ulfinator
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Boeing's Stonecipher On Airbus Launch Aid...

Fri Sep 10, 2004 5:11 am

Here is an monthly column written by Boeing CEO Harry Stonecipher that is published in the Boeing magazine Frontiers, both in print and online.

This month Harry decides to talk about Airbus launch aid. Key line I took away from it is:

"Boeing assumes full market risk every time we develop a new airplane. Airbus does not"

Of course this line, which I am sure will create some conversation, is expanded on in the article.

Just thought everyone would like to see it:

http://www.boeing.com/news/frontiers/i_st.html
 
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solnabo
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RE: Boeing's Stonecipher On Airbus Launch Aid...

Fri Sep 10, 2004 5:45 am

So what else is new about Boeing and Airbus? Do I smell envy here?

Read all that before (most of it from US, needless to say)  Insane

Micke/SE
Airbus SAS - Love them both
 
sabenapilot
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RE: Boeing's Stonecipher On Airbus Launch Aid...

Fri Sep 10, 2004 5:51 am

Does this man ever talk about anything else than Airbus?

Boy, it is really turning into an obsession!

I think he is the only CEO in the world which mentions the name of his company's main competitor more than the name of his own company!

Not good if you ask me.


 
Tasha
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RE: Boeing's Stonecipher On Airbus Launch Aid...

Fri Sep 10, 2004 6:05 am

"So what else is new about Boeing and Airbus? Do I smell envy here?"

No Solnabo it's not envy, but the stench of government sponsored industry, aka Socialism. It's also another proof that Airbus cannot survive without the massive influx of capital from European governments to prop it up. It might be said that Airbus builds excellent aircraft, perhaps even aircraft that are as good as Boeing's. Then again if they were, they wouldn't need all these billions now would they. It has been said here before (and not originated by me), that Airbus would have folded with the A300 if Socialist Europe hadn't provided massive assistance - AIRBUS: THE COMPANY THAT CANNOT BE ALLOWED TO FAIL, no matter how much it costs the European taxpayers.

Tasha  Smile/happy/getting dizzy
 
sabenapilot
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RE: Boeing's Stonecipher On Airbus Launch Aid...

Fri Sep 10, 2004 6:13 am

Besides, I think he still does not get it. EU officials are generally somewhat more diplomatic in the way they says things than in the US (e.g.:'you are against us, or you are with us', 'we are gonna smoke him out' etc.), so maybe this man is not used to interpreting what is really meant with:

Just like in the past, the EU is open for any in dept discussion regarding the 1992 bilateral agreement between our side and the US concerning the amount of government support aviation industries on both sides may receive IF and WHEN the US feels there is a need for it, in which case we will be more then pleased to look into their evidence on how civil, military and space projects in the US are now no longer or to a lesser extend supported by financial, infrastructural, military and fiscal benefits like they used to in the past and are allowed to under the 1992 bilateral agreement as well as into their reasoning on why the EU and its manufacturers should also no longer have to work along the lines of this bilateral agreement.
(free translation of the reply given by a EU official to a Frenchspeeking newspaper)

Anybody in Europe has understood the message: F*KC OFF !

Edit: it wasn't a French newspaper, but a Belgian one, so I edited that before France get's bashed once again....

[Edited 2004-09-09 23:16:28]
 
DfwRevolution
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RE: Boeing's Stonecipher On Airbus Launch Aid...

Fri Sep 10, 2004 6:13 am

Christ Tasha, you are no different than Soblano... you simply take a paragraph to say what he can summurize in a sentence. You both need to drop your blind affinity for your respective manufacture based on your respective patriotism. Get over it, this issue is way more complicated than either of you argue.

Hell I'm a flipin Boeing shareholder and I'm sick of your type of rehtoric
 
Tasha
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RE: Boeing's Stonecipher On Airbus Launch Aid...

Fri Sep 10, 2004 6:27 am

DFWRevolution...

So you're a Boeing shareholder, well isn't that quaint? I am too, as well as thousands of others. If this is your claim to fame.... LOL  Laugh out loud I will continue to speak about Airbus, Boeing, and other subjects as well.

Also, thank you for buying Boeing stock!

Tasha  Smile/happy/getting dizzy
 
antares
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RE: Boeing's Stonecipher On Airbus Launch Aid...

Fri Sep 10, 2004 6:39 am

All this whining and moaning from Stonecipher will get Boeing (recipient, deservedly of massive USG funds over time) nowhere and is an insult to a proud and innovative company that has been atrociously managed in the very near past if not the present.

If Boeing was to become an American company again, one that didn't cheat and lie about its relations with China, and sell out US workers on a such a systemtic and disgusting basis, and remember its roots, and restore its glory, I'll be a very happy if ancient and cranky bastard.

Instead it is whinge, whinge, whinge.

I've got great hopes for the 7E7. Stop whining guys, roll out the 200 orders promised for this year and get the thing flying non-stop around the world with giant windows and thick humidified air by October 2008 and 10% of the cost of flying anything else and make us all proud again.
 
Trolley Dolley
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RE: Boeing's Stonecipher On Airbus Launch Aid...

Fri Sep 10, 2004 6:43 am

OK, I'm not European or American, so hopefully I have a more balanced view of the situation.

Firstly different governments have a right to different philiosophies on how they handle their economies. Just because you don't agree with it doesn't make it necessarily wrong. A positive of government involvment is that there is accountability and transprancy. The Enron's and Arthur Andersen's of the world show that there can be flaws in the free market philiosophy. The US and EU are both practise protectionism and government intervention in a variety of industries that are important to them. The high value, high tech aviation industry is one of them. Government incentives can come in many forms like tax breaks, military orders or outright funding. A negative of government support is that poor business practises can flourish- take a bow Alitalia!

