The Boeing Company

views updated May 17 2018

The Boeing Company

7755 East Marginal Way South
Seattle, Washington 98108
U.S.A.
Telephone: (206) 655-2121
Fax: (206) 655-9391
Web site: http://www.boeing.com

Public Company
Incorporated: 1934 as Boeing Airplane Company
Employees: 227,000
Sales: $56.15 billion (1998)
Stock Exchanges: New York Amsterdam Brussels London Tokyo Pacific Boston Cincinnati Midwest Philadelphia
Ticker Symbol: BA
NAIC: 336411 Aircraft Manufacturing; 336413 Other Aircraft Parts and Auxiliary Equipment Manufacturing; 336414 Guided Missile and Space Vehicle Manufacturing; 336415 Guided Missile and Space Vehicle Propulsion Unit and Propulsion Unit Parts Manufacturing; 336419 Other Guided Missile and Space Vehicle Parts and Auxiliary Equipment Manufacturing; 334511 Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instruments Manufacturing; 334290 Other Communications Equipment Manufacturing

The Boeing Company is the largest aerospace company in the world, thanks to its 1997 merger with McDonnell Douglas Corporation and its 1996 purchase of the defense and space units of Rockwell International Corporation. The corporation is the world’s number one maker of commercial jetliners and military aircraft. Boeing has more than 9,000 commercial aircraft in service worldwide, including the 717 through 777 families of jets and the MD-80, MD-90, and MD-11. In the defense sector, the company makes military aircraft, including fighter, transport, and attack aircraft; helicopters; and missiles. In addition to its position as the nation’s top NASA contractor—and the leader of the U.S. industry team for the International Space Station—Boeing is also involved in commercial space projects such as satellite networks and a sea-based satellite launch platform.

Beginnings, Early 20th Century

Founder William Boeing was raised in Michigan, where his father operated a lucrative forestry business. While he was in San Diego, California, in 1910, Boeing met a French stunt pilot named Louis Paulhan who was performing at the International Air Meet. When Paulhan took Boeing for an airplane ride, it marked the beginning of Boeing’s fascination with aviation.

After two years of study at Yale’s Sheffield School of Science, Boeing returned to Michigan to work for his father. He was sent first to Wisconsin and later to the state of Washington to acquire more timber properties for the family business. In Seattle he met a navy engineer named Conrad Westerveldt who shared his fascination with aviation. A barnstormer named Terah Maroney gave the two men a ride over Puget Sound in his seaplane. Later Boeing went to Los Angeles to purchase his own seaplane, thinking it would be useful for fishing trips. The man who sold him the plane and taught him how to fly was Glenn Martin, who later founded Martin Marietta.

While in Seattle, Boeing and Westerveldt made a hobby of building their own seaplanes on the backwaters of Puget Sound. It became more than a hobby when a mechanic named Herb Munter and a number of other carpenters and craftsmen became involved. In May 1916, Boeing flew the first “B&W” seaplane. The next month he incorporated his company as the Pacific Aero Products Company. The company’s first customer was the government of New Zealand, which employed the plane for mail delivery and pilot training. In 1917 the company’s name was changed to Boeing Airplane Company.

Boeing and his partners anticipated government interest in their company when the United States became involved in World War I. They discovered their hunch was correct when the company was asked to train flight instructors for the army. After the war, Boeing sold a number of airplanes to Edward Hubbard, whose Hubbard Air Transport is regarded as the world’s first airline. The company shuttled mail between Seattle and the trans-pacific mailboat that called at Victoria, British Columbia. Later, when the post office invited bids for various airmail routes, Hubbard tried to convince Boeing to apply for the Chicago to San Francisco contract. Boeing mentioned the idea to his wife, who thought the opportunity looked promising. In the prospect, he and Hubbard created a new airline named the Boeing Air Transport Company. They submitted a bid and were awarded the contract.

To meet the demands of their new business Boeing and his engineers developed an extremely versatile and popular airplane called the Model 40. Fitted with a Pratt & Whitney air-cooled Wasp engine, it could carry 1,000 pounds of mail and a complete flight crew, and still have room enough for freight or passengers. The Kelly Airmail Act of 1925 opened the way for private airmail delivery on a much wider scale. As a result, a number of airline companies were formed with the intention of procuring the stable and lucrative airmail contracts. One of these companies was Vernon Gorst’s Pacific Air Transport, which won various routes along the Pacific Coast. Boeing purchased this company and then ordered a young employee named William Patterson to purchase its outstanding stock. Boeing also purchased Varney Airlines, which began operation in 1925 and won almost every mail contract it applied for until it became overextended and had financial difficulties.

1929–34: “United” Era

With the addition of National Air Transport, Boeing’s airline holdings formed the original United Air Lines. In 1928 all these companies were organized under a holding company called the Boeing Aircraft and Transportation Company. In 1929 a larger holding company was formed, the United Aircraft and Transportation Company. Included in this group were the “United” airlines and Stout Airlines; Pratt & Whitney (engines); Boeing, Sikorsky, Northrop, and Stearman (manufacturers); and Standard Steel Prop and Hamilton Aero Manufacturing (propellers). Boeing was made chairman of the company and Fred Rentschler of Pratt & Whitney was named president.

Boeing and Rentschler became extremely wealthy in this reorganization by exchanging stock with the holding company in a method similar to J.P. Morgan’s controversial capital manipulation. They multiplied their original investments by a factor of as much as 200,000 times. It was, however, entirely legal at the time. In 1933 the government conducted an investigation of fraud and other illegal practices in the airline industry. Boeing was called upon to testify and explain his windfall profits before a Senate investigating committee. Under examination he admitted to making $12 million in stock flotations.

Boeing was so infuriated with the investigation that he retired from the company (at age 52) and sold all his aviation stocks. Upon Boeing’s departure the company’s production manager, Phil Johnson, was named the new president. But William Boeing was not forgotten by the aircraft industry. In 1934 he was recognized for his innovation in aeronautical research and development with the award of the Daniel Guggenheim medal, “for successful pioneering and achievement in aircraft manufacturing and air transport.”

1934–52: Breakup and Military Aircraft

In 1934 a government investigation of collusion in the airmail business led to a suspension of all contracts awarded. As a result, the U.S. Congress declared that airline companies and manufacturers could not be part of the same business concern. This led to the break-up of the three aeronautic conglomerates: Boeing’s United, the Aviation Corporation of the Americas, and North American Aviation. All of the Boeing company’s aeronautic properties east of the Mississippi became part of a new company, United Aircraft (later renamed United Technologies), operated by Fred Rentschler. The western properties, principally the Boeing Airplane Company, remained in Seattle exclusively manufacturing airframes. Pat Patterson was put in charge of the commercial air carriers, which retained the name of United Air Lines and based their operations at Chicago’s Old Orchard (later O’Hare) airport.

In the years leading up to World War II Boeing led the way in developing single-wing airplanes. They were constructed completely of metal to make them stronger and faster; more efficient aerodynamic designs were emphasized; retractable landing gear and better wings were developed, along with multiple “power plant” technology; and, finally, directional radios were installed which enabled better navigation and night flying. Boeing had established itself as the leading manufacturer of airplanes.

When the United States launched its wartime militarization program, Boeing was called upon to produce hundreds of its B-17 “Flying Fortresses” for the U.S. Army. During the war the B-17 became an indispensable instrument for the U.S. Air Corps. In June 1944, when production was at its peak, Boeing’s Seattle facility turned out 16 of these airplanes every 24 hours. By this time the company was also producing an improved bomber called the B-29 “Super Fortress.” It was this airplane that dropped the atomic bombs on Hiroshima and Nagasaki in August 1945.

Boeing’s president, Phil Johnson, died unexpectedly during the war. He was replaced with the company’s chief lawyer, William M. Allen, on the last day of the war. Under Allen’s leadership, Boeing produced a number of new bombers, including the B-47, B-50, and the B-52. Boeing’s B-307 Stratoliner, a B-17 converted for transporting passengers, was succeeded by the B-377 Stratocruiser in 1952. The Stratocruiser was a very popular double-deck transport, most widely used by Northwest Orient. It was also Boeing’s only airplane built for the commercial airline market since before the war.

Company Perspectives:

The Boeing Company, after its merger in 1997 with McDonnell Douglas and acquisition in 1996 of the defense and space units of Rockwell International, became the largest aerospace company in the world. Its history mirrors the history of aviation. Boeing is the world’s largest manufacturer of commercial jetliners, military aircraft and the nation’s largest NASA contractor.

1953–69: Jets, Missiles, and Rockets

In the spring of 1953 Bill Allen persuaded the secretary of the U.S. Air Force, Harold Talbot, to allow Boeing the use of the government-owned B-52 construction facilities for the development of a new civilian/military jet. Boeing invested $16 million in the project, which was intended to put the company ahead of the Douglas Aircraft Company. Douglas had dominated the commercial airplane market for years with its popular propeller-driven DC series.

This new jet, the B-707, first rolled off the assembly line in 1957. American Airlines, a loyal Douglas customer, was the first to order the new jet. Their defection so alarmed Douglas that the company accelerated development of its nearly identical DC-8 passenger jetliner. The government later took delivery of Boeing’s military version of the jet, the KC-135 tanker, alternately known as the “missing 717.” Meanwhile, Boeing expanded its involvement in the defense market through the 1960 acquisition of Philadelphia-based Vertol Aircraft Corporation, a maker of military helicopters. During the Vietnam War, Boeing Chinook and Sea Knight helicopters were heavily utilized by American forces.

Boeing, which changed its name to The Boeing Company in 1961, enjoyed a large degree of success and profitability with the 707. The company devoted its resources to the development of a number of other passenger jet models, including the 720 (a modified 707) and the 727, which was introduced in 1964. The 727 was Boeing’s response to a successful French model called the Caravelle. The Caravelle’s engines were located in the rear of the fuselage, uncluttering the wings and reducing cabin noise. Boeing adopted this design for its three-engine 727, which carried 143 passengers. Douglas, unwilling to be passed by, introduced a similar two-engine model called the DC-9 in 1965.

During this time the company also recognized a demand for a smaller 100-passenger jetliner for shorter routes. As a result, Boeing developed the 737 model. The 737 seemed to run counter to the general trend at Boeing of building larger, more technologically advanced jetliners, but it did have a place in the market and made a profit.

Boeing’s next engineering accomplishment was the creation of a very large passenger transport designated the 747. This new jetliner was capable of carrying twice as many passengers as any other airplane. Its huge dimensions and powerful four-engine configuration made it the first of a new class of “jumbo jets,” later joined by McDonnell Douglas’s DC-10 and Lockheed’s 1011 Tri-Star. The first 747 was produced in 1968, and it made its first commercial voyage in January 1970 on a Pan American flight from New York to London.

The 1960s also saw Boeing active in the defense and NASA contracting sectors. As the Cold War continued, Boeing was selected to develop the Minuteman intercontinental ballistic missile system. The company completed the first test launch of a Minuteman missile at Cape Canaveral, Florida, in February 1961. The Minuteman II and Minuteman III followed later in the decade. In 1966 Boeing was selected to design, develop, and test the short-range attack missile (SRAM); by the early 1970s the company had produced 1,000 SRAMs.

