a good system (although I’d argue there’s less military conflict as a result), but that’s the reality now.

        • jb says:

          Maybe we are patronizing CHINA in the hopes they will assist in tempering N. Korea’s initiatives. looks like China has some leverage.

        • robt says:

          The biggest self destructive innovation of the late ’60s and the ’70s was the ‘joint venture’, at that time involving Hong Kong and Japan. You got to see your products on the market a year or two later, at a fraction of the selling price, slightly revised with humorously similar names and most often substandard materials. That wasn’t even with mandatory tech transfer – it was voluntary, and it was the beginning of economic suicide for North America.
          Then when Nixon and Kissinger unfroze relations with mainland China, my first reaction was “It’s all over”. It is just the way of the world, though – work follows the cost of labor. In the 19th century, the US used to rip off Europe and especially Britain on copyright, patented products, etc.
          In another few generations, China will probably have its own legends about inventing everything, a natural progression.

        • d says:

          Boeing is selling out Americans there will be no reciprocity with America.

          The CCP knows all you have to do is explain what will happen to the executive bonuses short term, and you can own the technology from any American company.

          This move should in theory, involve Boeing being removed from the defense contractors list.

        • Shanghai Dan says:

          The reality is that you are wrong. WFOEs (“woofies”) – Wholly Foreign Owned Enterprises – are common in China. You do NOT need a domestic partner AT ALL for any kind of formed business in China. Boeing is probably partnering with COMAC to made a longer-term play in China’s domestic airplane business, but it is NOT needed.

          10 years ago, you would have been correct; the laws in China – capricious as they are – changed back then and there is no requirement for domestic partnership with businesses.

          And yes, I’ve set up a few WFOEs over the years, it makes banking and sourcing much easier (many raw materials/components are only available in China anymore, so it becomes a question of dealing with China or going out of business altogether).

          http://www.wfoe.org/

        • Wolf Richter says:

          Shanghai Dan,

          Consider this: “One of the things a company needs to know before setting up their WFOE in China, is whether their business scope has any restrictions or is only allowed under special permits and regulations.”

          These restrictions cover sectors that the Chinese government considers of strategic importance, such as auto manufacturing and aircraft manufacturing.

          Here’s a list of of the encouraged businesses. The list is very long and detailed and it does NOT include references automotive manufacturing (except some spare parts) and aircraft manufacturing:

          http://www.fdi.gov.cn/1800000121_39_4830_0_7.html

        • d says:

          Beat me.

  2. mynamett says:

    From the text above

    So Boeing is moving some work to China and other locations overseas, CEO Dennis Muilenburg explained to the Wall Street Journal in an interview. He has been calling the business climate in the US “uncompetitive

    So basically he is saying the system capitalist is a failure and only server the rich, wealth and people politically connected. Basically he is saying we don’t need the little people. Since the little are not welcome into the capitalist system, little people will have to come up with their own system. Usually the system the little people adopt in such case is called anarchy, revolution, blood and killing of the rich, wealthy and politically connected people. The little people are now putting such system in place in countries like Mexico, Brazil, Argentina and probably some more I forget. This new political system is coming soon to the USA courtesy of the rich, wealthy and politically connected.

    • Jon says:

      This is the only way little people can voice up…

    • mynamett says:

      This is the reason why there is more and more talk about universal minimum income. The real reason behind all these talks about universal income is to avoid that the little people put in place a system that will served themself first (anarchy).

      • George McDuffee says:

        Doubtful “anarchy” would serve any but the strongest, e. g. Somalia.

        Progressive populism. depending how it is implemented, by whom, and the state of the socioeconomy/culture when it takes power, MAY be an answer.

        Unfortunately, the “populists” are generally able (allowed?) to gain power when things are in a shambles, and as soon as most of the problems are corrected, they are thrown out and its back to business as usual, sticking it to the people. MMacri backed by the Alliance [UCR and PRO] in Argentina is a poster child for this. Full speed ahead with governmental borrowing, tax cuts for big business, and austerity for the masses.

    • Jas says:

      Freedom of the capital is not a joke!! If things go on the way they go on now, we’ll all be living in a gigantic slum and the wealthy will be walled off in their gated communities.

      • Michael Fiorillo says:

        Nah, gated communities are too 20th century. Today’s Overclass seems to be obsessed with two things, immortality (see Peter Thiel and his creepy idea of blood transfusions from youths) and space travel (Elon Musk and Jeff Bezos).

        Having sucked humanity and planet earth dry, they plan they plan to set up “gated community” on Mars.

        If you want to see how all this will turn out, I suggest you re-read Poe’s “Masque of the Red Death.”

