Boeing’s Downfall - Before the McDonnell Douglas Merger

---------------------------------------------------
Boeing today seems to be going from crisis to crisis, with its reputation in tatters and the press and much of the public reacting any time something happens to a Boeing aircraft – even if one of the pilots just SNEEZES wrongly.

But HOW or WHY did we get here? How did Boeing, a gem of a company, that was once the Gold Standard of aviation engineering, end up with their name getting dragged through the mud this way? And more specifically, what role did Boeing’s merger with McDonnell Douglas have, in making this happen?

Today I’m starting a series on… Boeing’s fall from grace. And in this episode, I will set the stage by taking a look at the history of Boeing and McDonnell Douglas, to show how different these giants were, as they headed to a “wedding” that many now wish had never happened.

Stay tuned!

-----------------------------------------------------
If you want to support the work I do on the channel, join my Patreon crew and get awesome perks and help me move the channel forward!

Our Connections:

Social:

Download the FREE Mentour Aviation app for all the lastest aviation content
-----------------------------------------------------

Below you will find the links to videos and sources used in this episode.

[MrNoneofthem]

"Only those who do not seek power are qualified to hold it." - Plato -

Bill Allen refused to be the president at first because he knew and respected that he is not an engineer. Then he continued respecting engineering. Such a rare piece of history.

[dalejones]

I worked at McDonnell Douglas Finance back in the 90s. Both McDonnell Douglas and Boeing were obsessed with market share and kept trying to underbid each other to win sales based on low prices, which meant that the "winner" of any competition would have trouble making a profit. It's like they were trying to drive each other out of business.

I found it somewhat amusing when the two companies merged and then had to fulfill ALL the unprofitable deals they had forced each other into. As I recall, that was about the time when cost-cutting and "Lean Manufacturing" took a stranglehold on all kinds of decision-making.

[erichstocker]

The relationship of management, engineers and workers always reminds me what Mr. Douglas said when he retired from Douglas. It is not fun anymore because I used to talk to engineers and technicians and now I talk to lawyers and accountants. This morphed into a total money and stock view in MD which was inherited by Boeing during the merge.

[Hartbreak]

When Mentour Now starts a series about Boeing’s fall of grace we know that things at Boeing are really bad.

[LuigiRosa]

About the head of a company, there is a very nice book : "In Search of Stupidity: Over Twenty Years of High Tech Marketing Disasters" by Merrill R. Chapman where we learn that all IT companies Chapman analysed failed the moment where a tech leader have been replaced by a non-tech one.

Regarding the company culture there may be ad additional explanation that sometimes we European don't take in consideration. I work since 15 years ad a consultant for USA-based companies. I realized that if my US colleagues loses the job, they lose health insurance and maybe the car and the house because lately many Americans basically live on loans of the banks.
Lately this converted many good workers into "yes men". In other words, employees often have to choose between their welfare and standing in front of their boss and speak honestly.

This is very sad.

[frankpinmtl]

It was Stonecipher/McNerny & Calhoun - three Jack Welch guys from GE who shifted BA to focus on financial results, rather than engineering quality. McNerny - CEO from 2005-2015, & Stonecipher, made the decision on the Max/787 & 777X - all troubled programs that the company has to deal with, today.

[slaphead]

McDonnell Douglas was predominantly a business management corporation that employed engineers, whereas Boeing was predominantly a engineering firm that employed business managers.

As soon as a company gives power to bean counters, business managers, and shareholders (aka leeches) enshittification inevitably follows.

[mannyzx]

So, in summary, the CEO doesn’t have to be an engineer, but can’t be an MBA.

