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The role of McDonnell-Douglas is exaggerated. Boeing had achieved pretty close to a monopoly in the mid-1970s, but things had changed by the mid-1990s. 1. Dome
by stg22 3y ago
The role of McDonnell-Douglas is exaggerated. Boeing had achieved pretty close to a monopoly in the mid-1970s, but things had changed by the mid-1990s.
1. Domestic airlines protected by regulation had been effective monopolies and Boeing's engineer-led culture thrived in an environment where airlines didn't care about costs. But that environment died with airline deregulation in 1978 and an engineer-led culture made it more difficult to compete in a cost sensitive environment.
2. Airbus' rise put Boeing on the defensive for the first time in many decades. By 1996, Boeing's market share was less than twice Airbus' and falling rapidly enough that people could foresee the day when Airbus would overtake them. Although Airbus had good aircraft, their key advantage was they could sell them for lower prices than Boeing could.
3. Shareholders had become increasingly activist, quick to overthrow management when they weren't getting enough dividends and share price increases, and willing to install new management who would give them what they wanted.
Outsourcing, cost-cutting, and a move to an accountancy-led culture were the obvious responses to these challenges and Boeing's then CEO, Phil Condit, had already started the ball rolling on them before buying McDonnell-Douglas.
- AniseAbyss 3y agoWhat's happening to Boeing isn't really remarkable lots of dinosaur conglomerates rise and fall. I'm just a casual follower but it seems their glory days are from the 60s and 70s and they've been coasting along since then.
- quink 3y ago> glory days 1971: Will the Last Person Leaving SEATTLE — Turn Out the Lights I’d argue the 757, 767 and 737 Classic (i.e. -300 to -500), all of which much more 80s than 70s were much more glorious. And the 90s brought us the 737NG and 777 which continue to carry more than everything else today and for that matter anything else ever, other than maybe the A320ceo.
- rob74 3y agoI would say even the 787 is a good plane, if it didn't have major build quality issues because of Boeing wanting to reduce manufacturing costs (it was initially built at two plants, Everett WA and North Charleston SC, and it got to a point when airlines only wanted to have 787s manufactured in Everett, but ultimately the production in Everett was discontinued). And now the same major build quality issues start popping up with the 737 MAX (whose fuselage is being manufactured by Spirit Aerosystems, which was originally a division of Boeing but was outsourced in 2005).
- KennyBlanken 3y agoWhat's wild is that all this happened even with the NSA conducting industrial espionage on Airbus on behalf of Boeing and M-D.
- Solvency 3y agoSource? Or... book even?
- tiff_seattle 3y agohttps://www.economist.com/special-report/2003/06/12/airbuss-secret-past https://www.economist.com/special-report/2003/06/12/airbuss-...
- ethbr1 3y ago>> According to a European Parliament report, published in 2001, America's National Security Agency (NSA) intercepted faxes and phone calls between Airbus, Saudi Arabian Airlines and the Saudi government in early 1994. The NSA found that Airbus agents were offering bribes to a Saudi official to secure a lion's share for Airbus in modernising Saudi Arabian Airlines' fleet. The planes were in a $6 billion deal that Edouard Balladur, France's then prime minister, had hoped to clinch on a visit to see King Fahd in January 1994. He went home empty-handed. >> James Woolsey, then director of the Central Intelligence Agency, recounted in a newspaper article in 2000 how the American government typically reacted to intelligence of this sort. “When we have caught you [Europeans]...we go to the government you're bribing and tell its officials that we don't take kindly to such corruption,” he wrote. Apparently this (and a direct sales pitch from Bill Clinton to King Fahd) swung the aircraft part of the deal Boeing's and McDonnell Douglas's way. Wow, I knew national industry deals were murky, but damn.
- inferiorhuman 3y agoA big part of why Lockheed got out of the airliner business was that they got caught bribing the Japanese prime minister.
- naasking 3y ago> an engineer-led culture made it more difficult to compete in a cost sensitive environment. I know this is a common sentiment, but I don't quite get it. Engineering is often about optimizing multivariate functions, and cost is just another variable to optimize. If you frame it properly to engineers, they can solve cost problems too.
- epistasis 3y agoAgreed. Maybe I have become too much of a PHB, but I find that engineers (or scientists in my case) really love having cost as one of the visible metrics to optimize for, and will generally do a fantastic job at evaluating it amongst quality concerns. At least much better than management can do.
- salty_biscuits 3y agoThey are often surprisingly ruthless when given cost as part of the objective as well.
- close04 3y agoAll the good engineers I know will prioritize the product though. "Accountants" will prioritize the cost. The "cheapest good product" and the "best cheap product" are almost never the same. The the latter is what you want to pay for but the former is what you want to have.
- JohnFen 3y agoI think this is an oversimplification. Engineers prioritize the product, as they should, but what the best solution is depends on the constraints, and that includes things like cost of production, target price point, etc. "Good, cheap, fast: pick two" is a law of the universe that most engineers deeply understand, and good devs will produce the best product they can according to which two are chosen.
- JohnFen 3y ago