Another Boeing Quote Saying Price = Cost + Profit??


Airbus, Boeing Eye Production Rate Boosts Across Product Lines – Fly Away Simulation, Flight Simulator #1:

I've written about Boeing's impressive cycle time reduction before. I've also pointed out quotes from Boeing folks who think and say “well, our costs have gone down, we can charge less.

“For its part, Boeing's chief salesman, Scott Carson, said the company's successes in lean manufacturing techniques over the past half-dozen years–it's halved production times on the 737 line–have allowed it to re-evaluate sales prices. ‘Our costs are not as high as we thought,' he said.”

No. In the lean model, prices are driven by the market. If customers still value the planes as much and will pay the same price and you cut costs — congratulations, you've increased your profit! Why would you give that away to your customers? I can understand if they're in a price war with Airbus…. it's an argument that you're not “dumping” to say your production costs have dropped. That's the only reasonable explanation I can think of for why Boeing keeps talking like this. They are very defensive about how they're not taking unprofitable deals.

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Mark Graban
Mark Graban is an internationally-recognized consultant, author, and professional speaker, and podcaster with experience in healthcare, manufacturing, and startups. Mark's new book is The Mistakes That Make Us: Cultivating a Culture of Learning and Innovation. He is also the author of Measures of Success: React Less, Lead Better, Improve More, the Shingo Award-winning books Lean Hospitals and Healthcare Kaizen, and the anthology Practicing Lean. Mark is also a Senior Advisor to the technology company KaiNexus.



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