In my opinion there is a difference between launch aid and on going support of an unprofitable business. Airbus is made up of a large number of companies that are trading profitably. It also supports the USA industry too- think of all those GE engines just as a starter. My understanding is that Airbus has to pay the money back once performance targets are met- which they probably will be given its successful product line. If it failed to repay the billions there would be an outcry of the waste of government funds in the EU. I've not heard of any yet.

A question to ponder, if Airbus's business practises and operations are so inefficient, why is Boeing emulating some of them, eg greater component manufacturing off site so there's less to assemble at the main factory.

I honestly think that in this case there are rights and wrongs on both sides of the Atlantic.





 
DfwRevolution
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RE: Boeing's Stonecipher On Airbus Launch Aid...

Fri Sep 10, 2004 6:46 am

So you're a Boeing shareholder, well isn't that quaint? I am too, as well as thousands of others. If this is your claim to fame.... LOL

You bet'cher ass... Boeing stock has made me about $1,500 (if I sold out) since I first purchased. Not enough to retire at 30 on, but it's great to have a company you care about do so well.  Big thumbs up  Big thumbs up
 
Tasha
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RE: Boeing's Stonecipher On Airbus Launch Aid...

Fri Sep 10, 2004 6:56 am

"You bet'cher ass... Boeing stock has made me about $1,500 (if I sold out) since I first purchased. Not enough to retire at 30 on, but it's great to have a company you care about do so well."

Hee hee... that's more than my few piddly shares.

Tasha  Smile/happy/getting dizzy
 
cwapilot
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RE: Boeing's Stonecipher On Airbus Launch Aid...

Fri Sep 10, 2004 7:01 am

Well, there are most likely, in my view, two things going on here. First, people seem to forget that the first mention of dragging "launch aid" and "subsidies" before the WTO came from Airbus, regarding the 7e7 and arrangements in Japan and Italy. Stonecipher may basically be laying it all out for them: we will do to you as you to to us.

Also, Stonecipher knows very well that the EU will do nothing except say F*CK Off as an earlier poster so eloquently stated. The supposedly diplomatic EU has no interest in negotiating a fair deal. Stonecipher may not even want them to end. It would seem to me that he would be more interested in twisting Uncle Sam's arm into providing the same type of "loans", dollar for dollar, euro for euro, for future Boeing products. Noises coming from the Bush Administration point in that direction, and John Kerry's people and high-ups in Democrat congressional circles have been critical of the Bush Administration for not doing this earlier. Nevermind that they had 8 years in which to deal with this issue, but that's beside the point here...
Southside Irish...our two teams are the White Sox and whoever plays the Cubs!
 
Leskova
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RE: Boeing's Stonecipher On Airbus Launch Aid...

Fri Sep 10, 2004 2:57 pm

Cwapilot, you might be right in your analysis that the "EU has no interest in negotiating a fair deal" - though I doubt it, or at least I doubt that they're any more or less interested in it as the US is.

Nonetheless, for years, we've heard the US screaming about the subsidies and/or loans - but up to and including this day, what have they done?

Absolutely nothing.

If they really were able, as they've claimed again and again for years now, to prove that Airbus and Europe is violating the agreement, then why are they only now seemingly starting to make moves to actually change something about it? And it actually remains to be seen if this session of "Airbus gets unfair help"-whining will actually ever be more than the previous ones - of if the US will, once again and after a few months of making a lot of noise about it, simply forget about the issue.

Regards,
Frank
Smile - it confuses people!
 
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solnabo
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RE: Boeing's Stonecipher On Airbus Launch Aid...

Fri Sep 10, 2004 3:33 pm

Tasha, u got most hang-ups about "socialism"?

Soviet Union doesn´t exist anymore, did you know that?  Big grin

Micke/SE Big grin
Airbus SAS - Love them both
 
knoxibus
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RE: Boeing's Stonecipher On Airbus Launch Aid...

Fri Sep 10, 2004 3:47 pm

I say let's stop over this repetitive and useless discussion and wait for the round of negotiations that will take place on 16th September.

Hell, I kind of agree with all those subsidies being not clear and the lack of transparency (actually it seems on the European side that it is clearer than across the pond, from what I read so far, that's a fact).

That's my taxes for Christ's sake....but then again it pays for my job, what a vicious circle...

According to one of EADS' CEO, who for the first time expressed a view on the subject, if the case is to go before the WTO, Boeing might get a kickback.

I would just say wait and see.
No matter what anybody tells you, words and ideas can change the world.
 
AirframeAS
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RE: Boeing's Stonecipher On Airbus Launch Aid...

Fri Sep 10, 2004 3:53 pm

Airbus recieves subsidies from governments in order to survive and Boeing does not. Does that seem like fair competition to you? I dont think so. I dont think ANYONE is entitled to free money from anyone. Subsidies defies the point to competition...its not fair game....period!!

I think the 1992 Bilateral agreement needs to me modified because it seems to favor Airbus over Boeing. Times have changed, people....and with that in mind, contracts need changing too. Lets level the playing field for all involved.

[Edited 2004-09-10 09:17:15]
A Safe Flight Begins With Quality Maintenance On The Ground.
 
Joni
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RE: Boeing's Stonecipher On Airbus Launch Aid...

