Is Boeing too big to fail?

Boeing employs more than 150,000 people around the world, the vast majority in the US. (Reuters)
Updated 05 August 2019
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Is Boeing too big to fail?

  • Chinese purchases of Boeing aircraft likely to reduce US trade deficit Rias sumquiatia ipsus aperatu sdaeria sperspid

LUC OLINGA: The grounding of the 737 MAX for more than four months after two deadly accidents has tarnished Boeing’s reputation, but it still has the confidence of US policymakers.

This is despite the fact that one of the MAX flight systems, the MCAS, has been cited in both accidents.
Is this an indication that the American aerospace giant is too big to fail?
President Donald Trump, whose mantra is “America first,” certainly criticized Boeing early in his administration over the presidential plane, Air Force One, but he has been largely silent about the recent woes.
The wave of negative press about the flaws that caused the deaths of 346 people did not prompt legislators to summon Boeing CEO Dennis Muilenburg before Congress to inflict on him the kind of humiliation Wall Street bankers were subject to following the global financial crisis.
“Boeing is one of the engines of the US economy, it’s way too big and too important for the United States,” said Michel Merluzeau, an expert at Air Insight Research.
If American politicians were to attack the manufacturer, they would be shooting themselves in the foot, Merluzeau said, because “there are many jobs involved, a very, very numerous supply chain and it cannot be replaced with Facebook or Google that don’t produce anything tangible.”
Founded 103 years ago, Boeing employs more than 150,000 people around the world, the vast majority in the United States.
In addition to direct jobs, its subcontractors — like General Electric (GE), United Technologies and Spirit Aerosystems — are large US industrial employers.
The location of Boeing plants resembles a political campaign map, with facilities in Republican strongholds like Alabama, South Carolina and Texas, and Democratic areas like California and Washington, as well as states that helped Trump win the election: Pennsylvania and Arizona.

FASTFACT

• Boeing is a dominant player not just in civilian aircraft but in the defense and space industries, and is a major supplier to the Pentagon.

• In addition to direct jobs, its subcontractors — like General Electric (GE), United Technologies and Spirit Aerosystems — are large US industrial employers.

• The location of Boeing plants resembles a political campaign map, with facilities in Republican strongholds.

• It also is part of SpaceX, which will manage travel to the International Space Station.

And Muilenburg has shown political savvy in his picks for the company’s board of directors, naming Nikki Haley, former governor of South Carolina and Trump’s former ambassador to the UN, and Caroline Kennedy, ally of former President Barack Obama and daughter of former President John F. Kennedy.
Boeing is a dominant player not just in civilian aircraft but in the defense and space industries, and is a major supplier to the Pentagon.
The company produced the famous B-17 and B-29 bombers of World War II and the B-52 used the Vietnam War. Today it produces a variety of aircraft including the F/A-18 Super Hornet fighter jet, Apache attack helicopters, the B-1 bomber and combat drones.
It also is part of SpaceX, which will manage travel to the International Space Station. And Boeing manufactures the presidential plane, the iconic Air Force One.
But Boeing also “can be used as a strategic tool,” said Arthur Wheaton, a professor at Cornell University in New York.
Chinese purchases of Boeing aircraft are part of trade negotiations with Beijing, according to a source, since that can be a fast way to reduce the US trade deficit.
US civilian aircraft exports fell 12 percent to $20.4 billion in May, due to the MAX crisis, which affected the GDP, according to government data.


Huawei in public test as it unveils sanction-hit phone

Updated 33 min 14 sec ago

Huawei in public test as it unveils sanction-hit phone

  • Hit by US sanctions, Huawei's Mate 30 will not be allowed to use Google’s Play Store
  • Household-name services like WhatsApp, Instagram and Google Maps will be unavailable.
BERLIN: Chinese tech giant Huawei launches its latest high-end smartphone in Munich on Thursday, the first that could be void of popular Google apps because of US sanctions.
Observers are asking whether a phone without the Silicon Valley software that users have come to depend on can succeed, or whether Huawei will have found a way for buyers to install popular apps despite the constraints.
The company has maintained a veil of secrecy over its plans, set to be dropped at a 1200 GMT press conference revealing the Mate 30 and Mate 30 Pro models.
Huawei, targeted directly by the United States as part of a broader trade conflict with Beijing, was added to a “blacklist” in Washington in May.
Since then, it has been illegal for American firms to do business with the Chinese firm, suspected of espionage by President Donald Trump and his administration.
As a result, the new Mate will run on a freely available version of Android, the world’s most-used phone operating system that is owned by the search engine heavyweight.
While Mate 30 owners will experience little difference in the use of the system, the lack of Google’s Play Store — which provides access to hundreds of thousands of third-party apps and games as well as films, books and music — could hobble them.
Household-name services like WhatsApp, Instagram and Google Maps will be unavailable.
The tech press reports that this yawning gap in functionality has left some sellers reluctant to stock the new phones, fearing a wave of rapid-fire returns from dissatisfied customers.
Huawei president Richard Yu said at Berlin’s IFA electronics fair this month that his engineers found a “very simple” way to install the hottest apps without going via the Play Store.
Huawei could offer its own app store in a preliminary version, setting itself up as a competitor to the dominant Apple and Google offerings, observers speculate.
Over the longer term, the company could build out a similar “ecosystem” of devices, apps and services as the Silicon Valley companies that would bind users more closely to it.
The world’s second-largest smartphone maker after Samsung, Huawei earlier this month presented its proprietary operating system HarmonyOS, a potential replacement for Android.
The Mate 30 will not yet have HarmonyOS installed.
But it could make for a new round in the decades-old “OS wars” between Microsoft’s Windows and Apple’s Mac OS, then Android versus Apple’s iOS.
Meanwhile, Eric Xu, current holder of Huawei’s rotating chief executive chair, has urged Europe to foster an alternative to Google and Apple.
That could provide an opening for Huawei to build up Europe’s market of 500 million well-off consumers as a stronghold against American rivals.
“If Europe had its own ecosystem for smart devices, Huawei would use it... that would resolve the problem of European digital dependency” on the United States, Xu told German business daily Handelsblatt.
He added that his company would be prepared to invest in developing such joint European-Chinese projects.