Did a 1997 merger ruin Boeing?

Finshots ^ | Jan 2024

[CondoleezzaProtege]

…Yeah, things aren’t looking good for the plane manufacturer. And we must ask — where did it all go so wrong for Boeing?

Well, it probably all began in the summer of 1997.

Boeing wanted to establish dominance and show the world who was boss in the airline industry. So it decided to acquire another plane manufacturer called McDonnell Douglas. It was a massive merger worth $14 billion.

Now after the merger, the new entity retained the Boeing name. It was expected since it was Boeing that splashed the cash. But the problem was that the culture of McDonnell Douglas seeped in. And that changed the face of Boeing completely.

See, the Boeing of the pre-merger era was called an ‘engineers’ company’. The ones who made these flying machines called the shots. Costs didn’t matter and it was only quality and design that did. They wanted to ensure that only their best ideas took to the skies. Safety was paramount. And the Chief Financial Officer who was answerable to Wall Street about costs didn’t care much about trying to impress the bankers either.

But after the merger, everything changed.

The CEO of McDonnell Douglas actually became the CEO of Boeing. A chairman with no aviation background, but who’d worked in General Electric, was also appointed. The company started paying attention to creating shareholder value which was hardly a priority earlier. And as one article put it, “Now, a passion for great planes was replaced with a passion for affordability.” Boeing even turned to outsourcing critical operations. Sure, it made the balance sheet ‘asset light’, but, it came at the cost of quality…

[Alberta's Child]

Boeing’s problem is that its focus on quality was replaced by corporate fascism as its business model. Buying politicians like Lindsey Graham and Nimrata Haley became more important than building high quality aircraft. THE END.

[bigbob]

GE managers had a term for it: “”Rank and Yank”. They were required to rank their direct reports from best to worst and then fire the bottom 10%. Refuse and guess where you’d end up on YOUR bosses ranking?

Officially known as “top-grading”.

[MinorityRepublican]

United is moving towards Airbus which is the best possible solution for both companies.

You have some Germans working at Airbus so I assume that's why the quality is better.

Remember American car companies under UAW are terrible. (Japanese cars without UAW make excellent vehicles in USA).

[linMcHlp]

Had the same reaction to Microsoft advertising for Windows Vista. Told clients, “Let’s skip this.” Everybody said, “OK!”

[Wuli]

“Shareholder value” should not be the only consideration for a corporate merger, if the company is proud of that they do and want to keep it that way. A board of directors has the longest term value and respect of the company to consider, not just what would satisfy Wall Street immediately.

[DennisR]

It is amazing how many experts there are on this thread, all seeming to have inside and thorough knowledge of exactly what “ails Boeing.” A bit of perspective:

Boeing is not “ruined.” The tragic crashes of two 737s a few years ago were due to one software issue plus inadequate pilot training. In other words, they could have been avoided. In fact, the crash of one of those planes was actually avoided the day before, because a third pilot in the cockpit knew what to do. The

The door plug was definitely Boeing’s fault. That was a one-off, unfortunate incident. But the other recent incidents were caused by human error or poor maintenance. That is the responsibility of the airlines, not Boeing’s.

In the long haul, Boeing will do just fine. Having worked there for 32 years as an electrical engineer, I worked with dozens and dozens of great people, and I can think of just one (a contractor) who I felt was incapable of doing their job. In addition, Boeing has thousands of planes in the pipeline: as of May 2023, 4,634 of all models to be exact. And at any point in time there are thousands of Boeing airplanes plying the skies worldwide. If you compare the negative incidents on these airplanes with what happens to cars, it is not even close. Air travel is much safer. Why? Because the testing airplanes go through to ensure safety at certification are incredible rigorous.

So is Boeing “ruined”? Not even close. They will go through some difficult times as most big companies do. But they will continue to make great, safe, fuel-efficent, comfortable airplanes. Really.

[DariusBane]

While G.E. works on 3 year plans the Chi-coms work 100 year plans.