    • Gershon says:

      It’s all about “creating shareholder value” for the CEO and top company officials, at the expense of the long-term viability of the company and its employees. I hope I live to see the day when globalist CEOs like this one are tossed into prison and have their ill-gotten assets expropriated and redistributed among the employees and communities they screwed over.

    • TJ Martin says:

      Not to be contentious but a reality check is in order . Those ‘ so called ‘ systems you mention in Mexico , Argentina and Brazil aint exactly working . In fact just the opposite looking at their economies . The ‘ system ‘ is an absolute abject and abysmal failure . .. serving only to make things worse placing even more wealth in fewer peoples hands .. not making things better

    • Maximus Minimus says:

      There is this theory that people at the top are greedy, selfish bastards while the little people are virtuous, sticking together, and can’t be blamed for anything, anyways. The reality is that little people are first and foremost victims of other little people. When little people raised their sight and saw the enemy, it was because someone else showed them the way (often for his/her own benefit).

      • harvey says:

        That’s why successful revolutions are never actually led by little people, they are just shock troops. It is the upper middle class that does, too bad this recovery is geared to make sure they are taken care of.

  3. OutLookingIn says:

    The global aircraft industry is facing a continued softening market and an ongoing tightening of, already very slim margins.
    This is true across the size spectrum of aircraft builders, from mighty Boeing to small companies such as Viking Air. Which purchased the type certificates of the out-of-production de Havilland Canada Twin Otter. This gave Viking Air the exclusive right to manufacture new aircraft.

    On June 17 2015, Viking entered into a partnership agreement with the Chinese firm of Reignwood Aviation Group, which purchased 50 aircraft and became the exclusive representatives for new series 400 Twin Otters in China.

    Here we are two years later and Viking has just announced a large reduction of it’s Canadian workforce because of ” global market conditions”.

    • Petunia says:

      Every thing made in China is junk and Boeing’s manufacturing won’t be any different. Remember that when you fly in the future.

      • roddy6667 says:

        China makes Mercedes-Benz, BMW, Range Rover, Land Rover, Jaguar, Cadillac, and other cars that meet the specs of the parent companies. Americans only see Chinese junk because that is what they order. They can’t afford the good merchandise.

        • RD Blakeslee says:

          “Americans only see Chinese junk because that is what they order. They can’t afford the good merchandise.”

          Putting all Americans in the same boat is often not justified.

          For example, the Cayun audio amplifier, which reproduces a classic Marantz design, has sold well to audiophiles here. It is not cheap.

        • IdahoPotato says:

          Thank you, roddy6667.

        • d says:

          “China makes Mercedes-Benz, BMW, Range Rover, Land Rover, Jaguar, Cadillac, and other cars that meet the specs of the parent companies. ”

          NO

          china assembles them.

          It doe snot design or make them.

          The chinese versions of those products are Garbage as the chinese always introduce fake/substandard parts from chinese suppliers with no or poor quality control. Just lik ethe LDV van, great van, until they started amking them in china then the reliability, durability, and longevity went through the floor.

          also just like in south American cars, the chinese turn down the voltage of the welders (also when they are not supposed to) this saves a lot of money ( the biggest single component in the production of a car is Electricity) But produces cars that do not conform to rigorous crash testing standard’s. Randomly selected cars from South America and chian a regularly fail the euro tests.

          Brazill has horrendous road fatality’s due to sub standard welding on the cars produce there for the Brazilian market and export to(Where ever they can) China is the Same.

          Buy a car made in china, Risk your life every time you drive it, as you never know how many welds are missing and how far the welders were turned down when it was made.

          And you wont find out until it gets crashed.

          With your children in it perhaps.

          You get what you pay for.

          Unless you buy made in china, then you never get, what you paid for.

        • Robert says:

          d made a very interesting comment that I doubt any of us ever suspected. The National Highway Traffic Safety Administration has recently been reporting rising road fatality rates in the U.S.: in the press it is blamed on texting and use of electronic devices, but the slo-mo videos of even low-speed crash tests are nothing short of shocking: the cars shatter into a thousand pieces. In ads Ford used to roll cars down steep embankments, and then show them started up and driven away. I would take a pre-1975 full size economy model Ford or Chevy against anything on the road today , with or without airbags.

        • d says:

          The global games played with welding on car-bodies are not fairy stories I made up either.

          Different States/Countries have different regulations covering this issue.

          India also has big problems with this.

          There are also issue with the standards of windscreens, Bumpers and the materials in tail-lamps and bumpers, depending on which market they were originally manufactured for.

          That’s before we get to the composition of the metal itself and its thickness on truck and bus chassis, depending on which market it was originally specked for.

          Believe me they are not the same world wide for the same model of truck.

