Boeing’s attack on the Bombardier fly-by-wire regional jet

by philg

“How Boeing Tried to Kill a Great Airplane—and Got Outplayed” (Daily Beast) has a lot of good background on the Bombardier CSeries (Airbus A220), an evolution of the Canadair Regional Jet that I used to fly. I knew that the airplane had a geared turbofan engine for fuel efficiency, but I hadn’t realized that it was fully fly-by-wire (as long as the software works, impossible to have a Boeing 737 MAX-style catastrophe).

The article shows that critical importance of political connections in the U.S. business world:

Boeing’s formidable Washington lobbying machine swung into action. Dennis Muilenburg, the Boeing CEO, had already cozied up to President Trump by agreeing to cut the costs of the future Air Force One jets. In September 2017, the Commerce Department announced a killing blow to Bombardier, imposing a 300 percent duty on every C Series sold in the U.S.

The story of how Airbus outfoxed the high-paid Boeing executives is interesting.

One thing that the article does not explain is why Boeing executives moved the HQ from Seattle to Chicago. Why would high-paid workers want to be in Illinois with a 5 percent income tax rather than in Washington State with no income tax? (the family law is radically different in the two states as well; Illinois offers plaintiffs unlimited child support profits while Washington caps revenue at about $400,000 (tax-free) for one child)

I’m not sure that I agree with the conclusion:

Boeing provides no end of a lesson in how a great company can lose its moxie because of an indecent lust for short-term gain. It used to be the classic American can-do company. Now it can’t do anything right.

How do we know that Boeing is imploding due to a decision to seek short-term profits? Since the company’s problems are primarily engineering failures, why couldn’t it be that the quality of engineers the company is able to hire is not as high as in the 1960s? Americans with excellent quantitative skills have a lot more career choices today, most of which pay better than working at Boeing.

6 thoughts on “Boeing’s attack on the Bombardier fly-by-wire regional jet”

  1. Boeing’s troubles stem from a culture change. They bought failing McDonnell Douglas in 1997, but McDonnell ate Boeing from the inside, and brought its rotten military contractor culture to the fore.

  2. > How do we know that Boeing is imploding due to a decision to seek short-term profits? Since the company’s problems are primarily engineering failures, why couldn’t it be that the quality of engineers the company is able to hire is not as high as in the 1960s? Americans with excellent quantitative skills have a lot more career choices today, most of which pay better than working at Boeing.

    I think a good rebuttal that it was management and not engineers is found here: https://www.latimes.com/business/la-xpm-2011-feb-15-la-fi-hiltzik-20110215-story.html and also in the original paper this article cites: https://www.documentcloud.org/documents/69746-hart-smith-on-outsourcing.html

    And in house we were certainly told we were becoming system integrators who assembled the major pieces built by others and our value add was, … well I don’t recall what we were told our value add was, but I do recall being told our future was as system integrators.

    And as explained iirc in the articles above, the reasoning was that tooling was expensive, manufacturing was risky, unionized labor was torturous and it was clear to the MBAs the best thing to do was shed all of that and become system integrators.

    I can’t speak to the Boeing vs McDonald mentality as I arrived after that, but I worked in a former McDonald plant and our leadership was absolutely 10,000% rotten military contractor culture. We shipped late, over budget, and severely deficient wrt original specs, but that was okay, we knew even if a contract was cancelled there would be more contracts

    And our leader? He’s now CEO and I think his mentality is directly seen in the 737 MAX loss of life and fiasco.

    • To agree with @anon

      My recollection from the business press and discussions at the time was that BA’s competitive strength was going to be its ability to use its balance sheet to run mega-global projects and that running a unionized manufacturing operation in Seattle was not the way forward.

      And that increasing management’s geographical distance from said operation, and moving closer to Wall Street and DC was a necessary prerequisite for the transformation.

      Here – found a quote from P. Condit re: moving to Chicago. Note “financial community”
      “a location central to our operating units, customers and the financial community — but separate from our existing operations”

      Somewhat typically bad late-90’s thinking.

    • One wonders why Boeing didn’t move all the way to Washington, DC then? Did they want to be next to United? If so, that was a dumb move.

    • After searching the internet, I found a post on Reddit that asserts that Boeing moved to Chicago to pay back Dennis Hastert for his help in securing that big refueling tanker deal. It’s circumstantial but seems like a reasonable answer…

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