Tuesday, July 07, 2009
Boeing and Vought Aircraft Plant
Frustrated by delays with the 787 Dreamliner, Boeing has announced that it's acquiring a Vought Aircraft Industries manufacturing facility in South Carolina. The company says that they believe that assuming ownership and complete control over the facilty will help them get the Dreamliner back on track. This incident makes for an interesting example of the virtues and costs of vertical integration. Many firms have chosen to de-integrate in recent years, but of course, there are some coordination and transaction costs associated with trying to work closely with an outside party on a complex endeavor. Boeing appears to have concluded that the coordination costs have become unwieldly, and that the benefits of full ownership and control are perhaps greater than they first anticipated.