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Jon Talton

Analysis and commentary on economic news, trends and issues, with an emphasis on Seattle and the Northwest.

July 21, 2011 at 10:00 AM

Why did Boeing get its tail kicked by Airbus?

To paraphrase the old Watergate question: What did Boeing executives think and when did they start to think? As the Seattle Times’ Dominic Gates reports, the American Airlines fiasco may have led to 15 years worth of work on new 737s in Renton, but it raises serious questions about what we might call the company’s competitive posture.

No airline manufacturer more than Boeing, maker of the Dreamliner, should better understand that airlines’ top priority for our future of discontinuity is preparing for a high-energy world with more fuel-efficient planes. Yet after being embarrassed by Airbus with new orders at the Paris Air Show, Boeing executives seemingly sleep-walked into the most important competition in recent years. They lost big to Airbus with American, the most reliable of Boeing customers, giving Airbus a major new foothold in the United States. And this supposed model of American capitalism lost to a state-supported conglomerate making airplanes in France. Quelle horreur!

It’s not as if Boeing management hasn’t seen the need coming to replace the workhorse 737. And did it learn anything from its cascade of self-inflicted wounds on the 787. What’s going on?

Complacency is always a danger facing a supposed market-leader (“the future will be much like the recent past”). There’s also the danger that the Jack Welch-trained brass is focused on financial tricks, distracted by diversification and, worst of all, managing for short-term profits at the expense of the company’s long-term viability. Such a culture would pooh-pooh Boeing’s heritage, which was not based on cheap but engineering excellence, innovative leaps ahead of the competition and on-time delivery.

The big wave of rivals from China, Brazil and elsewhere hasn’t even arrived. And yet Chicago has been fried by the French (and Brits, Germans and Spanish).

Today’s Econ Haiku:

The shuttle comes home

That’s one giant leap backwards

But let’s eat our peas

Comments | More in Aerospace/Boeing

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