Passing round the hat

Here’s a great picture of the sub-assemblies of the Boeing 787 (Dreamliner – ok it’s a silly name, but it’s somehow fun to say).

Its touted by Deloitte as an example of how disaggregated industries are. But looking at it I wondered, might it tell us something else.  What (the hell) are wing-flaps and some other bits and bobs doing being made down the road from me at Fisherman’s Bend. I’m not entirely sure, but I do know that a great deal of effort is put into getting the Australian and Victorian Governments to pay for as much of the capital investment necessary to build these things as possible (and then some). How successful they have been I don’t know. I expect the really serious technology supplied by GE, Rolls Royce, Boeing itself and various other highly competent manufacturers. Perhaps Boeing Australia is in that category, but somehow I doubt it.

So it occurred to me that what we’re seeing illustrated here might not reflect the miracle of trade in lowering costs, but rather the miracle (for some) of trade in shifting costs to governments eager to claim that they’re part of the ‘cutting edge’. (Not to mention union busting – which may be no bad thing. The airline industry has been heading south in the US just like the automotive industry, I expect for similar reasons).

I’m sure the wingtips will be said to have put Melbourne on the Map in some ribbon cutting ceremony somewhere with local pollies and TV cameras lapping up the action.

If I’m wrong about all this, it is at least a pretty picture.

This entry was posted in Economics and public policy, Science, Space, Travel. Bookmark the permalink.

10 Responses to Passing round the hat

  1. Stilgherrian says:

    Well, in November 2011 we did have the amazingly important astounding news that Boeing would continue to have the Super Hornet rudder pedals made in Australia.

    These are the same $6 billion Super Hornets the RAAF didn’t want but we got them anyway. I assume that former Liberal Party leader Andrew Peacock being chairman of Boeing Australia and the decision being made by a Liberal government are completely unrelated facts.

  2. It’s my understanding, Nick, that at least part of the reason why they’re done here is that the folks at Boeing Australia are very good at making control surfaces out of various wonder materials.

    You may note that they make stuff for Airbus, Bombardier, and a number of military aircraft makers as well as their corporate parent.

  3. derrida derider says:

    Boeing itself has pretty openly admitted that they went much too far in farming out the work and this is a large part of the big problems they’ve had with the Dreamliner (way over budget, way past deadline and way overweight).

    But I agree with Nicholas – their strategy was much less about a global search to find the most efficient place to make bits as a global search for suckers governments keen to “develop local industry” by handing over their taxpayers’ money to Boeing. Of course Airbus have a similar strategy (with similar bad effects on the A380 program for example), except that their search has been mostly confined to Europe.

    • Tel says:

      Boeing carefully studied the Airbus subsidy-farming technique while they were putting together litigation for the World Trade Organization.

      I believe the final WTO ruling was along the lines of, “Oh, how dreadful!”

  4. paul walter says:

    So governments spend vast amounts of money attracting corporations with handouts, to replace local workers booted out by other corporations. It’s a good article but have risen to Ncholas’ bait re, “union busting, maybe a good thing”.
    Good for who?
    Did executive bonuses divert money away from reinvestment as well?
    Not for essentials as with workers, but discretionary spending? …. yes, I know they might have reinvested the lot, but they have control ove r their finances the like of which most of us can only dream of.
    Where (ever) was there leadership by example?

    • Nicholas Gruen says:

      Well, I’d be happy to see some management busting as well ;) but I’ll leave it to you to try to imagine some of the advantages of union busting. Here’s a primer, though of course it’s also a case where, as I’ve suggested, management busting should be going on also.

      • SJ says:

        I think Nick has to throw in this “union busting” nonsense so as not to disqualify himself from future work for Gina. I mean, the linked article provides no support for the anti union position. GM and Ford got into trouble because they consistently designed and built junk. They weren’t forced to do this by the unions. Health care in the US is unaffordable. This wasn’t caused by unions either. We can see where “union busting” gets you – it gets you into the position the US is in. Totally stuffed.

        P.S. Hope Gina sends some work your way. Failing that, maybe Clive will help out.

  5. rog says:

    Even more puzzling is that once the jigsaw has been assembled the plane is sold off to various interested parties – a plane can have different owners for each motor. Code share results in flying with different airlines under one ticket and then we are told to feel proud of “our national carrier”.

  6. Steve X says:

    @Fred has a great comment. The supply chain for the 787 has not worked out. A lot of this is about reducing the power of unions in Washington state.

    In other less safety critical components this kind of distribution of manufacturing has become common. The Ipad, for example, is composed of parts from around the world.

    The following link shows where the parts come from.

    http://www.innovationnewsdaily.com/812-infographic-paid-ipads.html

    With lowered transport and tariff costs, the amazing efficiency of the market is apparent. When it works well, it is truly staggering.

Comments are closed.