Veteran Boeing Reporter Lays It All Out In New Book

Grounder worker services A Boeing 787 for launch customer ANA in Tokyo in 2014. (Photo by Robert Alexander)

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Scott Hamilton was already a recognized expert on Boeing in 1989, when I started to cover airlines for The Miami Herald. I began reaching out to him when I needed information about Boeing. This has not changed.

Hamilton first followed Boeing in 1985. His intricate knowledge of the company is reflected in his new book “The Rise and Fall of Boeing And the Way Back.” It’s not just that he knows all the twists and turns of Boeing’s history, but also that he was there for much of it and can call upon interviews he did decades ago for his publication, Leeham News & Analysis, as well as interviews for this book and a previous one about Airbus.

It’s no secret that Boeing’s story is an immense tragedy of American business, a tale of precipitous decline at a company once known for innovation, engineering supremacy, production efficiency, global leadership, good union jobs and a commitment to safety. Sadly, the commitment to a higher share price overwhelmed them all. At its most extreme, the lust for profits resulted in the deaths of 346 people in two fatal Boeing Max crashes in 2018 and 2019.

Yet, despite the decline, Boeing remains the leading U.S. manufacturing exporter; its airplanes still provide a symbol of U.S. might; it is a major defense contractor and it has held its place among the Dow 65 stocks. The duopoly in large aircraft manufacturing means Boeing survives because it must survive.

Hamilton, fully aware of the scope of the tragedy as well as Boeing’s immense worth, carefully documents the various series of bad decisions and what led up to them. He doesn’t rely on simplistic assignments of blame, but rather explores the subtleties of each decision.

In this book, nothing is black and white. Alan Mulally, who displayed genius in leading Ford after he left Boeing, is not 100% blameless in the Boeing 787 fiasco, and Jim McNerney did not make every single decision based on cost, even if his bad decisions were in sum so bad that Hamilton writes that “If a finger must be pointed at one person” for Boeing’s decline, “Jim McNerney is the one at the top of many people’s list. But the real culprit is Jack Welch.”

Welch was CEO and chairman of GE between 1981 and 2001. His management style, once lionized, has fallen into disrepute. Welch “was ruthless in slashing labor costs and taking on GE’s unions,” Hamilton writes. The failed 787 model –outsourcing work to suppliers around the globe, abrogating the benefit of Boeing engineering expertise and busting unions — reflected the GE model.

“McNerney laid off thousands of workers in the heavily unionized Seattle area and transferred jobs to non-union states or to contract workers,” Hamiton writes. “Thousands of engineering jobs were outsourced to Russia and India. He set out to break unions. Shareholder value in the form of stock buybacks and dividends were prioritized.”

“The GEntrification of Boeing” is the title of an early chapter in the book. GE’s negative influence first impacted Boeing after the 1997 merger with McDonnell Douglas, symbol MDC, in a $13.3 billion all-stock deal. “It’s an article of faith among legacy Boeing employees, their families and thousands of others that the merger of Boeing and MDC was really a takeover of Boeing by MDC,” Hamilton writes. “Shareholder value rose to the top under the influence of MDC executives after the merger, displacing the engineering culture of Boeing.”

Harry Stonecipher spent two decades at GE, became CEO of McDonnell Douglas and became CEO of Boeing a few years after the 1997 merger. He is seen as the person who first chose cost cutting over engineering superiority, largely because of his GE background. Hamilton quotes Stonecipher as saying “When people say I changed the culture of Boeing, that was the intent, so that it’s run like a business rather than a great engineering firm.”

As for Mulally, he “is revered by many within Boeing even today, nearly twenty years after he left to go to Ford,” Hamilton writes. Mulally’s engineering background and management system – he would draw attention to problems with green, yellow and red production charts, with red signifying problems – would have been unlikely to miss developing issues with the 787.

Mulally was involved in the development of yellow, six Boeing aircraft: the 737, 747, 757, 767, 777 and the 787. In a 2009 interview, he told me, “I was on every airplane. I was there for 38 years — that’s a long time.” He noted “We developed every new airplane during the worst of times,” adding, “It’s important not to lose focus during down cycles. It’s about taking decisive action to reduce your production to the real demand, (and) to accelerate the new products — not stopping a product, but actually accelerating the research and development at the worst of times.”

Why did Mulally leave? He declined to comment for the book, but Hamilton cites instances of conflict with Stonecipher.

Despite the 787’s now obvious flaws, including late deliveries, the plane is the best-selling widebody aircraft ever, and passengers continue to praise the flight experience. Its predecessor, the 777 was successful. “Unlike the troubled 737 and 787 programs, the 777 Classic proved to be a superb program,” Hamilton writes. “It was Boeing’s last hurrah.” Mulally oversaw the 777 project and is widely credited for its success. .

The 747 is also a key piece of Boeing history. Its development nearly pushed Boeing into bankruptcy: the budget “ballooned as problems, design creep, and delays converged.” Tens of thousands of employees were laid off. However, eventually, the plane enabled long haul air travel for millions and 1,574 were built.

As for quibbles, the book has various redundancies on topics ranging from the Sept. 11 attacks to the engineering/share price conflict. Also, coming from the airline side rather than the manufacturing side, I was sometimes overwhelmed by the discussion of aircraft types including military aircraft.

But why quibble? This is the story of Boeing told by perhaps its greatest chronicler.