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Did a 1997 merger ruin Boeing?

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Re: Did a 1997 merger ruin Boeing?

#181

Post by iisan7 »

joe_the_user wrote: post #79

The article seems really thin. I'd be curious what decision-making process went into the situation where "McDonnell Douglas bought Boeing with Boeing’s money". Was the MD management team just savy about mergers? Were consultants pushing for "value creation" involved? Or what? Anyone have a better link?

I remember some good stories after the last MAX scandal, like https://qz.com/1776080/how-the-mcdonnell-douglas-boeing-merg.... It's not clear whether Stonecipher simply outmaneuvered Condit, or perhaps McDonnell Douglas execs were knowingly elevated because Condit didn't trust others, who might also have resented his decisons.

Re: Did a 1997 merger ruin Boeing?

#182

Post by dralley »

AdrianB1 wrote: post #112
bluGill wrote: post #44

Earlier quoted context omitted.

What choice do they have? Airplanes wear out from metal fatigue over time, so airlines must replace their airplanes regularly. It isn't safe to keep operating the same airplanes for decades. (this very much depends on what the plane is made of - so some airplanes from the 1950s are still safe while others from 2000 are not). Sometimes airplanes are scraped by selling to some "third world" airline that keeps operating…

> It isn't safe to keep operating the same airplanes for decades. Me, crying while flying a 50 year old Cessna 172. Oh, luckily you are wrong this time: most planes at top airlines are replaced with more competitive ones, not because they depleted the airframe. The rest is replaceable - airplanes replace engines more often than some people change their socks and everything else is either regularly checked or replaced…

Unlike a 172, an airliner is in near constant use, and subject to much more serious stresses, like heavy turbulence, storms, the temperatures at 35k feet, and pressurization.

Replacing the airframe with a more competitive one is part of it, but part of the competitiveness is that you reach a point where you're having to do much more inspections and maintenance than a new plane.

Re: Did a 1997 merger ruin Boeing?

#183

Post by Solvency »

KennyBlanken wrote: post #173
stg22 wrote: post #140

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…

What's wild is that all this happened even with the NSA conducting industrial espionage on Airbus on behalf of Boeing and M-D.

Source? Or... book even?

Re: Did a 1997 merger ruin Boeing?

#184

Post by missedthecue »

mcv wrote: post #34

Here's what I don't understand: the 737 MAX was introduced in 2017. In 2018, two of them dropped out of the sky, the grounded for a while, it turned out Boeing had lost its engineering culture and its priority for safety, and it became clear that the 737 MAX had some serious design problems that they had tried to fix in software. And according to this article, the 737 MAX is Boeing's best selling plane ever. Why? Why…

Because for the airlines, their ONLY other option is to put themselves on the end of a very long waiting list with Airbus.

Yes, Embraer, Sukhoi, Bombardier, and Mitsubishi have/had limited offerings but only in very select configurations. None sell an A321/737 equivalent.

So, the airlines bet that Boeing is not going to keep selling deadly airplanes, and will fix the Max, and they can keep their place in line.

It's a problem that the airline manufacturing industry is a duopoly but interestingly, it doesn't seem like the market can support more than a small number of players. Despite the fact that the airline industry has exploded and demand for new airplanes has grown with it, certain econonomies of manufacturing have meant that a lot of mergers and bankruptcies and consolidation happened.

Re: Did a 1997 merger ruin Boeing?

#185

Post by postingawayonhn »

moose_man wrote: post #22
skyyler wrote: post #21

Earlier quoted context omitted.

What can reasonably be done to combat it? Leadership at all the biggest firms is on board with shareholder capitalism. To them, Welch style management just means line goes up...

It's going to take a long time, but first is to destroy the myth that corporations have one purpose they need to fulfill: Generate revenue and ensure things are profitable for shareholders. This myth artificially took root in the 1970s. Business schools have to stop teaching this.

Working in the best interests of shareholders is fine.

The problem is that because Boeing has a US monopoly and global duopoly on large jets neither the regulators or customers are willing to punish them when they under perform. Boeing has become too big to fail.

Re: Did a 1997 merger ruin Boeing?

#186

Post by lovecg »

kevin_thibedeau wrote: post #163
lovecg wrote: post #95

Earlier quoted context omitted.

The biggest WTF to me is hiding the existence of this system from the pilots, even after the first crash. All in service of pretending that it’s exactly the same airplane as 737 NG.

The system was visible if the airline paid for the AOA disagree lights to be installed. Why such a basic feature was even an option is the WTF.

I can’t find anything about that. As far as I can tell, the optional AOA indicator would also include the disagree alert which would tell the pilots something is wrong with the sensors, but that had nothing do to with MCAS per se. They still had no idea there’s this whole new system that uses only one of the sensors and repeatedly trims down. Even after the first crash they only went as far as recommend going through the runaway trim procedure without explaining or even acknowledging MCAS’s existence. The pattern of omission is downright criminal.

Re: Did a 1997 merger ruin Boeing?

#187

Post by lmm »

GeekyBear wrote: post #156
lmm wrote: post #148

Earlier quoted context omitted.

Reputation is an asset like anything else. It's probably economically rational to build up a reputation for good quality while you're small, and then switch to extracting as much value as you can from that reputation once you've gotten big. (I don't like it but I don't see any way to prevent it being the most profitable course)

It's also possible to optimize for long term profitability. > There were certain things about the business where it was obvious – speaking to people who had been on that journey for 25 years before I joined – that they were not likely to change in the future because they hadn’t changed in the previous 25 years. The first thing that struck me was an absolutely rock-solid commitment to gaining the trust of the customer…

If you're in a stable business like groceries where you can be confident that your market will still be around in 25 years, sure. But that doesn't apply to a lot of businesses.

Re: Did a 1997 merger ruin Boeing?

#188

Post by arcfour »

aslatter wrote: post #150
GeekyBear wrote: post #141

Earlier quoted context omitted.

> “I have my own theory about why decline happens at companies,” Jobs told me: They make some great products, but then the sales and marketing people take over the company, because they are the ones who can juice up profits. “When the sales guys run the company, the product guys don’t matter so much, and a lot of them just turn off. It happened at Apple when Sculley came in, which was my fault, and it happened when B…

I keep this clip open in a browser tab so I can go back to it from time-to-time: https://www.youtube.com/watch?v=X3NASGb5m8s It's the same basic message from Jobs, but this time about Xerox.

How does this apply to e.g. the Bell System?

From what I understand, their network was overengineered and they generally put out a very high quality product, and didn't need to do a lot of marketing.

Re: Did a 1997 merger ruin Boeing?

#190

Post by astrange »

AdrianB1 wrote: post #102
atleastoptimal wrote: post #75

I feel like this pattern occurs in too many companies across all sectors: 1. Company is product-quality focused 2. Beats competition and creates mini-monopoly 3. Sales becomes somewhat inelastic to changes in quality 4. This leads "cost-cutting" and marketing focused execs/decision making to beat out product quality execs/decision making 5. Company's product quality takes predictable linear path to the bottom

It is a bit more nuanced: 4.1 Company starts to talk about politics instead of products in their marketing campaigns 4.2 Company starts to cut cost on workforce by pushing out experienced people and hiring cheap newbies 4.3 As a result of the previous one, expertise drops rapidly and product quality starts to drop 4.4 As the product quality decreases, bleeding experienced people makes it impossible to stabilize 4.5 T…

Does Boeing have marketing campaigns? They're B2B.
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