Key Dates:

1917:: Founder William Boeing incorporates Pacific Aero Products Company, involved in plane making, mail delivery, and pilot training.
1918:: Company changes its name to Boeing Airplane Company.
1929:: United Aircraft and Transportation Company is formed as a holding company for Boeing-controlled airlines and makers of airplanes, engines, and propellers.
1934:: Government investigation of airmail business leads to break-up of United, with Seattle-based Boeing Airplane Company emerging with a sole focus on manufacturing.
1944:: In peak wartime production, 16 B-17s are produced every 24 hours.
1954:: The Boeing 707 jet makes its first flight.
1960:: Philadelphia-based Vertol Aircraft Corporation, a maker of military helicopters, is acquired.
1961:: Company changes its name to The Boeing Company; completes first test launch of a Minuteman missile at Cape Canaveral, Florida.
1964:: The three-engine 727 passenger jet is introduced.
1966:: Company launches first Lunar Orbiter, which sends photos of the moon back to Earth.
1967:: The shorter-route 737 jet makes its first commercial flight.
1968:: Apollo 8, which takes the first astronauts around the moon, is launched in December boosted by a Saturn V rocket, for which Boeing had built the first stage.
1970:: The 747, the first of the “jumbo jets,” makes its first commercial flight.
1971:: Strict austerity measures, including the layoff of 43,200 employees, save the company from bankruptcy.
1976:: First air-launched cruise missile is test-fired from a B-52.
1981:: The first NATO AWACS is delivered to West Germany; the 767 makes its first flight.
1982:: The 757 makes its first flight.
1993:: NASA names the company the prime contractor for the International Space Station.
1995:: First 777-200 is delivered to United Airlines.
1996:: The aerospace and defense units of Rockwell International are acquired.
1997:: McDonnell Douglas, number one in military aircraft and number three in commercial aircraft worldwide, is acquired, making Boeing the largest aerospace company in the world.
1999:: Company-led consortium successfully launches a commercial satellite from a floating platform at sea.

As far back as 1959 Boeing had developed a prototype manned, reusable space vehicle similar to the Space Shuttle of two decades later. Called Dyna-Soar, the project was canceled in 1963. Boeing was heavily involved in NASA’s Apollo project of the 1960s, beginning with its production of several Lunar Orbiters, the first of which was launched in 1966. The Orbiters circled the moon, sending photographs of the moon back to Earth, which helped NASA select safe landing sites for the Apollo missions. Boeing was also responsible for the first stage of the Saturn V Apollo rocket, which launched Apollo 8 in December 1968, the mission that took the first astronauts around the moon. (The second stage of the Saturn V was built by Rockwell’s aerospace unit and the third by McDonnell Douglas—two entities that would be acquired by Boeing late in the 20th century.) In 1969 Boeing began building the Lunar Roving Vehicle, which was used to explore the moon in the early 1970s on the final three Apollo missions.

1970–82: Averting Bankruptcy; Diversification; the 757 and 767

Boeing had seemingly ended the 1960s on high notes. On July 20,1969, the first human being walked on the moon, with Boeing having played its key role in the Apollo 11 mission. By the time the 747 was first delivered in 1969, 160 orders had been placed for the jetliner. Boeing was counting on increased sales of commercial aircraft to make up for the revenue shortfall engendered by the winding down of the Apollo program. But the aviation industry was hit by a recession just as the 747 was beginning production, leading to an 18-month period when the company received not one new order from a domestic carrier. Aggravating the situation for a new jet that had not yet established itself in the market were higher than expected startup costs and initial delivery problems. A further blow came when development was halted on the 2707, a supersonic transport better known as the “SST.” Boeing and Lockheed had been selected to design the SST back in 1964, but progress on this aircraft was slow and costly. Despite the support of Senator Henry Jackson, the U.S. Congress in 1971 voted not to fund further development of the SST. Shortly thereafter Boeing abandoned the project altogether. Boeing’s situation was so dire that the company was close to bankruptcy. In 1969 a new chief executive, Thornton Wilson, was appointed to head the organization. Faced with an impending disaster, Wilson pared the workforce down from 80,400 to 37,200 between early 1970 and October 1971. The layoffs at Boeing had a profound effect on the local economy, as unemployment in Seattle rose to 14 percent.

Wilson’s austerity measures paid off quickly. Soon Boeing’s jets were rolling off the tarmac, and employees were called back to work. After the company’s initial recovery, it received a deluge of commercial airplane orders and military contracts. Boeing had been selected as the prime contractor for the airborne warning and control system (AWACS) aircraft. First test-flown in 1972, the AWACS was a modified version of a 707 used by the military as an airborne early warning system. The first NATO AWACS was delivered to West Germany in 1981. Another key defense contract won by Boeing was for the air-launched cruise missile (ALCM), which was first test-launched from a B-52 in 1976. Under a $4 billion defense department contract, construction began on an assembly facility for the ALCM program in July 1980 in Kent, Washington. In the space sector Boeing built the Mariner 10 spacecraft, which was launched in November 1973 and completed a flyby of Mercury in March 1975. Three years later the company won a contract with NASA to construct the inertial upper stage rocket used to boost the Space Shuttle.

In 1978 Boeing started development of two new passenger jet models—the 757 and the wide-body 767—intended to take the company into the 21st century. The 767 made its first flight in 1981 while the 757 did likewise one year later. Utilizing advanced technology and improved engines, these jetliners were Boeing’s response to McDonnell Douglas’s MD series and the European Airbus consortium’s 300 series. They also were more fuel-efficient than previous models, in response to the oil shortages of the 1970s, and quieter—the latter a nod to growing concern over aircraft noise. For airlines, the 757 and 767 also had added benefits: they required smaller crews and their shared design led the Federal Aviation Administration to declare in 1983 that any pilot qualified to fly one model was automatically qualified to fly the other. Besides the 757 and 767, Boeing offered an updated 737 for the shorter-range rural “puddle-jumper” market and modified 747s capable of greater range and passenger capacity.

During this period of prosperity with commercial jetliners, Boeing made several attempts to diversify its business. Not all of them were successful. In the 1970s Boeing entered the metro-rail business, manufacturing mass transit systems for Boston, San Francisco, and Morgantown, West Virginia. The systems were modern, computerized, and efficient. They were also prone to frequent breakdowns. After fulfilling its obligation to rectify the systems (at great cost), Boeing decided to discontinue its ground transport business. Other short-lived ventures were the management of a housing project for the U.S. Department of Housing and Urban Development, the building of a desalinization plant in the Virgin Islands, the construction of three huge wind turbines in the Columbia River gorge, and the irrigation of a 6,000-acre farm in an eastern Oregon desert.

Mid-1980s to Mid-1990s: The 777 and Another Industry Downturn

Boeing established an “Advanced Products Group” in the later years of the 1980s to oversee the company’s more futuristic aircraft and keep it at the technological vanguard. Boeing’s twin-engine wide-body 777, originally scheduled to be introduced with the 757 and 767, attracted little interest and was temporarily shelved. The development of the fuel-efficient, 150-passenger 777 was also delayed when declining fuel costs and rising research and development expenses reduced demand. By 1990 the 777 had made a comeback: an initial order of 34 airplanes and 34 options placed by United Airlines put the new jet, which carried 350 passengers, into official production. The first 777-200 was delivered to United in 1995.

Frank Shrontz advanced to Boeing’s chief executive office in 1986, at the start of the world’s largest aircraft order binge in history, and led the manufacturer from sales of $16.3 billion in 1986 to $29.31 billion in 1991. Although Boeing remained profitable, its earnings declined steadily in the mid-1980s and its stock dropped 20 points in October 1987. Boeing jets were involved in four fatal air accidents from December 1988 to March 1989, and the company missed its first delivery deadline in two decades when the 747-400 experienced production delays. These internal problems were exacerbated by increased competition from Airbus, which was heavily subsidized by a consortium of European companies and governments.

Nevertheless, in 1990 Boeing chalked up record sales and net profits of $27.6 billion and $1.4 billion, respectively, and ended the year with a $97 billion backlog. But after its experiences of the 1980s, and due to CEO Shrontz’s vigilance, Boeing began to institute retrenchment moves. Although the manufacturer experienced three years of rising sales and earnings from 1989 to 1992, prospects for the future of the company—and the industry—were not bright. Worldwide orders of all aircraft declined from 1,662 in 1989 to 439 in 1991, and cancellations from the besieged airlines diminished expected delivery figures even more. The commercial airline industry’s downturn started in 1990, heralding brutal price wars and canceled aircraft orders. Around the same time, the Cold War was winding down and Pentagon spending on military systems went into a sharp decline as well, buffeting Boeing’s defense unit. By the fall of 1992, Boeing’s stock suffered on Wall Street, selling for about $35 per share, down from a high of nearly $62 in 1990.

Shrontz moved to reduce Boeing’s cost structure by 20 to 30 percent by 1997, even though his firm was the world’s lowest-cost aircraft producer. Production cuts soon led to layoffs. Boeing’s workforce declined each year from 1989 to 1993, for a total of 40,000 jobs lost. Early in 1994, Shrontz announced that about 30,000 jobs—one-fourth of the company’s remaining workforce—would be eliminated over the course of the year. Sales for 1993 declined to $25.44 billion from 1992’s $30.18 billion, and net earnings slid from $1.55 billion to $1.24 billion. Additional workforce reductions came in 1994 and 1995, years in which revenue and earnings declined still further, dropping to $19.52 billion and $393 million, respectively, by 1995.

Meanwhile, in 1993 NASA selected Boeing as the prime contractor for the International Space Station, which was called the largest international science and technology endeavor ever undertaken, and which was scheduled for completion in the early 21st century. In addition, the company was also becoming increasingly involved in commercial space projects, most notably Sea Launch, a consortium 40 percent owned by Boeing with partners from Russia, the Ukraine, and Norway. In December 1995 this venture received its first order: ten commercial space satellite launches from Hughes Space and Communication Co. In October 1999 Sea Launch successfully made the first launch of a commercial satellite from a floating platform at sea. In the military contracting sector, in late 1996 Boeing was selected as one of two finalists, along with Lockheed Martin, to build and test two variants of the Joint Strike Fighter, a multiservice aircraft slated to be deployed in the 21st century by the U.S. Air Force, Marine Corps, and Navy, along with the U.K. Royal Navy. The project carried the potential for a massive $160 billion contract. Also in 1996 Philip Condit was named CEO of Boeing; Condit became chairman as well in early 1997.

Late 1990s and Beyond: Major Acquisitions and the 747-x Stretch

The industrywide difficulties in the aerospace and defense fields in the first half of the 1990s led to a wave of consolidation through mergers and acquisitions. Preoccupied with straightening out its own house, Boeing watched from the sidelines—that is, until the company completed two major acquisitions within an eight-month period. In December 1996 Boeing paid $3.2 billion for the aerospace and defense holdings of Rockwell International. Gained in the transaction were Rockwell’s contracts for the Space Shuttle and the International Space Station, as well as activities in launch systems, rocket engines, missiles, satellites, military airplanes, and guidance and navigation systems. In August 1997 Boeing completed a $14 billion acquisition of McDonnell Douglas, vaulting Boeing into the number one position worldwide in the aerospace industry. McDonnell had been the world’s number three maker of commercial aircraft, with its MD series of jets; the acquisition therefore increased Boeing’s share of the world market for large commercial jetliners to more than 60 percent—and it left Boeing with just one major competitor in that sector: the European Airbus consortium, which held about one-third of the world market. As the market for commercial planes was once again on the upswing at the time, Boeing particularly coveted the added production capacity the acquisition brought. Another key attraction—and perhaps even more important—was the opportunity to further bolster the company’s defense and space operations, which it hoped would provide a counterbalance to the boom-and-bust cycle of commercial jets. McDonnell was number two among U.S. defense contractors and was the number one maker of military aircraft worldwide. Among the military aircraft were the F/A-18, which formed the core of the U.S. Navy’s jet fleet, and the F-15, which was the U.S. Air Force’s top fighter aircraft. Following the McDonnell acquisition, Condit remained chairman and CEO of Boeing, while Harry Stonecipher, McDonnell’s CEO, was named president and chief operating officer.

