Part 1: 1916-1966 – Laying the Foundation
A discussion recent occurred that raised the question about the future of Boeing; if the character of the company has changed over the years, and if so, what is the outlook for the future of Boeing?
First, the question did not come up among recognized, vetted aerospace industry analysts, but among reasonably well experienced and well-read aviation enthusiasts. The following is a three-part arm-chair analysis of Boeing’s past and present business model and business pursuits followed by a look into the future based on trends in relevant and emerging markets and trends within Boeing.
Over the next week, Avgeekery will take a look at Boeing’s past, where it is today and what’s to come for this aerospace giant.
Boeing – The First Fifty Years (1916 – 1966)
Launched by William Boeing in 1916 as the Pacific Aero Products Company, Boeing changed the name to the Boeing Airplane Company the next year. From the beginning, Boeings goal was to build and sell airplanes. He assembled a group of young, talented, graduate engineers and designers, technicians (mechanics), and pilots.
In their first two years they built two B&W seaplanes at a marina boathouse outside of Seattle. The aircraft were flown successfully and eventually sold. Also during this time, Boeing was working on a design for the U. S. Navy—the Model C seaplane trainer, for which the Navy placed an order for 50 aircraft. Boeing was able to deliver all 50 aircraft within a year. He also built an extra airplane in this series for his own use, and he and his chief test pilot, Herb Munter, used it to win the first international airmail contract into the United States, flying between Vancouver, British Columbia and Seattle, Washington. Boeing’s involvement in airmail service would serve the company well in the future.
After World War I ended, government aircraft orders ended, but Boeing had built a solid reputation for aircraft construction, and the Curtiss Company contracted Boeing to build 25 HS-2L Curtiss-designed twin-engine flying-boat patrol aircraft. Boeing also won a competition to build the Thomas-Morse-designed 3A pursuit fighter.
From the outset, Boeing’s earnings have been a roller coaster of highs and lows. After the war, Boeing was able to make ends meet by building airplanes for other companies and also reportedly building bedroom furniture.
The company continued to struggle, finding just enough work to keep going until 1923 when both the Army and Navy ordered a total of 44 Boeing’s PW-9 Pursuit planes. Fortunes continued to improve as Boeing had contracts to design and manufacture more than 600 trainers and fighters including their P-1
Always innovative and a strategic thinker, William Boeing demonstrated what today would be called a true “entrepreneurial spirit.” Not content to simply win a contract for 25 new Boeing Model 40A aircraft from the United States Post Office for airmail service, Boeing determined he could reduce the price of the contract to the government if the new aircraft also had seats for two paying passengers, and if the Boeing Company operated the aircraft. He won the contract and formed Boeing
Air Transport (BAT) in 1927.
In 1928, Boeing introduced the Model 80A, a three-engine transport that carried 12 passengers and provided hot and cold water, a lavatory and toilet, forced air ventilation, upholstered seats, and reading lamps for each passenger. As the Model 80A went into service, Boeing realized the aircraft needed cabin stewards to take care of passenger needs. He insisted that all flight attendants—then “stewardesses”—must be registered nurses.
By the end of 1929, Boeing and BAT had become part of the United Aircraft and Transport Corporation (UATC)—a holding company that included engine manufactures (e.g., Pratt and Whitney), propeller manufactures and four airlines (BAT, National Air Transport, Varney Airlines, and Pacific Air Transport). In less than a year, with Boeing Airplane Company as a major holding, UATC became the strongest aviation company in the world.
In spite of the Great Depression of 1929, Boeing moved to a larger manufacturing facility near Santa Monica, Calif.
In 1931, the U.S. Government took notice of the expanding operations within the UATC, declaring that UATC’s organization violated government regulations, and UATC was split into three different businesses: United Airlines (combining the four original airlines), Boeing Airplane Company, and the United Aircraft Company. From that point on, Boeing only grew stronger, winning many lucrative military and commercial aircraft contracts including:
1936 – Boeing signed a contract to build the Boeing Model 314 Clipper transatlantic seaplane for Pan Am.
1937 – Under contract to the US Army, Boeing delivered the first bomber prototype, the X15B, Boeing Model 294.
1938 – Boeing first flew the Model 307, the first pressurized passenger transport
1939 – The Pan Am Clipper enters service.
1941 – In response to the war effort (World War II), Boeing builds a manufacturing plant in Wichita, Kansas to build B-17s and B-29s
1945 – World War II ends, and by the end of the year more than 255,000 aircraft manufacturing employees were out of work, including 70,000 from Boeing.
1946 – Boeing signs a contract to build the B-52 four-engine jet-powered bomber. They were already under contract to design and build the B-47 bomber.
1952 – First flight of the B-52 strategic bomber. Also in this year, Boeing began construction of the Model 367-80 (“Dash 80”), the prototype for the Boeing 707.
1954 – First flight of the Dash 80.
1955 – Pan Am Orders 20 Boeing Model 707s. Launching a family of aircraft, i.e., the “700 series,” that continues today.
1956 – William Boeing dies.
1958 – First Pan American Airlines commercial flight of the Boeing 707.
1966 – The plan to build the Boeing 747 was announced.
Diversification and Expansion
Some may say that William Boeing was a visionary. He clearly was an astute and determined business man and dedicated aviation entrepreneur who clearly saw an almost unlimited future in aviation business. He also surrounded himself with equally intelligent and dedicated staff.
After 1960, as the commercial airline business began to grow and thrive, the Boeing company began to expand into other market areas, including rotorcraft (Boeing Vertol), rocket boosters and satellites, hydrofoil vessels, the lunar orbiter, unmanned aerial vehicles, and other military high technology programs. Most of this expansion has involved acquisition of existing businesses.
In Part 2 of this series, we will examine how Boeing has fared in increasingly competitive commercial and military aircraft markets and in its effort to expand its product line into different markets.