The Crisis at Cinerama Has the Same Root as the Crisis at Boeing: Cost Cutting

 thestranger.com  02/13/2020 22:25:00 
20141028_cinerama_003.jpg

Charles Mudede


One of the most fascinating posts this week is on Reddit and by a person with the handle u/DraggingVulcan. Its title: "Cinerama layoffs - the untold story." Its length: 1713 words. Its essence: The recent closing of Cinerama, a world-class movie theater owned by a company, Vulcan (founded by the late Paul Allen), was caused by managers who wanted to increase profits by cutting costs. The cuts, which began in 2018, took the form of reducing the hours of workers and "the number of daily showtimes," and removing customer-friendly policies. There was also a sudden and sharp increase in ticket prices. Now here is the thing that will, at first, boggle common-sense economic thinking. When these cuts and price increases occurred, the theater was not losing money. It was making, according to u/DraggingVulcan (a verified insider), a profit of nearly $1 million.

Sponsored

Megadeth and Lamb of God are coming to White River Amphitheatre on Saturday 7/25. Tix on sale 2/14!

From u/DraggingVulcan:

Cinerama has been doing steadily better year over year. Well, now the epic renovation goes through and the numbers skyrocket. 2015 Cinerama grosses over $3M and nets $500K. So in 4 years the place has gone from grossing just $700K and losing money to netting $500K. Huge. 2016 is even better. Now Cinerama is netting close to $1M with a box office gross nearing $5M. Festivals are doing amazingly well and first-run content is on point. For example, Blade Runner 2049 tanked nationally but totally crushed at Cinerama. It ran sold out on the weekends for several weeks straight. Get this, Cinerama was the #1 theater in the country with BR2049. This means Cineramas one screen out performed every other theater in the country including multiplexes. Unheard of.

And so, Cinerama was a success in an industry that rarely receives good news. What went wrong? Why did workers suddenly lose their jobs earlier this month because of a "renovation"? The answer is identical to the one that explains the present Boeing mess.

Let's turn to the biggest story concerning the Chicago-based airplane manufacturer: It received no new orders in January.

From the Chicago Tribune:

Boeing won no new airplane orders and delivered just 13 jets.

While January is typically a very slow month for both Airbus and Boeing as they take a breath after the always-frenetic pace of jet orders and deliveries at the end of the year, this opening month for 2020  in the midst of the 737 Max crisis  is a new low for Chicago-based Boeing.

Airbus by comparison had a big order month, winning net orders for 274 commercial aircraft. The European jetmaker also delivered 31 aircraft, a typically low January output, though it looks large compared against Boeings figure.

The Airbus sales tally included two big orders from the U.S.

Ahhh, Airbus, a company owned primarily by the governments of Germany, France, and Spain. It is, in a word, a parastatal. States-owned Airbus is now in a position to mortally wound the privately owned Boeing ("As Boeing Jets Sit Idle, Airbus Cant Make Planes Fast Enough"; "Airbus Puts Squeeze on Boeings 737 MAX as Crisis Drags": "Airbus plans to ramp up production as rival Boeing is embroiled in 737 Max crisis").

But how is that Boeing ended up in this situation? Relentless cost-cutting. But were these cuts made because Boeing was not profitable? No. This month, Boeing reported "its first loss in two decades." Meaning, its job cuts during the previous two decades were not due to losses. They had everything to do with the neoliberal metaphysics of competition.

And here I must quote myself (a Slog post from 2017):

When Boeing announced yet another round of job cuts, and not just any old cuts, but cuts to technical and engineering jobs, Dominic Gates of the Seattle Times explained the situation exactly the way Boeing executives wanted it explained. It was a matter of remaining competitive in a harsh "business environment." And not only that, but "'fewer sales opportunities and tough competition' would drive further cuts in 2017."

Gates is now recognized for his sober reporting of the Max crisis. But he really contributed to it. He did not tell his readers the truth about the Boeing cuts. He simply parroted the rubbish dumped on our city's workers from the Chicago headquarters. Do not trust this Gates fellow for one minute. He is now behaving like he is not like one of them, the management. But at as soon the tide changes, he will return to his old usual self: regurgitating press releases from the top, sans context or criticism.

But the Everett Herald knew what was up back then:

But, of course, all this talk about competition and "sales opportunities" is complete nonsense, if you add an important factor that is completely missing in Gates's post but is indeed found in the Everett Herald's account of the current round of layoffs. It is buybacks. But what is this we are now talking about? And how does it have anything to do with making planes and profits? What we must always keep in mind during these times is this: Any explanation of a business environment or market (real estate, for example) that excludes finance (equity markets, bond markets, investment banks, interest rates, and the like) provides you as much useful information as the sight of a bear extinguishing a burning itch by rubbing its back on the bark of a tree.

At this point, do not think I do not know what many of you are thinking: Greed is the problem, not capitalism itself. These ruined enterprises (the plane manufacturer, the world-class cinema) made money, but the managers wanted even more money. All that's needed is a little reason, a little policy change toward the rational, a bit more regulation, and all will be fixed. But do not go down that seemingly reasonable path. It leads to a nowhere that, in terms of critical thinking, is not unlike that Swedish death cult in Midsommer. What you should realize is that if just making a profit was the whole name of the game, then capitalism as we know it would cease to exist. It would, in the long-term, evolve into a steady state (in John Stuart Mill's sense) or, put another way, a low growth economy.

It is not enough to just work, to be a successful business, to be in the black. What the owners or administrators of capital want are high yields, which only the short-term can provide. This want is what's normal to a mode of being defined not by economics as such (no high yields there), but by an exploitation that's class driven (cutting costs). The bad news is that this drive directs every aspect of our economy, from airplanes to movie theaters.

« Go back