Fri Sep 10, 2004 4:59 pm


Tasha,

Socialism isn't a word that's capitalized. Also, since you still haven't looked it up I'll have to tell you that socialism refers to the state ownership of means of production. EADS and BAE shares are traded in electronic stock markets, which is pretty much the opposite of socialism.

>Airbus recieves subsidies from governments in order to survive and Boeing
>does not.

Just repeating that line over and over again doesn't make it the case.
 
knoxibus
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RE: Boeing's Stonecipher On Airbus Launch Aid...

Fri Sep 10, 2004 5:12 pm

AirframeAS;

I think you should think twice before repeating the putrid garbage broadcasted by Boeing and Politicians in need of attention.

A round of negotiations will take place soon. Let's wait for the results.

Boeing agreed to this in 1992 and now is complaining about it. They should have thought back then that it might be a very dangerous decision for them. They played it bad, and now they are saying its unfair. Well learn from your mistakes guys. (And it's not the last one they made if you look at the scandals there has been recently).

Anyway, what I am saying (bis repetita) is that we should wait for the conclusion of the future meetings between the two parties. What I am hoping is that both parties will agree to provide full transparency on this issue.

And from my understanding, this has already been done by the Europeans, but not by Boeing...These subsidies are not, technically and contractually speaking, free money, this is written down.

No matter what anybody tells you, words and ideas can change the world.
 
Andreas
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RE: Boeing's Stonecipher On Airbus Launch Aid...

Fri Sep 10, 2004 5:20 pm

Ulfinator: Just thought everyone would like to see it

Err, no not really except the usual suspects, but they'll know it anyway!
And to make this a well-balanced post  Big grin: No, nobody is interested in the marketing raves of some Airbus hotshot either!


btw: can someone kick that overly ridiculous fake out for good? It gets annoying, boy! Get your bloody kicks elsewhere or take Valium to get your Hormone level down!  Yeah sure  Yeah sure  Yeah sure

[Edited 2004-09-10 10:21:40]
I know it's only VfB but I like it!
 
AngelAirways
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RE: Boeing's Stonecipher On Airbus Launch Aid...

Fri Sep 10, 2004 6:08 pm


My friend here (significantly older and more experienced than me) works in the risk management department. believe me there is a whole risk evaluation and management department at Airbus. It's not as simplistic as stoney cipher makes it sound. All risk calculations are presented to anyone before they give out a loan, be it commerical or government investors. Besides, governments give out loans because thy get back commercial interest on them. The days of free gov't money in Europe are long gone. please wake up to reality. And remember 66% of the investment for a new a/c comes from private companies. Why would they dump their money into a project they think will fail?

Spitting on your commercial competitor is not a new practice. It has happened many times before in history between various big companies. It usually comes from the underdog trying to draw sympathy towards itself.

But Boeing is overdoing it. It is beginning to sound like a sour loser and is in no way drawing any sympathy towards itself, as was seen on Mr Stonecipher's recent visit to London.

Perhaps he should divert his energies more towards Research and Development, and the marketing of his own a/c, especially the good ones like the 777, rather than moaning!


 
StickShaker
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RE: Boeing's Stonecipher On Airbus Launch Aid...

Fri Sep 10, 2004 7:54 pm

"All this whining and moaning from Stonecipher will get Boeing (recipient, deservedly of massive USG funds over time) nowhere and is an insult to a proud and innovative company that has been atrociously managed in the very near past if not the present."

Have to agree 100%
Boeing well and truly took their eye off the ball during the 1990's. Airbus was releasing a plethora of state of the art aircraft to which Boeing should have responded with some new models of their own.
There are few things more harmful to any company than taking your eye off the ball and neglecting your core business for a few years - far more detrimental than any perceived subsidies your competitor may receive.
Boeing employees and shareholders deserved better corporate management then they received during the 1990's.

Cheers,
StickShaker
 
Scorpio
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RE: Boeing's Stonecipher On Airbus Launch Aid...

Fri Sep 10, 2004 8:01 pm

DfwRevolution,

Christ Tasha, you are no different than Soblano... you simply take a paragraph to say what he can summurize in a sentence. You both need to drop your blind affinity for your respective manufacture based on your respective patriotism. Get over it, this issue is way more complicated than either of you argue.

Hell I'm a flipin Boeing shareholder and I'm sick of your type of rehtoric


Welcome to my Respected Users list.
 
AvObserver
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RE: Boeing's Stonecipher On Airbus Launch Aid...

Fri Sep 10, 2004 9:34 pm

"Boeing agreed to this in 1992 and now is complaining about it."

They agreed to it when Airbus still had only a small share of the market and it was reasoned then that Airbus needed more assistance to prosper. Airbus now has the lion's share of the market and is no longer struggling against Boeing, thus the rationale for that same level of launch aid is no longer valid. Though there was an understanding that launch aid would be reduced over time, it hasn't happened. It's been suggested that perhaps the much more comprehensive 1994 general accord on trade which reportedly has more restrictions on such aid and mechanisms to enforce it. Below is what I see to be the most troubling aspect of the current arrangement...

"Look at the A380, for example. Airbus has received nearly $4 billion in launch
aid for the ultra-big airplane. Airbus claims there is a market for 1,500 A380s, so it will have to sell 40 percent of that amount-or 600 airplanes-before it has to pay back just one-fifth of the launch aid it has received for the A380. We think the market for such large airplanes is much smaller, and we doubt Airbus will ever sell 600. If Airbus doesn't sell at least 600 A380s, it may never have to repay any of that launch aid."

