Boeing’s Downfall - Before the McDonnell Douglas Merger

Boeing seems to be going from crisis to crisis these days with its reputation on Tatris and the press reacting to anything that happens to a Boing airplane, whether it justifies it or not. The plane just had a big shake this morning at Boeing. Serious accusations are being made today. against Boeing by one of its own engineers, but how did we get here now? Most of you would have heard that the

merger

with McDonald Douglas had something to do with it, but well, today I'm starting a series on Boeing's fall from grace and in this episode I'll set the stage by taking a look at the history of Boeing. and McDonald Douglas and also to show them how different these Giants were as they headed to a wedding that many of us now wish had never happened.

Stay tuned when we are. Speaking of Boing, many people, including me, have been talking about the importance of having a good safety culture. This is true for airline aircraft manufacturers and their suppliers to ensure that their work is transparent, consistent and, above all, safe, now in a recent video. I mentioned the ntsp and its investigation into Alaska Airlines Flight 1282, which lost a door plug shortly after takeoff in January, and in that video I noted the frustration ntsp investigators felt when they couldn't even discover who had been working on it. that door at Boeing, now finally NTSB Chairwoman Jennifer Hundy said that Boeing was not providing enough information to the agency and her saying that publicly was what caused Bing to finally give the ntsp the names of 25 people who Of course, that's bad enough in itself, but it was made worse by the implication that the Boeing people simply didn't feel confident enough to bring forward a separate instigation of FAA investment in Boeing. , which began a year before the accident, showed that Boeing workers were worried about retaliation.

If they talked about even a typical production problem, you can imagine how they felt after an event like that. Now, to understand how Boing got to where it is today, we really need to talk about something broader, which is the culture of the Boing company as a whole, that is, its overall way of doing business and this is very important, the relationship between Boeing's management, its engineers and its workers because these attitudes and relationships used to be almost the polar opposite of what they now appear to be and to appreciate that change we have to delve a little deeper into the history of Boeing and McDonald Douglas Now in my Classic series I have looked at the history of some iconic aircraft, including the Boeing 707, but it is worth remembering here that before the 707, Boeing was not primarily considered a civil aircraft manufacturer, that reputation is actually something that Boeing was built after World War II, in part thanks to the experience they had gained building large bombers like the B17 and B29, but having that kind of experience didn't mean that becoming a successful commercial aircraft manufacturer was easy, Take for example the Boeing 377 Strata Cruiser, which was the company's first post-war attempt at making a large airliner.

Now this plane was the commercial version of the c97 Strat de freure, a military troop tanker and cargo plane that in turn had borrowed heavily from Boing's wartime B29 bomber, now you might be wondering why the Strat Cruiser It is no better known today and the answer is simple from a commercial point of view: it was a real failure. This aircraft was designed and built to outshine competing designs such as the Loid Constellation or the Douglas dc6 and at least on paper also had better weight capacity and range, but unfortunately the Strat Cruiser simply did not perform as well as a passenger airliner.

Despite its large size and enormous radial engines, it generally had seats for less. of 100 passengers despite being a double-decker aircraft like the 747 and the airb A380, now this relatively low number of passengers meant that the plane was struggling to make a profit on many routes, which obviously did not impress the airlines; Those large radial engines also had reliability problems that took years to fix, so in total only 55 Boeing Strat Cruisers entered service in comparison. Loid made more than 850 cones and Douglas made more than 700 DC 6 and more than 300 DC 7, but fortunately for Boeing they sold almost 900 military aircraft. freighter for the US Air Force, primarily the KC 97 tanker variant, so while this commercial failure hurt them, it was not a financial disaster.

At this point, you might be asking Peter, although this is all super interesting, but what does it really have to do with it? with boing's company culture, well what makes this story relevant is the way boing reacted after realizing that the strat cruiser was failing. Based on recent experiences, you would think that perhaps they decided to switch to a more reserved or conservative design, something that economists would love for a lower operating cost and a more secure financial future, but not at all, that was the time. when boing started working on a passenger plane, as i explained in my 707 video, what makes the development of this plane even more surprising is the fact that no one wanted it at the time

boeing

had approached the airlines about it, but they were simply not interested, even before the structural problems of the DEH havalon Comet were known, the airlines could clearly see that these Jets would have really high operating costs, especially compared to older piston-engined aircraft and remember when this happened.