          Car body panels also have the same issue.

          That’s before you get to non genuine replacement components where you can feel the difference in weight, when you pick them up.

      • Wolf Richter says:

        Much of the auto component industry has moved to China, including design work. So some of the key components in your Honda, Mercedes, Ford, GM or Beemer come from China. Automakers practice iron-fisted quality control all the way up the supply chain. And it works. Planes are going to be the same thing. Quality isn’t going to be different than in other places. Boeing already sources components from China.

        • Dan Romig says:

          I am an audiophile, and much of the high-end audio components are manufactured in China. Old school Japanese brands assemble most of their gear in China although Onkyo makes some in Malaysia.

          Just a sign of the times I guess, but I take satisfaction in having mostly US made gear in my main audio/video system.

        • TJ Martin says:

          I am an avid audiophile / melomane myself … with all YBA electronics in my system . Designed and engineered in France . Manufactured in China under the strictest supervision ( re; StereoPhile and Absolute Sound profiles ) And thats the key . If you want quality from China .. you have to keep a close watch on every step of the manufacturing process from quality control on …start to finish .. or you wind up with … junk

      • DH says:

        Maybe 20 years ago, but not any more. As someone who used to work in a music store in my 20s, I’m shocked how good even Chinese guitars have become, which would have been unthinkable 20 years ago.

        • TJ Martin says:

          Eastman being a case in point . Suffice it to say their arch tops and mandolins quality challenges the likes of Gibson etc on every level .. at a much lower price point .

        • Harambe says:

          Same deal with knives. I bought a CRKT rock climbing knife in 2003 right after they first started manufacturing in Taiwan. Everyone I showed it to couldn’t believe it was made in Taiwan, the quality was very good. That was one rugged knife. Sadly, I lost it a year ago and ordered a new one. When it arrived in the mail I was dismayed to see “Made in China” on the side of the box. But you know what, the Chinese version holds an edge better and has even better fit and finish than the Taiwanese one and all at a price that no US knife maker could ever match.

        • kevin says:

          Its just a matter of time, the Chinese will soon want to move into better quality and higher margin businesses.

          The same thing happened with Japan, right after WW2, when many of her exported products were considered to be of inferior quality to that made in the USA. Now, Koreans are moving up the chain with their TVs and smartphones and beating the Japanese at their game. Soon, it will be the Chinese turn.

          Don’t be too surprised if you will consider getting a made in China EV within the next 20 years or so. Countries will rise and fall, business will continue to evolve and perceptions will change….as it has been doing since time immemorial.

        • IdahoPotato says:

          I collect and use fountain pens. Duke and Jinhao fountain pens (shipped directly from China for under 10$ on ebay), sometimes with German or French nibs, sometimes with nibs made in China, work splendidly out of the box and are beautifully crafted. Some of them are a delight to behold with inlay work and great hand feel.
          I prefer them to my $200 pens, frankly.

      • Niko says:

        Exactly! I use to root for the “home” team but the foreign manufacturers build more in the USA than the domestic companies do anymore and they build it better!

      • Smingles says:

        “Every thing made in China is junk and Boeing’s manufacturing won’t be any different. Remember that when you fly in the future.”

        While this used to be true generally, it has become much less so in recent years.

        China manufactures quite a lot of high end products these days.

        Look at Huawei smartphones. Chinese brand, manufactured in China– three of four years ago, known for flooding the market with cheap, knock-offish phones, now legitimately competing with Apple and Samsung for the top smartphone in the world. I believe they’re currently #2 in Europe already.

    • MC says:

      Continental Motors was bought by AVIC in late 2010. Cirrus followed suit the next year. AVIC is 100% owned by the Chinese government.
      Intriguingly enough both companies have not only maintained production in the US, but Cirrus’ new owners have expanded their Grand Forks and Knoxville factories. The big “loans” approved by both cities may have had something to do with it, but it’s telling that while Western-owned firms are engaging in pot polishing*, Chinese companies have no qualms investing here.

      *”Pot polishing” is an archeological term which indicates how the end of bones become polished by rubbing against the pot walls in hot water. It’s invariably associated with starvation and in many cases with cannibalism, when people are desperately trying to extract every last calory where there are no more.

  4. Mike says:

    I wonder if Boeing is trying to play hardball with the US Government, and trying to get the Feds to throw in some enticements to get them to keep them in the US. Trump has been saying a lot about keepings jobs in the USA and that he’s a deal maker… time to ante up.

    That would really be business as usual for Boeing, always threaten to move jobs from high cost areas to some other cheaper locality, and then blackmail the unions, the local and the state governments into giving them wage or tax concessions to help out the Boeing bottom line.