This means that almost $4 billion (in USD) of European taxpayers' funding could go down the shute if Airbus can't sell the requisite number of airplanes for the program to be considered a success. I'd think you European taxpayers would be at least a bit concerned about this; giving Airbus an out to NOT repay the loans if the program is declared unsuccessful. Boeing, of course, balks because it doesn't have a similar cushion in case one of its commercial models fails to sell well, seeing this as an unfair advantage for Airbus. We'll see what happens, now. Stonecipher, the 'old warhorse' has fired the first shot in what could be a protracted trade battle. Very sticky business, this 'subsidies' issue, especially if BOTH sides must open the books for FULL disclosure.
 
jeffrito
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RE: Boeing's Stonecipher On Airbus Launch Aid...

Fri Sep 10, 2004 9:51 pm

Knoxibus

... Boeing might get a kickback.

Assuming English is not your first language, I just wanted to let you know that your writing is excellent! But here's a little FYI:

A kickback typically refers to money paid by a business under the table to a purchasing agent. Like if I am in charge of buying airplanes for the military, Boeing will give me a kickback for recommending that the air force buys a bunch of Boeing tankers.

I think what you meant is that Boeing's WTO court case might "backfire".
 
teva
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RE: Boeing's Stonecipher On Airbus Launch Aid...

Fri Sep 10, 2004 10:25 pm

AirframeAS, you say (or repeat)
"Airbus recieves subsidies from governments in order to survive and Boeing does not. Does that seem like fair competition to you? I dont think so. "
How do you call the illegal export subsidies used by US exporters (not only Boeing), that have been condamned by the WTO?
How do you call the fact that a big part of the 7E7 has been contracted to Japaneese firms, to get subsidies from Japan?
How do you call the transfer of the headquarters from Seattle to Chicago? Tons of taxpayers money (money+tax breaks) ...Of course, yu will argue it is not goverment money, but State and city....
Teva
Ecoute les orgues, Elles jouent pour toi...C'est le requiem pour un con
 
maddy
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RE: Boeing's Stonecipher On Airbus Launch Aid...

Fri Sep 10, 2004 10:27 pm

Another example:

Airlines under chapter 11 get subsides and are kept alive. Is that fair to the other airlines around the world??

"It's also another proof that Airbus cannot survive without the massive influx of capital from European governments to prop it up"

Again: Airbus made a profit of more than 1 billion € within the first 6 months of 2004! They can survive!
 
jeffrito
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RE: Boeing's Stonecipher On Airbus Launch Aid...

Sat Sep 11, 2004 12:28 am

Maddy,

Technically Ch. 11 offers protection from creditors, but does not provide any other subsidies or assistance. Usually a successful re-emergence from Ch. 11 entails a re-negotiation of the debt, but this is often a preferrable outcome for investors to liquidation. Still I agree that it is unfair to other businesses that meet their investors' terms.

The important point is that capital markets factor in the possibility of Ch. 11 & other outcomes when they loan funds. All these risks add to the cost of the capital. Boeing's claim (I have no idea whether it is true), is that capital supplied to Airbus (from European governments and indirectly from investors whose risk is shielded by governments) is significantly cheaper, both in rates and risks, than that supplied to Boeing. Boeing claims that at market rates and on market terms, Airbus' expenses for servicing its debt would be something like $40 billiion more than it has been over the last 20 years.

Hopefully, everybody will open their books and we can get some idea whether any of these claims are true!
 
knoxibus
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RE: Boeing's Stonecipher On Airbus Launch Aid...

Sat Sep 11, 2004 12:41 am

@ Jeffrito,

Thank you for the tip, I really appreciate it when people correct me, I never take it as a critic as it allows me to improve the beautiful English/American language that I torture so many times.

I looked in the dictionary though, despite the fact that I knew that "backfire" sounded right. Guess the dictionary was too "Oxfordian"...

Anyway, back to the subject, like several others, I definitely hope that both companies will open their books and show the real figures and forecasts.

I can read some good points from both sides here (not saying that we have two sides fighting against each other here...) but I just want the full case to be clear and well understood by everybody, with all the associated facts.
No matter what anybody tells you, words and ideas can change the world.
 
ORDagent
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RE: Boeing's Stonecipher On Airbus Launch Aid...

Sat Sep 11, 2004 12:42 am

IF Boeing ever did get into serious financial trouble the U.S. government would bail them out. The aviation industries are considered by most governments as vital to the contries economies as well as prestige items. Neither the EU or US would let the industries collapse.
 
dtw9
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RE: Boeing's Stonecipher On Airbus Launch Aid...

Sat Sep 11, 2004 1:19 am

I think what Harry is saying here is a loan is a loan when its paid back with interest, aloan is a subsidy when its not paid back as most of these Airbus [loans are written. Myself I would like to thank all the member countrys of Airbus for all the High paying jobs they have created in the U.S,and other nations suppling to Airbus using EU taxpayer money that will never be repaid. so i think the only one getting F@#K is the EU taxpayer
 
N79969
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RE: Boeing's Stonecipher On Airbus Launch Aid...

Sat Sep 11, 2004 1:25 am

Go Harry. He is absolutely correct. If Boeing were supposedly as government protected as Europeans love to allege, it would roll out new models just as often if not more often as the supposedly "innovative/creative" Airbus. Yet many Europeans like to ridicule Boeing for its supposed conservatism despite claims that they receive more support than Airbus. Cannot have it both ways.

