Boeing learns outsourcing lesson on 787

[Vympel]

http://www.latimes.com/business/la-fi-h ... 445.column

787 Dreamliner teaches Boeing costly lesson on outsourcing
The airliner is billions of dollars over budget and about three years late. Much of the blame belongs to the company's farming out work to suppliers around the nation and in foreign countries.

Michael Hiltzik

The biggest mistake people make when talking about the outsourcing of U.S. jobs by U.S. companies is to treat it as a moral issue.

Sure, it's immoral to abandon your loyal American workers in search of cheap labor overseas. But the real problem with outsourcing, if you don't think it through, is that it can wreck your business and cost you a bundle.

Case in point: Boeing Co. and its 787 Dreamliner.

The next-generation airliner is billions of dollars over budget and about three years late; the first paying passengers won't be boarding until this fall, if then. Some of the delay stems from the plane's advances in design, engineering and material, which made it harder to build. A two-month machinists strike in 2008 didn't help.

But much of the blame belongs to the company's quantum leap in farming out the design and manufacture of crucial components to suppliers around the nation and in foreign countries such as Italy, Sweden, China, and South Korea. Boeing's dream was to save money. The reality is that it would have been cheaper to keep a lot of this work in-house.

The 787 has more foreign-made content — 30% — than any other Boeing plane, according to the Society of Professional Engineering Employees in Aerospace, the union representing Boeing engineers. That compares with just over 5% in the company's workhorse 747 airliner.

Boeing's goal, it seems, was to convert its storied aircraft factory near Seattle to a mere assembly plant, bolting together modules designed and produced elsewhere as though from kits.

The drawbacks of this approach emerged early. Some of the pieces manufactured by far-flung suppliers didn't fit together. Some subcontractors couldn't meet their output quotas, creating huge production logjams when critical parts weren't available in the necessary sequence.

Rather than follow its old model of providing parts subcontractors with detailed blueprints created at home, Boeing gave suppliers less detailed specifications and required them to create their own blueprints.

Some then farmed out their engineering to their own subcontractors, Mike Bair, the former head of the 787 program, said at a meeting of business leaders in Washington state in 2007. That further reduced Boeing's ability to supervise design and manufacture. At least one major supplier didn't even have an engineering department when it won its contract, according to an analysis of the 787 by the European consortium Airbus, Boeing's top global competitor.

Boeing executives now admit that the company's aggressive outsourcing put it in partnership with suppliers that weren't up to the job. They say Boeing didn't recognize that sending so much work abroad would demand more intensive management from the home plant, not less.

"We gave work to people that had never really done this kind of technology before, and then we didn't provide the oversight that was necessary," Jim Albaugh, the company's commercial aviation chief, told business students at Seattle University last month. "In hindsight, we spent a lot more money in trying to recover than we ever would have spent if we tried to keep many of the key technologies closer to Boeing. The pendulum swung too far."

Some critics trace Boeing's extreme appetite for outsourcing to the regimes of Harry Stonecipher and Alan Mulally.

Stonecipher became Boeing's president and later chief executive after its 1997 merger with McDonnell- Douglas, where he had been CEO. Mulally took over the commercial aviation group the following year and is now CEO of Ford. The merged company appeared to prize short-term profits over the development of its engineering expertise, and began to view outsourcing too myopically as a cost-saving process.

That's not to say that outsourcing never makes sense — it's a good way to make use of the precision skills of specialty manufacturers, which would be costly to duplicate. But Boeing's experience shows that it's folly to think that every dollar spent on outsourcing means a cost savings on the finished product.

Boeing can't say it wasn't warned. As early as 2001, L.J. Hart-Smith, a Boeing senior technical fellow, produced a prescient analysis projecting that excessive outsourcing would raise Boeing's costs and steer profits to its subcontractors.

