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Boeing-gate
Donald Trump tweeted, Boeing stock fell. From Reuters:
U.S. President-elect Donald Trump said on Tuesday costs for a new Air Force One – one of the most prominent symbols of the U.S. presidency – were out of control, and urged the government to cancel a contract with Boeing Co for the jet.
Trump, who takes office on Jan. 20, griped during his unconventional election campaign about the cost of President Barack Obama’s use of the presidential aircraft to campaign for his rival, Hillary Clinton.
It was not immediately clear what prompted his complaint about Boeing and the presidential plane, but his transition team said that he aimed to send a clear message he intends to save taxpayers’ money.
“Boeing is building a brand new 747 Air Force One for future presidents, but costs are out of control, more than $4 billion. Cancel order!” Trump said in a morning Twitter message.
It was not clear what his source of information was for the cost. The budgeted costs for the Air Force One replacement program are $2.87 billion for the fiscal years 2015 through 2021, according to budget documents..
…Boeing shares dipped after Trump’s tweet and were down 0.7 percent in morning trading. Shares of several other major defense contractors were also lower.
“We want Boeing to make a lot of money, but not that much money.” Is Trump’s statement different from Obama’s “I do think at a certain point you’ve made enough money,” and, if so, why?
Published in Culture, Economics, Politics
He knows there’s more than one plane, right?
In the context, this is an absurd comparison. He’s talking about how much a company should be payed for a particular service with taxpayer money. He’s talking about fiscal responsibility, not limiting profits generally… which as a CEO he almost certainly has no interest in doing.
Skepticism is merited, but please end the hysteria.
The man owns his own jet, I’m sure he’s got a skewed view of how much one “should” pay for something.
You know better than that. There’s a material difference between Trump’s tweet which is “This costs way too much for what we’re getting” (debatable, or maybe not since I’m sure AF1 has classified stuff I can’t know about) and Obama’s statement which is “We get to cap your income.”
I find it amusing that Donald Trump of all people is saying we’re spending too much on the trappings of the President. And more so that some people would find it objectionable that Donald Trump thinks we should spend less on him.
There’s two, and 2 billion a pop is still outrageous, even for Air Force One. Even all of the C3 and crypto gear on board doesn’t justify 2 billion dollars apiece for a customized 747.
I previously worked for a government contractor whose contract was to measure the logistical lifetime of certain machines. The theory was that such machines had a predictable lifespan, and that certain signs could predict when the machine was going to permanently fail … so we could accurately predict the most efficient times to order a replacement. My job was to record the maintenance jobs on each machine throughout the country, looking for the telltale signs that the machine was better replaced than repaired. That would limit the amount of unnecessary repairs and replacements, saving millions of dollars.
Until the crash of 2008, when the machine manufacturers needed more sales, so they pressured the government to buy their machines whether they were needed or not … at which point the government shrugged and said in effect, “why measure efficiency if we’re just going to buy things to keep the manufacturers afloat anyway?”
They then canceled our contract and I was out of a job. Needless to say, I’ve been skeptical of government contracts ever since. Government contracts are a two-way street. Is the $4B more in line with what the government needs, or what Boeing needs?
The problem is the two existing 747-200-derived VC-25 aircraft need major overhauls if they are to stay in service. But they can’t be taken out of service for the overhauls.
My solution would have been to buy two used 747-200 and rebuild them as new Air force One aircraft. We could then similarly rebuild our other Air Force 747-200 derivative, the E-4. In that way, we would only have to maintain one set of spare parts and repair procedures.
The problem with the 747-8 derived plane is that we will have to maintain parts both for it and for the E-4.
A brilliant move.
Trump is ostentatious, luxury loving and wealthy. For him to cancel “his own” private set of planes because they are too pricey gives a message, he’s telling the world that he is serious about saving My Money and Yours.
He is doing exactly what he must do to earn the loyalty of the American middle class.
I was a Trump skeptic early on. I became a reluctant Trumper only after he called for Hillary’s indictment, this convinced me he was not a stalking horse. I then became a rabid Anti-Never-Trumper as the idea of another leftist POTUS is anathema to me and it became apparent that the Never Trump movement might give the election to the Marxists.
Since the election, just about everything Mr Trump has said and done has been pitch-perfect, even Reaganesque. His comments on the death of Castro, his imagery in helping Carrier, his end-running the MSM, his cabinet choices, his remaining in NYC, his Thank You tour, his talking to the Taiwanese PM, all of these and more have me giddy with delight. We have done well to elect this man.
The only way I’d consider it different is if he’s distinguishing between money made off the government and money made in the private sector.
The scale is interesting. Mark Steyn once wrote a column comparing the expense account of the British royal family and the Obamas. The Obamas have been spending way more than the royal family.
If wealthy Trump is seeing crazy amounts spent on presidential things, then I would believe him that the amounts are not what they should be.
I’ve seen signs that he is conscious of money and how it is spent, thank goodness. He talks about money a lot–for example, during his Ohio thank-you tour speech, several times he mentioned certain amounts of money he considered ill spent.