Boeing's Strat Cruiser had just failed exactly because it was such a big gas Guster, but Boeing engineers already had experience building military aircraft like the B47 and this meant they knew they could give a passenger plane enough capacity. of passengers to make it financially viable, even if the high fuel consumption of those early jet engines existed, so although no one wanted it, it had no orders and had just been burned at another company. Boeing management went ahead and approved the development of the 367-80, better known as the -80 in April 1952 and just to put that date in perspective, the first Douglas dc7, which was a piston engine design, would fly one year complete after the release of this-80 and loid did not.

Stopping building late versions of the constellation until 1958, this meant that Boeing's decision to build the -80 was an incredible financial gamble, a real leap of fate and would cost them $16 million now, which may not seem very impressive. today, but according to the author Martin. Bowman, those 16 million were 2/3 of all of Boeing's net profits since the end of the war, fortunately, although it turned out to be a very successful bet, the -80 is the plane that would become the prototype of both the military KC 135 like the legendary Boeing 707, the plane that would literally end up shaping commercial aviation for the rest of the 20th century, but what is really important for the topic of this episode is how and why the management of Boeing made that super risky decision and also what type Who was running Boeing stepped back, was he a business school graduate or maybe an engineer?

Well, it turns out that he was actually neither despite what you may have heard. Boeing's heyday as an aerospace engineering giant came with the company being run by a lawyer and I'll tell you. More on this after this Boeing has been hit by one problem after another lately, especially after revelations sparked by an internal whistleblower at a recent Senate hearing. Now, when it comes to keeping up with the deluge of news about Boeing, I initially always rely on the sponsor of today's episode ground news ground news gives me access to over 50,000 sources from around the world covering basically every topic whatever you can think of and that of course includes aviation so let me show you how they work because it's pretty ingenious and if you want to move on just go to the ground. news/Mentor here we can see that Ground News has over 90 different sources covering this story and that really gives you a good idea of ​​what's going on as we can see here. 60% of these sources come from mainstream media, meaning the coverage is likely to be balanced and free of substantial political spin - perfect for objective research, but it's also great to see all the different points of view in one site because that really gives you an idea of ​​what people on both sides think, as we can see here, for example.

The right-leaning article emphasizes personal responsibility and skepticism toward the government at the site, while this left-leaning article focuses on criticism of Boing's response and the need for corporate responsibility, so one story has two completely different points of view that really help to find a balanced evaluation to test the news on the ground. yourself and be more informed about the world around you, go down to earth. news/Mentor, this will get you 40% off your subscription or let you try it for less than $1 this month, thank you. News now, let's go back to the video when William McFerson Allen, better known as Bill Allen, was first offered the position of president. at Boeing in 1944 he ran away, he turned it down, he just didn't think he was the right person for the job as it was clearly an engineering company and he was not an engineer.

Alan joined Boeing in 1925 and became a member of its board from 1930 onwards because he worked for a law firm that represented the company. The previous president of Boing was Philip Gustaf Johnson, who by the way was an engineer but unfortunately had died suddenly in 1944, so the company needed a new ENT president, someone to make the transition. from a wartime military aircraft manufacturer to a post-war military and commercial aircraft powerhouse and selecting Bill Allen as Boeing's next president was the idea of ​​Boeing's then-president. Claremont Eget was now an engineer, but he had been with the Boeing Company long enough. remember how they had struggled to change course after World War I under the leadership of another engineer.

Boing founder William Boing Eget believed that other senior engineers at Boing simply did not have enough business mentality to guide the company through the same complicated process as now in the 1940s and thought that Bill Allen had demonstrated great abilities. management when he was working as corporate counsel on Boeing's board of directors, when the Boeing group had faced some legal and regulatory challenges, Eggett finally convinced Allan that he would be the right man for the job. When the time came and it turned out to be an incredibly precise assessment bill, Allan became president in 1945 and, as he prepared for his first day on the job, wrote the following notes to himself: Be considerate the opinions of my associates, don't do it. talk too much, let others do the talking, instead make a sincere effort to understand Labour's point of view and develop a post-war future for Boeing.