Unfortunately, 1997 turned disastrous for Boeing for reasons wholly unrelated to its acquisition spree. Attempting to take advantage of the upswing in airplane orders, which was in part caused by the aging of the airliners’ fleets, Boeing committed to doubling its production over an 18-month period. Various snafus led to production delays, including the wholesale shutdown of some production units while out-of-sequence work was brought back into line. The company took pretax charges in 1997 totaling a whopping $3 billion plus, more than half of which stemmed from the production difficulties. Boeing also took a $1.4 billion charge related to its decision to phase out production of the MD-80 and MD-90 jets by early 2000. These charges led the company to record its first loss in 50 years, a net loss of $178 million on revenues of $45.8 billion. Additional charges were taken during 1998, but the company managed to post net income of $1.12 billion on sales of $56.15 billion thanks to the strong performance of its defense and space operations. It also managed to increase the number of aircraft it produced from the 374 of 1997 to more than 550 in 1998. The company was in the midst of a major cost-containment effort, with its workforce expected to be reduced from its peak of 238,000 at year-end 1997 to between 185,000 and 195,000 by the end of 2000.

As it prepared for the 21st century, Boeing’s defense and space operations appeared to be healthy despite such setbacks as the August 1998 explosion of a Delta III rocket making its maiden voyage, with a satellite in tow, and the delays in the development of the International Space Station because of economic turmoil in Russia. In October 1998 the Air Force awarded Boeing a $1.38 billion contract to launch a new generation of rockets, and Boeing in 1999 also won a $4.5 billion contract to develop spy satellites for the CIA and others. If anything was clouding Boeing’s future it was the commercial aircraft sector, where Airbus was developing into a formidable adversary. In late 1999 Aerospatiale SA of France merged with the aerospace unit of DaimlerChrysler AG to form European Aeronautic Defense & Space Co., which now held 80 percent of Airbus, with the other 20 percent owned by British Aerospace plc. This streamlining of the ownership structure brought closer the long-anticipated transformation of Airbus into a publicly traded, focused corporation; should that occur, no longer could Boeing dismiss Airbus as a clumsy consortium propped up by government subsidies. In fact, the battle lines appeared to have been drawn by the two rivals at the end of the 20th century in the development of the next generation of super jumbo jets. Airbus had in the planning stages a brand-new jet, the A-3XX, envisioned as the largest jetliner ever, featuring four engines, double decks running the length of the fuselage, a range of 8,800 miles, and passenger capacity of 555 to 655. The project was estimated to cost $12 billion. Boeing had in mind producing a bigger, longer-range version of its 747 jet, dubbed the 747-x Stretch, with seating capacity of 500 to 520, a range of 8,625 miles, and a projected cost of just $2-$3 billion. An intense competition for contracts with airliners was expected in the early 21st century as the super jumbos began to take shape.

Principal Subsidiaries

757UA, Inc.; 767ER, Inc.; Aileron Inc.; Akash, Inc.; Aldford-1 Corporation; ARGOsystems Inc.; Astro Limited; Astro-II, Inc.; Autonetics, Inc.; Bahasa Aircraft Corporation; BCS Richland, Inc.; Beaufoy-1 Corporation; Boeing Aerospace Ltd.; Boeing Aerospace Operations Inc.; Boeing Agri-Industrial Company; Boeing Commercial Information and Communication Company; Boeing Commercial Space Company; Boeing Constructors, Inc.; Boeing Domestic Sales Corporation; Boeing Enterprises, Inc.; Boeing Financial Corporation; Boeing Global Services, Inc.; Boeing Information Services, Inc.; Boeing International Corporation; Boeing International Logistics Spares, Inc.; Boeing International Sales Corporation; Boeing Investment Company, Inc.; Boeing Leasing Company; Boeing Logistics Spares, Inc.; Boeing Middle East Limited; Boeing North American, Inc.; Boeing Offset Company, Inc.; Boeing Operations International, Incorporated; Boeing Overseas, Inc.; Boeing Precision Gear, Inc.; Boeing Space Operations Company; Boeing Support Services, Inc.; Boeing Technology International, Inc.; Boeing Travel Management Company; Canard Holdings, Inc.; CBSA Leasing II, Inc.; CBSA Leasing, Inc.; Cougar, Ltd.; Dillon, Inc.; Gaucho-1 Inc.; GAUCHO-2 Inc.; Hanway Corporation; Longacres Park, Inc.; Longbow Golf Club Corporation; McDonnell Douglas Corporation; Montana Aviation Research Company; North American Aviation, Inc.; Rainier Aircraft Leasing Inc.; Rocketdyne Technical Services Company; Rocketdyne, Inc.; Sunshine Leasing Company - 1; Taiko Leasing, Inc.; Thayer Leasing Company - 1; VC-X 757, Inc.; Wingspan, Inc.

Principal Competitors

Aerospatiale Matra; Airbus Industrie; The BFGoodrich Company; Bombardier Inc.; British Aerospace plc; Cordant Technologies Inc.; DaimlerChrysler AG; Dassault Aviation SA; Kaman Corporation; Lockheed Martin Corporation; Northrop Grumman Corporation; Raytheon Company; Sextant Avionique; Textron Inc.; Thomson S.A.; United Technologies Corporation.

The Boeing Company

views updated Jun 11 2018

The Boeing Company

7755 East Marginal Way South
Seattle, Washington 98108
U.S.A.
(206) 655-2121

Public Company
Incorporated: July 19,1934 as Boeing Airplane Company
Employees: 98,700
Sales: $16.34 billion
Market value: $8.259 billion
Stock Index: New York

The Boeing Company, one of America’s most successful corporations, is the world’s largest manufacturer of commercial aircraft. With the recent exception of the 727, every one of its 700 series jetliners is still in production (some for more than 30 years). Boeing is also an industry leader in aerospace technology.

William Boeing was raised in Michigan where his father operated a lucrative forestry business. While he was in San Diego, California in 1910 Boeing met a French stunt pilot named Louis Paulhan who was performing at the International Air Meet. When Paulhan took Boeing for an airplane ride, it marked the beginning of Boeing’s fascination with aviation.

After two years of study at Yale’s Sheffield School of Science, Boeing returned to Michigan to work for his father. He was sent first to Wisconsin and later to the state of Washington to acquire more timber properties for the family business. In Seattle he met a Navy engineer named Conrad Westerveldt who shared his fascination for aviation. A barnstormer named Terah Maroney gave the two men a ride over Puget Sound in his seaplane. Later Boeing went to Los Angeles to purchase his own seaplane, thinking it would be useful for fishing trips. The man who sold him the plane and taught him how to fly was Glenn Martin, who later founded Martin Marietta.

While in Seattle, Boeing and Westerveldt made a hobby of building their own seaplanes on the backwaters of Puget Sound. It became more than a hobby when a mechanic named Herb Munter and a number of other carpenters and craftsmen became involved. In May of 1916 Boeing flew the first “B&W” seaplane. The next month he incorporated his concern as the Pacific Aero Products Company. Their first customer was the government of New Zealand, which employed the plane for mail delivery and pilot training.

Boeing and his partners anticipated government interest in their company when the United States became involved in World War I. They discovered their hunch was correct when the company was asked to train flight instructors for the army. After the war, Boeing sold a number of airplanes to Edward Hubbard, whose Hubbard Air Transport is regarded as the world’s first airline. The company shuttled mail between Seattle and the transpacific mail-boat which called at Victoria, British Columbia. Later, when the post office invited bids for various airmail routes, Hubbard tried to convince Boeing to apply for the Chicago to San Francisco contract. Boeing mentioned the idea to his wife, who thought the opportunity looked promising. In the prospect, he and Hubbard created a new airline named the Boeing Air Transport Company. They submitted a bid and were awarded the contract.

To meet the demands of their new business Boeing and his engineers developed an extremely versatile and popular airplane called the Model 40, fitted with a Pratt & Whitney air-cooled Wasp engine. It could carry 1000 pounds of mail and a complete flight crew, and still have room enough for freight or passengers.

The Kelly Airmail Act of 1925 opened the way for private airmail delivery on a much wider scale. As a result, a number of airline companies formed with the intention of procuring the stable and lucrative airmail contracts. One of these companies was Vernon Gorst’s Pacific Air Transport which won various routes along the Pacific Coast. Boeing purchased this company and then ordered a young employee named William Patterson to purchase its outstanding stock. Another airmail carrier was Varney Airlines which began operation in 1925. Operated by Walter T. Varney, the company won almost every mail contract it applied for. However, it soon became overextended and had financial difficulties. Boeing also purchased this company and added its routes to his own.

With the addition of National Air Transport, Boeing’s airline holdings formed the original United Air Lines. In 1928 all these companies were organized under a holding company called the Boeing Aircraft and Transportation Company. In 1929 a larger holding company was formed, the United Aircraft and Transportation Company. Included in this group were the “United” airlines and Stout Airlines; Pratt & Whitney (engines); Boeing, Sikorsky, Northrop and Stearman (manufacturers); and Standard Steel Prop and Hamilton Aero Manufacturing (propellers). Boeing was made chairman of the company, and Fred Rentschler of Pratt & Whitney was named president.

Boeing and Rentschler became extremely wealthy in this reorganization by exchanging stock with the holding company in a method similar to J.P. Morgan’s controversial capital manipulation. They multiplied their original investments by a factor of as much as 200,000 times. It was, however, entirely legal under the legislation of the day.

In 1933 the government conducted an investigation of fraud and other illegal practices in the airline industry. Boeing was called upon to testify and explain his windfall profits before a senate investigating committee. Under examination he admitted to making $12 million in stock flotations. Boeing was so infuriated with the investigation that he retired from the company (at age 52) and sold all his aviation stocks. Upon Boeing’s departure the company’s production manager, Phil Johnson, was named the new president.

In 1934 a government investigation of collusion in the airmail business led to a suspension of all contracts awarded. As a result, the U.S. Congress declared that airline companies and manufacturers could not be part of the same business concern. This led to the break up of the three aeronautic conglomerates: Boeing’s United, the Aviation Corporation of the Americas, and North American Aviation.

All of the Boeing company’s aeronautic properties east of the Mississippi became part of a new company, United Aircraft, operated by Fred Rentschler. The western properties, principally the Boeing Airplane Company, remained in Seattle exclusively manufacturing airframes. Pat Patterson was put in charge of the commercial air carriers which retained the name of United Air Lines and based its operations at Chicago’s Old Orchard (later O’Hare) airport.

In 1934 William Boeing was recognized for his emphasis on innovation and experimentation in aeronautical research and development. He was awarded the Daniel Guggenheim medal, “for successful pioneering and achievement in aircraft manufacturing and air transport.”

In the years leading up to World War II the Boeing company led the way in developing single-wing airplanes. They were constructed completely of metal to make them stronger and faster; more efficient aerodynamic designs were emphasized; retractable landing gear and better wings were developed, along with multiple “power plant,” or engine technology; finally, directional radios were installed which enabled better navigation and night flying. Boeing had established itself as the leading manufacturer of airplanes.

