Comment by HeyLaughingBoy

I call this "quality momentum". A leader can come in, look at whatever "engine" that drives quality, decide it's not essential, remove it entirely, and coast on the momentum of previous quality practices for years before entropy sets in. But by this time, the board and shareholders have already rewarded the leader for "eliminating waste".

I disagree it happened instantly, it's just that Boeing didn't make any new planes for 20 years that made it to the sky. Even the Max was a redesign of an existing design.

That description you have of quality inertia certainly seems applicable to other areas of life as well.

I’m certainly seeing a few troubling issues brewing but don’t see as many people as myself taking them as serious warning signs.

But when the collapse happens it’s rapid because the entire foundation has rotted away.

It keeps happening because that’s what the system rewards, short sightedness, and is also why founder led companies have more success, because they are able to execute in years not quarters.

Ironically, Boeing's stock price was at about $140 at the start of 2014 -- and rose pretty steadily to a peak of $422 in March 2019.

So in addition to pushing out whatever sorts of financial results that Wall Street wanted, Boeing's perhaps questionable approach to quality was not registering with its financial overlords. This happened in spite of the Al-Jazeera investigative piece of 2014, a $2.5 billion penalty paid in 2021 in connection with the 787 crashes, etc. Not to mention steady coverage of problems in the Seattle Times, Wall Street Journal, etc.

Boeing's stock is still above $100 now, which suggests that it's got a strong enough monopoly/duopoly position that investors do not regard quality issues as being all that detrimental to the "investment thesis."

Brrr!

Where can I read more about quality inertia , find other case studies, etc?

https://youtu.be/GN80sx3s4LA?si=de_4xxo1YhFVy0lD

Analog enshitification

Boeing, and the United States as a whole, have been very richly endowed with capital. When you decide to stop adding to your seed corn and start to eat it down, but you began with an enormous mountain of it, you can eat well for a very long period of time.

GE seems like another firm / conglomerate that has lost its way - although we have heard about Jack Welch's management disaster, I do not know if they lost engineers the way it happened at Boeing.

Last year, I bought GE Monogram kitchen appliances and was pleased that they work so well, until I found that it is a Chinese firm that has bought the use of GE's name along with their operations. Maybe that is why the appliances work well, and Chinese century is already on its way

Our major system for evaluating companies is market-driven pricing of the company. That in turn is based mostly on the views of investors and traders, that is people who want to turn money into more money and generally aren't fussy about how it happens. So the market price for a company tends to favor short-term cash extraction over long-term value creation.

That is to say, this is basically what our "system of evaluating public corporations" rewards, and it's been that way for quite some time. We're just paying more attention here because lots of us fly and airline crashes capture the attention nicely. When Facebook enshittifies to juice revenues we all just kind of put up with it, but we're not so chill about a window blowing out at 15,000 feet.

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It's not about the size of the company, it's about the barrier to entry of the market they're in, how much competition they have and the amount of vendor lock-in.

And civil aviation in general scores top marks in all those fields. It's a duopoly with an insane barrier to entry both technical, legal and financial with very long and complex vendor lock-in.

Yep… I wish it were possible to easily invest in the downfall of obviously poorly run companies coughSirius XMcough, but things like puts and shorts really only work if you know when it will fail, and that it will be very soon.

Imagine how that scales and then how that might scale to nation states.

> Remember the big rollout of the Dreamliner in 2014 to show it was all done, but it was actually an empty metal tube with landing gear duct taped on it?

It was in 2007 (on July 8th, a date obviously picked for the memes). Maiden flight was supposed to be two months or so away with introduction in 2008.

Maiden flight was on December 15, 2009. Commercial service started October 2011.

> name a commercially successful Boeing-designed product from the 21st century

The MAX was commercially successful before it started falling out the sky. Orders even picked back up after the dip and cancellations from the MCAS crisis.

It's not like customers have much of a choice if they need a new frame, there are 7000 outstanding orders for the A320neo family and in 2023 Airbus built 45 a month, with plans to eventually reach 75 a month (and stabilise there) circa 2026.

>name a commercially successful Boeing-designed product from the 21st century. Something that can legitimately be called "Successful", and "Boeing"

Boeing is still able to sell planes to customers, they still have a lot of orders in their backlog. This would only change if their are mass cancellations by their customers.

There is a massive demand for planes right now, airlines rather would own a "good enough" plane from Bowling than no plane at all.

The problem isn't the lack of commercial success, the problem is that Boeing is commercially successful and that there is absolutely no punishment from the market or their customers, because everyone knows that they will continue to make and sell planes.

I doubt xitter has as much quality buffer as Boeing had in '97, and Elon's brutalisation of it was a lot less gradual.

Indexes of SP500 without Boeing should outperform ones including Boeing, if you’re predicting that Boeing will underperform in 25 years. You don’t have to short; you can use the knowledge to tune your retirement holdings.

You could even weight the index ratios by how self-cannibalizing you believe each company will be.

Requires a broker that does fractional shares or a lot of money, though.

You can buy options (puts and calls) for three years out.

Shorting a stock for that long would be a recipe for disaster, at some point it's going to go up and you're going to lose it all. Remember when you buy long your positive upside is infinite and your downside limited to 100%, when you short it's the opposite.

Sure. Just hold a small short position.

As they say, you’ve gotta be careful. The market can stay crazy longer than you can stay solvent.

From 25 years ago? No.