    • Wolf Richter says:

      These plans predate Trump by a good while. It takes a long time to plan this, get the joint venture set up, get all the permits, etc. and start building a plant in China. So this is a done deal. Even if the government were to offer some incentives, Boeing won’t shut down this plant – thought it might promise to “keep” some other work in the US.

    • roddy6667 says:

      United Technology (Pratt & Whitney jet engines) went this route more than ten years ago. They do overhaul and repair just outside Shanghai.
      The parts for the new engines come from all over Europe and are mostly just assembled in America.

  5. Maximus Minimus says:

    Boeing is suing Bombardier alleging subsidies, but requiring to build parts of the aircraft in China is business as usual.
    But what the heck, Airbus already transferred production of it’s most lucrative aircraft, and voila now China has it’s own. Airbus trembling when they will get kicked out under one pretext or another.
    Boeing’s latest aircraft built by Kuka robots which a Chinese company wants to buy.
    At least China does not want Western baristas, so there is hope.

  6. Gian says:

    For the love of God, I thought all this time China was our adversary, only to find out they’re merely a business partner.

    • nick kelly says:

      Welcome to reality

    • RD Blakeslee says:

      Many don’t agree with me, but I continue to maintain China is following a mercantilist policy, similar to that used by the British to build their empire in the 18th and first half of the 19th centuries.

      Why go to war when you can buy a country out?

      • DH says:

        I agree. They’ve even been investing in Africa like mad.

      • realist says:

        RD Blakeslee, I believe you are correct about China’s pursuit of mercantilist policy; the only “globalist” aspect of it is its global ambition. Meanwhile, the Western states have been seduced by neoliberal economic theory and its step-child: globalization. A consequence is their abdication of sovereign responsibilities, including regulating corporations to conform to national interest; on the contrary, Western government has effectively become a corporatocracy, acting as a conduit of money from taxpayers to corporate interests.

    • Robert says:

      Yes, and the families of 60,000 GI’s on the Memorial Wall in D.C. who sacrificed their sons to fight Communism and prevent the Domino Effect in Vietnam are wondering how that still-Communist country was granted Most-Favored-Nation by Congress when it suited Big Business.

  7. Movietech says:

    ” In 2016, net orders dropped 13% from 2015 and 53% from 2014, to just 668 planes, the lowest level since 2010! Through June 6, 2017, Boeing has just 208 net orders.”

    Are they losing market share to Airbus or is this just a softening global economy?

    Seems insane for Boeing to give away its technology. Maybe, it’s possible China pays off corporate Executives so they move abroad?

    • Wolf Richter says:

      Airbus and Boeing both are experiencing the same thing.

    • MC says:

      The market is literally chocked full with used airliners, often in excellent conditions.
      If you drive by the Basel-Mulhouse airport you’ll see at very least a dozen between 747-400’s, 757’s and 767’s waiting to be converted into freighters. These are well maintained, low hour aircraft from some of the world’s best known airlines: British Airways, Singapore Airlines, United etc.
      These freighters compete against new-production aircraft from Airbus but chiefly from Boeing. And they are just the big showy ones.

      The workhorses of air transport worldwide are the Airbus A320 and the Boeing 737 families. Just to give an idea of the numbers involved, Lion Air, an Indonesian carrier few heard of outside Asia, presently operates over a hundred 737’s and has standing orders for over 200 737 MAX’s.

      Big airlines or those, like most Gulf carriers, flushed with liquidity rotate their aircraft out for new models when there’s still a lot of life left in the airframes and engines. These aircraft, even after being completely overhauled, have tag prices extremely attractive for the “other” airlines and leasing companies and the extra fuel they burn is more than offset by big savings in paying off the loans to buy and run the aircraft itself: not only there are plenty of used airliners , but plenty of maintenance centers qualified and certified to work on “older” airliners as well.
      Again to give an idea of the numbers we are talking about, at its peak Ryanair operated 400 737-800’s. As delivery of the new 737 MAX’s is less than two years away, Ryanair has started to sell small numbers of its aircraft: these have already been put into service by leasing companies. If you have Flightradar24 look for 737’s with the Boeing customer code 8AS: these are former Ryanair aircraft.

    • Robert says:

      Interestingly enough, Iran, the very nation being tarred daily in the yellow-journalistic-MSM as the big backer of worldwide terrorism (and therefore fair game the Boeing bomber treatment) (their Revolutionary Guard, a part of their regular army having, incidentally been branded “a terrorist group” for many years now) stands out as one of the biggest new customers for Boeing’s civil aircraft sector. Given everything that has happened the past several years, I wonder whether they insist that Boeing also finance these purchases.
      Medal of Honor holder, Brig. Gen Butler, who famously, if belatedly wrote the book War is a Racket (free on line) might today support what appears to be President Trump’s penchant for deal-making (despite his Patton-like, if not frankly Prussian-like) demeanor); ironically, he is continuously attacked in what most regard as a “liberal” MSM, but who in fact resent his triumph over the more reliable war-hawk Hillary Clinton. But unlike his hero Andrew Jackson, who never backed down from a fight, but insisted on a balanced budget and no debt, Trump remains indulgent in the extreme to spending on a bloated military.

