Boeing's Ramped-Up Production Hits Turbulence

Boeing's increased production rate is a huge factor for investors to watch in 2014.

Feb 11, 2014 at 3:00PM

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.

Model S Blue Front

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.

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Daniel Miller has no position in any stocks mentioned. The Motley Fool recommends Tesla Motors. The Motley Fool owns shares of Tesla Motors. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

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David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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