Cessna profits plunge......OT (or is it?)

"Nomen Nescio" ] wrote in message
...
| -----BEGIN PGP SIGNED MESSAGE-----
|
| BOSTON, Jan 29 (Reuters) - Textron Inc. TXT.N on Thursday
| said quarterly net income fell sharply as profit at its key
| Cessna aircraft division was cut more than 50 percent on slack
| demand for business jets.
|
| Revenue at Cessna plunged to $620 million from $896 million
| in the year-ago quarter. Profit fell to $43 million from $94
| million on lower sales of Citation business jets.
|
| Backlog for unfilled customer orders at Cessna was $4.4
| billion, or flat with the third quarter, Textron said.
|

Um, let's see. There is a backlog, meaning that they have more orders than
they can fill. So they cut production by 50%, tell their customers that no
planes will be available until 2006, then whine that their sales are down.
Whoever is running this company should be hanged. No, actually, drawn and
quartered -- and their living entrails burned before their very eyes.
Seriously, Cessna has a management problem. In fact, they have possibly the
worst management in their entire history -- and that is going some. I
believe that even I could turn that company around.

You have to size the company to the current market. What would you have
them do? Run flat out until they have no backlog and then go out of
business? Keep in mind that a lot of their backlog is for airplanes that
they couldn't ship (new models). .I don't know about Textron's management,
perhaps they are terrible but I don't see anything here that demonstrates
that they are.

Mike
MU-2


"C J Campbell" wrote in message
...

"Nomen Nescio" ] wrote in
message
...
| -----BEGIN PGP SIGNED MESSAGE-----
|
| BOSTON, Jan 29 (Reuters) - Textron Inc. TXT.N on Thursday
| said quarterly net income fell sharply as profit at its key
| Cessna aircraft division was cut more than 50 percent on slack
| demand for business jets.
|
| Revenue at Cessna plunged to $620 million from $896 million
| in the year-ago quarter. Profit fell to $43 million from $94
| million on lower sales of Citation business jets.
|
| Backlog for unfilled customer orders at Cessna was $4.4
| billion, or flat with the third quarter, Textron said.
|

Um, let's see. There is a backlog, meaning that they have more orders than
they can fill. So they cut production by 50%, tell their customers that no
planes will be available until 2006, then whine that their sales are down.
Whoever is running this company should be hanged. No, actually, drawn and
quartered -- and their living entrails burned before their very eyes.
Seriously, Cessna has a management problem. In fact, they have possibly
the
worst management in their entire history -- and that is going some. I
believe that even I could turn that company around.

"Mike Rapoport" wrote in message
nk.net...
| You have to size the company to the current market. What would you have
| them do? Run flat out until they have no backlog and then go out of
| business? Keep in mind that a lot of their backlog is for airplanes that
| they couldn't ship (new models). .I don't know about Textron's
management,
| perhaps they are terrible but I don't see anything here that demonstrates
| that they are.

It may be that I am just mad at Cessna because they keep promising stuff
that they don't deliver. We have a customer who ordered a 182 with the G1000
Nav III package back in November. Cessna promised him May delivery. Now they
are saying that their entire production line has been sold out, but maybe
they can get him a plane in December. They do this time and again,
constantly. They toyed with the idea of doing a second production run this
year, but instead they laid off all the workers. Smart, real smart.

Revenue at Cessna plunged to $620 million from $896 million
in the year-ago quarter. Profit fell to $43 million from $94
million on lower sales of Citation business jets.

Gee, there's a surprise. I sure hope you didn't have a bunch of money
invested, cuz virtually anyone familiar with Cessna's product-line predicted
a severe downturn.

After all, other than jets, all they have to offer is a bunch of 50 year-old
designs, albeit with new electronics in 'em. And with used jets virtually a
dime a dozen now in "Executive Controller," who's going to buy a new one?

Cessna put all their eggs in one basket -- the jet market. When that fell
apart, they had little to fall back on. Meanwhile, Cirrus churns out three
new airplanes a day, every day...

The market is efficient, but ruthless...
--
Jay Honeck
Iowa City, IA
Pathfinder N56993
www.AlexisParkInn.com
"Your Aviation Destination"

"C J Campbell" wrote
Um, let's see. There is a backlog, meaning that they have more orders than
they can fill.

Well, your first problem is that you clearly have no idea what a
backlog is. Have you ever actually tried to run a business that
manufactures anything at all, never mind limited-market high-ticket
items? Do you know ANYTHING about manufacturing at all, or are you a
bean counter? Since the answer seems to be the latter, let me explain
the facts of life to you.

Everything has a lead time. Simple, common, and cheap parts have lead
times measured in days, and maybe even hours (sometimes you can send
someone out to pick it up). Complex, expensive, and limited
application parts can have lead times of literally months. Changes
are often not viable, because such parts are rarely standard. Changes
can have suble effects on operation, and not-so-subtle effects on
approvals. When most units you sell are expensive, complex, and
customized it is literally impossible to build anything as soon as it
comes in. Production must be scheduled, and parts must be ordered.
You simply can't survive without a backlog.

Depending on part lead times and assembly build times, the necessary
minimum backlog varies. In my business, the typical unit costs only
thousands or tens of thousands, we build several thousand units a
year, and we can't possibly survive with a backlog of less than about
3 months. Six months is more realistic. For a business that builds
hundreds of units costing several hundred thousand to several million,
a year or two of backlog sounds like a bare minimum.

So they cut production by 50%, tell their customers that no
planes will be available until 2006, then whine that their sales are down.

New airplanes are not purchased from stock. These are not passenger
cars, made largely standard and produced in lots of a million.

