[Jeff Higgins]

Originally Posted by IROC

McDonnell Douglas was in trouble long before Stonecipher took over. The writing was on the wall. McDonnell Douglas did not have (and could not raise) the capital to develop a new commercial airliner. Everything was just evolutions of DC-9s (MD-80, 88, 95 and the ‘717’ ) and derivatives of the DC-10 (MD-11). As a result they were always eating the scraps left over from Boeing and Airbus. Then we “merge” and the new Boeing has a commanding share of the commercial aircraft market. Then, Boeing kills off the MD commercial planes and 3-4 years after we merge, Airbus does the unthinkable and overtakes Boeing in market share. Hardly MD’s fault that early in the game.

The Douglas Aircraft Company was once a proud, independent, "old school" aircraft manufacturer. They took chances, made investments - with their own money - much as Boeing had always done. They were deep into the commercial market, a far riskier market than the military market.

McDonnell Aircraft were a far different company. John McDonnell was infamous for not taking any chances with his own money. Risk avoidance was the name of his game. He was the personification of that old joke about how copper wire was invented - two Scotsmen fighting over a penny... He was all about the guaranteed military contract.

I worked with a few former Douglas engineers early in my career. Their opinion of McDonnell Aircraft was a foreshadowing of Boeing employees' opinions of McDonnell Douglas. They saw McDonnell Aircraft as the failed entity that had somehow swooped in and purchased (not merged with) Douglas. One of their funny remembrances of those days involved the yellow #2 pencils that they all used, with "McDonnell Douglas" imprinted in gold leaf on one flat. First thing they would do, before ever using those pencils, was feed them to a pencil sharpener until the "McDonnell" part was ground off.

It was apparently the McDonnell business model that precluded new aircraft development (at least commercial) at McDonnell Douglas. Like you said, endless derivatives of outdated aircraft. At Boeing, with 777 just entering production, we were all set for our next new, clean sheet aircraft. "Then came Stonecipher" (as you note below)...

Following the MD model, Harry would not allow a new, "clean sheet" design. At least not without engaging what he referred to as "risk sharing partners", per the MD model. All major manufacturers sub out work and, in the case of Boeing vs. MD philosophy, there was a very important difference.

At Boeing, we had always maintained design authority over every part on the aircraft. Oh, the various subs often designed the parts they were going to supply, but Boeing maintained absolute, final engineering authority over those designs - "final buy-off". And, regardless of who designed it, Boeing owned that design.

MD's "risk sharing partner" model was different in one very important respect - the subs, or "risk sharing partners", "owned" their designs and, more importantly, held absolute engineering authority over them. They were designed to meet a functional specification, how they got there was up to them.

I well remember the first time I was exposed to the ramifications of that philosophy. I (along with every other legacy Boeing engineer) received an "open letter" from one of our own, a guy who had been tasked to sort out cockpit integration issues on our newly inherited 717 (just another old DC-9 iteration). Raytheon and Hughs had each supplied some cockpit electronic component that did not "talk" to each other. At Boeing, we would simply drive the required design changes to one or the other or both until they played nice with one another. We had the authority to do that.

Well, not so at MD. Raytheon and Hughs owned their respective designs in their entirety, as "risk sharing partners". Each had independently met their design specs as provided by MD. As a result, there was no over-arching authority to compel either to make the required changes. The changes had to be negotiated and contracts rewritten, and, of course, money paid. Watching this unfold was a real eye opener to us Boeing guys...

We didn't know it at the time, but it was a foreshadowing of how 787 was going to be managed. Harry wanted us to sign on investors as "risk sharing partners" per the MD model. What ensued was the single biggest disaster in the history of The Boeing Company.

We signed on plenty of these "risk sharing partners". And then proceeded to squeeze them so hard, regarding both schedule and cost, that over half of them eventually made the very pragmatic business decision to default on their contracts and pay Boeing the penalties. Well, while in ever deepening trouble because of this trend, the old Boeing guys thought all was not lost - we could simply take what they had so far, find another supplier, and carry on...

Alas, not so fast - we didn't own these designs. We had no rights to them. Some of these "risk sharing partners" were willing to sell what they had developed to Boeing - for an exorbitant cost, of course, recouping their penalties and making a tidy profit in the meantime. Many were not, and simply (quite bitterly) told Boeing to pound sand. And Boeing didn't have the capital to buy the design data from the ones that offered it. This happened more than once on several systems, installations, and assemblies. Years and years of delays and billions in cost over runs later, we now knew the full ramifications of MD's "risk sharing partner" approach.

Originally Posted by IROC

The C-17 was struggling with structural challenges due to its revolutionary use of carbon fiber. The early 90s were tough. John McDonnell was a great guy, but the ironic thing again was that I think McDonnell Douglas was too focused on the technical side and not the financial and they just slipped into the red year after year…. Then came Stonecipher…

Oh, believe me, John McDonnell was laser focused on the financial side. Notoriously the cheapest bastard to ever play the aerospace game. It was his insistence that only government money be spent that killed MD, even long after he was gone. Stonecipher was a Jack Welsh "true believer" to begin with, and he found "heaven" under old man McDonnell's policies.

Originally Posted by IROC

I was in the manned space flight part of the company (Spacelab, mostly) but transitioned to work on Space Station when we merged. Boeing had dropped the ball so badly on the ISS program (zero award fee one year) that McDonnell Douglas basically took over and pulled it back out of the ditch.

Never worked anything but commercial, so I cannot comment on any of this. What years were these?

So, anyway, this unfortunate situation on 787, the billions lost on that program through the disastrous adoption of MD's management philosophies, is what led to the 737 MAX. A 737 replacement (that thing predates 747, from the mid 1960's) was going to be our next project after 787. A brand new, "clean sheet", maybe all composite regional jet. 787 killed any hope of doing that. But Airbus was killing us in that market, so we "had to do something, even if it's wrong"... And boy, was it ever wrong...

Polishing a 50 year old turd, making terrible design decisions with regards to aerodynamics, and hoping to make up for it through computer intervention. The MAX is essentially "fighting itself" the whole time it's flying. These terrible engineering decisions were driven by upper management's policies and the company's lack of funding, squandered on 787.

Those upper managers get all of the glory when things go well. Big bonuses, stock options, all of that. Even if all they did was stay out of the way... Well, they should get all of the "glory" in the face of this kind of failure as well. Their decisions inarguably led directly to all of this. They need to be held accountable. Like in prison for the rest of their lives accountable. It's one of the biggest crimes of modern industry that they, with help from the politicians, have been oh so successful in shielding themselves from that responsibility.