When the United States launched its wartime militarization program, Boeing was called upon to produce hundreds of its B-17 “Flying Fortresses” for the Army. In the European war the B-17 became an indispensable instrument for the U.S. Air Corps. In June of 1944, when production was at its peak, Boeing’s Seattle facility turned out 16 of these airplanes every 24 hours. By this time the company was also producing an improved bomber called the B-29 “Super Fortress.” It was this airplane that dropped the atomic bombs on Hiroshima and Nagasaki in August of 1945.

Boeing’s president, Phil Johnson, died unexpectedly during the war. He was replaced with the company’s chief lawyer, William M. Allen, on the last day of the war. Under Allen’s leadership Boeing produced a number of new bombers, including the B-47, B-50, and the B-52. Boeing’s B-307 Stratoliner, a B-17 converted for transporting passengers, was succeeded by the B-377 Stratocruiser in 1952. The Stratocruiser was a very popular double-deck transport, most widely used by Northwest Orient. It was also Boeing’s only airplane built for the commercial airline market since before the war.

In the spring of 1953 Bill Allen convinced the secretary of the U.S. Air Force, Harold Talbot, to allow Boeing the use of the government-owned B-52 construction facilities for the development of a new civilian/military jet. Boeing invested $16 million in the project, which was intended to put the company ahead of the Douglas Aircraft Company. Douglas had dominated the commercial airplane market for years with its popular propeller-driven DC series.

This new jet, the B-707, first flew on May 15, 1954. American Airlines, a loyal Douglas customer, was the first to order the new jet. Their defection so alarmed Douglas that the company accelerated development of its nearly identical DC-8 passenger jetliner. The government later took delivery of Boeing’s military version of the jet, the KC-135 tanker, alternately known as the “missing 717.”

Boeing, which changed its name to The Boeing Company in 1961, enjoyed a large degree of success and profitability with the 707. The company devoted its resources to the development of a number of other passenger jet models, including the 720 (a modified 707) and the 727 which was introduced in 1964. The 727 was Boeing’s response to a successful French model called the Caravelle. The Caravelle’s engines were located in the rear of the fuselage, uncluttering the wings and reducing cabin noise. Boeing adopted this design for its three-engine 727 which carried 143 passengers. Douglas, eager not to be left out, introduced a similar two-engine model called the DC-9 in 1965.

During this time the company also recognized a demand for a smaller 100-passenger jetliner for shorter routes. As a result, Boeing developed the 737 model. The 737 seemed to run counter to the general trend at Boeing of building larger, more technologically advanced jetliners, but it did have a place in the market and made a profit.

Boeing’s next engineering accomplishment was the creation of a very large passenger transport designated the 747. This new jetliner was capable of carrying twice as many passengers as any other airplane. Its huge dimensions and powerful four-engine configuration made it the first of a new class of “jumbo jets,” later joined by McDonnell-Douglas’ DC-10 and Lockheed’s 1011 Tri-Star.

The 747 program required such a large investment that it nearly forced the company into bankruptcy. One hundred and sixty orders were placed for the jetliner by the time it was delivered in 1969, but no more were placed until 1972. During this period, Boeing was also developing the 2707, a supersonic transport better known as the “SST.” Progress on this aircraft was slow and costly. Despite the support of Senator Henry Jackson, the U.S. Congress voted not to fund further development of the SST. Shortly thereafter Boeing abandoned the project altogether.

In 1969 a new chief executive was appointed to head the organization. An engineer named Thornton Wilson took charge of Boeing in a way reminiscent of his predecessor, Bill Allen, 25 years before. Faced with an impending disaster, Wilson’s response was to pare the workforce down from 105,000 to 38,000. The layoffs at Boeing had a profound effect on the local economy; unemployment in Seattle rose to 14%.

Wilson’s strict austerity measures paid off quickly. Soon Boeing’s jets were rolling off the tarmac and employees were called back to work. After the company’s initial recovery, it received a deluge of commercial airplane orders and military contracts. Boeing started development of two new passenger jet models intended to take the company into the 21st century.

These new jetliner models, the 757 and the wide-body 767, became available in the early 1980’s. Utilizing advanced technology and improved engines, these jetliners were Boeing’s response to McDonnell-Douglas’ MD series and the European Airbus consortium’s 300 series. The current customer in the commercial jetliner market is more concerned with labor costs than fuel efficiency, owing to consistently cheaper oil. However, Boeing’s newest entries are doubly efficient, requiring smaller crews as well as less fuel. Besides the 757 and 767, Boeing offered an updated 737 for the shorter-range rural “puddle-jumper” market and modified 747s capable of greater range and passenger capacity.

During this period of prosperity with commercial jetliners, Boeing made several attempts to diversify its business. Not all of them were successful. In the 1970’s Boeing entered the metro-rail business, manufacturing mass transit systems for Boston, San Francisco and Morgantown, West Virginia. The systems were modern, computerized, and efficient. They were also prone to frequent breakdowns. After fulfilling its obligation to rectify the systems (at great cost), Boeing decided to discontinue its ground transport business.

Boeing now does most of its business through four principal divisions: civilian aircraft are manufactured and sold by the Boeing Commercial Airplane Company; the Boeing Vertol Company, acquired in 1960, produces helicopters for the armed services; Boeing Aerospace produces strategic and tactical missiles and space products; the Boeing Military Airplane Company builds bombers and tankers as well as high-technology surveillance aircraft.

Boeing’s military business has been more stable than its commercial airlines business. That stability did not, however, ensure the company against debilitating losses in its civilian business during the 747 crisis or during the period after “deregulation” in America when demand for new jetliners declined. In fact, the percentage of Boeing’s revenues from government contracts has been steadily declining. The military divisions, nonetheless, have remained viable and competitive in winning contracts, and designing and developing, and later producing, a wide variety of state-of-the-art military hardware.

Boeing’s major contributions to the military include the KC-135 tanker and the versatile mainstay of the United States Air Force, the B-52 bomber. The company builds E-3 Airborne Warning and Control System aircraft (AWACs) for the Air Force, the North Atlantic Treaty Organization, and Saudi Arabia. In addition, Boeing builds the E-4 command post and the E-6 submarine communications aircraft. Under a consortium led by Northrop, it is presently developing a new bomber intended to replace the aging B-52, designated the B-1B. Boeing’s other (top secret) project is a role in the development of the F-19 Stealth bomber. Boeing’s Vertol facilities, located in Philadelphia, produce CH-46 and CH-47 (Chinook) helicopters.

In the aerospace division, Boeing won a $4 billion defense department contract in 1980 to manufacture the air-launched cruise missile. It builds the MX intercontinental ballistic missile and the Roland air defense missile. The company also provides modernization services for existing Minuteman ICBMs. Boeing’s aerospace business includes the production of inertial upper stage boosters for satellites delivered into orbit by Titan rockets or the Space Shuttle. In addition, Boeing is developing an air-launched missile which destroys satellites.

With its wide variety of products, Boeing is America’s number one exporter. It holds a 55% market share of “the most expensive product in the world not sold by the bidding process.” There are more Boeings in the air than any other airplane. Boeing’s advantage is its size and broad product mix.

Boeing engineers have on their drawing boards an impressive array of futuristic aircraft. Boeing’s three-engine 777, originally scheduled to be introduced with the 757 and 767, attracted little interest and was shelved. Nonetheless, Boeing engineers are developing a new model, the 150-passenger 7J7, scheduled to fly in 1991. This new jet will be the first to employ fuel-efficient propfans, jet engines with rear-mounted propellers. Perhaps their strangest project is the 907 flying wing. Equipped with eight jet engines, this radically designed airplane will carry 1000 passengers, twice the capacity of a 747. Looking something like a boomerang, it is scheduled for service sometime in the next century. If this project is successful, it could allow Boeing to change the future of aviation once again.

Principal Subsidiaries

Astro, Ltd.; Logistics Support Corp.; Boeing Technology International, Inc.; Boeing of Canada, Ltd.; Boeing International Corp.; Boeing Financial Corp.; Boeing Equipment Holding Company; Boeing Leasing & Financial Corp.; Boeing International Sales Corp.; Boeing Environmental Products, Inc.; BCS Richland, Inc.; Boecon Corp.; Boeing Technical & Management Services, Inc.; Boeing Domestic Sales Corp.; Boeing Computer Services Canada, Ltd.; Boeing Engineering & Co. Southeast, Inc.; Boeing Agri-Industrial Co.; BE&C Engineers, Inc.; Boeing Electronics, Inc.; Boeing of Georgia, Inc.; Aircraft Sales & Financing Corp.; Boeing Computer Services (Europe), Ltd.; Boeing Operations International, Inc.; Hydraulic Units, Inc.; Boeing Computer Support Services, Inc.; Boeing Middle East, Ltd.; Astro II, Inc.; Boeing Sales Corp.; Boeing Investment Co., Inc.; Boeing of Mississippi, Inc.; Boeing Offset Co., Inc.; Boeing Petroleum Services, Inc,; Boeing Technical Operations, Inc.

The Boeing Company

views updated May 23 2018

The Boeing Company

7755 East Marginal Way South
Seattle, Washington 98108
U.S.A.
(206) 655-2121

Public Company
Incorporated: July 19, 1934 as Boeing Airplane Company
Employees: 98,700
Sales: $16.34 billion
Stock Exchanges: New York Amsterdam Brussels London Zurich Geneva Basel Tokyo Boston Cincinnati Midwest Philadelphia
SICs: 3721 Aircraft; 3760 Guided Missiles, Space Vehicles, Parts; 3663 Radio and TV Communications Equipment; 3724 Aircraft Engines and Engine Parts; 3728 Aircraft Parts and Equipment, Nee

The Boeing Company was one of America’s most successful corporations and ranked as the country’s number one exporter in the early 1990s. The corporation had the highest sales volume of any aerospace firm in the United States and was the world’s leading manufacturer of commercial jet aircraft. Boeing has been characterized as one of the world’s best managed companies, having made difficult but vital decisions in the face of intensifying global competition, the worst downturn in the history of the airline industry, and substantial defense and space cutbacks in the United States.

Founder William Boeing was raised in Michigan, where his father operated a lucrative forestry business. While he was in San Diego, California, in 1910, Boeing met a French stunt pilot named Louis Paulhan who was performing at the International Air Meet. When Paulhan took Boeing for an airplane ride, it marked the beginning of Boeing’s fascination with aviation.

After two years of study at Yale’s Sheffield School of Science, Boeing returned to Michigan to work for his father. He was sent first to Wisconsin and later to the state of Washington to acquire more timber properties for the family business. In Seattle he met a Navy engineer named Conrad Westerveldt who shared his fascination for aviation. A barnstormer named Terah Maroney gave the two men a ride over Puget Sound in his seaplane. Later Boeing went to Los Angeles to purchase his own seaplane, thinking it would be useful for fishing trips. The man who sold him the plane and taught him how to fly was Glenn Martin, who later founded Martin Marietta.

While in Seattle, Boeing and Westerveldt made a hobby of building their own seaplanes on the backwaters of Puget Sound. It became more than a hobby when a mechanic named Herb Munter and a number of other carpenters and craftsmen became involved. In May of 1916, Boeing flew the first “B&W” seaplane. The next month he incorporated his company as the Pacific Aero Products Company. The company’s first customer was the government of New Zealand, which employed the plane for mail delivery and pilot training.

