WEBVTT - Lots More on the Ongoing Mess That Is Boeing 0:00:03.120 --> 0:00:08.520 Bloomberg Audio Studios, Podcasts, radio News. 0:00:09.920 --> 0:00:12.600 I feel like we might have made a mistake recording 0:00:12.640 --> 0:00:16.319 this episode on Wednesday, October twenty third, which is the 0:00:16.400 --> 0:00:19.720 day that we're awaiting the strike vote over at Boeing. 0:00:19.960 --> 0:00:24.880 Oh yeah, but you know, yes, that's right, that's annoying timing. 0:00:24.920 --> 0:00:27.240 But on the other hand, what I would say is 0:00:27.240 --> 0:00:31.240 that Boeing issues seem so deep, et cetera, that the 0:00:31.320 --> 0:00:35.600 strike is only one chase. So even if there were 0:00:35.640 --> 0:00:37.519 you know, even if there were all, you know, by 0:00:37.560 --> 0:00:40.040 the time people listen to this and there's some resolution, 0:00:40.560 --> 0:00:42.720 I don't think there's going to be some resolution to 0:00:42.760 --> 0:00:45.360 the issues at Boeing at large. Well. 0:00:45.720 --> 0:00:47.919 The good news, I guess, in terms of timing, is 0:00:47.960 --> 0:00:51.239 also that we had Boeing earnings just yesterday, so you 0:00:51.240 --> 0:00:54.279 can kind of see a lot of those issues that 0:00:54.320 --> 0:00:57.600 you are alluding to directly on the balance sheet. Do 0:00:57.640 --> 0:01:00.240 you want to know some some good news for my 0:01:00.320 --> 0:01:01.240 personal life? Yeah? 0:01:01.280 --> 0:01:01.600 Please? 0:01:01.760 --> 0:01:06.920 Okay, The correlation between Boeing and Southwest, their biggest customer, 0:01:07.120 --> 0:01:10.679 is finally breaking down, so Southwest shares are up. Boeing 0:01:10.760 --> 0:01:14.000 is still pretty depressed. My dad used to fly for Southwest, 0:01:14.000 --> 0:01:16.320 so he still has a lot of Southwest stock. 0:01:16.760 --> 0:01:20.280 So there's a disclaimer. This is this is a financial disclaimer. 0:01:20.319 --> 0:01:20.800 That's all right. 0:01:21.080 --> 0:01:22.120 This is what's important. 0:01:22.280 --> 0:01:25.880 Also, this is what constitutes good news for me nowadays. 0:01:28.720 --> 0:01:35.800 I did a deadlift one, two, three, Jimmy, Okay, go up, barges. 0:01:35.920 --> 0:01:38.000 This isn't after school Special, except I've. 0:01:37.880 --> 0:01:40.600 Decided I'm going to base my entire personality going forward 0:01:40.680 --> 0:01:43.480 on campaigning for a strategic pork reserve in the US. 0:01:43.600 --> 0:01:46.920 Where's the best in posta? These are the important question? 0:01:47.040 --> 0:01:48.440 Is that robots taking over the world. 0:01:48.520 --> 0:01:48.680 No. 0:01:48.760 --> 0:01:51.640 I think that, like in a couple of years, the 0:01:51.720 --> 0:01:53.920 AI will do a really good job of making The 0:01:53.920 --> 0:01:56.800 Odd launch podcast and people. 0:01:56.520 --> 0:01:58.120 To say, I don't really need to listen to Joe 0:01:58.120 --> 0:02:02.960 and Tracy anymore. We do have ofuching the perfect. 0:02:03.680 --> 0:02:06.040 You're listening to lots more where we catch up with 0:02:06.080 --> 0:02:08.800 friends about what's going on right now, because. 0:02:08.560 --> 0:02:11.400 Even when The Odd Lots is over, there's always lots. 0:02:11.200 --> 0:02:14.040 Smart and we really do have the perfect guest. 0:02:17.400 --> 0:02:19.799 We did an episode I don't know, maybe three or 0:02:19.840 --> 0:02:22.120 four weeks ago, and the title of that one was 0:02:22.160 --> 0:02:24.640 the Ongoing Mess that is Intel. This one, I think 0:02:24.639 --> 0:02:26.600 we're going to title the ongoing mess that is Boeing. 0:02:26.840 --> 0:02:28.920 But it's interesting. I don't know if you saw earlier 0:02:29.080 --> 0:02:31.320 this week. I think it might have been Monday. Greg 0:02:31.400 --> 0:02:33.680 ipp Over at The Wall Street Journal wrote. 