Boeing To Beijing?

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September 1, 2009

Is Boeing thinking about moving part of its operations out of America? Some Boeing watchers think the company's future may be overseas, calling China's cheaper labor rates too tempting.

China has tried and failed to build a commercially successful jetliner. But it is successful in attracting work from Boeing to build airplane components.

The veritcal fin on the 787 dreamliner is one example of China's involvement in the 787 project. Peter Cohan has written about Boeing and its Chief Executive Jim McNerny in his book "You Can't Order Change". Cohan speculates Boeing's quest to lower its costs will drive the company to outsource more work to China. "I think it's a bias of Jim McNierny that over time he wants to move as much design and production of future aircraft over to China as he can," said Cohan.

The management argument, Cohan says, is if Boeing only outsources discreet components of the aircraft then they're only sharing limited amounts of intellectual property.

Cohan said Boeing is moving towards being a final assembler of planes from parts built elsewhere. But with China wanting more of that parts work at the same time it wants to build its own airliners Cohan wonders if Boeing is giving away intellectual property and creating a new competitor.

Boeing's position has always been that the outsourcing of work results in more airplane orders from countries like china, which ultimately results in more work in the U-S.

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