Among the least profitable jobs in aircraft manufacturing, he pointed out, is final assembly — the job Boeing proposed to retain. But its subcontractors would benefit from free technical assistance from Boeing if they ran into problems, and would hang on to the highly profitable business of producing spare parts over the decades-long life of the aircraft. Their work would be almost risk-free, Hart-Smith observed, because if they ran into really insuperable problems they would simply be bought out by Boeing.

What do you know? In 2009, Boeing spent about $1 billion in cash and credit to take over the underperforming fuselage manufacturing plant of Vought Aircraft Industries, which had contributed to the years of delays.

"I didn't dream all this up," Hart-Smith, who is retired, told me from his home in his native Australia. "I'd lived it at Douglas Aircraft."

As an engineer at McDonnell-Douglas' Long Beach plant, he said, he saw how extensive outsourcing of the DC-10 airliner allowed the suppliers to make all the profits but impoverished the prime manufacturer.

"I warned Boeing not to make the same mistake. Everybody there seemed to get the message, except top management."

The company's unions have also kept singing an anti-outsourcing chorale. "We've been raising these questions for five years," says Tom McCarty, the president of the Boeing engineers' union. "How do you control the project, and how do you justify giving these major pieces of work to relatively inexperienced suppliers? There's no track record of being able to do this."

It would be easier to dismiss these concerns as those of unions trying to hold on to their jobs if they hadn't been validated by the words of Boeing executives themselves. A company spokeswoman told me that it's not giving up on outsourcing — "we're a global company," she says — but is hoping for a "continued refinement of that business model." Yet Albaugh and other executives acknowledge that they've blundered.

"We didn't want to make the investment that needed to be made, and we asked our partners to make that investment," Albaugh told his Seattle University audience. The company now recognizes that "we need to know how to do every major system on the airplane better than our suppliers do."

One would have thought that the management of the world's leading aircraft manufacturer would know that going in, before handing over millions of dollars of work to companies that couldn't turn out a Tab A that fit reliably into Slot A. On-the-job training for senior executives, it seems, can be very expensive.

[Sidewinder]

The biggest mistake people make when talking about the outsourcing of U.S. jobs by U.S. companies is to treat it as a moral issue.

Sure, it's immoral to abandon your loyal American workers in search of cheap labor overseas. But the real problem with outsourcing, if you don't think it through, is that it can wreck your business and cost you a bundle.

Considering how many other jobs the US outsourced- not to mention "outsourcing" military operations to PMCs- I shudder to think what else is going wrong with the country.

By the way, are any other nations having trouble with outsourcing THEIR manufacturing jobs to foreigners? (I know Taiwanese companies set up factories in Mainland China, to take advantage of lower wages there.)

[Thanas]

There was a huge problem with cell phone manufacturers of Western Europe who moved their production to Hungary, only to move back a few years later due to inferior quality costing them business.

By and large though, outsourcing works. Just not that well for high-tech stuff.

[aerius]

By the way, are any other nations having trouble with outsourcing THEIR manufacturing jobs to foreigners? (I know Taiwanese companies set up factories in Mainland China, to take advantage of lower wages there.)

I used to work in the electronics industry around 10 years ago, I worked in a major company that built circuitboard assemblies for computers, cell phones and other electronics. We normally source all the circuitboard substrates from various North American manufacturers but we used substrates from China every once in a while. Sometimes they were fine, most of the time we ended up with a lot more issues on the boards with the copper peeling, soldering problems from oxidation, and boards which just weren't to spec where the boards & copper layers were too thin. The longtime workers told me that a couple times every year, some bright beancounter thinks that he can save a bunch of money by sourcing the materials from China and somehow sneaks it through management. It never works out but someone always keeps trying.

[Vendetta]

By and large though, outsourcing works. Just not that well for high-tech stuff.

Kinda.