He may not have been an engineer, but Allan turned out to be a good listener, a great talent manager, which meant that he also earned the trust of his subordinates. Not only was Allan the guy who authorized the construction of the 367-80 prototype, he also oversaw projects including the B47 and B-52 bombers and was still running the company when they developed the 727, the 737 and even the Boeing 747, this one was the period in which the company earned a reputation as an engineers' paradise. Bill Allen himself handled the strategic side of things as he put the engineers in charge of each program so they could design the best airplane they could.

Boing capable also had a great reputation as an employer for mechanics and the rest of its employees at the time, but of course there were some occasional problems with some disputes and strikes dating back to before World War II and which also The floating of the company immediately after the war, when all military contracts were cancelled, involved some really painful layoffs, so not everything was rosy here, but on the other hand, Boeing's management in the years Following the war, it seemed to inspire a sense of loyalty in its workers, which was quite rare at the time.

During the war, there were stories of engineers and other workers at many companies sleeping on cots in factories, but at Boeing there were similar stories even in times of war. peace, for example, when Boeing launched the 747. They had to build a whole new factory to do that sincezero and, by the way, that factory is today the largest building in the world by volume to save time. Bo's engineers and mechanics had to start working on the plane before the factory was even finished, which meant the place didn't even have a roof when the engineering mockup of the 747 was built, and of course it was raining during Those months, the first real production 747 was also assembled while most of the factory was still open to the elements and The workers who managed to build that plane under these conditions in 16 months became known as The Incredibles and had t-shirts, hats and other clothing made with a special Incredibles Lumberjack logo.

Now stories like that are signs of a great company culture with a really engaged and motivated workforce and even much later, in the 1990s, there were stories of engineers, mechanics and managers, all under the same roof, working as a team, high-fiving and hugging each other when they had solved serious problems and to me that sounds exactly like the kind of company culture I would like to work in now, I should point out that at least in the 1950s and 1960s there were some specific conditions in the industry that probably helped Boing make those kinds of bold strategic decisions that it did because, back then, airplane and engine technicians evolved so rapidly that new airplanes sometimes became obsolete before they even entered service, so you had to baffle Boeing, but also be careful at the same time.

Additionally, these were the days before airline deregulation, meaning that airlines in the United States were assigned specific separate routes and therefore ticket prices could be kept quite high now that it was about of a strategic decision by the US government, since most, if not all manufacturers had both civilian and military contracts and therefore the government needed them all to be profitable and healthy. This and the really low fuel prices of that time meant that airlines had money to spend and had every reason to compete for the fastest and most comfortable. jet that the industry was able to create, but that didn't mean that becoming a success as a commercial aircraft manufacturer was particularly easy and to understand what I mean by this we have to take a look at McDonald the dog and how they fared back then in comparison.

With Boeing now I want to start here by making it clear that at this moment we are talking about two companies: McDonald Aircraft Corporation and Douglas Aircraft Company. McDonald was a company based in St Louis Missouri and from its inception in 1938 was a military contractor focusing exclusively on the design and production of aircraft and missiles for the US Army and NASA. On the other hand, we had Douglas, which was based in Long Beach Beach, California and was a little more like a Boeing, they made airplanes especially for the military. early in its history, but then transitioned to the commercial market with the legendary DC2 and then the DC3.

Now at this point I should mention that these two activities that manufacture military aircraft or passenger aircraft have some really big differences between them. Scale is one where commercial aircraft generally sell in larger quantities, although that wasn't necessarily as true in the 1950s and 1960s, but more importantly these two markets generally differ when it comes to who pays for the plane. Developing a new aircraft design, with civil aircraft, the aircraft manufacturer usually foots the bill. perhaps with some help from its key suppliers, but on the contrary, when developing a military aircraft, the manufacturer usually charges a price to its launch customer that includes all the costs of developing the aircraft, which often comes out very wrong when, for example, a country's Air Force initially orders 300 Jet and then reduces it to just 150 to save a few tax dollars.