0:02:33.400 --> 0:02:34.679 This call, Oh yeah, I saw that. 0:02:34.680 --> 0:02:38.800 That is basically like, the crises at Intel and Boeing 0:02:38.919 --> 0:02:42.080 are a national emergency. And this is something that I've 0:02:42.280 --> 0:02:45.440 thought specifically. Sometimes random people who know that I like 0:02:45.480 --> 0:02:47.920 cover stuff like this for work, they'll say, what are 0:02:47.919 --> 0:02:50.280 you worried about these days? And this is usually what 0:02:50.320 --> 0:02:52.560 I go to first. That we're in an era of 0:02:53.000 --> 0:02:56.919 or trying to revitalize US manufacturing, and yet the two 0:02:57.040 --> 0:03:02.120 defining flagship US manufacturers are deeply struggling. And what does 0:03:02.160 --> 0:03:05.440 that say about institutional operations in the nature of you 0:03:05.520 --> 0:03:08.360 as capitalism. These are the companies that I think about 0:03:08.440 --> 0:03:09.600 first when I worry. 0:03:10.160 --> 0:03:14.320 You know who else thinks about them a lot. Richard Abulafia, 0:03:14.440 --> 0:03:17.680 who is of course a managing director at Aerodynamic Advisory. 0:03:17.760 --> 0:03:21.679 We've had him on before talking about both Boeing and Embraer. 0:03:21.919 --> 0:03:24.440 One day we're going to talk and it'll be good news. 0:03:24.720 --> 0:03:26.680 We're going to talk about something going really right. 0:03:26.720 --> 0:03:27.400 But I don't think. 0:03:27.760 --> 0:03:29.680 I don't think today is that day yet? 0:03:30.120 --> 0:03:34.400 Yeah, jetliner delivered to happy customers and waiting for book 0:03:34.400 --> 0:03:35.120 members that would be. 0:03:35.120 --> 0:03:38.080 Doors, staying on planes things like that. 0:03:38.760 --> 0:03:42.120 Well that's asking a lot, but yeah. 0:03:41.080 --> 0:03:45.120 Okay, yeah, So in terms of what you're watching at Boeing, 0:03:45.360 --> 0:03:48.680 I just mentioned the strike vote is coming later today, 0:03:49.000 --> 0:03:52.400 But what is the next catalyst for you in terms 0:03:52.400 --> 0:03:54.520 of the future of this company. 0:03:54.760 --> 0:03:58.480 Yeah, I mean, obviously getting the strike settled is just 0:03:58.600 --> 0:04:03.240 so enormous, but you know, quite frankly, once you get 0:04:03.280 --> 0:04:06.880 it back, get work going again, getting to the rate 0:04:07.040 --> 0:04:09.560 they want is really the key to everything. You know, 0:04:09.600 --> 0:04:14.040 the seven thirty seven is they're only really big profitability driver. 0:04:14.720 --> 0:04:17.360 So if you ever get to that Houlcyon place where 0:04:17.360 --> 0:04:21.240 they're delivering fifty something per month cash, sea seems to 0:04:21.240 --> 0:04:23.880 be a problem. You know, it's just that simple. And 0:04:23.920 --> 0:04:26.880 they've been stuck in first or second year for years 0:04:26.920 --> 0:04:30.560 now at twenty something or zero in the aftermath of 0:04:30.640 --> 0:04:34.480 the two crashes that you know, we're waiting and waiting 0:04:34.480 --> 0:04:37.479 and waiting, and all of their financial problems are basically 0:04:37.520 --> 0:04:40.400 as a consequence of this. There are other contributing factors, 0:04:40.440 --> 0:04:44.440 like they're rather horrible defense programs and whatever else. 0:04:44.520 --> 0:04:46.800 But it comes to the key that solving the company's 0:04:46.839 --> 0:04:49.919 problems comes back to getting that ramp going, and of 0:04:49.960 --> 0:04:53.480 course the key part of that is getting suppliers healthy 0:04:53.520 --> 0:04:56.640 and delivering again too, which is an added complication. 0:04:56.520 --> 0:04:59.160 We on this question. Okay, so they need to just 0:04:59.240 --> 0:05:02.599 objectively to be a profitable company that has a healthy 0:05:02.640 --> 0:05:06.479 balance sheet, they need to improve that production cadence. Just 0:05:06.520 --> 0:05:09.800 to be clear, like, Okay, if the strike is resolved 0:05:10.120 --> 0:05:13.039 at some point, which presumably it will either by the 0:05:13.080 --> 0:05:15.840 time we're talking about this or later on, what does 0:05:15.880 --> 0:05:18.840 that mean in terms of actually getting back to their 0:05:18.880 --> 0:05:23.080 production cadence. But that's also I don't think the only issue. 