Boeing (BA) is moving up the list of worst managed US companies at lightning speed. It went through a nice long strike with its machinists, which it settled after two months. Then it began to have labor trouble with other groups of its employees. All this worker trouble is extraordinary because Boeing has a huge backlog of aircraft orders. It might have given a little more to the union to avoid delaying the delivery of those planes and the customer discontent which accompanies it.
Boeing management took to the ramparts and fought the machinists. It may have saved some money over the three-year contract it cut, but it now seems certain that the incident and problems with parts will delay the delivery of its 787 Dreamliner again. This may push the launch of the first plane out another six months. The project had been delayed three times. Now, that will move up to four.
According to The Wall Street Journal, In a recent interview, Virgin Atlantic Airways Chief Executive Steve Ridgeway voiced customers’ growing frustration. "We’re pretty fed up," he said. "We’ve got no clarity from Boeing."
The 787 trouble could well force some of Boeing’s revenue into later quarters, undermining its financial results. It could certainly put customers in a position to ask for very large penalties for the late deliveries. Flying their older planes costs them more in fuel and the opportunity to more efficiently configure their fleets.
Boeing’s shares have dropped from a 52-week high of over $93 to $39. That means they have fallen by over 55% during a period that the DJIA is off 35%. Almost all of the plunge has been caused by poor labor relations and bad sourcing and controls of components. In other words, particularly poor management.
Under most circumstances, trouble at these levels causes a board to make changes. At Boeing, now would be a good time.
Douglas A. McIntyre
ALERT: Take This Retirement Quiz Now (Sponsored)
Take the quiz below to get matched with a financial advisor today.
Each advisor has been vetted by SmartAsset and is held to a fiduciary standard to act in your best interests.
Here’s how it works:
1. Answer SmartAsset advisor match quiz
2. Review your pre-screened matches at your leisure. Check out the advisors’ profiles.
3. Speak with advisors at no cost to you. Have an introductory call on the phone or introduction in person and choose whom to work with in the future
Take the retirement quiz right here.
Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.