Feature

A lesson in the perils of outsourcing

“Boeing executives now admit that the company’s aggressive outsourcing put it in partnership with suppliers that weren’t up to the job,” said Michael Hiltzik in Los Angeles Times.

Michael HiltzikLos Angeles Times

“Sure, it’s immoral to abandon your loyal American workers in search of cheap labor overseas,” said Michael Hiltzik. But why make the moral case against outsourcing when the business case is so compelling? Just ask Boeing, whose 787 Dreamliner is “billions of dollars over budget and about three years late.”

The main reason for that sorry performance is Boeing’s cost-driven choice to “farm out” the design and manufacture of many components of the giant passenger jet to overseas suppliers. Crucial design and engineering decisions were left to such suppliers—and in several instances, to their subcontractors. In some cases, parts made by one supplier didn’t fit properly with parts from other suppliers. In others, suppliers couldn’t meet their production quotas, leading to shortages of critical components.

“Boeing executives now admit that the company’s aggressive outsourcing put it in partnership with suppliers that weren’t up to the job.” You’d think highly paid executives would know to hire suppliers that could “turn out a Tab A that fit reliably into Slot A.” But apparently Boeing’s executives need “on-the-job training.”

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