I have a story. When I was a supervisor in a telecom sales call center (which is just two steps above rep and lead) my team always performed in the top three. Then the promoted a well liked rep who just got his MBA. To his credit, going to school and getting his MBA is impressive. Then in a supervisor meeting we all talked to the regional director and we all got a say. I talked about how I motivated my team, how I looked out for them and how I was there by their side and train them. The MBA talked about stock holder value, maximizing interactions and reducing cost. Huh? Dude, you’re supervisor. Guess whose team would consistently beat his? Yup this high school grad. Who ended up getting promoted? Yup, the MBA. He became the call centers operations manager, which is the second in charge of the whole call center. In reality, he was the one that did everything, the call center director, who was awful by the way, just sat at her desk and reported numbers to the higher ups. He made sweeping changes. Hired on his husband as a trainer (no training experience) and they came up with a script and implemented it. So now when you called, it was the same pitch. Customers aren’t dumb, they know that after the third time they called that are being sold. It was robotic at best. But they were so impressed by him that they made the script official and gave it to our sister call centers. Numbers fell, I told my team to abandon the script and sell like I knew they could. Didn’t matter that I was top supervisor, I got scolded and eventually written up. So I forced my team to go back on the script, but don’t be so impersonal. I flew under the radar. Numbers sucked for the call center, they modified the script, didn’t make much of a difference. My telecom got bought by another, which was awful, because they were the lowest rated but had the money to do so. Obviously the layoffs started. Him, the director, and his husband were the very first to get laid off. Yay right? No. They came in with their own MBAs, cut the pensions, obviously, made the commission even harder to get and surprise! A new script. When that wasn’t enough, they shut down call centers, opened up a bunch in Costa Rica, some did get moved to Texas and Florida.

I quit, which is what they obviously wanted us to do, and became a nurse. Never going back to sales.

[dodgyg]

As a person that has been both an Air Load Master and Non Detructive Testing Team member . As somebody sat in despair at what is happening, this video of yours is sad but fantastically accurate, hope you move in this direction. Wonderful effort.

[walshmabob]

Boeing Engineer: So how many processes are we hoping to cut back on?

Boeing Management: Yes

[JasonLastName]

I’ll never forget this merger, I was a kid then. My hometown St.Louis was pretty upset to see McDonnell Douglas leave STL. I’ll always remember my father and his buddies at the airlines saying how bad of a merger this would be down the line. They knew the airplane business well!

[kevinbarry]

Very well done. A separate story, when Boeing first designed the 727, back when European labor rates were much lower than American rates, Boeing did not outsource, they did not go the cheap way. They simply decided to engineer a superior airplane which would be worth its extra cost. And indeed it was superior to what the British and French industries produced. And it sold a lot and was quite profitable. Boeing would never do that today

[gnnascarfan]

The fact that the general public (who may not care about aircraft type like us aviation geeks) are using sites like Expedia to select aircraft type and AVOID Boeing should be setting off alarm bells at Boeing’s HQ.

[parrottm]

As a former Boeing employee of 15 years, I can tell it is Boeing in name only now. The 'merger' killed everything good about Boeing.

[tombrown]

I think a fundamental difference between Boeing and Douglas was the top management of the two companies. Before yielding day to day responsibility to his son, Donald Wills Douglas, Sr. WAS Douglas Aircraft Company. Employees were fond of saying, "We don't work for Douglas; we work for Doug." The loyalty of even senior executives and engineers was to one man, a loyalty his son did not command. Many left the company, and within ten years, this aviation giant was broke.

[shutigal]

"It is difficult to get a man to understand something when his salary depends on his not understanding it." - Robert Sinclair.

[darrylday]

It appears that humility and character are prerequisite for leadership.

Note to self:

1) Be considerate of my associates views
2) Don’t talk to much, let others talk
3) Make a sincere effort to understand labour’s viewpoint
4) Develop a (postwar) future for Boeing

[andyny]

I grew up right near JFK in New York. When the 747 first started operating I couldn’t believe how such a huge plane could fly. A few years later I got to travel in one. Still my favorite plane to fly on. What a marvel of engineering!

[randybentley]

One of the worst decisions Boeing ever made internally was passing over Alan Mulally for the CEO position in the mid-2000s. He could have returned the company to its engineering-first principles.

[GrouseAttack]

The McDonnell-Douglas merger definitely did one thing: eliminated competition. Less competition might lead to some “efficiencies” that cut corners.