Whoever is running this company should be hanged. No, actually, drawn and
quartered -- and their living entrails burned before their very eyes.
Seriously, Cessna has a management problem. In fact, they have possibly the
worst management in their entire history -- and that is going some. I
believe that even I could turn that company around.

Yeah, I've met several accountants that thought they could run
manufacturing companies. When things went well, they were fired
before they could run the companies into the ground.

Michael

"Michael" wrote in message
om...
"C J Campbell" wrote
Um, let's see. There is a backlog, meaning that they have more orders
than
they can fill.

Well, your first problem is that you clearly have no idea what a
backlog is. Have you ever actually tried to run a business that
manufactures anything at all, never mind limited-market high-ticket
items? Do you know ANYTHING about manufacturing at all, or are you a
bean counter? Since the answer seems to be the latter, let me explain
the facts of life to you.



Let me explain some facts to you: you are quite patronizing and
condescending. That's putting it mildly.

"Michael" wrote in message
om...
| "C J Campbell" wrote
| Um, let's see. There is a backlog, meaning that they have more orders
than
| they can fill.
|
| Well, your first problem is that you clearly have no idea what a
| backlog is. Have you ever actually tried to run a business that
| manufactures anything at all, never mind limited-market high-ticket
| items? Do you know ANYTHING about manufacturing at all, or are you a
| bean counter? Since the answer seems to be the latter, let me explain
| the facts of life to you.
|
| Everything has a lead time.

Of course it does. Cessna has been underproducing for five years running,
now. Even those who are not bean counters should be able to expect that some
of those parts should have been delivered by now.

Before you start telling me the facts of life, you would do well to do them.
Have you ever had a position of responsibility higher than that of stock boy
or janitor? I doubt it.

"Nomen Nescio" ] wrote in message
...
|
| "We expect a temporary decline in revenues in our aircraft
| segments this year and only a modest recovery in our other
| manufacturing markets," Textron Chairman Lewis Campbell said in
| a statement. "However, we expect the benefits of our
| transformation initiatives will result in earnings growth and
| solid cash flow."

You gotta love this excuse. Quick, somebody tell Textron that the recession
is over. Gee, Cirrus managed to innovate and even expand during the actual
recession. Cessna, with its far greater resources and experience, guessed
wrong. It wasn't for lack of trying, though. Cessna's dealers have been
screaming for more airplanes since 1999. The vast majority of manufacturers
saw the recession was coming to an end more than two years ago, and planned
accordingly. How smart do you have to be to know that all recessions have to
end within a few years? Apparently Textron's secret to "earnings growth and
solid cash flow" is to shut down their production lines and fire the
employees. Yeah, that will improve earnings and cash flow -- for awhile. It
is not a bad strategy if your goal is to liquidate the company.

"Temporary decline in revenues," indeed! I may be just an old bean counter
(guilty as charged), but even I know there are only two ways to increase
revenues -- you either sell more units or you charge more for each unit.
Charging more for each unit won't work if you have competitors producing
better products for about the same price, so I don't think Textron has a lot
of room there. But they are not going to sell more units, either -- after
all, they have made almost permanent reductions in production capacity. That
"temporary decline" smells awful permanent to me. The only thing temporary
about it is that it will last until either Textron goes out of business or
they get better management.

More of the same at Textron's other units. Zero innovation. The best any of
the units can manage is copying the innovations of others, a year or two
late, and with half the performance. Contraction in the face of soaring
demand. Canceling parts orders and laying off the labor force, then making
excuses instead of achieving even average performance. Well, excuses don't
buy lunch -- a little lesson that much of the rest of the aviation industry
could stand to learn. In every sector of aviation there appears to be bunch
of losers that are barely able to tie their own shoes, and a couple of
performers that seem to make money despite all the excuses the losers have.
It is as if an NFL team was trying to excuse its failure to make the
playoffs because their uniforms are the wrong color.

Textron's shareholders should have a little message for management. Try this
for a "transformation initiative:" You're Fired! Then get somebody who knows
how to actually communicate and run things like a business instead of a
social welfare agency for executive loons.

C J Campbell wrote:
In every sector of aviation there appears to be bunch
of losers that are barely able to tie their own shoes, and a
couple of performers that seem to make money despite
all the excuses the losers have.

And why is this so? Because aviation businesses are almost all terribly
difficult to be successful in: only those who have love and devotion to
invest will be true winners, ala the Klapmeiers. Note I do not equate
mere survival (Mooney, Piper, Lycoming, Continental, etc.) with success.

The Textron/Cessna situation reminds me of the AMF/Harley-Davidson
situation of a few years back: a multi-group corporation owning a
business it didn't understand or really care about. AMF damned near ran
it into the ground, and a guy who loved Harleys saved it. Imagine the
hero (and cash) it would take to do that for Cessna's piston aircraft
business!

...run things like a business instead of a
social welfare agency for executive loons.

What?! That's un-American!
--
Dan
C172RG at BFM
(remove pants to reply by email)

"Dan Luke wrote:

And why is this so? Because aviation businesses are almost all
terribly
difficult to be successful in: only those who have love and devotion
to
invest will be true winners, ala the Klapmeiers. Note I do not
equate
mere survival (Mooney, Piper, Lycoming, Continental, etc.) with
success.

I'm reading Donald Pattillo's book, "A History in the Making: 80
Turbulent Years in the American General Aviation Industry." Compared
to the past going back to 1920, the GA insdustry has been relatively
stable in recent years. In fact, it was so bad in the early days, that
one would have difficulty looking at only the GA industry to determine
when the Great Depression occurred. Remarkable also is how very old
the problems are where demand for small planes is very price
sensitive, new designs are often a unit sales success but financial
loss, and the availability of much cheaper, good used planes depresses
demand.

Fred F.