0:05:23.400 --> 0:05:26.360 Yeah, it's just sort of a necessary condition, I guess. 0:05:26.480 --> 0:05:28.720 You know, this is not a right to work state, 0:05:28.800 --> 0:05:31.960 which means that when the workers go on strike and 0:05:32.040 --> 0:05:35.320 pu should sound pretty much all deliveries kind of more 0:05:35.440 --> 0:05:37.480 or less come to a halt. Accept the stuff that 0:05:37.560 --> 0:05:40.719 was about to be delivered, and that means that the 0:05:40.720 --> 0:05:42.840 strike simply has to end for things to start again. 0:05:42.880 --> 0:05:48.599 But then there's finding the necessary resources and in terms 0:05:48.600 --> 0:05:52.799 of talent, which is an added complication to any terms 0:05:52.800 --> 0:05:55.839 and benefits they offer the workers. You know, you also 0:05:55.920 --> 0:05:58.920 want to regard this as an opportunity to attract talent, 0:05:59.000 --> 0:06:02.120 and I'm not so sure they're doing that. But then 0:06:02.160 --> 0:06:03.720 the next thing is you got to look at the 0:06:03.760 --> 0:06:07.400 supply chain, which has been badly dilapidated by everything from 0:06:07.400 --> 0:06:10.960 the pandemic to Boeing's terms and conditions over the past decade. Basically, 0:06:10.960 --> 0:06:14.240 Boeing was kind of using their supply base as an ATM, 0:06:14.560 --> 0:06:17.479 and they all have to be well turned back on. 0:06:17.640 --> 0:06:21.000 I have to have the adequate working capital and adequate 0:06:21.200 --> 0:06:24.039 labor resources of their own. And of course, at the 0:06:24.040 --> 0:06:26.080 center of all of the susperiord Eero Systems and Boeing, 0:06:26.120 --> 0:06:28.000 it reached the conclusion that the only way to make 0:06:28.040 --> 0:06:29.680 this good is to bring it back in the company. 0:06:30.320 --> 0:06:32.480 So that situation has to be cleared up. And that's 0:06:32.480 --> 0:06:33.000 a big one. 0:06:33.240 --> 0:06:35.080 That's exactly what I was going to ask you about. 0:06:35.120 --> 0:06:37.359 Do you get the sense at all that Boeing is 0:06:37.400 --> 0:06:41.920 going to sort of revamp its relationship with suppliers, because 0:06:42.320 --> 0:06:45.000 this was one of the big criticisms of the company 0:06:45.040 --> 0:06:48.000 and the sort of cultural change that happened. It was 0:06:48.040 --> 0:06:51.400 this idea that they just decided to outsource a bunch 0:06:51.400 --> 0:06:52.800 of stuff because it was cheaper. 0:06:53.120 --> 0:06:55.840 Well, you know, outsoarrescing would have been fine. At the 0:06:55.920 --> 0:06:58.000 end of the day. They had always outsourced a certain 0:06:58.000 --> 0:07:00.320 degree of the production aspect. It was the disease to 0:07:00.360 --> 0:07:04.400 also outsource designed and integration that when things made things 0:07:05.000 --> 0:07:08.200 a little bit worse. But then it got really bad 0:07:08.240 --> 0:07:11.280 when they sort of learned exactly nothing from General Motors 0:07:11.800 --> 0:07:14.720 and said, what if we outsource and outsource designed and 0:07:14.800 --> 0:07:19.000 integration and didn't treat them like a lemon to be squeezed, 0:07:19.040 --> 0:07:22.880 that'll work out great, right, And they adopted back in 0:07:22.920 --> 0:07:25.240 the twenty tens the same approach to the supply chain 0:07:25.280 --> 0:07:27.040 as they did to their workforce. You know, these are 0:07:27.080 --> 0:07:31.040 people we can squeeze and extract cash from, and they're 0:07:31.080 --> 0:07:33.960 realizing that incredible. I mean, no one could have seen 0:07:34.000 --> 0:07:38.080 this coming. But actions have consequences, and you know, taking 0:07:38.080 --> 0:07:40.920 all the margins out of your suppliers and giving them 0:07:40.960 --> 0:07:43.480 one hundred and twenty day payment terms and whatever else, 0:07:43.840 --> 0:07:46.880 and even demanding that you own the stuff that's on 0:07:46.960 --> 0:07:50.120 their factory for you know, just any metal them might 0:07:50.160 --> 0:07:52.680 have fallen into the I'm not making this up, is 0:07:52.760 --> 0:07:55.400 you know, buying property not theres I mean basically squeezed 0:07:55.440 --> 0:07:56.880 the sweathing them in all directions. 