Updated – May 4, 2013
Even though regulators have approved Boeing’s 787-Dreamliner return to the skies, uncertainties remain. The jet’s battery fires have had adverse impacts on a myriad of stakeholders.
They include Boeing employees, shareholders, customers, suppliers, and ultimately Seattle’s economy and the aerospace industry.
Firstly, regarding the aerospace industry, Boeing’s archrival Airbus should continue to refrain from making any sarcastic comments in the media about the Dreamliner’s woes. Put past issues aside.
Airbus’ A350, too, will be using the same lithium-ion battery structure for operational cost-savings to compete against Boeing. Pointing fingers at Boeing over safety concerns will only hurt the industry.
As the world’s most technologically advanced aircraft – in electrical systems and composite aerostructures – the Dreamliner was grounded worldwide following unsolved problems – fire reportedly from battery and electrical issues.
Unfortunately, the aircraft has a history of issues (see the interactive graphic: timeline of the Boeing 787 Dreamliner’s troubles).
Problems and solutions
Ironically, the Dreamliner’s comeback has depended largely on Boeing’s engineers. Boeing has long had labor issues with hostile labor unions and workers. The unions were understandably upset when Boeing announced it was outsourcing work on the 787.
Indeed, it caused massive migraines and delayed production. But with Boeing doing business in 145 markets in this global economy, the outsourcing was a necessary evil to garner sales.
It’s worth noting that the unions’ corrosive behavior was problematic long before the Dreamliner was conceived, and it hindered success. The company needed management-labor cooperation as the battery fires illustrated the dilemmas of energy storage technology.
The good news: Boeing can now focus on its objective to sell 5,000 787s in the next two decades. A long delay meant devastating economic repercussions for the greater Seattle region.
Boeing’s economic impact
Despite all the publicity about the technology sector in Washington state, Boeing is a major economic force.
- Boeing now employs 87,000 workers after adding about 13,000 in recent years.
- Employees have always been very well paid with terrific benefits.
- Boeing buys from 700 suppliers.
- The state assembles 90 percent of the aircraft sold in the U.S.
- Boeing’s success helps Washington to be the nation’s No. 1 exporting state.
That’s why the lights are still on.
Remember the infamous 1971 billboard message:”Will the last person leaving Seattle turn out the lights?” It reflected a true nightmare for Boeing and Seattle.
A nationwide recession, no airline customers for a year-and-a-half, the Carter Administration’s inability to solve the sky-high inflation rate, and other factors forced Boeing to lay off about 70,000 workers. The region’s unemployment rate was 17 percent.
In 2000, Boeing announced it was moving its corporate headquarters to Chicago. Boeing’s blockbuster announcement shocked everyone in Washington state. It was largely believed that apathy from public officials, who took Boeing for granted and incessant union hostilities prompted the move.
Employee strikes occurred with regularity just before each labor contract expired.
At the time, in addition to my business-performance consulting practice, I wrote a Biz Coach column for three Belo Web sites – King5.com, NWCN.com and Krem.com. I recall writing that the move made sense for multiple reasons.
- Boeing deserved better treatment from public officials who were also too cozy with the unions.
- The company needed space from the unions’ bad behavior.
- Boeing needed to be closer to its major customers – especially, the financially troubled United Airlines.
What did Illinois do to attract Boeing away from Washington?
According to a report in Space and Tech Digest: Illinois gave “$41 million in tax breaks and various state grants over 20 years…”
The publication also reported the city of Chicago gave Boeing incentives: “…$19 million in property-tax relief over a similar period and a $2 million grant. The city has also promised to establish a downtown area heliport that can be used by to transport executives to and from the central city. The city also agreed to contribute US$1 million to retire the lease of the existing tenant in the space that Boeing will occupy.”
Boeing Chairman Phil Condit was diplomatic in explaining Boeing’s move.
“We are here, not because we wanted to leave Seattle, but because we wanted to build a bigger, more capable Boeing Co.,” he said. “We believe that having our world headquarters separate from any one of our major businesses will help us to achieve our goals of growing this company.”
Oy vey! But it was true. It was impossible for the storied company to grow in Seattle’s toxic economic environment.
Considering that Boeing made its first plane flight over the Emerald City in 1910, what a PR and economic black eye for Seattle.
Washington state public officials: Design an economic-development strategy that works. Boeing still has a presence in Washington. Loyalty is important business relationships. Quit trying to lure Airbus and strategize to improve relationships with Boeing.
From the Coach’s Corner, suggested articles:
- Boeing, Airbus Rivalry – Lessons in Strategic Planning
- Strategic Planning Lessons: Why United Airlines Was Forced to Merge with Continental
- How to Avoid Failure in Risk Management and Strategic Planning
Memo to Boeing unions and government: Unemployment is not working.
Author Terry Corbell has written innumerable online business-enhancement articles, and is a business-performance consultant and profit professional. Click here to see his management services. For a complimentary chat about your business situation or to schedule him as a speaker, consultant or author, please contact Terry.