Boeing division, to independent supplier, back to Boeing, the story of Spirit Aerosystems

An article in the Wall Street Journal (July 2, 2024) titled “Boeing Calls Time on the Great American Outsourcing” describes the reintegration of supplier Sport Aerosystems back into Boeing as a failed attempt at outsourcing. When Spirit split from Boeing, it managed to reduce labor costs, and grow 19% of its sales to Boeing’s competitor Airbus. But production quality issues, COVID and other shocks saddled Spirit with significant costs. The article claims that Boeing suffered from a loss of the innovation resulting from “learning by doing”, and that low margin suppliers aggregated worldwide to become fewer and burdened with higher geopolitical risk.  Will US manufacturers reintegrate with key suppliers, thus reversing the growth of foreign value added as a fraction of US imports, which had grown from 13 to 20% between 1995 and 2000? How should high capital, low margin supply sources be justified within a company? What can governments do to ensure supply resilience and guard their key manufacturers from geopolitical risks?

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