The more parsimonious explanation is that commercial jet engine production is downstream of commercial airbody production and China's currently limited by COMAC's scaling woes. All the money and talent in the world can't replicate real users generating real data that you can use to improve.
I'd argue the opposite that jet engines have a market structure that's uniquely terrible for traditional free market societies. There's a few industries where structurally, companies can only exit the market but it's almost impossible for a new company to enter. Airframes, jet engines, CPU manufacturing, lithography etc.
What this dynamic doesn't make any company immune from though is corporate rot. You've seen the rot take down Boeing and Intel from the inside as a slow moving car wreck. There's no reason the rot can't take down ASML, TSMC or Airbus as well. The free market fundamentally doesn't have a good response to this problem, excess capital is taken out of these companies during good times and then they run to governments seeking bailouts during bad times but governments don't know how to mandate good corporate governance.
I think a lot of the jet engine manufacturers are seeing this same corporate rot process, the number of high profile scandals across the industry and reports of insiders on how the number crunchers are taking over the business are strangely reminiscent of what we heard out of Boeing and Intel.
> ...governments don't know how to mandate good corporate governance...
For a very brief moment, under the existential crisis condition of total war in WW2, the US government was somehow able to corral corporate governance towards a semblance of common purpose (survival). As I understand it from historians malfeasance was still widespread, but we arguably maybe got a good enough outcome?
This is the corporate equivalent of the shirtsleeves to shirtsleeves in three generations problem. And if that corollary is true, then I suspect the remedy is similarly not entirely amenable to deterministic antiseptic metrics and processes; they're necessary but not sufficient conditions.
One nitpick, all the money in the world would be able to achieve the goal by simply giving rides away for free.
Overall, I agree that any industry that is extremely optimized requiring ultra high precision+knowledge in multiple verticals makes the barrier to entry beyond difficult. It just requires too much up front cash.
> The free market fundamentally doesn't have a good response to this problem
The market may not for the most capital-intensive businesses, but US laws at least attempt to address the situation. In Boeing's case, for example, the McDonnell-Douglas merger likely could have been blocked under existing anticompetitive laws.
The US's longstanding refusal to apply antiticompetition law causes a number of harms to consumers, entrepreneurs, and the stability of our economy.
> All the money and talent in the world can't replicate real users generating real data that you can use to improve
Basically, China excellence in EVs and Solar was driven by the market being new. It's hard (almost impossible?) to outrank an incumbent very entrenched in a big market. You need a paradigm shift (ie: iphone vs nokia) to make the change.
> You need a paradigm shift (ie: iphone vs nokia) to make the change.
I imagine the manufacturing breakthrough for high temperature jet turbine blades could be additive manufacturing where you grow the crystalline structure layer by layer instead of casting and carefully nurturing it. Mature markets with few incumbents focus on local maxima and have difficulty to move from one maxima to another, while a new manufacturer can start from a different position and search for other maxima.
I'd argue the opposite that jet engines have a market structure that's uniquely terrible for traditional free market societies. There's a few industries where structurally, companies can only exit the market but it's almost impossible for a new company to enter. Airframes, jet engines, CPU manufacturing, lithography etc.
What this dynamic doesn't make any company immune from though is corporate rot. You've seen the rot take down Boeing and Intel from the inside as a slow moving car wreck. There's no reason the rot can't take down ASML, TSMC or Airbus as well. The free market fundamentally doesn't have a good response to this problem, excess capital is taken out of these companies during good times and then they run to governments seeking bailouts during bad times but governments don't know how to mandate good corporate governance.
I think a lot of the jet engine manufacturers are seeing this same corporate rot process, the number of high profile scandals across the industry and reports of insiders on how the number crunchers are taking over the business are strangely reminiscent of what we heard out of Boeing and Intel.
For a very brief moment, under the existential crisis condition of total war in WW2, the US government was somehow able to corral corporate governance towards a semblance of common purpose (survival). As I understand it from historians malfeasance was still widespread, but we arguably maybe got a good enough outcome?
This is the corporate equivalent of the shirtsleeves to shirtsleeves in three generations problem. And if that corollary is true, then I suspect the remedy is similarly not entirely amenable to deterministic antiseptic metrics and processes; they're necessary but not sufficient conditions.
One nitpick, all the money in the world would be able to achieve the goal by simply giving rides away for free.
Overall, I agree that any industry that is extremely optimized requiring ultra high precision+knowledge in multiple verticals makes the barrier to entry beyond difficult. It just requires too much up front cash.
The market may not for the most capital-intensive businesses, but US laws at least attempt to address the situation. In Boeing's case, for example, the McDonnell-Douglas merger likely could have been blocked under existing anticompetitive laws.
The US's longstanding refusal to apply antiticompetition law causes a number of harms to consumers, entrepreneurs, and the stability of our economy.
Basically, China excellence in EVs and Solar was driven by the market being new. It's hard (almost impossible?) to outrank an incumbent very entrenched in a big market. You need a paradigm shift (ie: iphone vs nokia) to make the change.
I imagine the manufacturing breakthrough for high temperature jet turbine blades could be additive manufacturing where you grow the crystalline structure layer by layer instead of casting and carefully nurturing it. Mature markets with few incumbents focus on local maxima and have difficulty to move from one maxima to another, while a new manufacturer can start from a different position and search for other maxima.