The bottom line is that Airbus introduces new technology simply because it cannot fail financially per EU protection. They have built more than their share of MD-11 projects yet remain in the market as a competitor. I would be pretty conservative as well knowing that my competitor will not be bailed out no matter no matter how bad of an airplane it sells.

If the EU decides to provide full funding for a 7E7 competitor despite the fact that Airbus now holds 50% of the market, the US congress should pass a law that the US firms should recover their 1992 share of the transport airplane market....I would gladly pay more taxes to end this heist by Europe and to bring back jobs from Tolouse and Hamburg back to Long Beach, Everett, and Renton.

 
Areopagus
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RE: Boeing's Stonecipher On Airbus Launch Aid...

Sat Sep 11, 2004 1:33 am

I certainly agree that the books should be opened, but I doubt the arguments will end then. Boeing could have placed their operations in a low-tax, low-regulatory burden state, rather than take the sweetheart concessions from Washington. The results would be the same for Boeing, but they show up very differently in the subsidies argument, so there is loads of room to continue arguing. I have no idea how A&B's tax burdens compare, and have not been enlightened on this point by the discussion to date.
 
N79969
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RE: Boeing's Stonecipher On Airbus Launch Aid...

Sat Sep 11, 2004 1:40 am

The difference is that BMW, Daimler, or Alstom would have received tax breaks and so on from the state of Washington if they built facilities in Washington but Boeing would not receive such treatment from Europe.
 
Leskova
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RE: Boeing's Stonecipher On Airbus Launch Aid...

Sat Sep 11, 2004 2:49 am

The difference is that BMW, Daimler, or Alstom would have received tax breaks and so on from the state of Washington if they built facilities in Washington but Boeing would not receive such treatment from Europe.

And how, exactly, do you come to that conclusion?

Just about every company building a new plant somewhere in Europe - regardless of where it's from - will get some form of tax breaks or subsidies from the city/county/state/country where it's building the plant.

One example: AMD built a production facility in Dresden, they received half a billion euros in subsidies - these were requested by Germany for AMD and were permitted by the EU commission.

So - do US companies receive subsidies if they invest in Europe? They certainly do.

Regards,
Frank
Smile - it confuses people!
 
antares
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RE: Boeing's Stonecipher On Airbus Launch Aid...

Sat Sep 11, 2004 6:11 am

N79969, Boeing is taking more out of the US industry with its transfer of the 7E7 to the Japanese than Airbus is actually putting into the US.

Lockheed Martin has it right on its web site when it says it never forgets which country it works for.

You have been ratted on big time by Boeing and you still don't see it.

You're not protecting the US industry. You're trying to protect the foreign based dividends flowing to a US company that took you for a ride.

There is going to be more US content in a lot of Airbuses than there is in Boeings the way things are going, and surely you're not going to be still carrying on about Airbus having an unfair advantage.

The unfairest advantage Airbus has at the moment is smarter management and dumber friends.
 
N79969
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RE: Boeing's Stonecipher On Airbus Launch Aid...

Sat Sep 11, 2004 9:37 am

Antares,

What you say is correct. Boeing has moved and continues to move a lot of production of out of the United States. I see that clearly and am not real happy about that. Boeing's unions and even some board members have questioned whether this is a good long term strategy as the company's value-added and role is getting smaller.

However BCAG is doing what it has to survive in a race with a competitor that has been shielded from its own failures and shortcomings. If some offshored manufacturing allows Boeing to continue employing Americans to assemble airplanes, then I say fine because I think it is better than the alternative of having completely Boeing exit the market down the road.

I would not feel half as vehemently about all of this if the success of Airbus were the result of market forces, some luck, and happenstance. I have no problem with the fact that Germans have more successfully sold luxury automobiles than American manufacturers. The Germans are better at building such cars.

However the success of Airbus is the product of deliberate policy to take part of the aerospace market away from the United States. The EU did not do anything to grow the pie, they just spent billions to take a piece away from Americans out of a sense of entitlement.

I don't mind that the EU helped Airbus get off the ground in the early 1970s. Helping such companies in their nascent phase is not bad public policy. The trouble is that the aid never stopped despite several successful and one dominant airplane model.

*********************

Frank,

I said Boeing specifically and not American companies in general.
 
QANTAS077
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RE: Boeing's Stonecipher On Airbus Launch Aid...

Sat Sep 11, 2004 9:43 am

i don't know enough about this but i know one thing, Harry is probably right when he says that the A380 won't sell 600 units, market seems to be headed down the longrange twin engine jet route.

 
antares
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RE: Boeing's Stonecipher On Airbus Launch Aid...

Sat Sep 11, 2004 10:03 am

Thanks N79969 for a well considered and I think sound assessment, although I can't detract from the success on merits contests where the A320 has done rather well from the likes of JetBlue.

I don't see any evidence in air transport of a well managed airline going broke simply because of its choice of manufacturer.

This letter has just appeared in the September edition of Boeing Frontiers and i suspect you will find it as distressing as I do, since I was a Boeing fan from an awfully long time back.

I won't reproduce the entire letter which is on page 6 under 'these changes hurt' and signed by John Finalyson of Seattle.

'As someone who has been involved in introducing new tools to people in Boeing, I have seen the eyes of the engineers light up when a new tool is introduced that would allow them to do better work than ever before.

'And it has brought tears to my eyes more than once when i recount how their faces go blank when they remind me they will not be designing or building that product any more.

'The partners will do it. I wonder if Frontiers will be able to highlight great achievements by Boeing engineers in five years.'

