Boeing Calls Time on the Great American Outsourcing

"Spirit AeroSystems is going full circle, from part of Boeing to independent supplier and back to part of Boeing. It is the perfect example of a realization dawning on corporate America: Outsourcing isn't all it was once cracked up to be.

On Monday, Boeing said it would buy the Wichita-based aircraft-fuselage maker in an all-stock deal valuing it at $37.25 per share, a 13% premium over Friday's closing price. It seems like a good deal for Spirit's investors, who have suffered a 53% negative total return since the end of 2019 -- worse than Boeing's negative 42%.

The pandemic hit to jet production was particularly devastating for Spirit, which accumulated $2.6 billion in losses between 2020 and 2023. This year, analysts expect net income to come in at minus $681 million. Its quality-control lapses -- including goofy ones such as badly drilled holes -- have in turn been a headache for Boeing, which is under severe pressure from lawmakers and customers following the blowout of a 737 MAX-9 door plug in January.

The deal's logic of vertical reintegration makes sense in light of recent history, with air-travel safety likely benefiting from centralized supervision and a simpler workflow between plants. Yet it is also an indictment of what executives in most industries have been doing for almost three decades.

When Boeing sold its Wichita and Tulsa operations to Canadian private-equity firm Onex in 2005, creating Spirit, aviation was still recovering from the 9/11 terrorist attacks. The IT revolution, together with the rise of consultants and business schools, had made outsourcing fashionable. Before the late 1980s it was unusual. Then, in 1989, Eastman Kodak pointed the way by tasking IBM with managing its data center. In 1996, General Electric showed how offshoring support jobs to low-wage countries such as India could help cut costs. Supply chains spread across the world: The share of imported value in U.S. manufacturing exports rose to a peak of 20% in the late 2000s, from 13% in the mid-1990s.

Renegotiating labor agreements was one rationale for an independent Spirit, and it broadly succeeded. The other was to gain economies of scale by selling to more manufacturers, which never worked as well.

At the core of the outsourcing trend, however, was the idea that an "asset-light" firm focused on intellectual property and its "core" expertise would be better run.

With this mindset, jettisoning aerostructures operations seemed like a no-brainer. It is a capital-intensive, competitive business that faces a lot of production pressure from final assembly -- not unlike the jet-engine business but with narrower gross profit margins. Over the years, many of Spirit's peers have either closed down or been taken over. In 2018, Britain's GKN was bought by Melrose Industries.

It wasn't just aerostructures: In the 2000s, Boeing outsourced more than 70% of the 787 Dreamliner program. But the problems with becoming an assembler of planes, as opposed to a true manufacturer, gradually became apparent. The company lost control of supply, resulting in years of delays and cost overruns.

Airbus followed Boeing's lead, including with the 2009 carve-out of its two aerostructures subsidiaries, Premium Aerotec and Stelia Aerospace. It was perhaps lucky to find no good buyers. Now, Airbus also sees aerostructures as essential again.

Aerospace isn't the only industry to revive vertical integration. Intel is beefing up chip manufacturing in the U.S., General Motors is building battery plants and Sweden's IKEA is acquiring containerships.

One general flaw of the asset-light model is that, over time, firms can lose their innovative edge because a lot of "learning by doing" happens when production processes interact. Another is that low-margin bits of the supply chain get worn down to just a few sources. These may not have the financial muscle to make big investments in times of turmoil, or they may be geopolitically sensitive. Such risks were underscored by post-Covid shortages, particularly in the largely "fabless" U.S. microchip industry, which has outsourced chip making to foundries in East Asia in a way that echoes what happened to aerostructures.

Spirit's round trip back to Boeing was borne of desperation, yet it captures the zeitgeist." [1]

1. Boeing Calls Time on the Great American Outsourcing. Sindreu, Jon.  Wall Street Journal, Eastern edition; New York, N.Y. 03 July 2024: B.12.   

 

Dirbtinis intelektas galėtų suteikti Robinhoodui dar vieną ginklą

„Robinhood Markets nuėjo ilgą kelią, bet vis dar nepadarė šuolio, siūlydama visaverčius investicinius patarimus. Tačiau naujausias jos įsigijimas gali parodyti kelią, kaip kada nors tai galėtų padaryti.