My employer had a disastrous experience with outsourcing it's customer and technical support call centres, resulting in massively increased operational cost as the outsourced operator had no vested interest in providing any quality of service, leading to a culture of repeated contacts and inflated returns due to bad service and support. The operation was eventually brought back in house because that was cheaper than continuing the outsourcing contract. The simple fact is that your outsourcing partner does not have the same strategic objectives as you. Your objective is to produce, sell, or support your end product. Your outsourcing partner's strategic objective is to get as much money out of you as possible for the minimum cost.

[spartasman]

By and large though, outsourcing works. Just not that well for high-tech stuff.

So it's OK to give the dangerous manufacturing work to other countries, where they can deal with unsafe working conditions and subsequent pollution?

[ShadowDragon8685]

By and large though, outsourcing works. Just not that well for high-tech stuff.

So it's OK to give the dangerous manufacturing work to other countries, where they can deal with unsafe working conditions and subsequent pollution?

Of course it is! After all, it's not in our back yard, and it's a lot cheaper than doing it here and implementing tons of environmental regulations to deal with the by-products (and the cost of those) and paying 'murricans or Canadians or Britons or other Westeners the kinds of wages we'd (rightly) demand to work with that kind of hazardous environments and materials, the union's we'd form to keep management on the level, which necessitate benefits and so forth and so on.



In a just world, the profits a company makes by outsourcing, fully assuming Westerner efficiency in the workforce, would be assessed and taxed at a 99% rate. That and shipping costs to get the products back should make outsourcing a decidedly unattractive option.

[Broomstick]

By and large though, outsourcing works. Just not that well for high-tech stuff.

Part of the problem with outsourcing for airplane production is that aviation is notoriously unforgiving of carelessness or sloppiness. There are some items where small flaws are of little or no consequence, but not airplanes.

I mean, who cares if widgets used in cheap wind up toys have flaws such than 1 in 100 will break or simply not work? It's just a cheap piece of crap toy, right? But if you're talking about an airplane carrying hundreds of people across an ocean.... yeah, kinda more important to get it right. More important that all the parts fit together properly.

Or, as I have often put it - just how cheap do you want to get with the airplane keeping you alive up there?

There are things where you really do need to pay a bit more to get the job done right. Frankly, I view it as a positive that Boeing has delayed the 787 rather than roll it out in a potentially unsafe condition.

Note that that is a different matter than unsafe production and/or working conditions. The problems with this particular outsourcing aren't just dangers to the workers (though putting them at risk is, of course, wrong) but also danger to the product users as well.

[ShadowDragon8685]

There are things where you really do need to pay a bit more to get the job done right. Frankly, I view it as a positive that Boeing has delayed the 787 rather than roll it out in a potentially unsafe condition.

A positive, yes, but remember:

That decision was made by beancounters who determined that the cost to the company and the PR/brand hits, etcetera, would be worse by delaying than the wrongful death lawsuits and the PR/brand hits that would result from rolling it out devil-may-care.

The fact that people could die was not viewed as unacceptable at any cost, it was crunched as a figure affecting the bottom line.

[spartasman]

Airplanes are not some toy that manufacturers in China coat with lead paint, Shadow. Airlines generally care when their multi-million dollar airplanes drop out of the sky with hundreds of people on board.

[Thanas]

By and large though, outsourcing works. Just not that well for high-tech stuff.

So it's OK to give the dangerous manufacturing work to other countries, where they can deal with unsafe working conditions and subsequent pollution?

No, I said that it works.

[spartasman]

No, I said that it works.

Oh, well... alright then.

[Highlord Laan]

Airplanes are not some toy that manufacturers in China coat with lead paint, Shadow. Airlines generally care when their multi-million dollar airplanes drop out of the sky with hundreds of people on board.

Only if said care costs less than the payouts to bereaved family from tragic accidents. Tombstone Tech is alive and well in pretty much every manufacturing industry in existence. If it can be painted as a random fluke, then a disaster-causing oversight or technical failure likely won't be fixed in the rest of a fleet unless there's a massive media storm over it.

