The Boeing Co. is turning 100 on July 15. Throughout the year, The Daily Herald is covering the people, airplanes and moments that define The Boeing Century. More about this series
A steady, chill wind blew across the North Carolina beach as the man climbed into the spruce, linen and wire contraption. The small motor chugged. The mooring line was released, and the craft ran into the wind along a thin wooden track. At 10:35 a.m. on Dec. 17, 1903, it lifted into the air. Orville Wright jerked the plane’s heavy rudder — left and right — fighting to stay in the air.
After 12 seconds and about 120 feet, the Wright Flyer smacked back into the sand. Man had flown.
Earlier that year, a recent Yale dropout steamed into Grays Harbor on Washington’s coast. He’d come to turn his inheritance into a fortune in logging. Bill Boeing had a sharp mind for mechanics and business. He was an avid hunter and adventurer, as well.
Boeing quickly joined the cluster of millionaires who’d wrenched fortunes out of the state’s lush forests, rich mineral veins and bountiful fish runs. By 1915, he’d bought a yacht — as well as the shipyard that built it — and a mansion in the Highlands, a posh enclave north of Seattle.
In July of that year, he and a friend, George Conrad Westervelt, paid a wiry barnstormer, Terah Maroney, to take them flying. Lake Washington dropped away below as the plane banked and turned through the air.
Boeing was hooked by the thrill of flying, and its technical challenge. He said to Westy, as friends called him, that they could probably build a better plane.
That year, he bought a rudimentary plane and took flying lessons from Glenn Martin’s Los Angeles-based company.
Like other aviation pioneers, Boeing and Westervelt were tinkerers, with no formal training in the science of flight.
The pair learned by trial and error while designing their own plane, the B&W, named for the initials in their last names. “Our interest was in progress,” Boeing later told an interviewer.
While flying was still a hobby for Boeing, he hired a crew to help develop the B&W and built a floatplane hangar on Seattle’s Lake Union. Westervelt moved back east before the B&W flew in June 1916. The plane performed well, as did a second one completed that fall.
Boeing established the Pacific Aero Products Co. on July 15, 1916. The articles of incorporation listed nearly every flying-related endeavor imaginable, including making airplanes. Pacific Aero Products was renamed the Boeing Airplane Co. less than a year later.
By 1917, the company developed the first all-Boeing airplane, the Model C, a seaplane trainer pitched to the Navy. Workers dismantled the prototype, packed it in crates and loaded it on a train bound for Pensacola, Florida, where Navy flyers put it through tests.
The Navy was so impressed that Boeing’s representative, C. Berlin, fired off a telegram: “Advise you get ready for big business. Everything points to big order. They ask how soon we can turn out twenty machines like these.”
The Boeing Airplane Co. was in business. But its survival was far from certain.
World War I brought a huge wave of orders, and by 1918, dozens of airplane makers had popped up, mostly in the Northeast and industrial Midwest. The names of some are still familiar today — Boeing, Lockheed, Martin. Most, though, including some of the biggest at the time, long ago disappeared into the maw of the industry’s churn.
Peace halted military orders. The industry contracted rapidly. Like others, Boeing struggled. “For quite a while during 1920 and 1921, I was tempted to abandon the whole subject,” Bill Boeing said.
Loyalty to his employees kept him from closing the company, he said. His wife, Bertha, chalked it up to sheer stubbornness.
The Boeing Airplane Co. accepted just about any work it could get to keep its core team together. They made furniture, a handful of fast boats, and fixtures for a corset shop in Walla Walla. Again and again, Bill Boeing reached into his pocket to cover payroll.
The company was saved in 1921, when it won a bid to make 200 MB-3A biplane fighters for the Army. Boeing had underbid the company that designed the plane. At the time, the military contracted separately for airplane development and production.
Many competitors scoffed at Boeing’s low bid, saying it would pull the company under — or at least leave its knees badly scraped. Instead, it was such a windfall that Bill Boeing gave out a cash bonus at Christmas.
One of the company’s young engineers, Claire Egtvedt, challenged Bill Boeing to hire more engineers to design new and better aircraft.
“We are building airplanes, not cement sidewalks,” he said.
Boeing certainly saw that engineering was critical to the company’s success. In 1917, he gave money to the University of Washington to start an aeronautical engineering program and to build a wind tunnel. He’d also hired three UW engineers, including Egtvedt and his classmate Phil Johnson. Both would one day lead the company.
Building up, breaking new ground
Airmail was big business by the mid-1920s, when Boeing developed its Model 40, a biplane designed to carry mail and passengers.