0:07:57.080 --> 0:07:59.080 Wait say that when you said I'm not making this 0:07:59.160 --> 0:07:59.720 up any metal? 0:07:59.760 --> 0:08:00.200 That's what? 0:08:00.280 --> 0:08:00.480 What? 0:08:00.480 --> 0:08:00.760 What? 0:08:00.760 --> 0:08:01.920 What was on the floor? 0:08:03.240 --> 0:08:06.000 You know, wait a minute. You know, if there's any 0:08:06.000 --> 0:08:09.000 scrap metal that falls from the manufacturing process, that's ours, 0:08:09.040 --> 0:08:09.480 not yours. 0:08:09.480 --> 0:08:12.640 We get to build that term that's true micromanaging. 0:08:12.760 --> 0:08:13.800 Yeah, that's true. 0:08:13.880 --> 0:08:16.680 Yeah, a lot of Wow, Yeah it is. 0:08:16.840 --> 0:08:20.400 And there was a rather Orwellian sounding program called Partnership 0:08:20.440 --> 0:08:24.320 for Success aka Partnering for Poverty basically, and they did 0:08:24.320 --> 0:08:27.480 this in two two different trenches, basically going in and 0:08:27.520 --> 0:08:30.160 saying we're going to cut your margins and by the way, 0:08:30.160 --> 0:08:32.560 we're going to have a go at your aftermarket business too, 0:08:32.679 --> 0:08:36.800 if you're an aftermarket player. Basically, they went after their 0:08:36.840 --> 0:08:41.800 supply chain and for a while, you know, suppliers basically 0:08:41.840 --> 0:08:45.320 were depending upon if they had Pentagon exposure, you know, 0:08:45.440 --> 0:08:47.960 to make things a little bit healthier during the pandemic, 0:08:48.000 --> 0:08:52.079 the Pentagon had an accelerated payment program for suppliers, which 0:08:52.200 --> 0:08:55.360 really helped a lot. And for a while it was 0:08:55.440 --> 0:08:58.360 sort of you know, everyone who loved Boeing regarded the 0:08:58.400 --> 0:09:01.600 Boeing part of their work portfolio is not so good 0:09:01.640 --> 0:09:03.520 at all because it was the least profitable. 0:09:03.720 --> 0:09:06.080 So another thing I wanted to catch up with you 0:09:06.200 --> 0:09:09.560 on is just the mood at Boeing. Have you been 0:09:09.679 --> 0:09:12.400 back to Seattle since the last time we talked to you? 0:09:12.960 --> 0:09:16.400 Uh yeah, And what's it like? What are people saying? 0:09:17.240 --> 0:09:20.800 You know, I mean, people were different, right, the workforce 0:09:20.880 --> 0:09:25.040 isn't completely homogenous. Having said that, boy, at that ninety 0:09:25.080 --> 0:09:28.360 six percent I think vote after the first contract offer, 0:09:28.440 --> 0:09:31.360 that is pretty telling. There's a real feeling that for 0:09:31.400 --> 0:09:35.160 the first time in many decades, labor actually has power. 0:09:35.280 --> 0:09:37.800 They can get back some of the ground they lost 0:09:37.840 --> 0:09:41.320 over the previous decade or so. Today is going to 0:09:41.360 --> 0:09:45.560 be incredibly telling. Whether or not they're willing to say, Okay, hey, 0:09:45.720 --> 0:09:48.199 it's a pretty good offer, let's get back to work, 0:09:48.440 --> 0:09:52.080 or whether they say, no, we gave up our pension 0:09:52.120 --> 0:09:55.280 ten years ago and we want it back read our lips. 0:09:55.520 --> 0:09:58.000 That's going to be the most interesting aspect, effectively a 0:09:58.040 --> 0:10:00.680 referendum on the the pension. 