Put bluntly, the profit returns for the shareholders are more important than the lives of the people on the aircraft. Welcome to Good American Capitalism. Your life has a monetary value assigned, and it isn't much.

[Skgoa]

Outsourcing is the norm in high tech, too. Its just not the "ship jobs overseas" kind of outsourcing. Almost no tech company can manufacture all parts of their product by themselves - and even less would want to.

[Bedlam]

Where I work certainly has all sorts of problems with our off shored areas, although it mostly seems to be down to whoever agreed the contract with the overseas company.

The overseas team get paid per case they complete but by refering a case to the much smaller team on shore its considered a new work item. So we get loads of cases being refered with comments like 'is the 6th number on page 32 a 7?' we return it with 'yes' they return back with 'are you sure' we return with 'yes!', they just got paid three times for the case and the on sure team budgeted and sized for dealing with 1 in 10 cases or so just had to review an unnessivery case twice.

In adition they are penatalised for doing anything wrong so rather than learning from their mistakes they instead refuse to so anything which they have previously made a mistake on an refer such a case to us so we have to make any judgement calls for them.

Finally they arn't paid to provide good customer service but to follow the procedure laid out exactly even if they know the procedure wont work. We can try to get a procedure changed by they get 6 weeks to review the change and can choose their own payment to implient the change no matter how small the change. Thus we end up having to put through on shore work arounds to deal with anything offshore cant deal with but we dont get any more manpower or resource because our work has been offshored and we're just here to review their work and deal with a few manual processes.

Highly frustrating

[Omega18]

Airplanes are not some toy that manufacturers in China coat with lead paint, Shadow. Airlines generally care when their multi-million dollar airplanes drop out of the sky with hundreds of people on board.

Only if said care costs less than the payouts to bereaved family from tragic accidents. Tombstone Tech is alive and well in pretty much every manufacturing industry in existence. If it can be painted as a random fluke, then a disaster-causing oversight or technical failure likely won't be fixed in the rest of a fleet unless there's a massive media storm over it.

Put bluntly, the profit returns for the shareholders are more important than the lives of the people on the aircraft. Welcome to Good American Capitalism. Your life has a monetary value assigned, and it isn't much.

That's actually a minor issue (with the loss of the expensive aircraft being another one) compared to the real economic problem which is simply that people won't fly on the airline if they really view it as unsafe. The safety issue is a very major reason Western European and US passenger airlines basically don't fly Russian or Chinese manufactured aircraft period right now. The reality is major airline crashes get a massive amount of media publicity, and actual customer perception in the US for instance that an airline is really unsafe really could outright drive the airline out of business.

It should be noted that the largest portion per country of the 787 work outsources outside of the US went to Italy and Japan, not exactly low wage areas designed to obtain the cheapest labor manufacturing costs.

The reality is airline safety has dramatically improved over the years when looking at the simple math of how many airliner crashes there are in relation to the number of flights, and how many fatalities there are on average per year period in the US. In comparison to much higher rates during the 1970s for instance, (worse than the basic numbers might suggest since there were fewer people flying less often then) there were 44 fatalities in 2009 and ZERO fatalities from regularly scheduled airliner crashes in 2010. While it may be true that sometimes specific safety standards still get compromised in a way they should ideally not be, the evidence is that clearly US airliners (and most western ones) have concluded its absolutely in their best economic interest to avoid fatal accidents.

[Dahak]

There was a huge problem with cell phone manufacturers of Western Europe who moved their production to Hungary, only to move back a few years later due to inferior quality costing them business.

By and large though, outsourcing works. Just not that well for high-tech stuff.

A friend of mine works in a company that produces special packaging. They had their chinese department do steel cages and had given them complete blueprints and photos of what it should look like. In the end, they had to redo the complete batch. They didn't even bother to make right angles...right. That's why he now has to babysit their producers locally...
So, kinda

[Simon_Jester]

By and large though, outsourcing works. Just not that well for high-tech stuff.

