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2020: How is Precision Castparts handling the severe slowdown in the aerospace industry?
BECKY QUICK: This next question comes from Eric LeFante, and it’s directed to Greg.
He asks, “How is Precision Castparts handling the severe slowdown in the aerospace industry?”
GREG ABEL: So, very consistent with everything we’ve just discussed, which is, obviously, a large part of their businesses, is the aerospace industry.
And it can really be broken into three areas as we do in our (10-)Q, but two are being impacted.
The defense contract business remains very sound and strong within Precision Castparts. But if you look at the large-body aircraft, the aircraft that they use within the regional jets, that business will move directly with the demand there, and the jets that are ordered longer term.
So, Precision Castparts is, literally as we speak, continuing to adjust their business relative to the demand that would come out of Boeing. They would be having weekly calls with Boeing, recognizing what are their production orders there and adjusting the business accordingly.
WARREN BUFFETT: Boeing raised 25 billion just a day or two ago, and they raised 14 billion before that. And a year ago, they felt they were in a fine cash position, and I understand how all that happened.
Airbus has had the same situation. They’ve made some comments recently, within the last week, you know, the fact that they — they really don’t know what their future is. And I don’t know what their future is.
We’re going to — we’re going to have aircraft in this country. We’re going to be flying. But the real question is, whether you need a lot of new planes or not, and when you’ll — when you’re likely to need them.
And it affects a lot of people. And it certainly affects Precision Castparts. It affects General Electric. It, obviously, affects Boeing.
And it’s — it is a blow to, essentially, have your demand dry up. And it goes up in the chain. And, you know, the aircraft manufacturers didn’t — they didn’t bring it on themselves. The airlines didn’t bring it on themselves. Precision Castparts didn’t bring it on itself. General Electric didn’t —
It’s, basically, that we shut off air travel in this country. And what that does to people’s habits, how they behave in the future, it’s just hard to evaluate. I don’t know the answer.
But we do know that it will have an effect on Precision Castparts. And how severe it will be depends on the same sort of variables that are hitting Boeing.
You name the company in aircrafts — and aircraft’s a big business. And this country’s good at it, incidentally, too.
I mean, if you think about Boeing, you know, it is one hell of a company and it’s important. It’s a huge exporter and it affects a lot of jobs. And some of them are with us.
And, you know, we hope for the best and we wish everybody the best. Obviously, we wish ourselves the best in it.
But part of it is out of our — certainly out of our control.