0:10:01.480 --> 0:10:04.400 So obviously, again, by the time this comes out, people 0:10:04.400 --> 0:10:07.200 have heard you know, I think and now we've talked 0:10:07.200 --> 0:10:10.600 to a few times. The one line you've said that 0:10:10.840 --> 0:10:13.640 like truly haunts me, or that like sticks in my head, 0:10:14.320 --> 0:10:17.360 is that Boeing could get to the point where, because 0:10:17.360 --> 0:10:20.679 it's been so long since they've launched a new a 0:10:20.720 --> 0:10:23.880 brand new product, you know, start from a clean sheet 0:10:23.920 --> 0:10:26.600 of paper and launch a new product, that it could 0:10:26.600 --> 0:10:28.880 get to the point where eventually they have no one 0:10:29.040 --> 0:10:31.920 inside the company who has ever been part of the 0:10:32.080 --> 0:10:35.640 process of designing a new product. And I think there 0:10:35.679 --> 0:10:38.240 were comments out today from the CEO that there's still 0:10:38.280 --> 0:10:40.440 no hurry on that aspect of it. 0:10:40.520 --> 0:10:43.440 No, no, no, He said that Boeing is still focused on 0:10:43.520 --> 0:10:46.560 building an all new airplane. But the question, to your 0:10:46.600 --> 0:10:48.480 point is like how do they actually do it? 0:10:48.679 --> 0:10:51.360 Yeah, And it's like this to me, Like when you 0:10:51.400 --> 0:10:53.360 said that there's like no one who knows how to 0:10:53.400 --> 0:10:56.360 build a new airplane from the beginning, I remember like, Oh, 0:10:56.400 --> 0:10:59.120 that's like a really chilling thought. And so I'm curious, 0:10:59.160 --> 0:11:00.200 like where that stand. 0:11:00.440 --> 0:11:02.640 Well, we're not at that point just yet. There's a 0:11:02.720 --> 0:11:05.720 risk of it given the demographics of the you know, 0:11:05.840 --> 0:11:08.920 design workforce, and you meet a lot of them and 0:11:09.440 --> 0:11:12.199 they're on the older side, you know, this be a 0:11:12.720 --> 0:11:15.160 engineering union. I think their median age is somewhere in 0:11:15.200 --> 0:11:18.400 the fifty ish range, you know, don't hold me to that, 0:11:18.440 --> 0:11:22.480 but it's it's it's older and the number of people 0:11:22.520 --> 0:11:25.079 who were around it the last time that a clean 0:11:25.080 --> 0:11:27.280 sheet design was launched the seven eight seven around two 0:11:27.320 --> 0:11:30.080 thousand and four. It's diminishing. And you can make an 0:11:30.120 --> 0:11:33.640 argument triple seven X has been kind of halfway to 0:11:33.679 --> 0:11:37.480 a clean sheet as a major derivative, and that's something. 0:11:37.920 --> 0:11:40.840 But you can see that if something new isn't launched 0:11:41.200 --> 0:11:43.040 in the next four or five years, they're going to 0:11:43.080 --> 0:11:46.720 have a really hard time reconstituting that that muscle memory, 0:11:46.720 --> 0:11:47.360 that cornelage. 0:12:01.000 --> 0:12:03.439 What do you think is more likely at the moment? 0:12:03.520 --> 0:12:04.959 And I get that there are a lot of moving 0:12:05.040 --> 0:12:08.959 parts here, but is it a turnaround of the company, 0:12:08.960 --> 0:12:12.199 a successful turnaround? Is it a sort of long slow 0:12:12.400 --> 0:12:14.880 death or is it a breakup? 0:12:15.200 --> 0:12:17.959 You know, that depends on leadership. You know, the previous leader, 0:12:18.080 --> 0:12:20.600 Dave Calhoun, as we discussed, you can see that the 0:12:20.640 --> 0:12:23.920 future right there, it was you know, either a glide 0:12:23.920 --> 0:12:26.200 soope into the ground or a breakup. And I think 0:12:26.240 --> 0:12:30.800 they were probably thinking about their breakup options. Killy Ortberg. 0:12:31.120 --> 0:12:33.640 That's the big change. Of course, his track record is 0:12:33.960 --> 0:12:36.520 not absolutely perfect, But there's still a lot of hope. 0:12:36.760 --> 0:12:38.720 I mean, he's somebody who knows the industry, who cares 0:12:38.720 --> 0:12:42.480 about the industry. We're kind of hoping that with him 0:12:42.520 --> 0:12:44.920 at the HELM, there is a chance of getting things 0:12:44.960 --> 0:12:48.040 back on track and for the company to survive and 0:12:48.120 --> 0:12:52.160 perhaps even be restored to health in something like its 0:12:52.360 --> 0:12:53.199 current incarnation. 