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.
> 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.
Agreed. 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.
I agree. In most of the places I've worked, devs have always taken costs into account as part of the design and development decisions, to the degree that they can. But at most companies, things like cost, expected ROI, etc. are never revealed to the devs, leaving it to guesswork.
All 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.
I 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.
Given the choice between cost optimized and safe, fast, cool, etc very few engineers are going to go for cost savings. If there's no bean counters in charge and no market cnstraints its obvious that the product is going to be really good and really expensive.
So make cost optimization cool. I always enjoyed getting rid of production hardware and running as lean as possible within operational constraints. Incentivize cost reduction with benefits proportional to the savings.
You know what’s cooler than an expensive thing? A high quality thing with higher margins. A very well known and highly profitable company has taken that model pretty far (like trillions in valuation far).
Higher margins are not really cool unless you share them, which the engineers probably did not.
Engineers arent really responsible for these types of attitudes though. Management are. By and large engineers will do as they are requested.
I find it far more plausible that costs ballooned due to an empire building dynamic by management than because engineers arm twisted them into building something "cool". Same reason Uber has, like, 150 people working on a mobile app.
> If there's [...] no market cnstraints its obvious that the product is going to be really good and really expensive.
Well sure, you literally just removed the cost optimization variable. SpaceX vs. NASA is a clear example demonstrating that engineers can do this sort of optimization when it's given to them as a constraint. NASA's rocket designs were all custom, single-use, often down to the bolts because the budget was per-project/launch, where SpaceX rockets were designed for reuse and cost minimization across multiple launches.
Spacex also had the very small advantage of all the basic science being done for them for free. The constraint in the NASA golden years wasn't getting it done cheaply, it was getting it done at all.
Rockets haven't changed much since the 60s. This doesn't explain all of the launches since the Space Shuttle, for example. Furthermore, SpaceX clearly innovated with their reusable rockets, but this is exactly the kind of cost constraint that commercial ventures prioritize which government ventures often don't.
Much of engineering is "bean counting" but not beans. I think that engineers will do some CYA around safety, but they also appreciate the money arguments because they are inherently numeric in their evaluations.
This is too simple. For large endeavors (building a plane) it is impossible to formulate all contributions to all quality criteria/cost and constraints into a technical engineering optimization problem.
Let alone when re-structuring and optimizing the company organization and processes to build those planes at the same time.
> For large endeavors (building a plane) it is impossible to formulate all contributions to all quality criteria/cost and constraints into a technical engineering optimization problem.
It's obviously possible, SpaceX vs. NASA is an existence proof. Maybe you have something specific in mind when you say "technical engineering optimization problem", like a formula you can minimize mathematically to account for every little contribution, but this often isn't necessary. Like when solving physics problems using approximations, you often only need to minimize the first and second order largest contributors to the cost and you'll be in the right ballpark.
This also means you don't need to find the literally absolute minimum and capture literally all of the contributors to the cost during the design process. And of course this is what happens in the real world already, do you think accountants and pointy haired bosses guiding a bunch of engineers are going to find the absolute minimum? Of course not, they find what looks like a minimum from their limited view of a project after the engineers estimate the costs of producing parts and the labour required. Just close the loop without the accountants and bosses and engineers can do this optimization themselves.
I agree with you and you basically make the same point as wanted to make: you can’t just frame it as an engineering problem, it involves accountants and bosses. So your original statement „If you frame it properly to engineers, they can solve cost problems too.“ is too simplistic in my view.
> you basically make the same point as wanted to make: you can’t just frame it as an engineering problem, it involves accountants and bosses.
I disagree that I was making this point. I said it currently involves accountants and bosses, and I'm saying it doesn't have to because you can make it an engineering problem. The accountants and bosses don't have any unique skills or insight here that aren't in principle also accessible to the engineers.
Ok, then I misunderstood, and we can only agree to disagree. I think there need to be people caring about organizational stuff which you cannot fully formulate as engineering problem: setting deadlines, putting teams together, determining team leads, determining how much budget is spent on which branch or discipline or even which part development. In addition, even more technical problems like calculating and comparing costs resulting from parts-Design over the full product lifecycle (design, manufacturing, usability, maintenance, repair, disposal) is not feasible today. And using approximations amounts to making assumption and thereby decisions up-front, where you usually cannot oversee all their implications. Designing complex machinery and shaping the organization which builds them is hellishly complex.