      • Wolf Richter says:

        Over the past six months or so, Boeing signed about $20 billion or so in deals with Iran – its first aircraft orders from Iran since the 1970s. The administration is tied up in knots over this because on one hand, Trump campaigned on pushing exports, but on the other hand he campaigned on being hard on Iran. These deals will have to be approved by the White House. So this is going to be interesting.

  8. Suzie Alcatrez says:

    “We know as we’re investing there, we’re also creating a competitor.”

    How short sighted can this guy be? He’s selling out his own company.

    • George McDuffee says:

      Indeed, and for a great deal more than thirty pieces of silver…

    • RD Blakeslee says:

      Globalists think the concept of “country” is obsolete. The nation-states and the unique culture and heritage of each are hindrances to be rid of.

      Take a good look at the clientelle and agenda at the Bilderberg conference.
      The world’s elite are NOT talking about patrotism, in any sense of that word.

    • meme Imfurst says:

      Before we call the kettle black we need to look into our own pot.

      How many look at the makings of their mutual funds?, the 401k’s? IRAs? Those ETF? You can bet that people who read this site have all these companies who took America like a fool and live like Kings, right there in their portfolios.

      Apple anyone?

      I find this similar to smoking. Smoking kills, but people do it anyway. Investing in companies that weaken your country, steal your futures, but get investments by Americans anyway, is suicide. Oh sure you have made a nice profit on your investment….so lets hope it supports your kids for as long as they live.

      “My goal over time is to add manufacturing jobs, but these will be different kinds of jobs,” he said. Yep, cleaning crews, yard work bartenders, table waiters, nail salons, grocery baggers…all the good jobs left at home for Americans to enjoy. Not even real estate agents are safe!!

      • TJ Martin says:

        Well said verging on profound

      • Altandmain says:

        Most of the investment gains are held almost entirely by the top 10% (over 80% in fact). The 80-90% percentile have some too.

        http://www.npr.org/2017/03/01/517975766/while-trump-touts-stock-market-many-americans-left-out-of-the-conversation

        The bottom 80% are struggling to survive. So no most people do not have stocks.

        • harvey says:

          Globalization is a game where the top 25% siphons from the bottom 75% around the world, when it can no longer do that aboard, it will do that within the country itself.

        • d says:

          “Globalization is a game where”

          the rules have been Gamed and Abused by cheater’s.

          Mainly china and it’s Globalised Vampire Corporate allies.

          At the expense of everybody else, and the planet itself.

          It will be Amusing to watch the coming fall out between china and its Globalised Vampire Corporate allies, china still thinks it can control these monsters, commanding their Loyalty and Subservience, to it.

          China does not understand these monster’s it has helped develop, have loyalty to only 1 thing, their profits.

          The sheeple cry against the 1%. The Globalised Vampire Corporate, encourage them to, in a perfect “look over there” deflection

          The people of the 1% are not the problem.

          These entity’s and their evil cultures are a much bigger issue, Most have greater annual Incomes than the countries outside the top ten OECD Nations.

          Black-rock (1 we know a little of) holds 1% + of all global equity’s.
          If you dont conform to its “Organisational Culture”, you dont rise in it.

  9. Dymo says:

    It can do anything for money in US;
    it can do anything for control in China.

  10. Gershon says:

    In Britain, the youth who are being relentlessly screwed over by globalism just gave the Establishment a middle-finger salute by voting for far-left loon Jeremy Corbyn. Can’t imagine how the Tories, who governed for the exclusive benefit of their billionaire patrons, didn’t see this coming.

    • mynamett says:

      The only reason most people are following the rules of law and accept to be governed is because they get some benefit from it. Now that some people have to chose between heating, food or mortgage, the deplorable or people at the bottom of the social ladder see less and less benefit from participating and obeying the rules of law. They are basically removing their consent to be government. The young might be removing their consent to be government tonight. This is the first set toward social decay and anarchy.

      • DH says:

        Deplorables were never specifically people at the bottom of the social ladder. They’re the ones who supported the president on the basis of the hateful undertones of the campaign. I never understood why that was so controversial.