0:12:53.920 --> 0:12:56.240 I have a question that I don't really want to 0:12:56.360 --> 0:13:01.040 know the answer to, but you mentioned troubles on the 0:13:01.400 --> 0:13:03.960 defense side of the business, which probably doesn't get talked 0:13:04.000 --> 0:13:06.440 about as much because the market is different and the 0:13:06.480 --> 0:13:11.600 public doesn't know those products. Defense stocks, say a Lockheed Martin, 0:13:11.840 --> 0:13:15.160 have actually done extremely well, despite the fact that I 0:13:15.240 --> 0:13:18.280 see a parade of headlines all the time about troubles 0:13:18.800 --> 0:13:21.520 at Lockheed Martin, and there is a headline out literally 0:13:21.800 --> 0:13:25.280 yesterday Lockheed falls as F thirty five delays, drag sales, 0:13:25.320 --> 0:13:29.280 and there's other things like that. Could we do versions 0:13:29.360 --> 0:13:34.200 of this conversation about many other American defense contractors. 0:13:34.679 --> 0:13:38.640 The good news is not really The bad news is, yes, 0:13:38.679 --> 0:13:40.240 we can about Boeing's defense side. 0:13:40.360 --> 0:13:43.000 Okay, so there actually is like it's not like what 0:13:43.160 --> 0:13:46.760 you identify in Boeing and whatever it is, and you know, 0:13:47.440 --> 0:13:51.079 there are probaty many different causes. Is not, in your view, 0:13:51.120 --> 0:13:54.040 completely endemic to the US defense sector. 0:13:54.640 --> 0:13:58.040 Right, It's pretty unique to Boeing, and it gets back 0:13:58.080 --> 0:14:01.240 to the roots of the or in class management that 0:14:01.559 --> 0:14:05.320 ran Boeing in the last decade and into this one. Basically, 0:14:05.320 --> 0:14:08.400 they made the strategic decision to sign a bunch of 0:14:08.600 --> 0:14:12.480 incredible money losing contracts, and of course the US military 0:14:12.559 --> 0:14:15.120 was fine with that. You want your investors to pay 0:14:15.160 --> 0:14:18.640 for our weapons systems, great, and the strategy was to 0:14:18.760 --> 0:14:23.400 use the amazing, incredible revenue from their unstoppable commercial jetliner 0:14:23.840 --> 0:14:27.680 cash flow to basically subsidize the defense. That was a 0:14:27.720 --> 0:14:32.640 strategic decision made worse by a decision to well inflict 0:14:32.680 --> 0:14:36.200 on the defense side exactly the same management mispractice that 0:14:36.240 --> 0:14:39.920 they did on the commercial side, you know, under resourcing things, 0:14:40.320 --> 0:14:44.840 demanding results without actually showing up and discussing requirements with people, 0:14:45.360 --> 0:14:49.600 and the consequences, predictably, were just horrible losses on major 0:14:49.680 --> 0:14:52.880 programs that dwarf anything else in the defense industry. 0:14:53.400 --> 0:14:56.200 Do you think Ortberg is going to recreate the strategy 0:14:56.200 --> 0:14:59.760 department that Calhoun dissolved so they actually know what they're 0:15:00.120 --> 0:15:02.840 ending all that new capital on and what they're aiming for. 0:15:03.960 --> 0:15:06.800 Well, again, you're asking for a lot with a strategic direction, 0:15:07.200 --> 0:15:11.000 big kitty. I mean, it's like, oh, wow, actually figure 0:15:11.000 --> 0:15:14.320 out where the super tanker is headed? Good idea? Crazy, 0:15:14.640 --> 0:15:17.200 I should hope, so, right, I mean, I'm really sure. 0:15:17.360 --> 0:15:20.000 I hope so. But there's so many things, and there's 0:15:20.040 --> 0:15:22.960 also frankly a lot he's doing that I don't get, 0:15:23.360 --> 0:15:25.080 you know, for a guy who knows the business, I mean, 0:15:25.600 --> 0:15:28.680 it's about a week or two. Well, he announced a 0:15:28.760 --> 0:15:32.600 literal decimation of the company. They're going to fire seventeen thousand, 0:15:32.640 --> 0:15:35.640 at of one hundred and seventy thousand people. Where the 0:15:35.640 --> 0:15:38.240 heck would they come from? So, Tracy, inting to your question, 0:15:38.440 --> 0:15:42.960 you know, to reconstitute a strategy team while cutting overhead 0:15:43.040 --> 0:15:45.520 quote unquote and whatever else that that doesn't seem to 0:15:45.520 --> 0:15:47.320 make a lot of sense to me. And where would 0:15:47.320 --> 0:15:49.640 those people come from in any event? Because commercial needs 0:15:49.640 --> 0:15:52.600 resources to do the ramp, and the one consistent problem 0:15:52.600 --> 0:15:55.960 with all those money losing defense programs is inadequate resources. 