Boeing stock value compared to Boeing Executive excessive incentive pay
Boeing CEO Jim McNerney’s compensation jumped 34 percent last year as the board of the big airplane maker rewarded him for delivering the new 787, The main increase was in incentive pay the board also granted above-target incentive pay to Boeing managers for 2011, including $4.4 million for McNerney. The above-target rewards were in order because of “strong, integrated performance across the Company and better-than-expected mitigation of risks,” Boeing said in its filing. So then what will be the reason for the huge increase in 2013 the SPEEA strike and the finding that the outsourcing was not as good as they planned for cutting costs ?
Is outsourcing to blame for Boeing’s 787 Dreamliner woes
It’s been a miserable 3.5 year delay and a worse week for Boeing. Federal investigators have grounded all of the U.S. company’s new and much-hyped 787 Dreamliner jets after reports that the aircraft’s lithium-ion batteries were overheating and catching fire.
And already, a favorite culprit has emerged: outsourcing. Although outsourcing has always been a part of commercial aviation, the difference now is the complexity and co-dependence of the electronics operating the aircraft.On the 787, the vast collection of components by hundred of suppliers that go into a 787 makes troubleshooting potentially more difficult
This is where the extreme outsourcing really causes problems. How are they going to get their suppliers to be truthful? That has always been a problem in aeronautics. The 787 organization makes it much, much worse.”
The first 3 years of the delay on the Boeing 787/These concerns are hardly novel. Back in 2011, Michael Hiltzik published a long piece for the Los Angeles Times questioning Boeing’s over-reliance on foreign suppliers for the Dreamliner. That piece, however, was largely focused on delays and cost overruns: “The drawbacks of this approach emerged early,” Hiltzik wrote. “Some of the pieces manufactured by far-flung suppliers didn’t fit together. Some subcontractors couldn’t meet their output quotas, creating huge production logjams when critical parts weren’t available in the necessary sequence.”
Next a Boeing Engineer Hart-Smith warned Boeing management in 2001, the result of outsourcing , would be that outsourcing doesn’t cut costs and increase profits but rather does the reverse, driving profits to suppliers and increasing costs for the mother company. Only by maintaining control of its manufacturing could Boeing succeed. He notes that rival Airbus’ outsourcing procedures, a result of the company’s multinational nature, are more efficient than Boeing’s but still fraught with inefficiencies absent in a more centralized approach.
Hart-Smith’s ideas were not adopted, and Boeing, led by then-executives Harry Stoneceipher and Allan Mullally (now Ford’s CEO), made a bet on short-term cost cutting. *Hart-Smith’s paper includes the best footnote ever: “The views expressed here are those of the author and not necessarily those of the Boeing management Boeing Management are still focused on short term profits , hence the SPEEA strike(CUTTING COSTS ON THE PENSION), the 787 grounding, the excessive short term executive bonus for very short term goals. It’s been interesting to watch millions of bonus paid to the Boeing executives for short term goals while the Boeing long term stock price has been flat and a loss for the entire last year. Airbus stock is up over 27% and the NASDAQ average is up 13.8% for a year , Lockheed (LMT) is up 12.26% for a year, the Dow of which Boeing is a part is up 8.51% for a year making Boeing a dog of the Dow at a loss of .69%. for a year .