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Boeing is in line for a bailout under “too big to fail” theory

Jon Gordon and Jack Stewart Mar 20, 2020
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Boeing directly employs about 150,000 people but relies on the broader aerospace industry with 2.5 million jobs. David Ryder/Getty Images
COVID-19

Boeing is in line for a bailout under “too big to fail” theory

Jon Gordon and Jack Stewart Mar 20, 2020
Boeing directly employs about 150,000 people but relies on the broader aerospace industry with 2.5 million jobs. David Ryder/Getty Images
HTML EMBED:
COPY

Boeing is critically important to the U.S. economy. That is the argument being made in favor of giving the company a government bailout. If Boeing collapses, the effects would ripple through American manufacturing. In essence, the company is too big to fail. Right?

“Yes, that is absolutely correct, it is too big to fail,” said Bijan Vasigh at Embry-Riddle Aeronautical University. He said Boeing’s importance to the U.S. economy can’t be overstated. 

“Air transportation, including aircraft manufacturing, if it was a country, would be the fifth biggest economy in the world.”

Boeing is a huge part of that, along with its suppliers.

“The bulk of the jobs involved are actually in the supply chain,” said Richard Aboulafia, an aviation analyst at Teal Group. 

“It’s tremendously complicated to build a jetliner, and there are lots of individual subcontractors, each with their own workforces,” he said. Take the 737 Max, for example. The body comes from Spirit AeroSystems in Wichita, Kansas. General Electric builds the engines in Evendale, Ohio, along with a French company

And Boeing is also a space and defense company, building everything from fighter jets to a new spacecraft designed to take astronauts to the International Space Station. 

“They are a huge provider of government services,” said Arthur Wheaton at the Worker Institute at Cornell.

Boeing employs around 150,000 people directly. In its call for government support, it says it relies on the broader aerospace industry with 2.5 million jobs.

Wheaton said it’s important to protect that specialized, highly trained workforce.

“If you start shutting Boeing down, and you start losing those employees, then you could be hurting by decades the capacity of the United States to start building other planes when things, or if things, pick up,” he said.

COVID-19 Economy FAQs

What’s the outlook for vaccine supply?

Chief executives of America’s COVID-19 vaccine makers promised in congressional testimony to deliver the doses promised to the U.S. government by summer. The projections of confidence come after months of supply chain challenges and companies falling short of year-end projections for 2020. What changed? In part, drugmakers that normally compete are now actually helping one another. This has helped solve several supply chain issues, but not all of them.

How has the pandemic changed scientific research?

Over the past year, while some scientists turned their attention to COVID-19 and creating vaccines to fight it, most others had to pause their research — and re-imagine how to do it. Social distancing, limited lab capacity — “It’s less fun, I have to say. Like, for me the big part of the science is discussing the science with other people, getting excited about projects,” said Isabella Rauch, an immunologist at Oregon Health & Science University in Portland. Funding is also a big question for many.

What happened to all of the hazard pay essential workers were getting at the beginning of the pandemic?

Almost a year ago, when the pandemic began, essential workers were hailed as heroes. Back then, many companies gave hazard pay, an extra $2 or so per hour, for coming in to work. That quietly went away for most of them last summer. Without federal action, it’s mostly been up to local governments to create programs and mandates. They’ve helped compensate front-line workers, but they haven’t been perfect. “The solutions are small. They’re piecemeal,” said Molly Kinder at the Brookings Institution’s Metropolitan Policy Program. “You’re seeing these innovative pop-ups because we have failed overall to do something systematically.”

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