Incidentally Mr Finalyson also refers to the business book, Creating and Sustaining Successful Growth by Clayton Christensen. I recommend it as one of better books from a so called business guru, and also two books on Innovation, inparticular The Innovators Dilemma which is very pertinent to the difficulties of the legacy carriers and the rise of the LCCs.

Antares
 
N79969
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RE: Boeing's Stonecipher On Airbus Launch Aid...

Sat Sep 11, 2004 10:38 am

Antares,

Sure. I do not mean to imply that Airbus builds bad airplanes that only sell because of EU subsidies. That clearly is not the case. The 319 and 320 are solid competitors and the 330-200 is the clear winner in its niche.

I sympathize with Boeing engineers who have to witness their legendary company's transition from an airplane maker to an airplane marketer/lead-contractor.
 
Leskova
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RE: Boeing's Stonecipher On Airbus Launch Aid...

Sat Sep 11, 2004 4:50 pm

N79969, ok - sorry, misunderstood you there.

Though I, nonetheless, seriously doubt that Boeing would not get anything if they were to invest in Europe - as far as I know they've just, as opposed to Airbus, never tried investing in Europe (or do they have some production, design or engineering facilities within the EU?), so it's a somewhat hypothetical thing anyway.

Regards,
Frank
Smile - it confuses people!
 
AirframeAS
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RE: Boeing's Stonecipher On Airbus Launch Aid...

Sat Sep 11, 2004 4:57 pm

I think you should think twice before repeating the putrid garbage broadcasted by Boeing and Politicians in need of attention.

If you refer back to my post, all I said was that its not fair game and getting free money defies the point to competition. The agreement was only brought down to favor Airbus. Thats pretty straightforward. Everyone knows this, even the excs. at Airbus knows this too. But then again, this agreement was in place when Boeing, at the time, was very very successful. Hey, pal...its freedom of speech. Dont like what you read, then dont reply back as 'putrid garbage' as you put it. Sorry, dude!

And from my understanding, this has already been done by the Europeans, but not by Boeing...These subsidies are not, technically and contractually speaking, free money, this is written down.

yeah sure sure sure!! I'll believe that when pigs fly. Look up the word 'subsidies' for me will ya?? Airbus does get free money. (Example: If the A380 does not do as expected, they dont have to pay gov't money back that they were given therefore they have no liability...get the idea??)

This means that almost $4 billion (in USD) of European taxpayers' funding could go down the shute if Airbus can't sell the requisite number of airplanes for the program to be considered a success. I'd think you European taxpayers would be at least a bit concerned about this; giving Airbus an out to NOT repay the loans if the program is declared unsuccessful. Boeing, of course, balks because it doesn't have a similar cushion in case one of its commercial models fails to sell well, seeing this as an unfair advantage for Airbus.

Free Money I tell ya!! This hits it on the nail compeletely.

Teva:
How do you call the illegal export subsidies used by US exporters (not only Boeing), that have been condamned by the WTO?

Well for starters....selling aircraft at way below market prices would be one violation.....Something Boeing cannot do. Remember, Airbus gets subsidies (free money from EU Gov'ts) and is able to do this practice by offering aircraft below market prices. Is that fair to anyone??

How do you call the fact that a big part of the 7E7 has been contracted to Japaneese firms, to get subsidies from Japan?

Irrevelant!! Baseless and off the point. Has nothing to do with anything. Airbus has suppliers in the USA just like Boeing has suppliers from Europe. Both companies are FREE to contract suppliers for needs. I dont see a crime here. If Airbus had a contract with Russia for making big parts for its A380, I wouldnt care less. Who cares!

How do you call the transfer of the headquarters from Seattle to Chicago? Tons of taxpayers money (money+tax breaks) ...Of course, yu will argue it is not goverment money, but State and city....

A) Stupidity was involved in the transfer to Chicago, Im sure the excs at Boeing realized this.
B) The 1992 agreement has nothing to do with the State of Washington at all. The agreement and the State of Washington have nothing to do with each other so the theory is irrevelant. The State of Washington did not want Boeing to leave the Seattle/Puget Sound area so they were the ones the offered the breaks, not Boeing. Do research on this and you'll see....

IF Boeing ever did get into serious financial trouble the U.S. government would bail them out.

Exactly...and the US Government would say "Screw the 1992 agreement..."

By the way, I would like to also bring up the fact that the State of Washington is NOT, I repeat, IS NOT a part of the US Government, but a government of its own and still abides by national laws and makes its own state laws. So the 1992 agreement does not apply to the State of Washington. Also, It was our lawmakers who were the ones that signed the 1992 agreement, not Boeing. I think everyone should open the books and then decide how to move forward. I still think that the free money what the Europeans call "subsidies" should cease. Then it would definately be 100% fair competition.
A Safe Flight Begins With Quality Maintenance On The Ground.
 
Leskova
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RE: Boeing's Stonecipher On Airbus Launch Aid...

Sat Sep 11, 2004 5:42 pm

Teva:
How do you call the illegal export subsidies used by US exporters (not only Boeing), that have been condamned by the WTO?


AirframeAS:
Well for starters....selling aircraft at way below market prices would be one violation.....Something Boeing cannot do. Remember, Airbus gets subsidies (free money from EU Gov'ts) and is able to do this practice by offering aircraft below market prices. Is that fair to anyone??


And your proof for that is what? Is the $1bn profit they made in the first half of this year or the more than $800mn they made in each 2003 and 2002 proof? Do you have any proof beyond the "everyone knows" (thinks he/she knows, that should be) or "it's been stated again and again" that Airbus actually does sell planes at a loss?

