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Boeing’s Decline in Innovation: The Impact of the McDonnell Douglas Merger

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Boeing and McDonnell Douglas agreed to a merger in December, 1996. At the time, Phil Condit, then CEO of Boeing, called the acquisition a “historic moment in aviation and aerospace”. The past 28 years have proven that it was definitely a historic moment–just not in the way Boeing originally envisioned. (avgeekery.com) More...

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CHRISMORGAN
CHRIS MORGAN 22
Clearly the merger with MD started the decline at Boeing but how surprising that in the following nearly 30 years no one at Boeing was able to stop the rot. Whilst it is easy to put the blame on the original merger the ongoing problems rest solely on the shoulders of subsequent Boeing senior board and management members.
azorie
azorie 2
That is because the merger was about money and stocks, greed. They were in it for profits, you dont merge to innovate, you merge to remove competition and make the MB&A guys rich.
avionik99
avionik99 27
So basically Boeing merged with a horribly run MD company and then let them run Boeing! We can all see how that's working out. Makes no sense that Boeing merge with a poorly run company and then allowed those people to run Boeing??
Sorak
Sorak 24
It makes sense only to the bean counters. Every large company has declined after depending on stock manipulation instead of customer satisfaction.
xtoler
Larry Toler 8
There were movies back in the '80's about corporate greed. We're certainly reaping those benefits. Don't get me wrong,there is nothing wrong about making money, but greed wins.
n914wa
Mike Boote 2
If, by "bean counters", you mean Accountants - Accountants simply report results. They do not run companies. What the executive suite decides to do based upon the results reported is up to them. Though the Accountants will report those results as well.
dba74m
dba74m 21
What if the executive suite that runs companies is made up of folks with a wall street mentality vs. safety/engineering? That's what happened at Boeing
TimDyck
Tim Dyck 2
They do run companies if the Bean Counters are the majority on the Board Of Directors or are the CEO
n914wa
Mike Boote 1
Harry Stonecipher was not an Accountant. His background was Physics.
ColinSeftel
Colin Seftel 1
Accountants do run companies when they get promoted to the C-suite!
ColinSeftel
Colin Seftel 11
Yes,“McDonnell Douglas bought Boeing with Boeing’s money,” was the ironic joke going around Seattle in 1996.
JimHerman
Jim Herman 5
I lived in the Everett WA area when the merger happened and knew a lot of Boeing employees. The general consensus then was that McDonnel Douglass bought Boeing with Boeing's money. That does appear to be the case.
mariofer
mariofer 5
I see this all the time with companies across just about any industry. Makes no sense but that's how these deals are structured.
mariofer
mariofer 11
I have been saying this for years. And I see this all the time in my line of work, across all industries. Good company acquires or merges with a struggling company and as a condition to the merger, the leadership who ran the not so good company into the ground, is retained and they get to run the Good company. The result is the Good company becomes a clone of the not so good company. Boeing has not had a clean sheet aircraft design since the 777 since before the merger, they became MD.
user3956
user3956 3
Facts, the 777 was the last of the greats indeed.
ColinSeftel
Colin Seftel 1
787 was a clean sheet as well as being a very innovative design.
ColinSeftel
Colin Seftel 0
787 was a clean sheet as wall as being a very innovative design.
btweston
btweston 1
“Innovation” is an excuse for lots of things nowadays.
ravanviman
hal pushpak 8
Nice article from Avgeekery/Jeff. Can't disagree with any of it.
tipo159
Alan Perry 7
I think the MentourNow videos on this topic is a better analysis than this piece.

Boeing got a bunch of execs of the Jack Welch variety with the MD merger and this enabled the existing Boeing execs who wanted to join the companies following the Welch's GE Way. History has since shown that that was not a good strategy in the long term.

Welch's management style prioritized short-term gain, which doesn't work when your company makes products with long development cycles.
nasdisco
Chris B 17
At some point, people have to stop blaming the MD merger that happened twenty eight years ago and take a serious look at themselves

The time for old excuses is over. Every single person at Boeing must personally face the music of the things they have done to contribute towards the mess that Boeing is today.
twinsemi
Tom Winsemius 4
The point of the article is that the merger fundamentally changed Boeing for the worse and they have been that way ever since. It is a problem that started at the top and has been that way ever since.
Baywooff
James Bruton 4
Boeing's 757 is and will always be my favorite commercial aircraft.
Skip737
steven iltz 4
When management looses it's culture and support of the employees, bad things happen. I loved the B-737 in my pilot career, but the 737 Max pushed the envelope of an aging airframe limits. Now you have a plane that has reached its life cycle, and no airline wants to be the last customer to place an order for a plane that will soon be out of production. Airlines will soon be looking for a replacement that has a production future. Boeing has yet to develop a replacement for the 737
DavidEmery
David Emery 2
This article begs the question "-Why- did Boeing buy McD, given the relative strengths of the two companies."
ColinSeftel
Colin Seftel 2
Boeing wanted to gain M-D's military business and the Pentagon wanted to ensure continuity of supply.
cjrp
conrad pillai 2
Boeing was one of the best Companies in the US providing most of its exports, when they eat their nearest competitor ( capitalism does not work very well wo competition ) greed took over, and that is its pitiful descent to a second class company!!
richardbaldock
Richard Baldock 2
Was it a merger or an acquisition? Surely it can’t be both?
eldin1503
M Ahmed 1
One of the main issue is that the Americans are too proud to admit their mistakes and take corrective steps. Also, they are totally blinded by profits, the greed for money rules. As a passenger, I say my last prayers if I am boarding a Boeing.
gabrillio
Gabriel G Flores 1
Boing employees went to MDC Long Beach Calif. and caused trouble in the assembly of C-17, Boing wanted the C-17 program from MDC. Look at the C-17 production serial numbers, ser. 50001 the tail section was hard installed, without the loadmaster frame assembly, at that time it became museum bound. Serial number 50003 and and 50005 were scrapped, too many cannabolized parts to get the late first flight on Ser. 50002 September 15, 1991.
DougHaviland
Doug Haviland 1
The “merger” with Boeings money. Funny the way that went. IMO
dwiggins01
Scott Wiggins -1
The 787 and 777 are declines in innovation? Who knew...and the much derided Max has 6000 orders on the books. No decline buddy, just innovating for the future.
CHRISMORGAN
CHRIS MORGAN 3
Airbus has a considerably larger order book, and a far greater share value than Boeing. It would be wrong to suggest that, just because Boeing has a substantial order book, all is well and recovery is guaranteed. The recent strikes did enormous damage to the company and quality control issues have still to be fully resolved. I would suggest that it will take many months before they can increase production to the levels required to sustain profitability and in the meantime Airbus will continue to grow it's market share.
popnovember
Pop November -4
what about the fact that the Euro subsidized Airbus ate Boeings lunch.
ColinSeftel
Colin Seftel 2
Boeing is also subsidized through military contracts.
btweston
btweston 2
What about it?

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