So it's OK to give the dangerous manufacturing work to other countries, where they can deal with unsafe working conditions and subsequent pollution?

In many cases, it's not even a question of danger in the workplace: some place like Hungary does have laws about such things. It's a question of the quality of the facilities: can your machine tools cut to a precision of 0.000001 inch, 0.00001 inches, or only 0.0001 inches? All three machine shops may be perfectly safe and pleasant places to work, but they won't all be equally fit to produce parts for an airliner.

Airplanes are not some toy that manufacturers in China coat with lead paint, Shadow. Airlines generally care when their multi-million dollar airplanes drop out of the sky with hundreds of people on board.

Only if said care costs less than the payouts to bereaved family from tragic accidents. Tombstone Tech is alive and well in pretty much every manufacturing industry in existence. If it can be painted as a random fluke, then a disaster-causing oversight or technical failure likely won't be fixed in the rest of a fleet unless there's a massive media storm over it.

Put bluntly, the profit returns for the shareholders are more important than the lives of the people on the aircraft. Welcome to Good American Capitalism. Your life has a monetary value assigned, and it isn't much.

Bear in mind that Boeing is delaying production for a reason: their customers want to be confident the planes won't crash, if nothing else because they do have to replace the plane if it crashes. And, yes, because a perception that the airliner is unsafe can have disastrous effects on the airline that operates it.

[PainRack]

By and large though, outsourcing works. Just not that well for high-tech stuff.

So it's OK to give the dangerous manufacturing work to other countries, where they can deal with unsafe working conditions and subsequent pollution?

Actually, aren't most manufacturing jobs that shifted overseas relatively low pollution such as garments and etc?

I'm not sure about outsourcing in terms of products, but I do know that for handphones, companies may outsource the production of parts. But producing the high tech components like chips are usually done in advanced countries with a stable workforce. Of course, said countries are in places like Taiwan, Singapore or Japan, but that's actually the result of America neglect in advanced electronics in the late eighties, right?


And pardon me if I'm wrong, but isn't the profits from selling planes actually from the maintenance contracts? Rolls Royce supposedly sells engines at a loss, because they stand to make money from the spare parts and maintenance post sale.So, if said subcontractors are the one that's actually producing the parts.........

[Fingolfin_Noldor]

I'm not sure about outsourcing in terms of products, but I do know that for handphones, companies may outsource the production of parts. But producing the high tech components like chips are usually done in advanced countries with a stable workforce. Of course, said countries are in places like Taiwan, Singapore or Japan, but that's actually the result of America neglect in advanced electronics in the late eighties, right?

No, rather the Americans chose to focus on the higher end side of electronics, such as microprocessors and such. They still are the leaders in this field.

[MKSheppard]

Actually, outsourcing is probably a good thing, when executed properly.

A few weeks ago, I got the chance to tour the NEW Piper Aircraft plant in Vero Beach, FL.

Unfortunately, I wasn't allowed to take photographs while in the factory

What I saw was pretty disheartening.

Piper is going to get eaten alive in 15-20 years when the Chinese gain enough of a reputation for quality to begin to move into the General Aviation business outside of S. Asia and China itself.

The plant was like something out of the 1960s or 1970s, and I mean that. Some of the wing jig/clamp/holders had manufacturing tags from about 1976/1977.

There were only a few concessions to modernity like an automatic parts tracking system using UPC Bar code scanners and computers in between work stations; as well as a few modern machines -- they had a modern computerized plastics machine that could spit out semi finished plastics products, two CNC machines, and a couple of tools with 1970s or 1980s level of automation (Green phosphor CRT screens).

But overwhelmingly, the majority of work was being done by hand, whether putting together a fuselage section on a jig and hand installing bolts; or assembling a wing.

