Air War

One of the more interesting issues going on in the world of business and politics today is the upcoming Boeing/Airbus case to be heard in front of the WTO.

To sum it up the US is filing a grievance against EADS (Airbus' owner) for significant government subsidies given by the various European governments that back EADS. The US contends this is unfair labor practice and is crying foul.

All of that would be fine and dandy except Boeing spends as much time in the subsidy lunch line as their European competition. The state of Washington has essentially become Boeing own personal credit card, doling out billions in "indirect"grants to the state's largest employer.

The problem here is twofold: lack of competition and Boeing falling asleep at the wheel in the commercial jet business. The first one is hard to fix. The jet business is expensive and competitors fled the market long ago for more profitable business. The barrier to entry is high and I don't see that changing any time soon.

However on the second issue, Boeing has no one to blame for their troubles than themselves. Despite having a virtual lock on the commercial jet business for decades the company got fat and happy and took it's eye off the prize (think KMart only in the jet business). Along the way, poor management (first by Phil Condit and then by Harry Stonecipher) diversified Boeing away from its bread and butter and into other more "sexy" businesses. The avalanche began shortly after former CEO Condit moved Boeing out of Seattle to Chicago (a move many believe was done to distance the company from its airplane heritage).

Turns out Boeing was much better at building planes than doing any of its other projects the problem is by the time they realized that they were woefully behind in R&D and had taken an eye off of their customers. Now they are running to catch up.

Hawk's View: The WTO case is a joke. This is a duopoly with the US in one corner and the EU in the other. Boeing doesn't lose out because of subsidies, they lose out because of poor business decisions. Look for the US (not a fan favorite in the world today) to get whipped at the WTO.