0:15:56.080 --> 0:15:57.800 So where do those workers come from? 0:15:58.240 --> 0:15:58.440 Yeah? 0:15:58.480 --> 0:16:01.360 By the way, on CNBC this morning, Ortberg, there is 0:16:01.400 --> 0:16:06.360 a quote calling Boeing quote overstaffed for its business going forward, 0:16:06.400 --> 0:16:07.960 and then he said I would rather err on the 0:16:08.000 --> 0:16:11.000 side of doing less than doing more and not doing well, 0:16:11.040 --> 0:16:14.120 which you know, I guess that sounds fine. But yeah, 0:16:14.160 --> 0:16:16.120 if you're building out things, if you're building out a 0:16:16.160 --> 0:16:18.680 new product, if you're building out a new strategy team, 0:16:19.640 --> 0:16:22.040 seems like there are things intention to say the least. 0:16:22.760 --> 0:16:24.760 Yeah, I just don't get it. I mean, they're trying 0:16:24.800 --> 0:16:27.920 to ramp, as we discussed earlier, from twenty something to 0:16:27.960 --> 0:16:34.160 fifty something seven thirty seven's that's directly linked to people. Similarly, 0:16:34.920 --> 0:16:38.920 the one Crew thing that Dave Calhoun said was some 0:16:39.000 --> 0:16:43.480 of their key defense programs were suffering from well personnel 0:16:43.520 --> 0:16:49.200 and talent shortages. I don't get the under resource or 0:16:49.240 --> 0:16:52.080 over resourced argument at all. He's going to have to 0:16:52.200 --> 0:16:55.520 actually explain where those jobs would come from. 0:16:55.960 --> 0:16:58.520 One thing I wanted to ask you, and I'm actually 0:16:58.520 --> 0:17:00.440 a little bit I don't know if you want to 0:17:00.480 --> 0:17:03.760 talk about this, but we do have the election coming up, 0:17:04.320 --> 0:17:07.760 and as Joe said in the intro, you know, boosting 0:17:07.880 --> 0:17:12.239 America's manufacturing sector has been such a big thing in 0:17:12.480 --> 0:17:17.640 recent years, a big policy goal, and both presidential candidates, 0:17:18.040 --> 0:17:20.480 you know, have talked about this and say they care 0:17:20.560 --> 0:17:24.600 about it. But do you have any opinion or idea 0:17:24.680 --> 0:17:28.520 or insight on what the two candidates would mean for 0:17:28.600 --> 0:17:29.639 a company like Boeing. 0:17:30.680 --> 0:17:33.800 Yeah, you know, during the Trump years, there were some 0:17:33.880 --> 0:17:37.439 who believed there was actually a pattern of favoritism towards 0:17:37.440 --> 0:17:40.480 Boeing and defense contracts. The F fifteen came back in 0:17:40.520 --> 0:17:43.640 the budget, the Super Hornet came back in the budget, 0:17:43.960 --> 0:17:47.720 and there were rumors that Boeing had even received Next 0:17:47.760 --> 0:17:52.600 generation fighter contract development work. And you know, it's impossible 0:17:52.640 --> 0:17:55.240 to say for sure or whether that would continue because 0:17:55.440 --> 0:17:58.400 you know, Trump two point zero would look very very 0:17:58.440 --> 0:18:00.760 different from Trump one point zero in terms of people 0:18:00.800 --> 0:18:05.280 and policies. Obviously, Kamala Harris would probably be you know, 0:18:05.520 --> 0:18:09.639 pretty much as is. Either way, it's not really clear 0:18:09.720 --> 0:18:13.280 other than defense what could be done. And even with defense, 0:18:13.280 --> 0:18:16.560 we're not really sure. I mean, this country doesn't really 0:18:16.720 --> 0:18:20.520 do industrial policy the way say Europe or Japan does. 0:18:20.680 --> 0:18:24.600 We can provide government resources to stabilize a very bad 0:18:24.600 --> 0:18:28.320 financial situation with loan guarantees or you know, pension bailouts 0:18:28.400 --> 0:18:31.840 or something like that, and of course there's long lead 0:18:31.920 --> 0:18:37.280 Advanced Technology development, semiconductors, whatever, artificial intelligence, you know, just 0:18:37.440 --> 0:18:40.560 DARPA sort of stuff. But the stuff in between favoring 0:18:40.600 --> 0:18:42.960 industries in one way or another, we don't have a 0:18:43.000 --> 0:18:45.880 lot of experience with and policy makers, you know, it's 0:18:45.880 --> 0:18:47.960 not really clear exactly what they would do to further 0:18:48.040 --> 0:18:48.440 that goal. 0:18:48.800 --> 0:18:51.760 Last question for me, you still sort of bearish on Comac. 