> I think there need to be people caring about organizational stuff which you cannot fully formulate as engineering problem: setting deadlines, putting teams together, determining team leads, determining how much budget is spent on which branch or discipline or even which part development.
These are mostly hacks to get around the fact that the engineers haven't been given enough information. If you just say, "we need product X that can be produced at cost Y/unit and we need to start production by date Z", then this is a satisfiability problem that the right set of engineers can evaluate as possible or not possible. It's fine to assign a team lead with the requisite experience and authority to pull in the engineers, equipment and data they need to answer this question, but then you get out of the way.
Answering this question involves laying out a semi-detailed plan for how to achieve the goal. If it turns out to not be possible within the given constraints, then you at least have that plan to inform you where the expected cost or time overruns are (or the unknowns/uncertainty), and whether that means you have to revise the expected selling price, deadline or you can compromise on the scope to achieve the desired selling price.
I will agree that some engineers and programmers really don't care about this stuff, but I'd argue it's because it's typically not part of their job, and sometimes because worrying about costs and schedules is not an "interesting problem". But it is an interesting problem if you frame it as set of optimization and satisfiability problems.
Industrial espionage does not necessarily improves engineering culture.
When I visited NITsEVT, a big-big-big organization dedicated to adapting of the stolen IBM 360/370 software to Russian language and Russian computer variants - I was amazed at how low the software culture was there. It looked like the only way to implement something was to look at how some American (but not necessarily bright) person has implemented some similar thing.
The whole “adaptation” project led to overall degradation of software culture as compared to 60s, when a lot of Russian system software was an original one. Or so a lot of people were saying.
Is there any evidence that's what happened? As far as I can tell, the NSA was doing it's routine thing of spying on foreign governments and and discovered that Airbus was trying to bribe a gov official.
Maybe you agree with Henry L. Stimson that "Gentlemen do not read each other's mail", but I haven't seen anything indicating that the NSA was spying on behalf of Boeing, or even directly targeting Airbus. Maybe I missed something, would be happy to learn if you have any sources to share :)
I don't think secret tech or cloak and dagger business moves are what makes an aircraft company win. it's a far more complex amalgamation of government intervention, regulations, institutional knowledge, and company culture. Things you could never steal with spies.
European countries have had aviation industries stretching back to the 1910s. They always had the engineering. But making a good product is not enough. You have to SELL it.
No what made Airbus start winning in the 1980s was hiring a former Boeing salesman. That's when they took off. Convincing air liners to take a chance and order Airbus planes.
>> 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.
Another way of presenting the same facts is that Airbus has done business with a country where corruption and bribes are the norm. The U.S. intercepted communications and used them to blackmail buyers so that they chose Boeing instead of the best airplanes.
Exactly. It's fair to say that at the level of national champion industries and state-to-state deals, countries' intelligence organizations are always involved.
Maybe they're doing defense (discovering bribes swaying the bid to another country, or monitoring their own country's bribes) or offense (stealing competitor bid data and specifications), but they're not idle.
I don't mind being asked for a source on a difficult to research topic but this was covered in the mainstream press and you clearly didn't even attempt a google search.
The article referencing this and Airbus is rather sensationalized and cuts off half the quote. This was said in reference to Airbus bribing foreign officials to buy from them. The full quote reads:
"When we have caught you at it, we haven’t said a word to the U.S. companies in the competition. Instead we go to the government you’re bribing and tell its officials that we don’t take kindly to such corruption. They often respond by giving the most meritorious bid (sometimes American, sometimes not) all or part of the contract. This upsets you, and sometimes creates recriminations between your bribers and your bribees, and this occasionally becomes a public scandal…"[5]
[5] R. James Woolsey, "Why We Spy on our Allies," Wall Street Journal, March 17, 2000.
The source unfortunately is locked behind a paywall so admittedly I don’t have the full context either.
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.
I 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).
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.