A-Mus­ings As High as a Kite!

Mus­ings are thoughts, the thought­ful kind. For the pur­pose of these ar­ti­cles, a-mus­ings are thoughts that might amuse, en­ter­tain and even en­lighten.

The Star (St. Lucia) - - LOCAL - By Michael Walker

For ev­ery Amer­i­can Boe­ing plane, Euro­pean Air­bus has an equiv­a­lent sim­i­lar priced com­peti­tor. If Trump's poli­cies dam­age Boe­ing, Air­bus would be the big ben­e­fi­ciary. Air­bus en­joys sub­si­dies from Euro­pean gov­ern­ments, which Boe­ing con­tends is an unfair ad­van­tage. Euro­peans con­tend that Boe­ing re­ceives or­ders for de­fence-re­lated prod­ucts that are in fact hid­den sub­si­dies. The mat­ter is be­ing lit­i­gated at the World Trade Or­ga­ni­za­tion. Trump's “Amer­ica First Poli­cies” are a threat to Boe­ing.

Dur­ing his visit to Boe­ing's fac­tory in South Carolina to un­veil the lat­est 787-10 Dream­liner, Trump vowed to pro­tect US man­u­fac­tur­ing jobs. He should have said “as­sem­bly” jobs. The Dream­liner is a fly­ing sym­bol of an in­ter­de­pen­dent world econ­omy com­pris­ing a net­work of global sup­pli­ers and cus­tomers, the un­rav­el­ling of which would have cat­a­strophic con­se­quences.

The Dream­liner's wings and bat­ter­ies come from Ja­pan. The wing tips come from South Korea. In­dia pro­vides its floor beams. The front fuse­lage is made in the USA and Ja­pan. The cen­tre fuse­lage and hor­i­zon­tal sta­bi­liz­ers are pro­duced in Italy. The land­ing gear and pas­sen­ger doors are man­u­fac­tured in France. Its cargo ac­cess doors are built in Swe­den. The wing and body fair­ings, which cover gaps on the body, are Cana­dian prod­ucts. The move­able trail­ing edge of the wings is sourced in Canada, the US and Aus­tralia. Thrust re­versers on the en­gines come from Mex­ico so they will have to be lifted over The Wall. The ac­tual en­gines come from ei­ther Gen­eral Elec­tric in the US or Rolls Royce in the UK. All these com­po­nents travel from far dis­tant cor­ners of the world for as­sem­bly at one of Boe­ing's fac­to­ries in Wash­ing­ton or South Carolina so that Boe­ing can as­sem­ble a plane at a price that can com­pete with Europe's Air­bus.

Trump's for­eign pol­icy and stances on trade and de­fence will have sig­nif­i­cant ef­fects on how Boe­ing and other multi­na­tional com­pa­nies do busi­ness. Boe­ing may sup­port a mas­sive man­u­fac­tur­ing en­tity in the USA, but a vast net­work of in­ter­na­tional part­ners, 30% of the Dream­liner's sup­pli­ers, lo­cal gov­ern­ments and busi­ness com­mu­ni­ties have in­vested decades and bil­lions of dol­lars into re­la­tion­ships with Boe­ing else­where. Trump's hard­line stance on glob­al­iza­tion threat­ens Boe­ing and its part­ners. The loss of jobs in all the above-men­tioned coun­tries could spark a global re­ces­sion on a scale never seen be­fore. The irony of this is that Boe­ing will not be able to re­place its sup­pli­ers from Amer­i­can sources any time soon and the com­pany will fail caus­ing a tsunami of un­em­ployed work­ers.

With the North Amer­i­can Free Trade Agree­ment (NAFTA) in doubt - Trump has vowed to rene­go­ti­ate or scrap the agree­ment - and Trump's plan to build a multi­bil­lion­dol­lar wall on the Mex­i­can border paid for with a 20% tax on Mex­i­can im­ports, Boe­ing will suf­fer be­cause its thrust re­versers, built in Mex­ico, will in­stantly be­come a lot more ex­pen­sive. The same goes for parts made in Canada.

Mex­ico's flag car­rier, AeroMex­ico, flies an all-Boe­ing fleet, while its two lo­cal ri­vals, In­ter­jet and Vo­laris, are loyal cus­tomers of Air­bus. If Mex­ico re­tal­i­ates against US tar­iffs by in­sti­tut­ing its own border tax for goods com­ing into the coun­try, Boe­ing planes could be­come a lot more ex­pen­sive lead­ing AeroMex­ico to choose Air­bus over Boe­ing. The same ap­plies to air­lines world­wide.

Boe­ing hopes to sell China as much as $1 tril­lion worth of com­mer­cial air­planes over the next 20 years but Trump's poli­cies and rhetoric to­ward China could put that at risk. China ac­counts for 20% to 25% of Boe­ing's present pro­duc­tion.

Two other coun­tries plan­ning to buy a lot of Boe­ing air­planes are Iran and Iraq, both tar­gets of Trump's tirades. The Iraqi gov­ern­ment has 28 Boe­ing air­craft worth about $3.7 bil­lion on or­der and Boe­ing is try­ing to com­plete a deal with Iran for an 80-plane or­der that could be worth $16 bil­lion.

The Dream­liner's Ja­panese-built wings are an ex­am­ple of a com­plex in­ter­na­tional sup­plier re­la­tion­ship.

If Boe­ing were to re­nege on those con­tracts, in­stead of mak­ing prof­its over the 30-year life­time of the 787 pro­gram, the com­pany would have to pay back the sup­pli­ers bil­lions of dol­lars of in­vest­ment costs, in ad­di­tion to find­ing an Amer­i­can com­pany will­ing to in­vest in cre­at­ing al­ter­na­tives as there are no US com­pa­nies pro­duc­ing equiv­a­lent parts.

Not so long ago Trump tweeted, “Boe­ing is build­ing a brand new 747 Air Force One, but costs are out of con­trol, more than $4 bil­lion. Can­cel or­der!” The new re­al­ity for those do­ing busi­ness in the US is that they can come into the pres­i­dent's crosshairs with no warn­ing, and BANG they are dead.

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