Boeing says it can’t make money with fixed-price contracts

L4sBot@lemmy.worldmod to Technology@lemmy.world – 118 points – Boeing says it can’t make money with fixed-price contracts
arstechnica.com

Boeing says it can’t make money with fixed-price contracts::"Rest assured we haven't signed any fixed-price development contracts, nor intend to."

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Fuck you Boeing. You fuckers have stacked cash hand over fist for fucking decades milking the fucking government and the American people like goddamn cattle. The endless growth has to end. The endless greed has got to end.

Jeez, if you can't make money off of defense industry contracts, you should probably just hang it up.

They can, they just use cost-plus contracts so they make money no matter how far off schedule or budget they end up.

Doing work with government, I understand why - ten billion different stakeholders to wrangle, strained budgets (probably not as big of an issue in defense but rampant throughout the rest of gov't), lawmakers changing things mid-project that have a material effect on how the project is carried out, and endless redtape throughout the process. I don't propose FF for gov projects either because inevitably they violate our assumptions by not getting their shit in order which kills the timeline, adds a ton of overhead, and results in a change order anyway which then just starts the whole process of approvals all over again.

I was under the impression that those sweetheart deals were getting hard to come by, but I don't work bids.

There's still a few out there. Take Clear for example, the subscription line skipping service that works alongside TSA.

Somebody's palms got heavily greased to allow this company to thrive in the airport security space.

Admittedly, it was quite a while ago that I had anything to do with government contracting, so you could be right.

So either you suck at forecasting your own production, or you suck at production enough to not hit your forecast? And you want other people to pay you more because you don't have a good handle on your buisness?

As an employee at a production facility in the US, don’t think Boeing is unique in that regard.

These companies have gotten too big to work without exploiting their employees or inflating costs.

This problem could be solved with a co-op structure even within a free market. If ten workers in a co op produce $100 bucks of extra money, they all get voting power over ten buck, and as long as any new hires can carry their weight so everyone still gets ten bucks surplus to command, they will hire them if you follow the game theory incentives. Once companies get big enough to have diminishing returns, like a new employee could only produce 5 bucks of surplus, then hiring that person would make everyone have a smaller piece of the pie (adding him to our first ten means the share drops to 105/11 or 9.5 dollars.) If the pie(surplus) all goes to one person they can keep adding workers until the worker doesn't produce any surplus over the cost, bloating the departments. Because of this co ops tend to expand to peak productivity, (surplus per worker), rather that peak output (produce as much as we can until it becomes unprofitable to produce)

You are assuming two things:

  • Each worker is paid the same
  • The number of workers in the company affects the market for their products

In a small company, none of this is true.

This is a proof of theory, the same way capitalist economists show what options and game theory incentives exist. Its quite literally a textbook example. What I said about co ops is not a new claim, and im not gonna research the exact financials of the mondragon co op to make an example on lemmy lmfao. Also nowhere does my post suggest each worker is paid the same, thats not what surplus means. Nowhere do I assume the number of workers effects the market either, it effects production. Wow you really went out of your way to misread that.

Also that each worker supplies the same surplus. While forecasters will assume this, this is rarely the case in engineering.

All I said was 10 workers produce 100 dollars of surplus. Nowhere does that imply each produced 10 dollars. Only that their voting power commands 10 dollars of surplus. Read it again.

So you have a system that doesn't reward increased productivity between members, or even provides some metrics for measurement. You can have a successful project with non-performing members.

Co ops directly reward increased production, increased production would lead to increased surplus, and the surplus is democratically allocated, weather that's bonuses or investments, raises even if they see the increase is surplus as permanent. All of thats extra money that everyone gets to decide what to do with. Thats more incentive than ive seen more than most workers in top down systems get.

I don't see that getting implemented in an engineering company.

There are employee owned companies out there given the economics of creating an engineering company, but I don't see a co-op format scaling. At most, it is going to be employees choosing leadership.

I don't think they suck at forecasting...I think they are probably exceptional at forecasting but willfully lie about project costs when submitting bids for projects in order to come under the competition and win the contract. There doesn't seem to be any penalties for this, so why would they stop?

That happens all the time. I went through several government contracts where a company would come and under bid the current contract by a significant amount, win the bid, offer the current contractors 3/4 of what they were being paid and fill in the rest with new hires. There is no continuity between contracts so unless a bunch of the old contractors took a pay cut to stay on they would come in and start from scratch with all new processes and procedures and absolutely slow down productivity for all those they were supposed to be providing support.

If they're anything like other DOD contractors they make empty promises and straight up lies to get bids on contracts that they can't deliver on time on. They know they will fail these timelines but it makes them look good for that quarter so it doesn't matter to them.

The forecasts for FFP projects have competitive forces pushing them down. Many times they will underbid to win than hope everything goes perfect or they can find a way to weasel out of it.

It sounds like Boeing is shit at forecasting. Maybe hire better analysts.

This is the best summary I could come up with:

Boeing released its third-quarter results on Wednesday, and there were promising numbers showing increasing revenues and narrowing losses as the multinational corporation continues its economic recovery.

This division, which includes missile production for the military and space activities such as satellites and the Starliner spacecraft, lost $1.7 billion during the first three quarters of this year.

Notably, the pair pinned the blame for performance by its defense and space division, referred to internally as BDS, on fixed-price contracts.

Boeing has been developing Starliner for more than a decade and is running six years behind its original goal of flying crew to the International Space Station for NASA in 2017.

As it has sought to compete with SpaceX on a purely fixed-price contract for crew transport, Boeing has reported more than $1 billion in losses to date and still has yet to fly its first astronaut mission.

After an issue was discovered with the soft links in Starliner's parachute design this summer, Boeing has had to work with Airborne to strengthen the main canopy suspension lines.

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I bet there are some other airplane makers that can.