When the federal government privatized airmail routes, Boeing started its own airline — Boeing Air Transport — and landed the key Chicago-San Francisco route. Boeing’s bid was about half the cost of the next lowest. Again, competitors expected the company to bleed money. Again, the company made huge profits.
Bill Boeing set up a holding company to raise money for the expansion of his aviation empire. His company bought other air carriers, manufacturers and suppliers. After a partnership with enginemaker Pratt & Whitney, the holding company became the United Aircraft and Transport Co. (UATC). The carriers were collectively known as United Air Lines.
UATC’s stock soared even as the Depression crashed into Wall Street. The holding company raked in fat profits in the late ’20s and early ’30s.
Four big holding companies, including UATC, dominated the industry by 1930. The business model was to tie suppliers, manufacturers and airlines together under one corporate umbrella.
More than 5,000 people crowded Boeing Field in 1933 to behold Boeing’s newest plane, the Model 247. It was like no passenger plane before. Earlier frame-and-wire designs looked more like birdcages with propellers. The 247 had a sleek, streamlined, all-metal body and powerful Pratt & Whitney Wasp engines.
The 247 was the first modern airliner and established fundamentals of passenger airplane design that are still used today. It also was a commercial flop.
Airlines rushed to order the new plane but found they’d have to wait. Boeing had committed the first 60 deliveries to its own air carrier, United.
Competing airlines, led by TWA, pushed other manufacturers to meet or beat Boeing’s design. Douglas Aircraft in Southern California responded by launching its DC series, which quickly antiquated the 247. Boeing’s misstep in handling customers opened the door for Douglas, which would dominate the commercial airplane market for more than 20 years.
Scandal and breakup
UATC was caught up in Depression-era politics in 1934. Critics accused Boeing and other airmail carriers of colluding to squeeze excessive profits from federal airmail contracts. Smaller competitors said they were being pushed out by the big holding companies.
Hugo Black, an Alabama senator at the time and a future Supreme Court justice, led a Senate investigation, banging its bully pulpit as loud as he could. He grilled Bill Boeing and other industry leaders who were called to testify.
The worst accusations were never substantiated. However, in 1934, federal legislation prohibited any single company from both controlling airplane manufacturing and running an airline. UATC split into three companies, known today as Boeing, United Airlines and United Technologies, which includes Pratt & Whitney.
The experience embittered Bill Boeing, who sold his shares in his company and walked away, making good on his long-term plan to retire in his 50s. That left the company in the hands of Boeing’s president, Claire Egtvedt.
Egtvedt focused on making big airplanes. By 1935, he committed to developing a four-engine bomber, essentially betting the future on its success. The Model 299 is better known as the B-17 Flying Fortress. Egtvedt also greenlighted work on what would become the B-29.
The other two big planes Boeing developed in the late ’30s, the 307 Stratoliner and the 314 Clipper, were both commercial failures.
Tragedy led the company to double down on its commitment to being a research leader. The prototypes of Boeing’s B-17 and 307 both crashed during flight tests, killing several people. Test pilot Eddie Allen pushed the company for a dedicated aerodynamic testing program. The company already understood — as did its competitors — that better testing could reduce development costs.
It built one of the country’s most advanced wind tunnels in the early 1940s, powered by the Pacific Northwest’s cheap hydroelectricity.
Big bombers, big business
World War II brought huge orders for B-17s and B-29s. Like the rest of the industry, Boeing rapidly expanded. Before the war, Egtvedt turned over day-to-day operations to Phil Johnson, who carefully guided the company through wartime expansion until his death in 1944.
Boeing’s workforce soared from 5,000 in 1939 to more than 51,000 in 1945. New federally financed plants were built in Renton and Wichita to churn out warplanes.
The company embraced mass production and developed a supply chain that presaged future production flow. Subassembly plants around the Puget Sound region, including two in Everett, fed a steady stream of B-17 and B-29 parts to assembly lines.
In 1944, U.S. factories turned out more than 90,000 airplanes. Boeing was not the biggest airplane maker during the war. Consolidated Vultee, North American Aviation, Curtiss-Wright and Douglas were all bigger.
Peace hit Seattle like an economic bomb. Nearly all military contracts were canceled or severely reduced. Boeing laid off tens of thousands of workers, and lost money in 1946 and 1947. An anticipated commercial air travel boom did not materialize until the 1950s.
Boeing fared better than many competitors, though. The B-29 stayed in production thanks to its advanced design and critical mission in the new atomic age. It kept the plants running after war.
The company beat competitors in designing a jet bomber, which began as a research project during the war. Boeing made the most of captured Nazi technology and research into jet airplane design. That led to the B-47 Stratojet bomber, which established the shape of today’s big jet planes at a time when competing designs were rooted in the status quo of spinning props.