        • Lucy says:

          True that. I expected Trump would win early in the campaign, purely based on the amount of vitriol against Hillary Clinton I saw spewed forth across the internet. I’ve never seen anything like it. Real fear based loathing.

        • Petunia says:

          Lucy,

          It wasn’t fear based loathing, just loathing.

  11. Gregg Armstrong says:

    Typical American business school graduate BS. The only thing that’s important to them and CON Street’s Intellectual Yet Idiot classes morons is the next quarterly report. They cheer on the destruction of companies like Hewlett-Packard, IBM, Sears, Boeing, etc. Carly Fiorina gutted HP, took her $ hundreds of millions and went on to run for President as a Republican. Besides, they’ll be sitting in their golden parachute lined retirement when the SHTF. They ARE smart enough to get their payouts upfront so as not to be dependent on the same pension plans that their former workers depend on.

  12. mick says:

    Since the beginning of 2017, most…..yes most, big corps have been undergoing big layoffs, quietly. Purposefully trying to hide them from the public, which is why this site exists.

    Real people working at these companies posting anonymously about layoffs by their company which aren’t being reported. Some of the numbers are shocking, and been going on heavily for over 6 months.

    But don’t expect any of this to show up on the FED’s fake data.

    https://www.thelayoff.com/last-25.php

    • RD Blakeslee says:

      Beyond layoffs, General Electric (CEO is Jeffry Imelt, Obama’s “Jobs Czar” – there’s an irony for you) sold its entire U.S. home appliance business to China.

      The whole company is being re-structured with no regard whatever for its workers or erstwhile American consumers of what used to be its products.

      Among other things, it is now building generators for China’s latest hydroelectric project.

    • Meme Imfurst says:

      Then the media has failed you…imagine my surprise.

      It is their job to report the state of the nation, the real parts.

  13. Steve M says:

    China will buy 6,800 jets over the next 20 years, according to Boeing.
    I wondee what their projections are for total jet purchases in the US over the same tine period?

    • Dymo says:

      It will copy your knowledge and technology and become their original invention and patent in China.
      You origin will be the copycat and fine huge to push you out China market. They will make cheap alternative to compete with you in globally with government funds.
      My beloved New Balance is the fake one.

    • MC says:

      Boeing does not release long term projections about individual markets (China, India, Brazil etc) but they do release projections about regions.
      2016-2035 projections for the whole Asia-Pacific region are set by Boeing at 15,130 aircraft while North America is set at 8,330.

      Much more intriguing is “Demand by Size”: Boeing predicts demand for all sizes will increase except for two. “Large Widebodies” and “Regional Jets”. Both are predicted to decline.
      “Large Widebody” sales are already declining: Boeing has had good success with the 747-8 freighter but its passenger sibling is a sales disaster and enthusiasm for the A380 has not merely cooled down but completely disappeared: orders are either being cancelled or converted into orders for the new A350-1000. Both programs will most likely turn into financial black holes.

      • Suzie Alcatrez says:

        Emirates is buying 20 more A380’s.

        • Wolf Richter says:

          I heard it’s the only customer for the 380.

        • MC says:

          Perhaps deleted orders by Qantas (-8), ANA (-3) and Virgin Atlantic (-6), plus a few from Amedeo, a leasing company which ordered 20 but is having a lot of buyer’s remorse.
          Malaysia Airlines tried selling their six A380’s first, then leasing them out and finally, when nobody wanted them, decided to convert them to a 712-seat configuration (aka cattle car) and turn them over to a newly formed subsidiary dedicated to religious pilgrimages. They will be replaced by A350’s in regular service.

          Airbus’ Tom Enders called the A380 “One of the two crosses we have to bear”, the other being the A400M military transport aircraft. The aircraft is good, but not so good as to warrant its high running costs ($50/seat-hour vs the Boeing 777 $42/seat-hour) and especially monster price tag: it presently stands at a $437 million/unit. By contrast the A350-1000 is presently offered at $350 million/unit, and it’s a very expensive aircraft already.

          Airbus is presently pitching the A380 to African and charter companies in the “cattle car” configuration pioneered by Malaysian, squarely aiming it to the pilgrimage and holiday-making market. But Boeing and ANA already tried using large widebodies on relatively short routes and it didn’t work well at all. Coupled with the A350’s excellent performances (almost as fast and as cheap to run as the Dreamliner but considerably larger), this doesn’t bode well for the A380.

          Henry Ziegler, the first Airbus president, famously criticized Aerospatiale and BAC for the Concorde, for the simple reason it had been designed without consulting the airlines which should have bought and operated it, resulting in what can only be called a financial disaster.
          The A380 was effectively designed for Emirates (which owns 95 of the 213 built until now) and Emirates alone, without consulting other airlines which may have been interested in it. Airbus has so far refused to disclose how much the A380 program has cost so far but estimates are around €25 billion, an enormous sum of money. Nobody knows if Emirates and its financial backers shared this enormous financial load but it’s likely Airbus will lose a whole lot of money on the A380 when all will be said and done.