 

Pirmadienį „Robinhood“ pranešė įsigijusi „Pluto Capital“, kuri, remiantis pranešimu apie sandorį, siūlo investicinius tyrimus, paremtus dirbtiniu intelektu (AI), ir „pateikia labai pritaikytas investavimo strategijas, pagrįstas klientų poreikiais ir finansiniais tikslais“.

 

Tokia informacija, žinoma, gali padėti žmonėms patiems priimti investicinius sprendimus. Tačiau Pluto nedaro to, ką daro vadinamasis robo patarėjas, kuris iš tikrųjų valdo turtą ir atlieka tuos sandorius vartotojams.

 

O kas, jei galiausiai tai padarys? Robinhoodas nenurodė, kaip jis galėtų konkrečiai integruoti Pluto investicinius tyrimus. Ir nors Robinhood į savo planą įtraukė siekį tapti patarėju investicijoms, dabar šios paslaugos neteikia.

 

Pasiūlyti kokį nors patarėjo produktą, be abejo, idealiai tiktų vienam iš naujausių, pursliausių produktų: išėjimo į pensiją sąskaitoms. Nors yra žmonių, kurie naudojasi, savarankiškai nukreiptomis, investicinėmis pensijų sąskaitomis ir prekiauja jomis, kaip jūs su apmokestinamaisiais „žaidimo“ pinigais, daugelis amerikiečių taip pat yra įpratę, kad pensijų lėšas jiems tvarko pensijų teikėjas, patarėjas ar kažkas panašaus į tikslinės datos fondus.

 

Jei „Robinhood“ įsitrauktų į tokį verslą, padėdamas iš tikrųjų valdyti klientų turtą ir patarti dėl finansinių sprendimų, o ne tik suteiktų jiems įrankius, kad jie galėtų tai padaryti patys, klausimas taip pat būtų, kaip tai įsilietų į jos verslą apskritai.

 

„Robinhood“ pajudėjo pelningumo link iš dalies sumažindama išlaidas. Gerų patarėjų samdymas yra brangus, kaip ir telefono skambučiai ar susitikimai su klientais, nerimaujančiais dėl to, kas vyksta su jų pinigais.

 

Praėjusiais metais „Robinhood“ generalinis direktorius Vladas Tenevas analitikams sakė, kad bendrovė ieško konsultavimo paslaugų. Tačiau, pasak jo, „mes tikrai nenorime sukurti dar vieno „aš taip pat“ robo, kuris tiesiog įtrauktų jus į biržoje prekiaujamų fondų (ETF, exchange trading funds, angl.) krepšelį. Jis pridūrė, kad mato galimybę pasiūlyti „aukštos klasės finansinius patarimus“, bet „už tikrai patrauklią kainą, naudojant šiuolaikines technologijas ir padaryti jas prieinamas visiems“.

 

Robinhoodo pretenzija į šlovę anksti buvo nemokama prekyba.

 

 Vėliau tai sekė ir kiti internetiniai brokeriai, tačiau jie taip pat uždirbdavo daug pinigų iš klientų grynųjų pinigų ir platesnio investicinio turto. Robinhood vis labiau diversifikavosi, ypač pasinaudodamas didėjančiomis palūkanų normomis, kad uždirbtų daugiau iš grynųjų. Tolesnis nuolatinio valdymo mokesčių srauto pridėjimas ilgainiui gali būti rimtas Robinhood akcijų postūmis. Investuotojai linkę šioms pajamoms skirti daug kartų didesnę vertę.

 

Anksčiau šiais metais Robinhood vyriausiasis finansų direktorius Jasonas Warnickas, atsakydamas į analitiko klausimą apie nuoseklesnes pajamas, sakė, kad dabar bendrovė turi daug labiau subalansuotas pajamas, ne tik prekybą, įskaitant naujausius papildymus, tokius, kaip kredito kortelės ir auganti mokamų abonentų bazė, naudojančių jos auksinę paslaugą. „Laikui bėgant, tai yra tokie dalykai, kaip [valdomas turtas] pagrįsti mokesčių modeliai, tokie dalykai, kaip patarimai“, – sakė jis. „Visi tai yra dalykai, apie kuriuos galvojame ilgesniam laikotarpiui“, bet jis pridūrė, kad dar per anksti pasakyti, kaip Robinhood tvarkys tokius mokesčius.