Boeing and his partners anticipated government interest in their company when the United States became involved in World War I. They discovered their hunch was correct when the company was asked to train flight instructors for the army. After the war, Boeing sold a number of airplanes to Edward Hubbard, whose Hubbard Air Transport is regarded as the world’s first airline. The company shuttled mail between Seattle and the transpacific mailboat which called at Victoria, British Columbia. Later, when the post office invited bids for various airmail routes, Hubbard tried to convince Boeing to apply for the Chicago to San Francisco contract. Boeing mentioned the idea to his wife, who thought the opportunity looked promising. In the prospect, he and Hubbard created a new airline named the Boeing Air Transport Company. They submitted a bid and were awarded the contract.

To meet the demands of their new business Boeing and his engineers developed an extremely versatile and popular airplane called the Model 40. Fitted with a Pratt & Whitney air-cooled Wasp engine, it could carry 1000 pounds of mail and a complete flight crew, and still have room enough for freight or passengers. The Kelly Airmail Act of 1925 opened the way for private airmail delivery on a much wider scale. As a result, a number of airline companies formed with the intention of procuring the stable and lucrative airmail contracts. One of these companies was Vernon Gorst’s Pacific Air Transport, which won various routes along the Pacific Coast. Boeing purchased this company and then ordered a young employee named William Patterson to purchase its outstanding stock. Boeing also purchased Varney Airlines, which began operation in 1925 and won almost every mail contract it applied for until it became over-extended and had financial difficulties.

With the addition of National Air Transport, Boeing’s airline holdings formed the original United Air Lines. In 1928 all these companies were organized under a holding company called the Boeing Aircraft and Transportation Company. In 1929 a larger holding company was formed, the United Aircraft and Transportation Company. Included in this group were the “United” airlines and Stout Airlines; Pratt & Whitney (engines); Boeing, Sikorsky, Northrop, and Stearman (manufacturers); and Standard Steel Prop and Hamilton Aero Manufacturing (propellers). Boeing was made chairman of the company and Fred Rent-schler of Pratt & Whitney was named president.

Boeing and Rentschler became extremely wealthy in this reorganization by exchanging stock with the holding company in a method similar to J. P. Morgan’s controversial capital manipulation. They multiplied their original investments by a factor of as much as 200,000 times. It was, however, entirely legal at the time. In 1933 the government conducted an investigation of fraud and other illegal practices in the airline industry. Boeing was called upon to testify and explain his windfall profits before a Senate investigating committee. Under examination he admitted to making $12 million in stock flotations.

Boeing was so infuriated with the investigation that he retired from the company (at age 52) and sold all his aviation stocks. Upon Boeing’s departure the company’s production manager, Phil Johnson, was named the new president. But Boeing was not forgotten by the aircraft industry. In 1934 William Boeing was recognized for his emphasis on innovation and experimentation in aeronautical research and development. He was awarded the Daniel Guggenheim medal, “for successful pioneering and achievement in aircraft manufacturing and air transport.”

In 1934 a government investigation of collusion in the airmail business led to a suspension of all contracts awarded. As a result, the U.S. Congress declared that airline companies and manufacturers could not be part of the same business concern. This led to the break up of the three aeronautic conglomerates: Boeing’s United, the Aviation Corporation of the Americas, and North American Aviation. All of the Boeing company’s aeronautic properties east of the Mississippi became part of a new company, United Aircraft, operated by Fred Rentschler. The western properties, principally the Boeing Airplane Company, remained in Seattle exclusively manufacturing airframes. Pat Patterson was put in charge of the commercial air carriers which retained the name of United Air Lines and based its operations at Chicago’s Old Orchard (later O’Hare) airport.

In the years leading up to World War II the Boeing company led the way in developing single-wing airplanes. They were constructed completely of metal to make them stronger and faster; more efficient aerodynamic designs were emphasized; retractable landing gear and better wings were developed, along with multiple “power plant” technology; finally, directional radios were installed which enabled better navigation and night flying. Boeing had established itself as the leading manufacturer of airplanes.

When the United States launched its wartime militarization program, Boeing was called upon to produce hundreds of its B-17 “Flying Fortresses” for the Army. During the war the B-17 became an indispensable instrument for the U.S. Air Corps. In June of 1944, when production was at its peak, Boeing’s Seattle facility turned out 16 of these airplanes every 24 hours. By this time the company was also producing an improved bomber called the B-29 “Super Fortress.” It was this airplane that dropped the atomic bombs on Hiroshima and Nagasaki in August of 1945.

Boeing’s president, Phil Johnson, died unexpectedly during the war. He was replaced with the company’s chief lawyer, William M. Allen, on the last day of the war. Under Allen’s leadership, Boeing produced a number of new bombers, including the B-47, B-50, and the B-52. Boeing’s B-307 Stratoliner, a B-17 converted for transporting passengers, was succeeded by the B-377 Stratocruiser in 1952. The Stratocruiser was a very popular double-deck transport, most widely used by Northwest Orient. It was also Boeing’s only airplane built for the commercial airline market since before the war.

In the spring of 1953 Bill Allen convinced the secretary of the U.S. Air Force, Harold Talbot, to allow Boeing the use of the government-owned B-52 construction facilities for the development of a new civilian/military jet. Boeing invested $16 million in the project, which was intended to put the company ahead of the Douglas Aircraft Company. Douglas had dominated the commercial airplane market for years with its popular propeller-driven DC series.

This new jet, the B-707, first flew on May 15, 1954. American Airlines, a loyal Douglas customer, was the first to order the new jet. Their defection so alarmed Douglas that the company accelerated development of its nearly identical DC-8 passenger jetliner. The government later took delivery of Boeing’s military version of the jet, the KC-135 tanker, alternately known as the “missing 717.”

Boeing, which changed its name to The Boeing Company in 1961, enjoyed a large degree of success and profitability with the 707. The company devoted its resources to the development of a number of other passenger jet models, including the 720 (a modified 707) and the 727, which was introduced in 1964. The 727 was Boeing’s response to a successful French model called the Caravelle. The Caravelle’s engines were located in the rear of the fuselage, uncluttering the wings and reducing cabin noise. Boeing adopted this design for its three-engine 727, which carried 143 passengers. Douglas, eager not to be left out, introduced a similar two-engine model called the DC-9 in 1965.

During this time the company also recognized a demand for a smaller 100-passenger jetliner for shorter routes. As a result, Boeing developed the 737 model. The 737 seemed to run counter to the general trend at Boeing of building larger, more technologically advanced jetliners, but it did have a place in the market and made a profit.

Boeing’s next engineering accomplishment was the creation of a very large passenger transport designated the 747. This new jetliner was capable of carrying twice as many passengers as any other airplane. Its huge dimensions and powerful four-engine configuration made it the first of a new class of “jumbo jets,” later joined by McDonnell Douglas’s DC-10 and Lockheed’s 1011 Tri-Star.

The 747 program required such a large investment that it nearly forced the company into bankruptcy. One hundred and sixty orders were placed for the jetliner by the time it was delivered in 1969, but no more were placed until 1972. During this period, Boeing was also developing the 2707, a supersonic transport better known as the “SST.” Progress on this aircraft was slow and costly. Despite the support of Senator Henry Jackson, the U.S. Congress voted not to fund further development of the SST. Shortly thereafter Boeing abandoned the project altogether.

In 1969 a new chief executive was appointed to head the organization. An engineer named Thornton Wilson took charge of Boeing in a way reminiscent of his predecessor, Bill Allen, 25 years before. Faced with an impending disaster, Wilson’s response was to pare the workforce down from 105,000 to 38,000. The layoffs at Boeing had a profound effect on the local economy, as unemployment in Seattle rose to 14 percent.

Wilson’s strict austerity measures paid off quickly. Soon Boeing’s jets were rolling off the tarmac and employees were called back to work. After the company’s initial recovery, it received a deluge of commercial airplane orders and military contracts. Boeing started development of two new passenger jet models intended to take the company into the twenty-first century.

These new jetliner models, the 757 and the wide-body 767, became available in the early 1980s. Utilizing advanced technology and improved engines, these jetliners were Boeing’s response to McDonnell Douglas’s MD series and the European Airbus consortium’s 300 series. The current customer in the commercial jetliner market is more concerned with labor costs than fuel efficiency, owing to consistently cheaper oil. However, Boeing’s newest entries are doubly efficient, requiring smaller crews as well as less fuel. Besides the 757 and 767, Boeing offered an updated 737 for the shorter-range rural’ ’puddle-jumper” market and modified 747s capable of greater range and passenger capacity.

During this period of prosperity with commercial jetliners, Boeing made several attempts to diversify its business. Not all of them were successful. In the 1970s Boeing entered the metro-rail business, manufacturing mass transit systems for Boston, San Francisco, and Morgantown, West Virginia. The systems were modern, computerized, and efficient. They were also prone to frequent breakdowns. After fulfilling its obligation to rectify the systems (at great cost), Boeing decided to discontinue its ground transport business.

Most of Boeing’s business in the early 1990s came through four principal divisions: civilian aircraft manufactured and sold by the Boeing Commercial Airplane Company; helicopters for the armed services produced by the Boeing Vertol Company, acquired in 1960; strategic and tactical missiles and space products produced by Boeing Aerospace; and bombers, tankers, and high-technology surveillance aircraft built by the Boeing Military Airplane Company.

Boeing’s military business has been more stable than its commercial airlines business. That stability did not, however, ensure the company against debilitating losses in its civilian business during the 747 crisis or during the period after “deregulation” in America when demand for new jetliners declined. Despite steady revenue from government contracts, Boeing’s military divisions have remained viable and competitive in winning contracts, and in designing, developing, and producing a wide variety of state-of-the-art military hardware.

Boeing’s major contributions to the military include the KC-135 tanker and the versatile mainstay of the United States Air Force, the B-52 bomber. The company builds E-3 Airborne Warning and Control System aircraft (AWACs) for the Air Force, the North Atlantic Treaty Organization, and Saudi Arabia. In addition, Boeing builds the E-4 command post and the E-6 submarine communications aircraft. Under a consortium led by Northrop, it is developing a new bomber intended to replace the aging B-52, designated the B-1B. Boeing’s other (top secret) project is a role in the development of the F-19 Stealth bomber. Boeing’s Vertol facilities, located in Philadelphia, produce CH-46 and CH-47 (Chinook) helicopters.

In the aerospace division, Boeing won a $4 billion defense department contract in 1980 to manufacture the air-launched cruise missile. It builds the MX intercontinental ballistic missile and the Roland air defense missile. The company also provides modernization services for existing Minuteman ICBMs. Boeing’s aerospace business includes the production of inertial upper stage boosters for satellites delivered into orbit by Titan rockets or the Space Shuttle. But the dismantling of the USSR in the late 1980s, which ushered in substantial defense budget cuts, promised to limit the growth of this business segment.

Boeing established an “Advanced Products Group” in the latter years of the decade to oversee the company’s more futuristic aircraft and keep it at the technological vanguard. Boeing’s three-engine 777, originally scheduled to be introduced with the 757 and 767, attracted little interest and was temporarily shelved. The development of the fuel-efficient, 150-passenger 7J7 was also delayed when declining fuel costs and rising research and development expenses reduced demand. Perhaps their most radically designed project was the 907 flying wing. Equipped with eight jet engines, this airplane could carry 1000 passengers, twice the capacity of a 747. Looking something like a boomerang, it was scheduled for service sometime in the 21st century. If this project is successful, it could allow Boeing to change the future of aviation once again.

Frank Shrontz advanced to Boeing’s chief executive office in 1986, at the start of the world’s largest aircraft order binge in history, and led the manufacturer from sales of $16.3 billion in 1986 to $29.31 billion in 1991. Although Boeing remained profitable, its earnings declined steadily in the mid 1980s and its stock dropped twenty points in October 1987. Boeing jets were involved in four fatal air accidents from December 1988 to March 1989, and the company missed its first delivery deadline in two decades when the 747-400 experienced production delays. These internal problems were exacerbated by increased competition from Airbus, which was heavily subsidized by a consortium of European companies and governments.

