Boeing ignores engineering; halves its workforce
By the end of 2003 Boeing will employ only half as many people as it employed in September 2001. Today’s layoffs will leave 5,000 people out of work. Boeing’s management blames the economy but perhaps there is an engineering angle worth examining. Consider that Boeing’s commercial airplane products are much older designs than the Airbus series and therefore that they are more expensive to manufacture. Where Airbus would use a modern technique such as molded plastic, reinforced with carbon fiber or fiberglass (cheap; this is how my Diamond DA40 is built), Boeing would use a labor-intensive pre-WWII technique of bending or machining aluminum. Airbus’s lower costs give it the ability to undercut Boeing on prices. This apparently didn’t hurt Boeing too badly when the airlines were making money like crazy but now that the airlines are pinched being the low-cost supplier is critical.
Imagine Boeing trying to sell a 747 against an Airbus A380. The 747 was designed between 1963 and 1966 and first flew in 1969. The A380 program was launched at the end of 2000 and will be flying customers in 2006. The A380 incorporates nearly 40 years of new engineering ideas compared to the 747 (which of course has been improved incrementally, especially its engines and avionics, but never redone from a clean sheet).
Boeing was famous for being an engineering-driven company, headquartered right next to its factories in the Seattle area. Boeing became a finance-driven company, run by guys in suits from a new headquarters in Chicago. Instead of growing by creating new product designs the company grew by financial engineering, i.e., acquiring other companies. Instead of competing in the commercial market, Boeing now concentrates its efforts on supplying the U.S. military, which is reluctant to buy foreign airplanes even if they are cheaper.
Investing in engineering has a bad reputation right now, perhaps because so many computer programmers built so many things in the 1990s that users did not want. However, the alternative to spending money on engineering seems to be well illustrated by Boeing: slowly losing market share to a competitor who has invested in engineering.
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