Boeing Agrees to Buy Spirit AeroSystems, a Longtime Supplier (opens in new tab)

From the FT article:

> As part of that, Airbus will assume the work that Spirit does for its A220 and A350 aircraft programmes at several sites around the world, including Northern Ireland, the US, France and Morocco.

My reading of the situation is that no - Airbus will only take factories that produce components for Airbus planes; Boeing will do the same; and the rest will be spun off.

As an example, the Northern Ireland complex will be split (something the union explicitly didn't want because it's unsuitable for it and will lead to job lesses, according to them)

Trying to assemble planes with non-union workforce was another cause of Boeing’s production quality problems.

It feels like Boeing divested itself of Spirit to try and avoid the responsibilities of having to manufacture various components, but the awful culture was retained at Spirit and probably made worse by the priorities of its private equity owners.

> Spirit have had numerous serious quality control lapses

Boeing spun out Spirit to be able to fire all the experienced union employees and move the work to a state where they could hire non-union people, all part of cost-cutting.

To be fair to Spirit, the didn't forget to put the bolts in - that was the idiots at Boeing sidestepping procedures.

Spirit are the idiots who can't drill holes properly.

Yep. And the low price, low quality play in that area is and should stay risky.

But the shareholders collectively outrank the company management in a public company. So it is their failure as well, and so they have to take the L on this too.

TSMC‘s machines can build any kind of chip, once the masks are there, they have many customers and operate in highly competitive market where you can’t afford to fuck up and you can switch to a competitor more easily.

Spirit cannot easily build any airplane part, and it has very few customers and with very low levels of competition, so they can afford to be bad at their job because it is hard to switch suppliers.

The cases aren’t comparable.

Yes, but Apple has a habit of also shafting its outsources, like what they did to the UK designers back in the ipod era: as soon as chip design could make them more money they disintermediated. And now deal direct with the foundry.

ARM holdings annoys me. I wish they hadn't stopped doing fab. The potential weakness for the West dependency on TSMC worries me.

There is outsourcing of e.g. the engines, various hydraulic/electrical systems, electronics etc. etc. and then there is outsourcing bits of the fuselage, which is maybe not such a good idea. I mean, I understand how this came about - e.g. Spirit's location in Wichita was originally an independent airplane manufacturer (Stearman Aircraft, which was bought by United Aircraft and Transport Corp. and then became part of Boeing after UATC was broken up: https://en.wikipedia.org/wiki/Spirit_AeroSystems#History). Airbus is also made up of bits and pieces of various (former) European aircraft makers, so they also have assembly plants spread all over the continent, but these parts actually got more tightly integrated over the years, while Boeing took the opposite path.

SpaceX famously has almost no outsourcing. And Ford built his empire on vertical integration, all the way down to the mining the ore.

Neither are airplane manufacturers, but they represent companies on either side of the complex machine spectrum compared to airplanes.

Boeing is 64% of spirits revenue. Without Boeing, they don't exist anyway. Not to mention how Boeing's stock might be down, but they are not going to disappear at all.

Just from a strategic standpoint, USA has Boeing, EU Airbus and China has the Chinese Boeing /Airbus. Major aviation companies just aren't created any more, no major government would let their strategic assets fall like that.

Someone who knows how critical Boeing is (even in its depleted state) and thinks the government won’t let them fail?

Just hazarding a cynical guess.

This is Spirit’s current CEO [1]:

> Patrick Michael Shanahan (…) is a former United States federal government official who served as the acting United States Secretary of Defense in 2019.

which is to say that these are companies that are, in essence, controlled by the US Government when it comes to their strategic future, so in cases like this one here the money involved is of secondary importance.

[1] https://en.wikipedia.org/wiki/Patrick_M._Shanahan

Depends on the stock you’re trading in, and judging from the news, spirit stock might just be even less solid than Boeing. As far as I understand, a lot of Boeings issues are connected to Spirit as a subcontractor. At the very least, you can rest assured that the US government won’t let Boeing fail completely.

Uhh, it’s a public traded company, you sell the stock if you don’t have faith in the company fixing things.

There are two commercial airline manufacturers in the world and a rapidly growing global population. Boeing has a 10+ year manufacturing backlog of 5600+ aircraft. Airbus has a backlog of about 7500. Both companies produce around 550 commercial units a year.