Working conditions were pretty bad too -- my dad who has more experience in this kind of stuff due to his 40 years in the elevator industry noticed that nobody was really wearing steel toed boots or protective footwear.

I on the other hand noticed the EXTREMELY LOUD NOISE LEVEL and the fact that I didn't see people wearing ear protection -- they may have been wearing foam earplugs, but I didn't see any hardshell permanent hearing protective gear in sight.

The plastics department was sort of heartbreaking -- nobody was really wearing any kind of protective breathing apparatus -- except for one guy who had a dust mask. My dad heard on the tour or noticed that they had special sanding tables which used air vortexes/vacuums to suck away dust from sanding operations on plastic or composite parts during the finishing/prepping segment for those parts.

The problem is, even if those tables eliminate 95% of the dust, if you spend 15 years on the job, doing that sanding for 330 days a year...the cumulative exposure will build up and give you lung problems.

Half the damn workforce is going to end up with all sorts of job related illnesses by the time they retire due to all the cumulative exposure they're getting with halfassed protection or no protection at all.

But anyway, on the main assembly line, they essentially had largely bare metal fuselage sections being bolted together and then wired up with people crawling inside the fuselage and over the wings.

Wouldn't it be faster to wire up and finish up as much of each fuselage section independently, to limit the amount of time it takes to finish up the product?

Sure, it will weigh a bit more due to the increased amount of connectors, but the speed of assembly goes up.

But yeah...very damn labor intensive process -- which is fine all and all in a F-22A, it being one of the most complex things ever produced -- but not so good on a general aviation aircraft -- the Chinese can always undercut you (and will) on labor pools and labor prices.

This is why outsourcing is a good idea if implemented properly. For example, on the tour, they said that NEW Piper makes about 95-98% of the parts for each plane in house. They only import the propellor, engines, avonics, and landing gear.

The problem is, they're producing all those parts on old equipment and with a labor intensive process.

If they outsourced to a higher percentage (70% built in house, 30% outsourced) they would be able to have more parts come from more modern machine shops or assembly lines than they could ever afford.

This split also retains your in house design knowledge and expertise -- which is important for fact checking your suppliers and having the knowledge of how things are actually done on the shop floor/assembly line, which is important to an engineer as they design some widget.

[Broomstick]

Piper is going to get eaten alive in 15-20 years when the Chinese gain enough of a reputation for quality to begin to move into the General Aviation business outside of S. Asia and China itself.

Quality? Like their toxic drywall? Lead paint in children's toys? Poisonous pet food? Deadly infant formula?

It would take more than time for them to gain a reputation for quality, it will take some very fundamental changes in attitude and business practices.

The plant was like something out of the 1960s or 1970s, and I mean that. Some of the wing jig/clamp/holders had manufacturing tags from about 1976/1977.

Apparently you are unfamiliar with the approval process for airplane construction in the US. Updating those tools would likely require re-approving from the get-go as if they were entirely new designs. This would greatly add to the cost of small general aviation airplanes, with questionable added value. Cessna bothered to do that with the new line of C172's, which now easily cost a fifth to a quarter million new. Compare that to some of their 50 year old C172's which are still flying just fine and can be purchased for $50,000 or even less. There are times when it's not cost-effective to update an item simply for the sake of updating. Airplanes are now cars. They last longer, among other things.

But overwhelmingly, the majority of work was being done by hand, whether putting together a fuselage section on a jig and hand installing bolts; or assembling a wing.

General aviation airplanes are not a high volume item. You have to weigh the cost of hand labor vs. designing and building a machine that will automate it, to required tolerances, yet only output a few dozen airplanes a year. Hand assembly of general aviation aircraft is pretty standard in the industry.

Your notations about dust from composites are on the money. As for the other protective gear, that would depend on what, exactly, is being done.

But anyway, on the main assembly line, they essentially had largely bare metal fuselage sections being bolted together and then wired up with people crawling inside the fuselage and over the wings.