[Fester Chugabrew]

Good question.

At that time Ira was probably developing his “skills.” There are analytics that attend to any business that require thought patterns alien to the simple man.

It really came as a disappointment to me that he turned out as he did.

[mcatch22]

The same thing happened when Allied Signal bought Honeywell.

*********

and airResearch when I worked there making airplane engine parts. Allied ruind them

[CodeToad]

“In the long haul, Boeing will do just fine.”

It has been a long haul already, and Boeing is circling the drain. The Max is a dismal financial failure, the 777X canceled, production lines shut down, quality sucks out loud to the point even the easy tanker program has failed. The damned thing does little of what it was supposed to do.

Boeing is living on the works of others decades ago, but it has little talent left to go forward and that gets worse the more white men are expelled from the company with their “Diversity”.

[CodeToad]

“So is Boeing “ruined”? Not even close.”

Boeing stock price says otherwise.

[DennisR]

Stock prices go up and down. They do not mean a company is “ruined.” Or maybe you think the company will go out of business? Not likely, since it is a huge manufacturer and the largest US the exporter.

[DennisR]

So you think they are going to go out of business? Hm…not likely at all.

[minnesota_bound]

#21 You explained what is happening to the last company I worked at. New management came in and rearranged the deck chairs. Either they will go or the company will be bought out.

[Glennb51]

They sent a lot of the machining from the 404 building to mexico. It was sent back on the average of three times. They would have saved money keeping it in house.

[minnesota_bound]

Jack Welch was said to have fired 250,000 people during his time at GE. That is an entire city of people. There are others like him such as "Chainsaw" Al and Mitt Romney. Top 10 Worst Bosses - "Chainsaw" Al https://content.time.com/time/specials/packages/article/0,28804,2025898_2025900_2026107,00.html Jack Welch https://www.nytimes.com/2022/05/21/business/jack-welch-ge-ceo-behavior.html Almost immediately after Mr. Welch retired in September 2001 with a $417 million severance package, G.E. went into a tailspin from which it would never recover. His pupils, though, went on to run dozens of other major companies, including Home Depot, Albertson’s, Chrysler and Boeing. Most of them failed. G.E. was an industrial company when he took over — making most of its money selling appliances, light bulbs, power turbines and jet engines. By the time he retired, the company derived much of its profit from GE Capital, which was essentially a giant unregulated bank. READ THIS PART: More than any company besides G.E., it was Boeing that was most directly shaped by Mr. Welch. Over the past 25 years, a succession of men who worked for Mr. Welch refashioned the airplane maker’s culture to resemble G.E.’s, transforming a company that once made a priority of aeronautical engineering into one that thrived on financial engineering. “When people say I changed the culture of Boeing, that was the intent, so it’s run like a business rather than a great engineering firm,” Mr. Stonecipher said in 2004. “It is a great engineering firm, but people invest in a company because they want to make money.”

[CodeToad]

Same was said of Kodak.
Same was said of Blockbuster.
Same was said of K-mart.

Same was said of many companies that have been displaced.

Boeing is on an extinction path.

[CodeToad]

[CodeToad]

Boeing employs ~145,000 people. In the past 15 years they have laid off about that many, and those are just the WARN required reporting numbers. The number of layoffs amounting to 50-150 people at a time are unknown but happen several times a year in various divisions and do not required a WARN notice.

Boeing just killed off their entire R&D department of ~50 people in one of the divisions and laid off another 30 people or so. These are unreported layoffs, of course, but common at Boeing. There are only a few older white males left and this layoff took out many of the key people left.

Shaping the company is about removing older white males. Entire offices are filled with Indians and women. For DEI, they even have “Chief of Staff” (COS) positions for every director and VP now. These positions are political commissars, all are women and all are liberals. Imagine a liberal women who no engineering and no aviation experience, and little real -world experience, being given authority over chief engineers. That has now happened at Boeing.

[DennisR]

Totally different situations.

So for the record, you believe Boeing will go completely out of business. And if so, when?