0:18:51.840 --> 0:18:53.200 What's your view on them these days? 0:18:54.640 --> 0:18:56.640 Yeah, you know, I mean it's pretty much the same thing, 0:18:56.680 --> 0:19:00.760 and it's no dig at China itself, you know. I mean, 0:19:00.760 --> 0:19:03.040 if they were to privatize COMAC and not make it 0:19:03.119 --> 0:19:06.200 part of the you know, Central Committee of the Communist Party, 0:19:07.280 --> 0:19:10.680 I think they'd probably be pretty darn good. And better still, 0:19:10.960 --> 0:19:13.280 if they could become a global enterprise and say we're 0:19:13.320 --> 0:19:15.680 going to buy best technologies all over the world, they'd 0:19:15.720 --> 0:19:18.840 be really good. But right now they're basically the DMV 0:19:18.960 --> 0:19:22.560 with wings trying to build. It's a little embarrassing. Frankly. 0:19:23.240 --> 0:19:26.120 Well, I have one more question, which is, since we 0:19:26.359 --> 0:19:29.360 spoke to you last, we've had this year's air shows, 0:19:29.600 --> 0:19:32.199 and I'm just curious what was the most interesting or 0:19:32.240 --> 0:19:34.320 surprising thing that you heard from those? 0:19:34.800 --> 0:19:37.280 Yeah, thanks for asking, great great question. I guess the 0:19:37.320 --> 0:19:40.679 mood at Farnborough this year outside of London was excuse me, 0:19:40.760 --> 0:19:43.720 where's our planes. We've been waiting for a supply chain 0:19:43.760 --> 0:19:47.960 in production recovery for some time now, and you talked 0:19:48.000 --> 0:19:52.840 with supply chain managers and they were apologetic and they said, well, 0:19:52.840 --> 0:19:56.119 look we're you know, we've got a roadmap map to 0:19:56.240 --> 0:19:59.800 seeing the results from investments we're making at various levels 0:20:00.080 --> 0:20:04.119 the supply chain. This wasn't one hundred percent completely convincing, 0:20:04.200 --> 0:20:06.840 but hey, there's it sounds like they are starting to 0:20:06.840 --> 0:20:08.959 make those investments. So in a year or so we 0:20:09.040 --> 0:20:13.200 might begin to see a slightly faster, you know, increase 0:20:13.480 --> 0:20:16.399 in production. That was sort of the big talked about topic, 0:20:16.440 --> 0:20:19.679 and it sounds like people were getting serious about you know, 0:20:19.800 --> 0:20:23.800 sourcing is a strategic function more than ever, so maybe 0:20:24.000 --> 0:20:25.720 it's getting the priority it deserves. 0:20:26.240 --> 0:20:28.200 By the way, Tracay, I just wanted to clarify something 0:20:28.400 --> 0:20:31.040 I said earlier. So Ortberg was on CNBC today and 0:20:31.040 --> 0:20:33.439 he was asked about the next plane that they're going 0:20:33.480 --> 0:20:36.639 to design from scratch. Yeah, as I'm reading the Bloomberg articles, 0:20:36.840 --> 0:20:39.399 restoring the balance sheet will be requirement for Boeing to 0:20:39.440 --> 0:20:42.679 consider it's next commercial aircraft, Ortberg said, So the basic 0:20:42.760 --> 0:20:44.959 gist is like, yeah, there's going to be another plane. 0:20:45.040 --> 0:20:48.320 In theory, it's not going to happen until the current 0:20:48.920 --> 0:20:52.560 financial issues are resolved. And so in the meantime, day 0:20:52.560 --> 0:20:55.440 after day that work, the number of people who were 0:20:55.480 --> 0:20:58.680 there the last time a new plane was launched dwindles. 0:20:59.000 --> 0:21:02.120 Right, They're in a capital death spiral. So the most 0:21:02.160 --> 0:21:05.960 pressing concern is gaining altitude by rebuilding that capital the 0:21:06.280 --> 0:21:08.760 Christian before you can figure out where the plane is 0:21:08.800 --> 0:21:12.480