Nevertheless, in 1990, Boeing chalked up record sales and net profits of $27.6 billion and $ 1.4 billion, respectively, and ended the year with a $97 billion backlog. But after its experiences of the 1980s, and due to CEO Shrontz’s vigilance, Boeing began to institute retrenchment moves. Although the manufacturer experienced three years of rising sales and earnings from 1989 to 1992, prospects for the company’s—and the industry’s— future, were not bright. Worldwide orders of all aircraft declined from 1,662 in 1989 to 439 in 1991, and cancellations from the besieged airlines diminished expected delivery figures even more. The commercial airline industry’s downturn started in 1990, heralding brutal price wars and canceled aircraft orders. By the fall of 1992, Boeing’s stock suffered on Wall Street, selling for about $35 per share, down from a high of nearly $62 in 1990.

Shrontz moved to reduce Boeing’s cost structure by 20 to 30 percent by 1997, even though his firm was the world’s lowest-cost aircraft producer. Production cuts soon led to layoffs. Boeing’s workforce declined each year from 1989 to 1993, for a total of 40,000 jobs lost. Early in 1994, Shrontz announced that about 30,000 jobs—one-fourth of the company’s remaining workforce—would be eliminated over the course of the year. Sales for 1993 declined to $25.44 billion from 1992’s $30.18 billion, and net earnings slid from $1.55 billion to $1.24 billion. Despite Boeing’s cost cutting measures, industry analysts worried that the commercial airplane industry had entered a period of vast, irrevocable change, wherein airlines’ continuously mounting debt would prevent them from purchasing Boeing planes, no matter how inexpensive they were.

Principal Subsidiaries:

Aileron Inc.; Aldford Ltd.; Andsell Ltd.; Aldford-1 Corp.; Aldsell-1 Corp.; Argosystems Inc.; A.S.I. Electronics; Astro, Ltd.; Boeing Technology International, Inc.; Boeing of Canada, Ltd.; Boeing International Corp.; Boeing Financial Corp.; Boeing Equipment Holding Company; Boeing Leasing Co.; Boeing International Sales Corp.; BCS Richland, Inc.; Boecon Corp.; Boeing Aerospace Operations Inc.; Boeing Canada Technology Ltd.; Boeing China Inc.; Boeing Commercial Space Development Co.; Boeing Defense & Space-Corinth Co.; Boeing Defense & Space-Irving Co.; Boeing Domestic Sales Corp.; Boeing Computer Support Services, Inc.; Boeing Agri-Industrial Co.; BE&C Engineers, Inc.; Boeing Georgia, Inc.; Boeing Operations International, Inc.; Boeing Middle East, Ltd.; Astro-II, Inc.; Boeing Sales Corp.; Boeing Investment Co., Inc.; Boeing Mississippi, Inc.; Boeing Nevada Inc.; Boeing Sales Corp. Ltd.; Energy Enterprises Inc.; Longacres Park Inc.; Montana Aviation Research Co.; Rainier Aircraft Leasing Inc.; 767ER Inc.; Boeing Offset Co., Inc.; Boeing Petroleum Services, Inc.

The Boeing Company

views updated Jun 11 2018

The Boeing Company

founded: 1916

Contact Information:

headquarters: 7755 e. marginal way s seattle, wa 98108 phone: (206)655-2121 fax: (206)655-7004 url: http://www.boeing.com

OVERVIEW

The Boeing company has been the leading aircraft manufacturer in the world for 30 consecutive years. It was also among the top three U.S. exporters for five consecutive years beginning in 1990. The company's primary businesses are commercial aircraft construction, defense and space, and computer services. The company successfully juggled the continuing need for commercial passenger airliners with its defense contracts, which account for an estimated 30 percent of its business as a result of the company's merger with McDonnell Douglas in 1997. Boeing works with companies such as Lockheed Martin, Sikorsky, and Bell Helicopter Textron, and is the leading contractor for NASA.

COMPANY FINANCES

Operating revenues for 1997 were $45.8 billion, compared with $35.5 billion in 1996 and $33.0 billion in 1995. The higher revenues for 1997 reflect increased deliveries in both the Commercial Aircraft and the Information, Space, and Defense Systems segments, as well as 1997 operations of the aerospace and defense units acquired from Rockwell International Corporation in December 1996. Of 1997 revenues, commercial aircraft generated $26.9 billion, or 59 percent of the company's total, compared to 56 percent ($19.9 billion) in 1996 and 53 percent ($17.5 billion) in 1995. Information, Space, and Defense Systems segments accounted for $18.1 billion in 1997 sales, compared to $14.9 billion in 1996 and $14.8 billion in 1995. Remaining sales were accounted for by Boeing's customer and commercial financing divisions among others.

Boeing stock was trading around $48.00 per share in mid-1998. The company's 52-week high was $60.50, and its 52-week low was $42.81. Boeing's five-year high was also $60.50, but its five-year low was $16.69. Boeing's earnings per share were down, at $.63 per share by year end 1997, compared to $1.92 in 1996.

ANALYSTS' OPINIONS

Analysts were divided over what rating to grant Boeing Company stock, some recommending shareholders simply hold onto what they own, an equal number recommending a "moderate buy" rating, and just as many recommending the company as a "strong buy." While the company realized net losses of $178 million in 1997, some of that loss was due to outlays needed to fund Boeing's acquisition of the McDonnell Douglas Long Beach commercial aircraft division, a venture not nearly as successful as its aerospace operations. Boeing also had to absorb $1.6 billion in losses as a result of production problems. Sales and operating revenues still rose by $10 billion, however, and the company was successfully addressing recent production issues.

HISTORY

Bill Boeing and Conrad Westervelt built an airplane at Seattle's Pacific Aero Products in 1916. The next year, the company became the Boeing Airplane Company. Throughout its history The Boeing Company has successfully provided air power for decades of defense contracts, beginning in World War I when the company built flight trainers for the United States Navy.

To bide its time between world wars, the company embarked on air mail service. It established the first international air mail route between Seattle and neighboring British Columbia. Other routes were developed starting in 1927. Boeing purchased several companies in the late 1920s, all in aviation-related businesses. Bill Boeing and Frederick Rentschler combined their businesses in 1929 into a firm called United Aircraft and Transport. The advent of regulations for air mail services led to the formation of United Airlines, and Boeing Airplane continued as an aircraft manufacturer.

Boeing has also seen American consumers through the birth and adolescence of commercial passenger airline travel. The company built many of the most popular commercial airliners between 1935 and 1965 including the PanAm 314 Clipper and the 747 Jumbo Jet. Boeing also brought the first pressurized cabin to market, the Model 307 Stratoliner.

The downsizing and consolidation within the modern aircraft industry has affected Boeing, which has integrated competitor companies into its operations. Boeing and Rockwell completed a merger of their defense and aerospace units in 1996, and Boeing completed its merger with McDonnell Douglas Corp. on August 1, 1997.

Boeing experienced some difficulties getting approval from Europe on its merger with McDonnell Douglas. The European Union was concerned about Airbus Industrie, a French consortium and Boeing's only major competitor, and its continued viability if the merger went through. Boeing did finally get approval from the European Union Commission. However, the company had to sign nonexclusive contracts for the next decade in order to do so.

STRATEGY

One of Boeing's primary goals, according to its 1997 annual report, was to "build a position of leadership in information, space, and defense markets comparable to the one we have long held in commercial aircraft." The company went after that goal using substantial internal investment and through strategic acquisitions and mergers. During 1997, Boeing's Information, Space & Defense Systems Group (ISDS) accounted for 40 percent of total company sales, partially due to contributions of a full year of revenues from the aerospace and defense operations acquired from Rockwell International in December 1996.

In order to meet incredibly high demand from the industry (which more than doubled), Boeing also had to create and maintain a focus on work process improvements and the flow of parts and materials. The company was building a major initiative to vastly simplify the aircraft configuration process for customer specifications. Its new system was also designed to simplify processes used to schedule and order parts and manage inventory.

INFLUENCES

Competitive pressures and lower fares for personal travel caused a long-term downward trend in passenger revenue yields worldwide. And in Asia, recessionary economies, reduced business travel, and devalued currency contributed to sharply reduced revenues. One example occurred in Indonesia, where three Boeing 737s built for Garuda Indonesia Airlines remained grounded in the United States until the Indonesian government could pay for them. As a result of these factors, and price pressure on the Boeing products, the company needed major productivity gains to ensure a favorable market position.

Another factor influencing Boeing's performance in 1997-1998 was the sudden increase in demand for Boeing commercial jets, just as Boeing executives were concentrating instead on the company's expansion of its aerospace division, and its related acquisitions of Rockwell and McDonnell Douglas. The problem was so bad, that as it was stated in the Wichita Business Journal, "The Boeing Co. has so many manufacturing orders, that if each airplane were built one at a time, the last would be completed by people not yet born." Not only were Boeing's production methods an area for needed improvement, but parts shortages were as well. To rectify the problem, Boeing began working with vendors on improved production processes, helping to alleviate further shortages.

In May of 1998, Boeing was experiencing additional difficulties, this time as a result of damaged wiring in its 737s. According to The New York Times, half of all Boeing 737s inspected on May 11 alone showed wear in the fuel pump wiring. The identified flaw not only resulted in grounded planes pending inspection, but opened up the possibility of investigation of Boeing's role in the explosion of a Philippine Airlines aircraft on a Manila runway in 1990, and TWA Flight 800 as well. The TWA flight, however, was on a 747, and the identified flaws were found only on Boeing's 737s.

CURRENT TRENDS

Boeing's direction for the late 1990s and into the next millennium was greater diversifaction as a company. What has helped the company to do this is improved balance between aerospace products. Prior to the McDonnell Douglas merger, Boeing had a 3-to-1 ratio between commercial jetliners and all of its other products in revenue generation. In 1997, that ratio became 3-to-2. Boeing equates this better balance with "greater stability and agility." When one market is down, the company could somewhat rely on another to be up. This gave Boeing more latitude to deploy people from one sector to another, wherever the need arose.

FAST FACTS: About The Boeing Company

Ownership: Boeing is a publicly owned company traded chiefly on the New York Stock Exchange. Additional U.S. exchanges that trade Boeing stock are the Boston, Chicago, Cincinnati, Pacific, and Philadelphia Stock Exchanges. Boeing common stock is also listed on the Amsterdam, Brussels, London, Swiss, and Tokyo stock exchanges.

Ticker symbol: BA

Officers: Philip M. Condit, Chmn. & CEO, 57; Harry C. Stonecipher, Pres. & COO, 61; Theodore J. Collins, Sr. VP, Gen. Counsel, & Secretary, 61; Boyd E. Givan, Sr. VP & CFO, 61

Employees: 238,000

Chief Competitors: Boeing is a manufacturer of commercial jetliners and military aircraft and is one of the largest aerospace companies in the world. Its primary competitors include: Airbus; Bombardier; Daimler-Benz; Lockheed Martin; Raytheon; Rockwell International; and Thiokol.

Boeing identified "fast growth" as its new motto in the commercial aircraft business, as a result of strong growth in airline traffic, record airline profits, and the need to replace aging aircraft. The outlook for military aircraft and missiles business also looked promising, and Boeing hoped to capitalize on development of next-generation aircraft and missile programs for the U.S. military agencies.