  14. Frederick says:

    This is just more of that ” sucking sound” Ross Perot mentioned in the 80s

    • Meme Imfurst says:

      As a certain actor in a certain movie said: ‘truth, you can’t handle the truth”

      That in a nut shell, describes America right now.

  15. Kent says:

    “But he said that completing planes in China will not affect Boeing’s manufacturing workforce in the US and that these plants Boeing is building overseas aren’t, as the Journal paraphrased him, “directly harming US jobs.””

    Indirectly then? Obviously Boeing could hire more Americans to do this work in the USA, even if the planes are destined for China.

    This is an issue of corporate governance. This CEO is almost certainly incentivized to create long-term damage to Boeing by creating competitors, as well as harming the USA by off-shoring jobs. These actions increase shareholder “value” and his income in the short term.

    Corporations are purely creations of government. They don’t exist without the legal constructs and contract enforcement of the government. Hence, the government has every right to step in and stop these types of actions.

  16. william says:

    In reaction to much of what’s discussed here, there are companies like Infinera, a telecom equipment manufacturer in San Jose, who will not send manufacturing of their key components to Asia. Infinera built their own fab within their HQ and has it heavily guarded behind layers of security.

  17. Gary says:

    Interesting article on Bloomberg Businessweek today titled “Factories Won’t Bring Back The American Dream”. The argument is that the manufacturing of the product is not where most of the companies profit come from. The real area to capture profits according to the author ( Micheal Schuman) is at the edges: in designing, branding, R&D and service and support after it’s been sold. I’m thinking that the author doesn’t realize that there are smart people in China just as capable of R&D and customer service and that they would probably be paid less then their American counterparts.
    https://www.bloomberg.com/news/articles/2017-06-08/factories-won-t-bring-back-the-american-dream

    • meme Imfurst says:

      “real area to capture profits” is selling shares of stock to dummies who listen to Kramer and CNbc, then selling your shares allocated to you in your ‘option plan’ before the music stops.

      It is a disease, a virus, and for some reason everyone wants to get infected.

    • Altandmain says:

      Funny that article positively referred to Acer.

      Cross posted on Naked Capitalism:

      https://www.extremetech.com/computing/213103-acer-founder-declares-company-would-welcome-a-takeover-bid

      Where the manufacturing happens, so does the innovation.

      It is not profit that matters. It is about good quality jobs that drive a standard of living. That is also why so many of China’s top companies are State Owned Enterprises.

  18. r cohn says:

    The math is very simple
    Simply put,when you run huge trade deficits ,you are going to ship jobs and factories overseas .Trumps campaign idea that we were chumps in previous trade negotiations was %100 correct.However,he has proven to be traitor to that idea and should be impeached for that
    We went from virtually no trade deficit in the mid-1980’s to a cumulative $4 trillion deficit with China in 30 years.
    Russia has a population of 146 million and a GDP in the 1.2 trillion range.
    China has a population and GDP almost 10 times Russia’s
    China steals technology and has restrictive trade requirements
    China s military is on a huge building spree thanks to the money shipped from the US and others
    CHINA IS THE ENEMY NOT RUSSIA.

  19. Bud says:

    To all those Boeing workers who will soon be losing their jobs because of foreign competition, the ones who drive to work in their Subarus and Mazdas and would never even consider buying an American car – Welcome to the real world. I for one look forward to the day when I can ride in a high quality import, and not have to risk my life riding in some piece of crap built in Seattle.

    • Altandmain says:

      I agree.

      If you were to go to Japan or South Korea or China or Germany, the overwhelming majority of the automobiles would be domestically made.

      That said, so much of the American Big Three supply chain is overseas now and cars themselves are made overseas that ironically many cars under foreign marques are actually more North American than American car companies.

    • Echo says:

      Subaru made in America. BMW made in America. Ford made in Mexico.

      • d says:

        “Subaru made in America. BMW made in America. Ford made in Mexico.”

        Yopu forgot the important one GM MADE IN CHINA.

  20. Winston says:

    “We know as we’re investing there, we’re also creating a competitor.”

    Also one which will steal your intellectual property. So very, very dumb…

    “The capitalists will sell you the rope you hang them with.”

  21. walter map says:

    It should be obvious that the U.S. economy is being liquidated, not merely to enrich the wealthy but to disempower the general population. A people who have been reduced to poverty will not quarrel with their masters.

