Engineering vs Wall Street
The problems at Boeing, GM, Ford and others are contrasted with the likes of SpaceX, Tesla and more.
Profit vs Engineering
Boeing used to be a company that produced great airplanes based on solid engineering principles and excellent business practices. The same could be said for GM and Ford. New comers to the scene like SpaceX and Tesla are outperforming the older companies for several reasons but chief among these are a significant emphasis on Wall Streets demand for profits and financial incentives at the expense of solid old school type great engineering and a corporate culture based on engineering excellence and not on bean counting and scrimping on the cost of every part.
Let's review a few examples of bean counter vs engineering.
GM and the ignition switch fiasco. GM tried to save a few pennies, I have heard not even a dollar on each ignition switch for some of the models being produced. The switches failed and caused problems and deaths. The lawsuits resulted in severe penalties and or bankruptcy of the GM. All to save a few cents. Let’s be clear, ignition switches are not rocket science. Building a good one, safe, reliable and easy to maintain is not difficult. But to redesign it specifically to produce it at lower cost and ignoring the engineering ramifications is difficult to characterize as anything but stupid.
GM’s TH400 Transmission
Another example from my personal experience with GM products. I owned a 2004 GM Suburban with a TH400 automatic transmission behind a Chevy 350 V8. Now how many of these transmissions do you guess GM has produced over the years? Millions? That would be my guess. At around 80K miles the transmission started to slip and the service to repair it not only cost over $2K but the tech informed me there were 20 pages of mods and updates necessary to correct defects in the transmission. again, why is this the case? GM knows how to build a reliable, long-lasting and cost effective transmission. But the bean counters demanded cheaper instead of well-designed and engineered components. Again, I characterize this as putting Wall Street profits ahead of good solid engineering and an emphasis on reliability and product excellence.
Ford went through a similar debacle with the pinto gas tank design and they specifically calculated that it was cheaper to fight and defend the results in court rather than admit to a significant design flaw they would not fix. I am sure there are many more ford examples.
Boeing is a real good example of how a great company, well-known for engineering excellence crashed and burned (sorry about the pun) with a preference for Wall Street results at the expense of in house engineering. the culture at Boeing used to be one of terrific engineering expertise applied to significantly advanced technologies and applications. I know. I worked at Boeing as an software contractor and as an employee. The entire workforce underwent some ethics training, spending millions because the boss at the top was having an affair with his secretary, etc etc. As one of my co-workers said, it’s not us that needs the ethics training….
Profits or Deliverance?
There are more examples for Boeing in the aerospace side of the business. I won’t bother with the 737Max debacle. that should be well-known to anyone with a news feed. On the other hand NASA is still funding the SLS that is billions of dollars over budget, behind schedule and unlikely to be better than the closest competitor's product, SpaceX and the Falcon Heavy as well as Starship. As noted elsewhere, sometimes the contracts for products are manipulated into seeking more funds, never delivering a product and only serve to create unjustified profits. Again, Wall Streets emphasis on profits come at the expense of delivering a well-designed and engineered product on time that meets the customers requirements and expectations. There are more, the KC46 Pegasus tanker program is a total fiasco although it might be possible to save it after all.
SpaceX and Tesla
Now let's look at a few examples of where the engineers run the show and profits are expected but not at the expense of good if not great engineering solutions. Consider both Tesla and SpaceX. Tesla effectively beat GM and Ford at their own game by application of engineering and leadership. SpaceX proved they could do what NASA and their bloated suppliers could not do. Deliver a reliable and cost effective solution to getting payloads to orbit. they even made it look easy, but we know it was not. But it was the application of engineering and new approaches to problems that made the difference. One of these new approaches is the significant engineering leader ship provided by Elo Musk personally. Of course he was backed up by a very large cadre of well-trained engineers but the singular thing is the direct leadership advantage he provided. Not a corporate group think and government bureaucracy but a singular drive and goal.
And now consider this again from my personal experience. I worked as a Design supervisor in the SEAWOLF SSN21 submarine program. this effort was to design and eventually build what many have described as the best attack submarine in the world. It cost billions to design it and several billions to deliver 3 to the USN. Now consider, suppose some guy cam up and said we have to save a few bucks on this part, so we want you to redesign it. In this specific case, who could justify explaining to Congress that we lost one of these ships because we tried to save a few bucks here or there.
One note on the SEAWOLF example, the USN eventually decided to reduce production of the SSN21 class to 3 ships. they were too expensive but more to the point, the threat had changed and such an enormously capable ship was no longer required. The USN had another design, slightly smaller and less expensive as a follow on. This brings up another issue, the need, indeed a National Security issue, to keep a well-trained submarine design force working all the time. this type of design expertise simply cannot be allowed to disperse and fall out of practice. this principle applies to fighter aircraft, space craft, cars, aircraft carriers and almost anything that is significantly technical as to require trained engineers to apply their talent in delivering products.
In Summary, a company that puts it’s emphasis on Wall Streets penny pinching profits at the expense of engineering excellence is never going to be as good as one that works toward superior engineering at a profit, but the engineering, safety and reliability have to come first. To do otherwise is to court disaster instead of long term excellence.