The one story I would love to know more about is the one in which he canceled his last few fund-raisers that were designed to raise money for the RNC. His fund-raising efforts for his own campaign had already generated $40 million for the RNC. Did he curtail these fund-raising efforts because he decided that more money wasn’t needed at that point? If so, he was right, it seems to me.
I agree with Trump. Cancel the order.
If Boeing is making so much money on these two planes that the threat of a cancelled order causes the stock to decline, then they are overcharging.
The current airframe is reaching the limits of its service life and is becoming too expensive to maintain. What should we replace it with?
He’s got bad data apparently. But after 8 years of Obama we should be accustomed to presidents making decision and pronouncements based on bad data.
Metro card?
Yes, but he spouts off without a thorough understanding of what goes into designing and building this aircraft for this specific mission. Air Force One has capabilities far in excess of your standard 747 – a requirement of the job its most important passenger fills. The problem here is that Trump has once again gone off on a twitter rant on cursory or surface level information. He sees a price tag and spouts off – does anyone here really think he’s looked into the entire procurement and capabilities of the aircraft and what is actually involved in developing and building the aircraft?
My issues is I don’t think he’s actually looked into the specifics of the program – just saw one number and decided it was Boeing trying to soak the government.
How do you know that? Have you done a breakdown of the RFP and all of the equipment and capabilities of this new aircraft?
Threatening their contracts to exact something from them?
I find it hard to believe the airframe is at the end of its service life (absent poor maintenance). Airframe life is generally measured in cycles (# of flights). There are plenty of commercial aircraft that have flown nearly every day for the last 30 years. Air Force One is mostly in downtime.
My understanding is that the electronics were outdated. This includes both the general systems common to civilian airliners and the special equipment.
This is Trump’s way of negotiating. Boeing wants badly to be the supplier of AF1 and will do whatever Trump wants to secure it.
There must be some backroom dealings that are foundering and Trump is trying to break them free.
So the VIP version of the 747-8 costs over $500 M per plane:
http://www.azureazure.com/toys/boeing-747-8-vip-the-largest-and-most-luxurious-private-jet-in-the-world
Now Air Force One is more than just a luxury aircraft – its is also the most secure aircraft in the world with capabilities far exceeding your typical 747:
http://people.howstuffworks.com/air-force-one4.htm
Among its more interesting additions are onboard state of the art medical facilities, a vast communications array, in-flight refueling capabilities, and advanced military grade avionics – most of which are classified. The on board electronics are harded against EMP attacks or nuclear blasts.
The issues here is not that we shouldn’t scrutinize the costs of any government program – but that Trump is making these claims without any understanding of what is actually involved in the process.
http://www.military.com/daily-news/2016/11/16/white-house-seeking-new-air-force-ones.html
The CNN story on this seems confused.
http://money.cnn.com/2016/12/06/news/companies/trump-air-force-one-boeing/index.html
Various excerpts:
Which is perfectly debatable. It does seem high to me, but I’d have to know more about why the cost is that high and I may in fact not be able to know about that due to classified electronics or defensive capabilities. For all I know Boeing’s reverse engineering Roswell space wreckage into anti-gravity boosters for Air Force 1.
It is a bit heartening to see a president say, in effect, “$4 billion? With a ‘B’? For what?” as opposed to the previous administrations’ “No cost too high!” as a knee jerk reaction however.
It’s not, however, the same as Obama saying “At some point you’ve earned enough money.” which is what the closing question of the post suggested (in a passive aggressive way too! How is this different indeed.)
I see very little difference here. Trump’s assumption is that Boeing is soaking the government, just as Obama’s assumption is that the rich are soaking the rest of us. He didn’t say for example “I looked into the program and saw that Boeing is making an obscene 250% profit margin on these aircraft. The costs of everything including the classified avionics, defense technologies and communications array is only $750M per plane.” He said “They’re making too much money. Cancel it.” That’s ridiculous.
Trump must be really stupid, eh?
Where did I say that?
That would also be achieved with a full rebuild of the existing aircraft (or of a pair of used 747-200B).
The major factor favoring this is that we are apparently going to be maintaining the existing VC-25/E-4 support infrastructure to serve the E-4.
The 747-800 has other advantages such as greater fuel economy and extended range. There are reasons the 707 Air Force One’s are current at Wright-Patterson and the Reagan Library – the Air Force decided an upgrade was warranted.
Of all the people to win the presidency Trump is the most likely to have priced 747 aircraft and know how much they cost.
Did he in this instance make an informed decision on whether Boeing’s overcharging? Who knows? My money’s on probably not, but I’d bet there’s at least one “Here’s all the bells and whistles on your neat new plane Mr. President-Elect” briefing given by a staff guy at some point.
Also if you see very little difference between a president saying taxpayers are paying too much for airplanes out of the public purse and a president saying any taxpayer wanting to keep their money beyond a certain amount is in the wrong then, may I suggest, your personal dislike for this president (elect) is getting in the way of your judgement.