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Jon Talton

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

January 30, 2013 at 1:30 PM

What the Dreamliner isn’t…

I’ve heard much from readers searching for a historical parallel to the Dreamliner crisis at Boeing.

The 787 isn’t the Edsel, Ford’s misbegotten car from the late 1950s. The Edsel was the product of the most intensive market research in history up to that point, meant to compete against General Motors’ wide selection of nameplates by giving buyers something between a Ford and a Mercury. Yet aside from the Edsel’s early homely grille, it was basically a Ford. It came to an overcrowded market during a recession. It was built in Ford plants. It also had quality issues. The Edsel debacle was a cautionary foreshadowing of the data-driven myopia of Robert McNamara, Ford’s president who would go on to lead JFK and LBJ’s Defense Department, one of the “best and brightest” who got us in Vietnam.

The Dreamliner is an entirely new airliner, with revolutionary technology. It was hobbled early on by misguided attempts to cut costs through extreme outsourcing. Now it has a bug, centered around the lithium-ion battery. But it’s not an Edsel.

The Dreamliner isn’t a reincarnation of Britain’s de Havilland DH 106 Comet. This jetliner was revolutionary for its time, beating the 707 to market with its debut in 1952. Yet the catastrophic metal fatigue that would cause three highly publicized midair disasters was not well understood at this early point in the Jet Age. Boeing has been building jet airliners for decades and had the best research and computer-aided design to create the carbon-composite Dreamliner. There may be a rough analogy — the advanced electronic system and use of li-ion batteries is proving to be less understood than Boeing had claimed. But the 787 is not the Comet.

Then there’s New Coke, the disastrous Coca-Cola rollout from the 1980s. Once again, as with the Edsel, market research trumped common sense. The public hated the new drink. If there’s a link with Boeing, it may be corporate hubris. But the Dreamliner might be considered the Tolstoy airplane. As in, happy new airliners are all alike; every unhappy new airliner is unhappy in its own way.

I’ll leave you to react to this email I received from a reader today:

This morning on KUOW I heard you state that Boeing’s engineering ethos was overcome by the “bean counting” culture of Douglas. I beg to disagree. I was at Boeing in the 1980s, well before the merger, and it was already evident that the engineering ethos of T. A. Wilson was being subordinated to the “bean” (dividend) orientation of Frank Schrontz. Which might not have been so bad if they had taken a sufficiently long-range view, but a near-term focus on annual and even quarterly returns and a misapprehension of some manufacturing realities led to a number of stumbles. Perhaps you recall the fire extinguisher misconnection problem; that is probably my favorite example.

And Don’t Miss: Amazon.com’s growth looks like Wal-Mart in the 1990s, but even better || Wired

Today’s Econ Haiku:

GDP contracts

Is a double-dip ahead?

No, the new normal

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