 

Nors apskaičiuota, kad šimtai milijardų JAV dolerių buvo valdomi per „robo“ patarėjus, tai vis tiek buvo tik dalis dešimčių trilijonų JAV mažmeninių klientų turto rinkoje, rodo „Morningstar“ praėjusių metų ataskaitoje pateikti duomenys. Tai taip pat labai konkurencinga erdvė, kurioje tiek nepriklausomos, tiek didelės įsitvirtinusios įmonės siūlo įvairias automatizuotas paslaugas, įskaitant kai kurias su mišriomis žmonių konsultacijomis.

 

Robinhood nebūtų lengva pavogti kitų vadovų turtą, tačiau patarimai gali būti vienas iš svarbiausių komponentų, pritraukiant platesnį klientų ratą. Tai suteiktų jaunesniems, labiau rizikuojantiems, nariams mažiau priežasčių eiti kitur, kai jie bręsta." [1]

 

1. AI Gives Robinhood Another Weapon. Demos, Telis.  Wall Street Journal, Eastern edition; New York, N.Y.. 03 July 2024: B.12.

AI Could Give Robinhood Another Weapon

"Robinhood Markets has come a long way, but it still hasn't made the leap into offering full-fledged investment advice. Its latest acquisition, though, might point the way toward how it could someday do that.

On Monday, Robinhood said it had acquired Pluto Capital, which, according to the deal announcement, offers investment research powered by artificial intelligence and "delivers highly customized investment strategies based on customer needs and financial goals."

Such information can, of course, help people make their own investment decisions. But Pluto doesn't do what a so-called robo adviser does, which is to actually manage assets and make those trades for users.

So what if it eventually does? Robinhood didn't outline how it might specifically integrate Pluto's investment research. And, while Robinhood has put becoming an investment adviser on its road map, it doesn't now provide that service.

Offering some kind of adviser product arguably would be an ideal fit for one of its newest, splashiest products: retirement accounts. While there are people who use self-directed investment retirement accounts, trading in them like you might with taxable "play" money, many Americans are also accustomed to having retirement money managed for them by a pension provider, an adviser or through something like a target-date fund.

If Robinhood were to get into the business of helping to actually manage customers' assets and advise on financial decisions rather than just giving them tools to do it themselves, the question is also how it would fit into its business more generally.

Robinhood has moved toward profitability in part by lowering costs. Hiring good advisers is pricey, as is handling phone calls or meetings with customers nervous about what is happening with their money.

Last year, Robinhood Chief Executive Vlad Tenev told analysts that the company was looking at advisory services. But, he said, "we definitely don't want to build another me-too robo that just puts you into a basket of ETFs." He added that he saw an opportunity to offer "high-end financial advice" but "at a really attractive price point using modern technology and make that available to everyone."

Robinhood's claim to fame early on was free trading.

 Other online brokers later followed it, but they were also making lots of money from customers' cash and broader investment assets. Robinhood has increasingly diversified, particularly taking advantage of rising interest rates to earn more on cash. Further adding a steady stream of management fees could be a serious boost to Robinhood's shares over time. Investors tend to award those revenues a high multiple.

Earlier this year, Robinhood's Chief Financial Officer Jason Warnick, in response to an analyst question about more-consistent revenue, said that the company now had much more balanced revenue beyond trading, including recent additions such as credit cards and the growing paying subscriber base for its Gold service. "Over time, it's things like going into [assets under management]-based fee models, things like advisory," he said. "These are all things that are on our minds over a longer term," but he added it was too early to say how Robinhood would handle such fees.

Though hundreds of billions of dollars in the U.S. were estimated to be managed via robo advisers, it was still just a slice of the tens of trillions in the U.S. retail client asset market, according to figures compiled by Morningstar in a report last year. It also is a highly competitive space, with both independents and big established firms offering a variety of automated services, including some with hybrid human advice.

It wouldn't be easy for Robinhood to steal other managers' assets, but advisory might be one critical component to drawing in a wider array of customers. That would give its younger, more risk-loving members less reason to go elsewhere as they mature." [1]

1. AI Gives Robinhood Another Weapon. Demos, Telis.  Wall Street Journal, Eastern edition; New York, N.Y.. 03 July 2024: B.12.