And keep in mind: Boeing’s 787 project is already billions of dollars over budget. The delivery schedule has been pushed back at least seven times. The first planes were delivered over three years late. In fact, out of a total of 848 planes sold, only 6 percent have been delivered.
Yet grave as these issues seem, they are merely symptoms of a deeper disease that has been gnawing at the US economy for decades: flawed offshoring decisions by the C-suite. Offshoring is not some menial matter to be left to accountants in the backroom or high-priced consultants armed with spreadsheets, promising quick profits. It raises mission-critical issues potentially affecting the survival of entire firms, whole industries and ultimately the economy.
Not just Boeing: an economy-wide problem
Thus Boeing is hardly alone in making flawed offshoring decisions. Boeing is just the latest and most spectacular example of an economy-wide problem.
“Many companies that offshored manufacturing didn’t really do the math,” Harry Moser, an MIT-trained engineer and founder of the Reshoring Initiative told me. As many as 60 percent of the decisions were based on miscalculations.
As noted by Gary Pisano and Willy Shih in their classic article, “Restoring American Competitiveness” (Harvard Business Review, July-August 2009), offshoring has been devastating whole US industries, stunting innovation, and crippling capacity to compete long-term.
Pisano and Shih write: “The decline of manufacturing in a region sets off a chain reaction. Once manufacturing is outsourced, process-engineering expertise can’t be maintained, since it depends on daily interactions with manufacturing. Without process-engineering capabilities, companies find it increasingly difficult to conduct advanced research on next-generation process technologies. Without the ability to develop such new processes, they find they can no longer develop new products. In the long term, then, an economy that lacks an infrastructure for advanced process engineering and manufacturing will lose its ability to innovate.”
Pisano and Shih have a frighteningly long list of industries that are “already lost” to the USA, including: compact fluorescent lighting; LCDs for monitors, TVs and handheld devices like mobile phones; electrophoretic displays; lithium ion, lithium polymer and NiMH batteries; advanced rechargeable batteries for hybrid vehicles; crystalline and polycrystalline silicon solar cells, inverters and power semiconductors for solar panels; desktop, notebook and netbook PCs; low-end servers; hard-disk drives; consumer networking gear such as routers, access points, and home set-top boxes; advanced composite used in sporting goods and other consumer gear; advanced ceramics and integrated circuit packaging.
The list of industries “at risk” is even longer and more worrisome.
Thus Boeing is hardly alone in making flawed offshoring decisions. Boeing is just the latest and most spectacular example of an economy-wide problem.
“Many companies that offshored manufacturing didn’t really do the math,” Harry Moser, an MIT-trained engineer and founder of the Reshoring Initiative told me. As many as 60 percent of the decisions were based on miscalculations.
As noted by Gary Pisano and Willy Shih in their classic article, “Restoring American Competitiveness” (Harvard Business Review, July-August 2009), offshoring has been devastating whole US industries, stunting innovation, and crippling capacity to compete long-term.
Pisano and Shih write: “The decline of manufacturing in a region sets off a chain reaction. Once manufacturing is outsourced, process-engineering expertise can’t be maintained, since it depends on daily interactions with manufacturing. Without process-engineering capabilities, companies find it increasingly difficult to conduct advanced research on next-generation process technologies. Without the ability to develop such new processes, they find they can no longer develop new products. In the long term, then, an economy that lacks an infrastructure for advanced process engineering and manufacturing will lose its ability to innovate.”
Pisano and Shih have a frighteningly long list of industries that are “already lost” to the USA, including: compact fluorescent lighting; LCDs for monitors, TVs and handheld devices like mobile phones; electrophoretic displays; lithium ion, lithium polymer and NiMH batteries; advanced rechargeable batteries for hybrid vehicles; crystalline and polycrystalline silicon solar cells, inverters and power semiconductors for solar panels; desktop, notebook and netbook PCs; low-end servers; hard-disk drives; consumer networking gear such as routers, access points, and home set-top boxes; advanced composite used in sporting goods and other consumer gear; advanced ceramics and integrated circuit packaging.
The list of industries “at risk” is even longer and more worrisome.
by Steve Denning, Forbes | Read more:
Image: uncredited