PRODUCTS

The Boeing Company has a line of planes designed for customer and cargo uses ranging from the 737 to the 777—the best selling jetliner of this line was the Boeing 737. The company also manufacturers defense and space aircraft such as the CH-47 Chinook helicopter and the F-22 fighter (built with Lockheed Martin) and the V-22 Osprey tilt-rotor aircraft (built with Bell Helicopter Textron). It also provides information systems and management services. Other aerospace products Boeing builds include electronic and defense systems, missiles, rocket engines, launch vehicles, and advanced information and communication systems.

CORPORATE CITIZENSHIP

The Boeing Company feels strongly about corporate citizenship, and focuses its efforts on education, health and human services, the arts, and civic participation. 1997 company contributions totaled $51.3 million. Including contributions from Boeing employees, total contributions were more than $90 million. Boeing employees also donated time and service to local communities.

Of company contributions, $16 million was given to promote education. Boeing works with educational institutions and students at all levels, and places special emphasis on enhancing engineering curricula at U.S. colleges and universities. Boeing also offers internships to students starting at the eleventh grade level.

Boeing is an environmentally conscious company. In 1997 it was testing alternative paint primers that did not contain toxic chemical compounds. And in September of 1997, the EPA honored Boeing with its Region IX Pollution Prevention Award for "reducing and eliminating the generation of pollutants at their source." Boeing also worked with the United Nations Environmental Programme, sponsoring a conference in India that focused on ozone-depleting gas emissions in the aviation industry.

CHRONOLOGY: Key Dates for The Boeing Company

1916:: Founded
1917:: Names the company the Boeing Airplane Company
1927:: Starts establishing air mail routes
1929:: Combines with another company to form United Aircraft and Transport
1933:: Introduces the first all metal airliner
1934:: Antitrust laws split company into United Air Lines, United Aircraft, and Boeing Airplane Company
1941:: First B-17s see combat
1945:: The Enola Gay, a B-29, drops the world's first atomic bomb on Hiroshima
1954:: Develops the Dash 80
1958:: First passenger jet, the 707, is introduced
1962:: Two 707 models begin to serve as "Air Force 1"
1967:: The first flight of the 737 takes place
1969:: The 747 flies for the first time
1970:: Establishes Boeing Computer Services
1987:: Buys some of ARGOSystems
1989:: First V-22 Osprey flies
1990:: Announces plans to build the 777
1993:: NASA choooses Boeing Defense & Space Group as a contractor for the Space Station
1994:: Boeing becomes number one U.S. aerospace firm in total sales; first flight of the 777
1995:: A 69-day labor strike is waged against Boeing
1996:: Acquires aerospace and defense units from Rockwell International
1997:: Merges with McDonnell Douglas

GLOBAL PRESENCE

The Boeing Company serves customers in 145 countries. The company has endured its share of criticism from its increase in outsourcing parts and assemblies to Chinese companies despite continued tension between the United States and China. Boeing operates one of the world's largest aircraft spare parts centers at Beijing Capital Airport. Comparable to Boeing facilities in London and in Singapore, they are able to ship urgent orders from among 35,000 parts in just 2 hours. According to Boeing's web site, "In addition to Boeing parts, the center stocks parts from 25 suppliers, provides support for component repair and overhaul, and provides logistics training for airlines." These policies, of course, have been de-cried by United States labor unions. However, Boeing sees China as a market with incredible growth potential. The Chinese economy has been growing more than twice as quickly as North America or Europe, and was expected to be the world's largest within 20 years. Air travel within China has also been growing rapidly, at a rate of approximately 20 percent each year. Given those numbers, Boeing foresees a market worth $124 billion (and for 1,900 commercial aircraft) over the next 20 years, and hopes to capitalize on that growth.

EMPLOYMENT

Boeing has had its share of labor problems, including a bitter strike that lasted 69 days in 1995, resulting in $2 billion in financial losses to the company as well as substantial trickle-down losses to the numerous sub-contractors and communities in which Boeing operates.

TO BOLDLY GO. . .

The Starship Enterprise must have been built by Boeing. Who else would Starfleet trust to build the vessels needed for "exploring strange new worlds" and "seeking out new life and new civilizations"? Who else has Boeing's track record of developing space systems? From almost the very beginnings of the American space program, Boeing has been there.

Boeing's involvement began in earnest in 1960 when its Delta II rocket was launched, carrying the Echo 1A satellite into orbit. Then in 1966 and 1967, the Boeing-built Lunar Orbiters circled the moon, photographing the surface in order to help NASA choose a safe landing site for the Apollo 11 astronauts. The astronauts reached the moon with the help of the 363-foot-tall Saturn V rocket. Its development was integrated by Boeing, which also made the first stage booster. It was 138 feet high and had 7.5 million pounds of thrust—the equivalent of 130 of today's most powerful jet engines. The Saturn V was used 13 times—not once failing.

But Boeing did not just help the astronauts get to the moon, it also helped them get around once they got there. The Lunar Roving Vehicles, built by Boeing in only 17 months, were used on the last three Apollo missions. The rovers looked like modified dune buggies and enabled the astronauts to travel more than 20 miles from the landing site. The vehicles operated without a problem in temperatures that ranged from minus 200 to plus 200 Fahrenheit degrees. To this day the rovers are still parked on the lunar surface.

Boeing's involvement in the lunar missions might have been its most spectacular moment, yet it remains heavily involved in the space program to this day. It continues to launch Delta rockets, and it has a large role to play in the Space Shuttle operations—Boeing processes all space suits and equipment, and McDonnell Douglas, with which it merged in 1997, developed the aft propulsion pods and structural parts of the boosters used to get the shuttles into orbit.

But probably the most exciting and interesting project that Boeing was involved in in the late 1990s was the International Space Station, the largest peacetime international scientific venture ever undertaken. Sixteen countries were participating. Boeing was the main contractor of the station that, when completed, will have a total area covering two football fields. It is scheduled to be completed in 2003 and will take more than 40 launches to complete. This massive undertaking is truly a venture that requires international cooperation. Says Doug Stone, Boeing Space Station program manager, "Space Station is about people of all walks, all races, many political systems all coming together to reach outside ourselves and accomplish something far greater than any of us could accomplish alone. To attempt what seems impossible, to reach beyond your grasp, to dare great deeds—this is an important part of being human." James T. Kirk couldn't have said it better himself.

The cyclical nature of aircraft manufacturing is notoriously hard on workers, as evidenced by a suit brought against the company in 1995 by 18 former Boeing employees accusing the company of employment fraud. These people, hired in 1988 and 1989 at the end of the Boeing boom, contended Boeing misled job applicants the promised of secure new careers in the Puget Sound area as pre-flight mechanics and electricians in the Everett division. These people had, according to newspaper accounts, left homes in locations as distant as Georgia, Texas, and New York to work for the aircraft manufacturer. They contend they were promised at least five years of work; none worked for more than three years. Boeing contended none of these employees were provided with a contract or written statement promising them long-term employment, nor did they ask for a written guarantee.

Changes in technology have also resulted in worker woes. When Boeing shifted to using advanced design software, for example, that translated into the need for thousands fewer machinists to build each plane.

Once again on an upswing, at the end of 1996 Boeing was hiring at such a rapid pace that its suppliers' employees were being drained. According to the Puget Sound Business Journal, "One wag said the company will hire anyone who can pronounce 'machinist'." Worldwide employment was up to 238,000 at the end of 1997, compared to 211,000 in 1996 and 169,000 in 1995.

SOURCES OF INFORMATION

Bibliography

1997 current market outlook. seattle, wa: the boeing company: 1997.

banks, howard. "slow learner." forbes, 4 may 1998.

the boeing company 1997 annual report. seattle, wa: the boeing company, 1998.

"boeing corp. moving ahead and flying high." the online investor, 4 august 1997. available at: http://www.investhelp.com/ba_spotlight.shtml.

brown, leslie. "former boeing workers accuse washington jet-maker of employment fraud." knight-ridder/tribune business news, 16 may 1995.

company profile. seattle, wa: the boeing company, 1995.

dove, laurie. "boeing turns dilemma into success story." wichita business journal, 16 march 1998.

hackney, holt. "boeing: back on course." financial world, 18 january 1994.

homes, stanley. "boeing's dangerous liaison." seattle times, 22 march 1998.

ropelewski, robert. "boeing keeps sharp focus on china." interavia business & technology, november 1996.

wald, matthew l. "checks of 737's show more damaged wiring." the new york times, 12 may 1998.

wilhelm, steve. "boeing: commercial side still the growth engine." puget sound business journal, 3 january 1997.

For an annual report:

on the internet at: http://www.reportgallery.com/boeing97or telephone: (800)457-7723 or write: the boeing company, mail code 3t-33, po box 3707, seattle, wa 98124-2207

For additional industry research:

investigate companies by their standard industrial classification codes, also known as sics. boeing's primary sic is:

3721 aircraft

Company Profiles for Students

The Boeing Company

views updated May 18 2018

The Boeing Company

100 North Riverside
Chicago, IL 60606
(312) 544-2000
www.boeing.com

From the early days of rickety biplanes to today's high-tech space vehicles, the Boeing Company has been a world leader in aerospace and aviation, known for its highly skilled engineers. Millions of commercial airline passengers fly its jets, including the 757, 777, and the 747 "jumbo jet." Boeing has also provided the U.S. government with some of its best fighter planes and bombers, as well as missile systems. And circling Earth is the International Space Station, with a laboratory and living quarters made by Boeing.

A New Company in a New Industry

Aviation was still a mystery to most Americans when businessman William Boeing and U.S. Navy engineer George Conrad Westervelt began building airplanes. Working out of Boeing's boathouse in Seattle, Washington, the two men and an assistant completed a plane, called the B & W, in June 1916. The next month, Boeing officially formed the Pacific Aero Products Company, which later became the Boeing Airplane Company.

When the U.S. Navy assigned Westervelt to the East Coast, Boeing hired Tsu Wong as his engineer. Wong's improvements to the B & W led to the Model C, Boeing's first commercial success. During World War I (1914-18), the company sold fifty Model C's to the U.S. government; its first international sale came when New Zealand bought two for its postal service. After the war, however, the demand for planes fell, and Boeing made furniture and small boats to stay in business.

Military sales picked up in the early 1920s, as did sales to the airmail industry. Boeing's Model 40A had a lightweight engine that let it carry twice as much mail as any other plane using the same amount of fuel. Boeing won government contracts to carry mail between Chicago, Illinois, and San Francisco, California, and it formed an airline company, Boeing Air Transport. After buying several other airlines, Boeing called its transport company United Air Lines.

Growing Bigger, Breaking Apart

In 1928, the Boeing Airplane Company joined with several other companies to form the United Aircraft and Transportation Company The new company included Pratt & Whitney, a builder of aircraft engines, and Sikorsky Aircraft, a company founded by another aviation pioneer, Igor Sikorsky (1889-1972). Pratt president Fred Rentschler was president of United Aircraft, with William Boeing serving as chairman of the board. By this time, Boeing had turned over most day-to-day operations at his company to Philip Johnson.