The Jet Age roared in July 1949, when De Havilland Aircraft’s Comet first flew. When the British-built jetliner entered service in 1952, it left American industry behind. Douglas and Lockheed pursued prop planes instead.
Phil Johnson’s successor at Boeing, Bill Allen, carefully weighed the risks. In 1952, he committed the company to developing the jet-powered 367-80, or Dash 80, a prototype that bred both the KC-135 Stratotanker and the 707.
A few weeks after the Dash 80’s first flight, Boeing test pilot Tex Johnston famously flew barrel rolls in the plane over Lake Washington during Seafair. Flight tests for the Dash 80 did not always go smoothly, though, test pilot Jim Gannett told an Australian reporter a few years later. “Once, the nose wheel stuck up and we worked four hours trying to get it down,” Gannett said. “We had to take an axe to the wheel well. The nose finally came down about one second before we landed.”
Boeing beat Douglas to the jetliner market. Douglas responded with the DC-8, which performed well but suffered from production problems. Other challengers, such as Convair, arrived on the market too late, or missed the mark when they got there.
The 707 established Boeing as the dominant jet maker. The company’s position was bolstered by its focus on innovation, quality and customer service, and on designing a family of jets to span the market.
Boeing rapidly expanded during the 1960s, introducing the 727, 737 and 747, and trying to develop a supersonic transport airplane. While commercial airplane sales climbed Boeing hired workers to keep pace with its rapid growth. Shift changes were carefully choreographed to handle the daily ebb and flow at plants and offices around the Puget Sound region. In seemingly every office and shop, workers from the time say they felt they were part of something bigger.
Boeing was pushing the bounds of commercial jet travel. The SST promised to take us faster than ever before. And the 747 jumbo jet, the world’s first widebody, would take us farther.
Still, Boeing felt growing pains, Australian journalist Peter Dunn noted in 1967; “like a fat man in leather trousers, it is running out of room.”
That same year, St. Louis-based McDonnell rescued Boeing rival Douglas Aircraft from financial collapse. Douglas’ slide started in the early 1950s, when the company was at its peak. At the time, hundreds of Douglas planes hauled passengers around the world, compared to about 50 Boeing planes.
The Boeing boom collapsed into the Boeing bust in the late 1960s. Soaring oil costs, a global recession and growing environmental concerns forced airlines to slash orders. The SST was abandoned. The company had spent heavily on developing new airplanes. It didn’t have cash to weather the storm. Massive layoffs were necessary. The company’s board wanted an “ice water man,” someone who could make the deep cuts, Boeing President Thornton “T” Wilson said at the time.
More than 85,000 workers were laid off. In 1971, a billboard near the Seattle-Tacoma International Airport captured the region’s despair in one simple sentence: “Will the last person leaving SEATTLE turn out the lights.”
Executives considered selling or canceling the 737, said Peter Morton, a retired Boeing vice president who led the program’s marketing at the time. “The company was in financial straits, and everything was on the table.”
Even as the 737’s fate hung in the balance, engineers were improving it. “Boeing’s a complicated company,” Morton explained. “You can have a team of engineers improving the airplane at the same time you have the bean-counters running the numbers on closing the program.”
He and his team convinced the company to keep the plane and scoured the world for orders. It sold well in often-overlooked markets.
By the late ’70s, the 737 was on its way to becoming the best-selling commercial jetliner ever. In the early ’80s, Boeing introduced the 757 and 767.
The rise of Airbus
Boeing misread the future market when it upgraded the 737 in the early 1980s with a lowest-cost tweak. Demand for single-aisle jets exploded. Airbus, stepped in with its new A320.
“Each year, there are maybe one or two decisions that shape the industry for the next 20 years,” said Barry Eccleston, the current head of Airbus’ operations in North America.
The A320’s advanced design came along as the single-aisle market blossomed following airline deregulation. Northwest Airlines, a longtime Boeing customer, ordered 100 A320s worth a collective $3.2 billion. When United placed an order for A320s a few years later, it shocked the industry and even some people at Airbus. The order, from a company that shared Boeing’s corporate DNA, removed any doubt that the two airplane makers were in a bare-knuckle fight.
Some of Airbus’ claims about the A320 were overblown. Nonetheless, Boeing’s rival had taken the lead in the single-aisle market. “It had a better wing than the three-seven, and we had to catch up,” former Boeing manager Mike Alexander said.
Boeing responded with variants of the 737, referred to as the Next Generation. They’ve been hugely successful and are still in production.