Teva:
How do you call the fact that a big part of the 7E7 has been contracted to Japaneese firms, to get subsidies from Japan?


AirframeAS:
Irrevelant!! Baseless and off the point. Has nothing to do with anything. Airbus has suppliers in the USA just like Boeing has suppliers from Europe. Both companies are FREE to contract suppliers for needs. I dont see a crime here. If Airbus had a contract with Russia for making big parts for its A380, I wouldnt care less. Who cares!


If Boeing simply had suppliers in Japan, no-one would care - it was the point of the subsidies from Japan, the one that you so wonderfully avoided answering, that was actually the point of the question.

Teva:
How do you call the transfer of the headquarters from Seattle to Chicago? Tons of taxpayers money (money+tax breaks) ...Of course, yu will argue it is not goverment money, but State and city....


AirframeAS:
A) Stupidity was involved in the transfer to Chicago, Im sure the excs at Boeing realized this.
B) The 1992 agreement has nothing to do with the State of Washington at all. The agreement and the State of Washington have nothing to do with each other so the theory is irrevelant. The State of Washington did not want Boeing to leave the Seattle/Puget Sound area so they were the ones the offered the breaks, not Boeing. Do research on this and you'll see....


In other words: if the loans to Airbus weren't given by the European governments but, for example, by the cities of Toulouse or the states of Hamburg or Midi-Pyrénées, then you'd have no problem with them?

Regards,
Frank
Smile - it confuses people!
 
N79969
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RE: Boeing's Stonecipher On Airbus Launch Aid...

Sat Sep 11, 2004 5:53 pm

Frank,

I think Boeing has a design center in Madrid.

Anyway my point is that the tax treatment that Boeing is getting from Washington state (which is a type of subsidy) is no different from the tax breaks that BMW and Daimler received from South Carolina and Alabama. Those tax breaks did not concern the EU. That the EU is complaining now about Boeing's deal with Washington states makes it seem like they are really clutching straws in this debate.

What is uniquely available to Airbus in Europe and not available to Volkswagen, Boeing, or Siemens (for example) are outright cash disbursements that may or may not have to repaid. I would much rather have this privilege as opposed to a tax break which are not liquid and have only contingent values.
 
AirframeAS
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RE: Boeing's Stonecipher On Airbus Launch Aid...

Sat Sep 11, 2004 5:55 pm

And your proof for that is what? Is the $1bn profit they made in the first half of this year or the more than $800mn they made in each 2003 and 2002 proof? Do you have any proof beyond the "everyone knows" (thinks he/she knows, that should be) or "it's been stated again and again" that Airbus actually does sell planes at a loss?

They sell planes at low market prices BECAUSE they have subsidies to back them up from other projects. There have been other threads that have stated this over and over...do a search.

If Boeing simply had suppliers in Japan, no-one would care - it was the point of the subsidies from Japan, the one that you so wonderfully avoided answering, that was actually the point of the question.

I dont think Boeing recieves ANY subsidy from ANY government. I dont think Japan is giving Boeing any subsidies. I doubt that.

In other words: if the loans to Airbus weren't given by the European governments but, for example, by the cities of Toulouse or the states of Hamburg or Midi-Pyrénées, then you'd have no problem with them?

I dont know...depends on the situation. Actually I can't anwser that because Airbus is a company that is based in several countries while Boeing is based in one country. Big difference there. But...since the 1992 agreement does NOT apply to the State of Washington, the State can do whatever they want to help Boeing. Its the U.S. Govt, from my understanding, that cannot help Boeing financially.

The State of Washington's only goal was to keep Boeing in the Puget Sound area regardless of what aircraft or products Boeing made. The point was to keep the people of Washington State employed and the only way was to lower tax costs PROVIDED BY the State of Washington, not the U.S. Government. Again, the 1992 agreement does NOT apply to the State of Washington since no one from Washington State signed anything with the EU.

Hopefully the 1992 can be thrown out to make the game fair. All Im saying is make the competition fair....how hard can that be? Not too hard to do. Its pretty simple.
A Safe Flight Begins With Quality Maintenance On The Ground.
 
N79969
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RE: Boeing's Stonecipher On Airbus Launch Aid...

Sat Sep 11, 2004 6:05 pm

AirframeAS,

The government of Japan has or is going to declare the 7E7 as a national project (or something like that) because 35% of the airplane will be Japanese content including the wings and the composite materials.

If the 7E7 has such project status, the Japanese governments will provide millions of dollars in subsidies to Boeing's Japanese partners to aid in the development of the 7E7. Boeing will clearly benefit from this as it will not have to fund the R&D itself.

The EU is of course complaining...even though Airbus has been getting even more generous support for each and every one of their airplanes for years.
 
AirframeAS
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RE: Boeing's Stonecipher On Airbus Launch Aid...

Sat Sep 11, 2004 6:09 pm

Ahh, thanks for the clairfication, N79969! I didnt know that, but now I do. I guess its ok for Airbus to recieve subsidies but its not ok for Boeing to recieve subsidies. Is this what Airbus is trying to say?
A Safe Flight Begins With Quality Maintenance On The Ground.
 
Leskova
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RE: Boeing's Stonecipher On Airbus Launch Aid...

Sat Sep 11, 2004 6:23 pm

They sell planes at low market prices BECAUSE they have subsidies to back them up from other projects.

And Boeing does not have money from other parts of the company to - if they chose to do so - help them in the commercial aviation part of it?

There have been other threads that have stated this over and over...do a search.

