Ross: Boeing has become a punchline

The Saturday Night Live skit was brutal.

“You know those bolts that hold the plane together, we’re gonna tighten some of those,” is a line from the video.

Even more brutal was that the skit targeted Alaska Airlines, and never mentioned Boeing.

Of course, it didn’t have to. Everybody knows who supplied the plane.

The repeated hits to Boeing’s reputation have vindicated the warnings from engineers who years ago warned that relying on too many subcontractors, and trying to maximize stock price would have dire consequences.

But there’s more at stake here than just Boeing’s reputation. Capitalism’s reputation is also on the line.

Saturday Night Live video: ‘You know those bolts that hold the plane together? We’re gonna tighten some of those’

Boeing’s troubles are being portrayed as another example of glaring flaws in American free-market capitalism – with Europe’s highly-regulated, unionized and subsidized Airbus now out-pacing Boeing – to the point that last year Airbus delivered 40% more jets. And won 60% more orders. Even though Europe has the kind of labor-friendly laws that would supposedly be far too costly to enforce here.

And even if we ignore Airbus, as any investor will tell you it’s pretty clear that if the goal of Boeing management was to optimize stock prices – it’s been a colossal failure.

And I think we know why. A consensus has developed that the trouble began in 1996 with the McDonnell Douglas merger, followed by the decision to move the headquarters to Chicago in 2001, until finally in 2004, management formally decided that Boeing – with its detail-obsessed engineers who wouldn’t sign off on anything unless it was perfect – was being run too much like an engineering firm, and that it was time to run it as a business instead.

That now appears to have backfired. It turns out that the way to create lasting shareholder value is NOT to focus on shareholder value! Because in the airplane business, where one mistake can be deadly, what creates shareholder value is a flawless product.

So how to turn this around? I think the perfect opening move would be to admit the mistakes of the past and announce that headquarters is moving back to Seattle.

– A place teeming with talented people who know how to design and build reliable airplanes and who would be more than happy to explain to management what kind of resources they need to make that happen.

Plus I’m told you can get a really good deal on office space around here these days.

Listen to Seattle’s Morning News with Dave Ross and Colleen O’Brien weekday mornings from 5 – 9 a.m. on KIRO Newsradio, 97.3 FM. Subscribe to the podcast here.

Follow @http://www.twitter.com/thedaveross