Wouldn't it be faster to wire up and finish up as much of each fuselage section independently, to limit the amount of time it takes to finish up the product?

Sure, it will weigh a bit more due to the increased amount of connectors, but the speed of assembly goes up.

Weight issues are critical with aircraft, Shep. And it's not just the added weight but also where it's located on the airplane in relation to the center of gravity. It would require re-calculating all the weight and balance formulas on every design you do that for, which will also require a round of test-flying and approval from the FAA. If Piper thought they could sell 10,000 Cherokees or Saratogas in a year maybe it would be cost-effective but if they're building designs that are already approved and only sell dozens a year this does not work out to be economically sensible.

But yeah...very damn labor intensive process -- which is fine all and all in a F-22A, it being one of the most complex things ever produced -- but not so good on a general aviation aircraft -- the Chinese can always undercut you (and will) on labor pools and labor prices.

True. Chinese labor is cheaper. What about their quality? Aviation is NOT somewhere you can skimp on quality control. Can you trust them to use materials that are of the appropriate quality? Can you trust them use the appropriate number of fasteners, secured in the appropriate manner? How much will it cost to correct any defects?

This is why outsourcing is a good idea if implemented properly. For example, on the tour, they said that NEW Piper makes about 95-98% of the parts for each plane in house. They only import the propellor, engines, avonics, and landing gear.

Coincidentally, those are all parts that won't automatically kill you if they fail. Huh - think about that. Only parts that won't kill you immediately if they fail. Mind you, losing any of those will certainly be serious, but you can still land and walk away from the above crapping out on you if you keep your head and have any luck at all.

This split also retains your in house design knowledge and expertise -- which is important for fact checking your suppliers and having the knowledge of how things are actually done on the shop floor/assembly line, which is important to an engineer as they design some widget.

The thing is, once an airplane is designed and approved you don't have engineers constantly designing upgrades and new widgets because all of those would have to be approved. It's too expensive and too much hassle. Once the design is approved it is set. Even minor upgrades are a complete pain in the ass.

In other words, airplanes aren't like a lot of other things. It's because if your iPod fails you don't fall out of the sky and squash someone standing on a sidewalk beneath you. iPod failures are annoying, but not nearly as costly as airplane failures, even small airplane failures.

[jollyreaper]

Stonecipher? Dickens couldn't have come up with a better name if he wrote it himself.

[bobalot]

Here is a brilliant story.

The story of heavy overhaul maintenance. It used to be done 100% in-house at a government depot.

Someone came up with the idea to outsource 50% of the work to a private firm. It was a reasonable idea.

- The private firm would always have the threat of simply sending all the work to the government depot if they overcharged
- The unionised government workers would have the threat of privatisation if they slacked off.
- The competition between them would lower costs.

Then a bean counter came up with the fucking brilliant idea of selling off 100% of the maintenance to one firm. The government has never made a dollar of savings from this debacle. I had a friend who worked there who told me they used to take perfectly working parts of the trains, charge the government for the cost of a new part, add a coat of paint to the old part and sell that back to us at a later date.

Don't worry, the taxpayer is still paying for this idiocy.

[mr friendly guy]

Piper is going to get eaten alive in 15-20 years when the Chinese gain enough of a reputation for quality to begin to move into the General Aviation business outside of S. Asia and China itself.

Quality? Like their toxic drywall? Lead paint in children's toys? Poisonous pet food? Deadly infant formula?

It would take more than time for them to gain a reputation for quality, it will take some very fundamental changes in attitude and business practices.

According to Bloomberg they already have orders, including from a non Asian customer.

I should point out that according to eurostat in 2009 China produce more high tech exports by value than the EU.

I could also point out to their other hi tech success story, their high speed trains.

The point is, shit products in the low tech market most likely doesn't affect negatively too much reputation in the hi tech end. Although I agree with Shep, like all new players in the market Chinese companies still need time to gain a positive reputation for quality.