That answer was precisely what I meant in my last post - and precisely the one I expected... in other words, you have no proof.

I dont think Boeing recieves ANY subsidy from ANY government. I dont think Japan is giving Boeing any subsidies. I doubt that.

Then what is that amount that the 7E7 project is receiving from Japan? True, as far as I know it's money being paid to Japanese companies, not directly to Boeing - but it's for developments they make for Boeing, so it's money Boeing does not have to spend, and does not have to repay. It's - plain and simply - a subsidy for Boeing. Nothing more, nothing less.

I dont know...depends on the situation. Actually I can't anwser that because Airbus is a company that is based in several countries while Boeing is based in one country.

Airbus, as a company, is based in the Netherlands. Nowhere else. It has production facilities in other countries, but it's not based there. Just as Boeing is, through it's strange move, based in Illinois - though it has production facilities in Washington, California and other US states... actually, wasn't there something about Boeing actually being registered in Delaware? True, all those states are members of one country - but nonetheless, I've never heard anyone calling the Netherlands more than one country...

Big difference there. But...since the 1992 agreement does NOT apply to the State of Washington, the State can do whatever they want to help Boeing. Its the U.S. Govt, from my understanding, that cannot help Boeing financially.

How very convenient... maybe the EU should use that explanation as well: it was the EU and the Governments of the countries in the EU that signed the agreement - the states within the countries are not bound by it...

Hopefully the 1992 can be thrown out to make the game fair. All Im saying is make the competition fair....how hard can that be? Not too hard to do. Its pretty simple.

Absolute and 100% agreement on that. It's just not going to work with the US coming to the discussions thinking "we're doing everything right, you're doing everything wrong"... nonetheless and again: full agreement on your comment regarding the agreement.


Regards,
Frank
Smile - it confuses people!
 
antares
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RE: Boeing's Stonecipher On Airbus Launch Aid...

Sat Sep 11, 2004 6:55 pm

Well, I'm not sure if we'll get to the truth ever about what airlines pay for jets but here are a few local insights that suggest Boeing sure knows how to offer a cheap jet.

When a senior person at Virgin Blue was asked if they wanted to buy the EMB family the answer was reported as not likely, they asked more for a 70 seat jet than Boeing did for the 177 seat 738. We know that Qantas picked up the AA discount on its big order for 738s which the magazines reported as well south of $50 million (US) and similarly when Boeing tried to deter Qantas from buying the A380 it offered the 744 ER at a claimed $90 million, so Qantas bought them and the Airbus, since it had two suckers giving it away by the buck load at the same time. In fact there were rumours that Airbus gave away the A330s for free one per A380 and we know with more certainty that the big jet was flogged off at around $215 million. I've often wondered about these rumours, some of which seem rather implausible but then this is a very strange industry.

I'd like to see an analysis if anyone is aware of one in which the number of jets paid for in a financial year is reconciled through the Airbus or Boeing accounts in a way that would allow us to discern how far below the catalogue price the various units were sold.
 
knoxibus
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RE: Boeing's Stonecipher On Airbus Launch Aid...

Sat Sep 11, 2004 8:00 pm

Well methink that we will never get to the end of this. This industry deals with so much money and jobs in the balance I guess it's going to be pretty tough to know the full business scale of these stories.

I guess none of us can really give a full explanation on this issue, unless he/she knows all the figures and work them out.

I did look at "subsidy" in my dictionary and here is what I got:

A subsidy is a grant or monetary gift given by a private person or entity (often a government) to another private person or entity, as financial assistance or to help launch an enterprise.

So I totally agree with you AirFrameSA, if this money was given at the start to help a new company, or finance some preliminary research, then it is justified and fair, but it must now stop for Airbus, looking at the market share they have now. I'm totally with you on this.

But then, the definition in my dictionary did not stop there:

A subsidy normally exemplifies the opposite of a tax, but can also be given using a reduction of the tax burden. This kind of subsidy are generally called tax expenditures.

So basically what Boeing got from Washington state is also a subsidy, and looking at the amount of money the Japanese govt will give "freely" to help the R&D on the 7E7, through japanese companies, I find it rather interesting that Boeing criticizes those subsidies while it directly and indirectly benefits from it also. Do you understand my point?

I agree that Airbus should not benefit from these anymore, but if you want fair, then give fair also.

Hell, I admit I work for Airbus, oh and by the way Leskova, Airbus HQ are in Toulouse officially, you are talking about EADS, but Airbus is a company, owned by EADS and BAe, but with its HQ in Toulouse.

So I was saying that I currently work right in Central Entity (corporate HQ in TLS), and what astonishes me is that we are currently undergoing a very heavy cost reduction plan. Why should we then if we benefit from free money from EU gvts??? Just tell me!!!! Maybe it's because we want to finance a new A/C, or pay back those famous free subsidies? What could it be otherwise?

No matter what anybody tells you, words and ideas can change the world.
 
Leskova
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RE: Boeing's Stonecipher On Airbus Launch Aid...

Sun Sep 12, 2004 1:22 am

Knoxibus, you're right, thanks for the correction - I did mix up EADS and Airbus there... but, if I'm not mistaken, the actual point remains valid: Airbus is not based in several countries, but in one.

I hadn't heard of the cost reduction plan... interesting to know... really does not fit into the picture being painted of Airbus on these boards, as a company with endless financial resources available (ha... as if any European government currently had one Euro more than it needed - most have less than they need for running their respective countries)...

Regards,
Frank
Smile - it confuses people!