Airbus countered with the A330 and A340 — planes designed to challenge Boeing’s dominance of the widebody market. Boeing responded with its 777, which killed off the A340, its direct competitor.
By the early 1990s, Boeing was feeling pressure from trade globalization and other changes affecting the American economy. A recession and the end of the Cold War further weakened aerospace companies and prompted a wave of consolidation. Boeing pursued the strategy with vigor, buying divisions of Hughes Communications and Rockwell International.
A different Boeing
Tuesday, Dec. 10, 1996, was a typical early winter day in Seattle: light rain, temperatures in the 40s. Boeing CEO Phil Condit and McDonnell Douglas CEO Harry Stonecipher met alone for 45 minutes in a suite at the Four Seasons. They hashed out a deal for Boeing to buy the flailing McDonnell Douglas for $13.3 billion in stock.
McDonnell Douglas leaders exerted a strong influence in the new company — much stronger than many at Boeing had expected. They brought a rigidly cost-conscious view to the board. Condit and Stonecipher made it clear that shareholder value was the performance measure that mattered most.
Condit “sold his soul to shareholders,” said Stan Sorscher, a retired Boeing engineer and former official with the Society of Professional Engineering Employees in Aerospace, the union representing Boeing engineers.
Stonecipher, who was one of the company’s largest shareholders, joined Wall Street analysts in arguing that Boeing was no different than any other manufacturer — be it Coca-Cola or cars.
Boeing went from being the smartest, most successful commercial jetliner manufacturer to simply squeezing out as much cash as possible for shareholders, said Richard Aboulafia, a leading aerospace industry analyst.
Leaders at Boeing’s commercial airplane division pushed for a successor to the 767 to compete with the A330. However, a faction led by former McDonnell execs balked at spending huge amounts on R&D. Instead, they pushed for outsourcing the development costs and the risks to suppliers.
The result: the 787’s far-flung supply chain.
Outsourcing fit with Condit’s long-held desire to move Boeing away from its bread and butter — making big jet planes. Boeing, in his eyes, should be a “systems integrator,” not a manufacturer. That meant it should manage suppliers making airplane parts that it could then snap together, like a piece of Ikea furniture.
Condit took the corporate offices to Chicago, a move meant to put the Puget Sound factories at arm’s length.
“We are in the midst of a mental shift, from being an American company that exports to the world to being a truly global company,” he said in 2003.
Becoming a “truly global company” has been painful and expensive for Boeing and many of its workers.
Boeing’s success was built on “product, process and listening to the customer,” Sorscher said. “The new focus was cost-cutting and shareholders.”
In 2001, L.J. Hart-Smith, a senior Boeing engineer, urged against blindly outsourcing work. The benefits are illusory or, at best, limited to specific situations, he said. Outsourcing could easily leave the company vulnerable to troubled suppliers. His concerns were dismissed but proved prophetic of the difficulties encountered on the 787 program.
The airplane’s development costs soared to more than $20 billion. It was delivered more than three years late. Producing the first 300 planes has cost Boeing nearly $30 billion more than it has recovered from sales.
Production and development headaches haven’t been limited to the 787 program. Developing the 747-8, the newest version of the iconic jumbo jet, took longer than Boeing had needed to design the prototype of the original in the 1960s.
Ethics scandals forced out first Condit, then Stonecipher, who succeeded him. The board found a successor: Jim McNerney, the head of 3M.
McNerney brought with him a rigid focus on stock price and shareholder dividends that earned praise and condemnation. In 2015, he described his tenure at Boeing as “trying to get the business fundamentals of this company as strong as the technical.” Investors responded, sending the stock price soaring even as problems continued to plague 787 production, which is running more or less smoothly today.
That focus, though, alienated many workers and even suppliers. Boeing sees its suppliers, its workers and even its finances as “commodities to be squeezed” for quarterly profits, Aboulafia said.
Not long before he retired, McNerney declared that the company would not pursue “moonshots,” but rather focus on incremental innovation. Be evolutionary, not revolutionary. Hard words for engineers at Boeing to hear.
The company invested more than ?$3 billion in research and development last year. By contrast, it spent more than $6 billion to buy back shares.
Meanwhile, more companies are making jetliners than at almost any time since the Jet Age began.
On its 100th birthday, Boeing is the world’s biggest aerospace company, but its future is uncertain, just as in 1916.
The centennial? “We’ll celebrate the hell out of that,” said Conrad Ball, one of Boeing’s top engineers.
But after the party, “there’s no guarantee, there’s no special place for Boeing in the future,” he said. “If anything, people are coming for us.”