    • Frederick says:

      Walter While I agree that’s the plan I’m not so sure it will work The internet has awakened many Now to get them hungry enough to actually get off the couch and do something about it I saw the writing on the wall in the early 80s and I’m sure plenty of you guys did as well

    • Robert says:

      Apparently, the idea is, if you’re starving, how much of a fight can you put up? In Venezuela, where people are beginning to starve, the masses are out clogging the streets in great numbers,(and gridlock never does much for keeping the machinery of an economy humming). It can hardly be said they are not up for a quarrel; if the brutal balance of power were not so extreme (sticks and stones against tear gas, water cannon..and snipers plus submachine guns) a true revolutionary war might have broken out as did in 1789 France (where one of the triggers was an unusually harsh winter, and starvation.)

  22. mvojy says:

    “It has a Chinese partner, which is required in China to do business in China. There will be technology transfers, which is also required. The Chinese partner is state-owned Comac, which is leading China’s efforts to become an aerospace giant to compete with Boeing and Airbus.”

    So the idea is to save costs but TRANSFER Boeing’s tech to a state-owned company that wants to COMPETE with Boeing? Great idea! (sarcasm)

    • Gary says:

      I find it interesting that these free market CEO’s don’t mind partnering with a state run economy.

  23. interesting says:

    “It has a Chinese partner, which is required in China to do business in China”

    Normally that would be referred to has a “training” program.

    the capitalist will sell you the rope you use to hang him with.

  24. John says:

    Flying at 30,000 feet in an aircraft built in China. No, thanks, my flying days are over.

  25. S and P 500 says:

    I’m not sure where commercial aircraft design can go from here. I flew a 777 from LAX to Chicago last month and I was surprised how cramped it was. It was supposed to be a revolutionary plane in 1995 so I guess I was expecting a 747 or an L-1011 in terms of comfort. From Chicago to NYC I flew a smaller Embraer jet which was a nice plane. Last year I flew a Bombardier jet from LAX to San Francisco. There are a lot of competitors out there. I’ve heard that the only hard part of the plane to build is the wing. I would guess that new aircraft design will focus entirely on specific parts of the market and won’t just try to be engineering milestones like the A380.

    • MC says:

      I won’t ask the name of the airline but know the general trend in commercial aviation is towards smaller and less confortable seats.
      This is chiefly done to lower the seat-hour cost of flying the aircraft itself without doing anything else: the 777 in the configuration used by companies such as Emirates and Air France has a seat-hour cost of $42, which is more than good for widebodies in that generation and a revolution compared to earlier widebodies. The few 747-200 and -300 still in passenger service have a seat-hour cost close to $80.

      By squeezing more seats inside the aircraft airlines lower the unit cost for them, even if they fail to sell a single extra ticket and even if they routinely fail to fill the aircraft, and we all know how much “the market” loves cost-cutting, even if it ends up killing the company long term.

      “Certain” airlines have the benefit of no competition, either by decree or lack of competition, and behave accordingly.
      For example before low-cost airlines became commonplace flying with Ryanair was an extremely negative experience but, apart from cost, they were the only airline with regular services to “peripheral” airports. Once companies such as Jet2, Wizz, BAC etc started eating their lunch they radically changed their tone.

    • Altandmain says:

      Yes the wings are difficult to make. They have to be very thin and strong, surviving intense situations.

      Here’s an example of the test:
      https://www.youtube.com/watch?v=meEG7VwjTew

      Eamonn Fingleton a while back did an article about how Boeing outsourced that to Japan:
      http://www.theamericanconservative.com/articles/boeing-goes-to-pieces/

      The other really hard part to make of course is the turbine blades in the jet engines. They have to stand immense temperature and pressure for a very long time.

  26. Gregg Armstrong says:

    A question for the American Intellectual Yet Idiot classes ruling MORONS: How is America going to maintain and police the empire when all American manufacturing completes the transfer to Communist China?

    The American semiconductor long ago moved locked, stock and barrel to Southeast Asia. Semiconductors are critical to American high-tech weaponry yet a huge proportion of total semiconductor production is within reach of Communist China. Communist China is already practically the only source of ultra-pure silicon required for manufacturing integrated circuits and the slightly lesser quality silicon used for solar panels, etc.

    Aircraft manufacturing has been moving to China for more than 2 decades since McDonnell-Douglas, with William Jefferson Clinton’s blessing, sold them an entire aircraft manufacturing line.

    Is the answer that the job of maintaining the empire will also be outsourced to China? When that happens it will be the Chinese Empire.

    • MC says:

      Small correction: 80% of the silicon wafer used in the world is manufactured by just two Japanese companies: Shin-Etsu and SUMCO, with the former accounting for about half of the total production worldwide.

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