Boeing at a Glance

Employees: 198,000
CEO: Philip Condit
Subsidiaries: Aileron Inc.; Astro Ltd.; Autonetics; BCC Limited; BCS Richland, Inc.; Delta Launch Services, Inc.; Douglas Limited Express; Falcon Leasing Ltd.; Hanway Corporation; Kuta-3 Aircraft Corporation Ltd.; MDC Properties; North American Aviation Inc.; Rocketdyne, Inc.; Wingspan, Inc.
Major Competitors: Airbus; General Dynamics; Northrop Grumman; Lockheed Martin
Notable Products: KC-135 tanker; F-15 fighter; F-18 fighter; B-2 bomber; B-52 bomber; C-17 transport; AH-64 Apache helicopter; CH-46 Seas Knight helicopter; CH-47 D/F Chinook helicopter

As part of United Aircraft, Boeing introduced the first comfortable passenger plane. The Model 80 carried twelve people in a cabin that featured leather seats, running water, and reading lamps. A later model carried eighteen passengers. In 1930, the company built its first all-metal plane; earlier craft featured fabric and wooden parts. The "Monomail" was also Boeing's first single-wing plane, as most aviation companies began moving away from biplanes. The design of the Monomail influenced the Boeing 247, a twin-engine passenger plane that has been called the first modern commercial airliner.

Timeline

1917:: William Boeing renames his aviation company the Boeing Airplane Company.
1927:: Boeing begins carrying mail and passengers on its Model 40A.
1928:: Boeing and Pratt & Whitney are the main companies in the new United Aircraft and Transportation Company.
1933:: The 247 becomes the model for other passenger planes.
1934:: William Boeing retires after the U.S. government breaks up United Aircraft.
1952:: The B-52 bomber begins production.
1957:: The 707 flies for the first time.
1969:: The first jumbo jet, the 747, begins service.
1995:: Boeing introduces a new long-range jet, the 777.
1997:: Boeing merges with McDonnell Douglas.

Boeing's new planes made United Aircraft an aviation leader. The company, however, faced problems starting in 1933. That year, the U.S. government began investigating possible illegal business deals in the aviation industry. William Boeing was called to testify before Congress, and he admitted making millions of dollars in questionable—but technically legal—transactions. The next year Boeing returned to Washington, D.C., as the government drew up new rules for airline companies. One rule forced United Aircraft to break up into smaller parts. United Air Lines became a separate company, and the manufacturing divisions split into United Aircraft and Boeing Aircraft.

Winning the War

Through the rest of the 1930s, Boeing developed both commercial and military aircraft. Its four-engine "Clipper" was used to fly passengers over long distances. For the military, Boeing built the long-range B-17 bomber. A commercial version was the first passenger aircraft to feature a cabin with enough air pressure to let the plane fly above bad weather.

Even before the United States entered World War II (1939-45), Boeing was gearing up for wartime production. Once the war started, its plants built the B-17 and the later B-29 bombers twenty-four hours a day, seven days a week. Thousands of women built many of the planes, filling in for men drafted into the military. The B-17, known as the "Flying Fortress," first saw action with the British Air Force in 1941; it became famous for its ability to take enemy gunfire and keep flying. The B-29 "Superfortress" was used primarily in Asia and dropped almost all the bombs that landed on Japan—including the two atomic bombs that helped end the war.

Peacetime was devastating for Boeing workers: the U.S. government cancelled contracts and seventy thousand people lost their jobs. Slowly, however, Boeing gained new orders, both commercial and military. During the postwar years, Boeing built new bombers, including the B-52, which still flies today. It also made a commercial version of its C-97 military transport plane. This "Stratocruiser" carried up to one hundred people and offered twenty-eight bunks for overnight flights. Boeing also built one of the first U.S. military jet planes, which could fly much faster than the old propeller-driven planes.

The Boeing Model 40A, which was used to deliver airmail, included two extra seats, making it Boeing's first passenger plane. The first passenger to fly on Boeing Air Transport was a Chicago reporter. Her trip from San Francisco, California, to Chicago, Illinois, took twenty-two hours.

Filling the Skies with Passengers

Jet engines and the larger, faster planes they powered drastically changed commercial aviation. As flying times became shorter and ticket costs fell, more people flew for both business and leisure. Boeing helped pioneer this new age with its first commercial jet, the 707. Both the 707 and a military version were based on the "Dash 80," which cost Boeing $16 million to develop. To compete with Douglas Aircraft Company, the leading commercial plane builder at the time, Boeing built several versions of the 707, tailored to its customers' needs. The plane carried up to 181 passengers while cruising at 300 miles per hour. Boeing delivered its first 707 in 1957, and sold more than seven hundred for commercial use through 1978.

The 707 was a huge moneymaker for Boeing, and the company continued to develop more commercial jets. The 727, introduced in 1964, was designed to fly in and out of small airports. Three years later, the 737 began rolling down runways. It became popular for carrying smaller numbers of passenger on short flights. The next Boeing model went in the other direction. The 747 carried twice as many passengers as any other plane and could fly 6,000 miles nonstop. This was the world's first "jumbo jet"; Boeing has made several versions of the 747 since the first one flew in 1969.

The 747 looked promising, but Boeing faced difficult times shortly after the plane was introduced. Orders were slow, and company president Thornton Wilson laid off about sixty-seven thousand workers. As the major private employer in Washington state, the move hurt the local economy. Eventually, however, the success of the 747 and other new business let Boeing bring back many of these workers, and the company began to design its next commercial planes, the 757 and 767.

During World War II (1939-45), Boeing camouflaged one of its Seattle, Washington, factories by building a fake town on the roof. If any enemy pilots flew overhead, they would have seen a residential neighborhood, not a war plant.

Other Ventures

At the end of World War II, Boeing began to move beyond aviation into aerospace and other fields. The company designed an anti-aircraft missile system and rockets used to carry nuclear weapons. When the U.S. government began its space program to land astronauts on the moon, Boeing won many important contracts to build spacecrafts. Its rockets also helped boost satellites into orbit around Earth.

Other new products included huge windmills for producing electricity, a plant to remove salt from seawater, and several hydrofoils built for the U.S. Navy. These high-speed boats ride just above the surface of the water. The company also expanded its product line by purchasing other companies. In 1960, it bought the Vertol Aircraft Company of Philadelphia, Pennsylvania. Vertol manufactured large, twin-rotor helicopters. Many of these "choppers" were used during the Vietnam War (1959-75). In 1961, Boeing Aircraft made another move when it officially changed its name to the Boeing Company

Not all of Boeing's new ventures succeeded. In 1966, it began working on a supersonic transport (SST). The plane would fly at almost three times the speed of sound—more than 1,900 miles per hour—and carry 175 passengers. More than $1 billion was spent on the program, but Boeing ended work on the SST after the U.S. Congress voted to stop funding the project.

New Growth

By the 1980s, Boeing faced new pressure on its commercial aviation business. Airbus, an aircraft company formed by several European nations, was offering planes that matched Boeing's. Airbus also had one major advantage over Boeing: it received government funds, which meant it could afford to lose profits and still stay in business. As a private company, Boeing did not have this luxury. Despite the competition, however, Boeing sales rose from $16.3 billion in 1986 to $29.3 billion in 1991.

By 1995, Boeing controlled more than half of the commercial aviation market. It also remained active in military aviation and aerospace. Boeing built the first Airborne Warning and Control System (AWACS) in 1976 and continues to make them today. This system is used on planes to track enemy aircraft with sophisticated electronics. It also worked on the F-22 fighter and the B-2 bomber, a "stealth" plane designed to elude enemy radar One project, Sea Launch uses a ship to launch satellites.

To strengthen its position in military fields and aerospace, Boeing struck a number of deals. In 1996, it bought the defense and space division of Rockwell International for $3.2 billion. The next year, Boeing merged with a former competitor, McDonnell Douglas. The new Boeing had 220,000 employees and annual sales of almost $46 billion. At the same time, Boeing was struggling with production and financial problems. The company had always been driven by creative engineering, but its assembly methods and business practices were out-of-date. Boeing briefly shut down its production line in 1997; that same year the company had its first loss in more than fifty years.

Chief executive officer (CEO) Philip Condit and president Harry Stonecipher, the former head of McDonnell Douglas, took steps to update the company. One strategy was to start using more computer technology to design planes. They also put more emphasis on cutting costs and raising profits.

Aircraft for the Future

As competitor Airbus planned a new "super jumbo" jet, Boeing announced plans for its Sonic Cruiser. Rather than carrying more passengers than a 747, as the Airbus plane will, the Sonic Cruiser will hold only about 250 passengers. Its benefit will be speed and range. The plane will fly just under the speed of sound and travel up to 7,500 miles without stopping. The goal is to reduce flight length and the number of times passengers must change planes on long journeys.

Boeing is also working on new military craft. Its "Phantom Works" research-and-development division hopes to perfect a pilot-less aircraft. Known as the X-45, this stealth plane will be used to take out enemy defense systems. Computers on board will bring the craft to its targets and release bombs. The unmanned craft will be cheaper to build and fly than regular jet planes, and prevent the loss of pilots on extremely dangerous missions.

Meeting New Challenges

Boeing entered the new millennium as the world's largest aerospace company. It made another major purchase in 2000, buying the space and communications division of Hughes Electronic Corporation. Still, Boeing faced tough times. In 2000, the company endured a strike by its engineers. The next year, Boeing had barely settled into its new corporate headquarters in Chicago when the September 11 terrorist attacks on New York City and Washington, D.C., sent the commercial aviation industry into a tailspin. Facing a cutback in new plane orders, Boeing laid off thirty thousand workers.

For airlines that were still buying aircraft, Airbus was increasingly becoming their preferred provider, although Boeing still produced about 60 percent of new commercial planes. The company also lost out on a government contract to build a new fighter, and its V-22 Osprey faced lingering questions over technical problems. Designed to lift off and land like a helicopter and fly like a plane, the Osprey seemed prone to crashing.

Despite the setbacks, Boeing continued to develop new products in all areas. It introduced Connexion, a satellite-based system that provides Internet service and communications to airplanes. Boeing also made improvements to its most popular aircraft, including the 777, which was introduced in 1995. In 2002, CEO Condit remained confident in Boeing's future. He said on the company Web site, "We have a strong balance of commercial, defense, and space capabilities, customers in 145 countries, a business backlog of more than $100 billion, and a future with extraordinary potential for discovery and achievement."

Leading American Businesses

The Boeing Company

The Boeing Company

Beginnings, Early 20th Century

1929–34: “United” Era

1934–52: Breakup and Military Aircraft

Company Perspectives:

1953–69: Jets, Missiles, and Rockets

Key Dates:

1970–82: Averting Bankruptcy; Diversification; the 757 and 767

Mid-1980s to Mid-1990s: The 777 and Another Industry Downturn

Late 1990s and Beyond: Major Acquisitions and the 747-x Stretch

Principal Subsidiaries

Principal Competitors

Further Reading

The Boeing Company

The Boeing Company

Principal Subsidiaries

Further Reading

The Boeing Company

The Boeing Company

Principal Subsidiaries:

Further Reading:

The Boeing Company

The Boeing Company

Contact Information:

OVERVIEW

COMPANY FINANCES

ANALYSTS' OPINIONS

HISTORY

STRATEGY

INFLUENCES

CURRENT TRENDS

FAST FACTS: About The Boeing Company

PRODUCTS

CORPORATE CITIZENSHIP

CHRONOLOGY: Key Dates for The Boeing Company

GLOBAL PRESENCE

EMPLOYMENT

TO BOLDLY GO. . .

SOURCES OF INFORMATION

Bibliography

For an annual report:

For additional industry research:

The Boeing Company

The Boeing Company

A New Company in a New Industry

Growing Bigger, Breaking Apart

Boeing at a Glance

Timeline

Winning the War

Filling the Skies with Passengers

Other Ventures

Aircraft for the Future

Meeting New Challenges

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The Boeing Company

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