That's when they usually quickly discover that the total cost is not cut in half, since the development cost remains the same. Obviously, we're simplifying things a bit here and there are definitely exceptions on both sides - there are military aircraft that a company developed as a private company and airliners whose development was paid for by a launch customer, but the point is that military contracts are generally safer or at least give a much faster return on investment for the manufacturer, on the other hand the military market also tends to be a little less stable, so for example when a military contract ends and a manufacturer If you don't get the next one, you could have a very long recession and obviously something like the end of World War II would hit a military aircraft manufacturer and civil aircraft manufacturers very, very hard, as I explained in a recent video. , they generally take seven or even more years to develop and then often need another seven years to pay for themselves and even more than that, so before the

merger

with McDonald Douglas found themselves in real financial trouble, a big reason seemed to have been that the company just wasn't as bold as the boring ones were.

The launch of new aircraft designs, the DC2 and DC3, had been incredible aircraft, but the evolution of these to the four-engine DC4 DC6 and DC7 was quite conservative after the war, both Boeing and Douglas were awarded military contracts which they used to boost its commercial developments, but when for example Boeing developed swept wings and pod engines for its large military aircraft such as the B47 and B-52, which they could later use in the Boeing 707. Douglas simply evolved its Warf DC4 with larger radial engines and pressurization to make the DC6. and the dc7, now the Douglas dc8 airliner, eventually sold reasonably well, but only got a fraction of the sales of the Boeing 707.

The dc9 also sold well, even to the point where he was actually a little worried about the boing, but Douglas was behind on deliveries and they could really use someone to buy them, someone with some money to spend at the same time, McDonald wanted a way to get into the world of airliners, so they ended up buying Douglas , leading to the formation of McDonald Douglas on April 28, 1967. Actually, that was exactly 57 years before this video was published, but in terms of new airliner designs, the partnership with McDonald Douglas really It didn't bear much fruit technically, the dc10 was released after the merger, although Douglas had been studying it for quite some time before that. and the md11 was actually just a derivative of the dc10, while the MD80 family was a similarly updated and expanded dc9.

Maybe you'll start to see a pattern here now. McDonald Douglas worked on several other projects, including a twin-engine version of the dc10 with a shorter fuselage and larger wingspan and they also studied variations of smaller fuselage diameters, but ultimately none of those projects came to fruition, so why? Well, the answer seems to be because McDonald Douglas president James McDonald or Mr. Mac basically said no. Despite airline interest in those projects, Mr. Mac simply did not greenlight the funds needed to launch them now in his excellent book Air Wars. Scott Hamilton explains that McDonald's management in St Louis never really understood how the commercial aircraft market really worked and, crucially, Even after the Douglas merger, the two companies continued to operate somewhat independently, except that McDonald had money and therefore also made all the decisions, so while the merger probably saved Douglas from bankruptcy, it also meant that the company could now no longer make its own contracts with suppliers or deal with customers, even a possible agreement to collaborate with Airbus in 1976 was shot down from St Louis.

Can you imagine what history would have been like if Airbus was the one who ended up merging or at least working together with McDonald Douglas and It's not a slap in the face, but to be fair, Douglas management, which was still based in Long Beach, routinely made presentations and overly optimistic and unrealistic projections and that led McDonald's management in St. Louis to conclude that Douglas simply could not or should not be left to his own devices and make decisions, the end result of this was that the McDonald Douglas merger never really designed an original airliner to the end, they only made derivatives of existing designs with any improvements they could add retroactively, mainly in engines and avionics with the only new big one they made was the military c17, on the other hand, in less than 19 years, between 1964 and 1983, Boeing introduced five different aircraft types, the 7 27 737 747 757 and 767, and that was despite going through the painful BST boing in the late 1960s.

Which I will discuss further. in another video in the 1990s. Boing then had to abandon the promising 7 j7 replacement for the 737 and instead they released the 737 NG, but they also released the Triple 7 which was an amazing engineers plane and was also a design that showed how successful a potential TW with dc10 could have been if McDonald Douglas had the guts to do it now. McDonald Douglas actually considered launching a large aircraft in the 1990s, which was going to be a double-decker four-engine. very similar to the Airbus A380 which they called md12 but it also didn't go anywhere which was probably a good thing given what happened later with the airb a 380 but what happened when Boing and McDonald Douglas finally merged and why they wanted merge.

First of all, well, that's what I'll talk about in the next episode of this series, which is coming next week, let me know in the comments below if you have any questions about this or you can also join my Patron team and discuss this. directly with me on our next Hangout. I would love to hear from you. Stay tuned for next week and have an absolutely fantastic day, bye.