Boeing's Ramped-Up Production Hits Turbulence

The Dow Jones Industrial Average (DJINDICES: ^DJI  ) is trading 212 points higher in midafternoon after new Federal Reserve Chairwoman Janet Yellen testified on Capitol Hill today. Yellen stated support for the strategies put in place by former Chairman Ben Bernanke and said there is no set course for the Fed as it continues to trim bond purchases. Yellen's comments give investors confidence that there are not likely to be drastic or significant changes to Fed policy under her guidance. With that in mind, here are some companies making headlines in the market today.

The first 787 Dreamliner to be produced at the faster rate. Source: Boeing.

Boeing (NYSE: BA  ) is leading the Dow higher today, up 2.4%. Despite today's gains, the aviation juggernaut has hit some turbulence after soaring smoothly in 2013. One of the bright spots in this young year was news of the company's production rate of its 787 Dreamliner reaching 10 planes a month, the fastest rate for a twin-aisle jet. Unfortunately, it now appears Boeing workers in South Carolina are struggling to keep up with the faster pace. This is causing some production to be sent to Boeing's larger plant in Everett, Wash.

"While we try to minimize it, traveled work is something we deal with in all production programs," said Boeing spokesman Marc Birtel, according to Reuters. "The 787 program remains on track to meet its delivery commitments in 2014 and we are producing 787s at a rate of 10 per month as planned."

This is a big factor for investors to watch over the next couple of quarters as the company has had to hire extra teams to inspect work being sent from South Carolina to Washington, as well as hiring contract workers to help the South Carolina plant stay on pace, which could put pressure on margins.

While this is a headache for Boeing, it is also the right move as investors are hoping the company can ramp up production on its commercial aircraft to take advantage of a massive backlog of orders. Boeing's demonstrated capacity to execute its ramped-up production would be a huge win for the company's financial performance in 2014 – which is extremely important as its defense business is expected to remain softer amid government budget cuts.

Tesla's popular Model S. Source: Tesla Motors

In other news, Tesla (NASDAQ: TSLA  ) is busy fighting to maintain a business model that does not involve dealerships. Tesla has showrooms where potential car buyers can test its luxury, and fully electric, vehicles before completing the purchase online. Auto dealers in Ohio contend that this is a direct breach in legislation that requires a dealership to have a contract with an auto manufacturer to sell vehicles in Ohio.

There's definitely cause for worry among standard auto dealerships, as Tesla's way of doing business has been a hit with consumers who say it removes typical headaches from vehicle purchases. If Tesla were to successfully execute its business model, what stops other automakers from cutting out the middleman to secure more profit? A move like that could cost tens of thousands of jobs at dealerships in every state.

While the cause for concern is real, at the moment, Tesla's electric vehicles remain in the very early innings of a long-term story -- the company is just now reaching production of 550 cars per week. For Tesla investors, watching the success of the company's legislation battles regarding its sales model will be of huge interest going forward through 2014 and beyond.

Dividend stocks like Boeing can make you rich
One of the dirty secrets that few finance professionals will openly admit is the fact that dividend stocks as a group handily outperform their non-dividend paying brethren. The reasons for this are too numerous to list here, but you can rest assured that it's true. However, knowing this is only half the battle. The other half is identifying which dividend stocks in particular are the best. With this in mind, our top analysts put together a free list of nine high-yielding stocks that should be in every income investor's portfolio. To learn the identity of these stocks instantly and for free, all you have to do is click here now.


Read/Post Comments (0) | Recommend This Article (6)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

DocumentId: 2834819, ~/Articles/ArticleHandler.aspx, 7/29/2014 11:50:17 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement