The Boeing Company

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The Boeing Company

7755 East Marginal Way South
Seattle, Washington 98108
U.S.A.
(206) 655-2121

Public Company
Incorporated: July 19,1934 as Boeing Airplane Company
Employees: 98,700
Sales: $16.34 billion
Market value: $8.259 billion
Stock Index: New York

The Boeing Company, one of America’s most successful corporations, is the world’s largest manufacturer of commercial aircraft. With the recent exception of the 727, every one of its 700 series jetliners is still in production (some for more than 30 years). Boeing is also an industry leader in aerospace technology.

William Boeing was raised in Michigan where his father operated a lucrative forestry business. While he was in San Diego, California in 1910 Boeing met a French stunt pilot named Louis Paulhan who was performing at the International Air Meet. When Paulhan took Boeing for an airplane ride, it marked the beginning of Boeing’s fascination with aviation.

After two years of study at Yale’s Sheffield School of Science, Boeing returned to Michigan to work for his father. He was sent first to Wisconsin and later to the state of Washington to acquire more timber properties for the family business. In Seattle he met a Navy engineer named Conrad Westerveldt who shared his fascination for aviation. A barnstormer named Terah Maroney gave the two men a ride over Puget Sound in his seaplane. Later Boeing went to Los Angeles to purchase his own seaplane, thinking it would be useful for fishing trips. The man who sold him the plane and taught him how to fly was Glenn Martin, who later founded Martin Marietta.

While in Seattle, Boeing and Westerveldt made a hobby of building their own seaplanes on the backwaters of Puget Sound. It became more than a hobby when a mechanic named Herb Munter and a number of other carpenters and craftsmen became involved. In May of 1916 Boeing flew the first “B&W” seaplane. The next month he incorporated his concern as the Pacific Aero Products Company. Their first customer was the government of New Zealand, which employed the plane for mail delivery and pilot training.

Boeing and his partners anticipated government interest in their company when the United States became involved in World War I. They discovered their hunch was correct when the company was asked to train flight instructors for the army. After the war, Boeing sold a number of airplanes to Edward Hubbard, whose Hubbard Air Transport is regarded as the world’s first airline. The company shuttled mail between Seattle and the transpacific mail-boat which called at Victoria, British Columbia. Later, when the post office invited bids for various airmail routes, Hubbard tried to convince Boeing to apply for the Chicago to San Francisco contract. Boeing mentioned the idea to his wife, who thought the opportunity looked promising. In the prospect, he and Hubbard created a new airline named the Boeing Air Transport Company. They submitted a bid and were awarded the contract.

To meet the demands of their new business Boeing and his engineers developed an extremely versatile and popular airplane called the Model 40, fitted with a Pratt & Whitney air-cooled Wasp engine. It could carry 1000 pounds of mail and a complete flight crew, and still have room enough for freight or passengers.

The Kelly Airmail Act of 1925 opened the way for private airmail delivery on a much wider scale. As a result, a number of airline companies formed with the intention of procuring the stable and lucrative airmail contracts. One of these companies was Vernon Gorst’s Pacific Air Transport which won various routes along the Pacific Coast. Boeing purchased this company and then ordered a young employee named William Patterson to purchase its outstanding stock. Another airmail carrier was Varney Airlines which began operation in 1925. Operated by Walter T. Varney, the company won almost every mail contract it applied for. However, it soon became overextended and had financial difficulties. Boeing also purchased this company and added its routes to his own.

With the addition of National Air Transport, Boeing’s airline holdings formed the original United Air Lines. In 1928 all these companies were organized under a holding company called the Boeing Aircraft and Transportation Company. In 1929 a larger holding company was formed, the United Aircraft and Transportation Company. Included in this group were the “United” airlines and Stout Airlines; Pratt & Whitney (engines); Boeing, Sikorsky, Northrop and Stearman (manufacturers); and Standard Steel Prop and Hamilton Aero Manufacturing (propellers). Boeing was made chairman of the company, and Fred Rentschler of Pratt & Whitney was named president.

Boeing and Rentschler became extremely wealthy in this reorganization by exchanging stock with the holding company in a method similar to J.P. Morgan’s controversial capital manipulation. They multiplied their original investments by a factor of as much as 200,000 times. It was, however, entirely legal under the legislation of the day.

In 1933 the government conducted an investigation of fraud and other illegal practices in the airline industry. Boeing was called upon to testify and explain his windfall profits before a senate investigating committee. Under examination he admitted to making $12 million in stock flotations. Boeing was so infuriated with the investigation that he retired from the company (at age 52) and sold all his aviation stocks. Upon Boeing’s departure the company’s production manager, Phil Johnson, was named the new president.

In 1934 a government investigation of collusion in the airmail business led to a suspension of all contracts awarded. As a result, the U.S. Congress declared that airline companies and manufacturers could not be part of the same business concern. This led to the break up of the three aeronautic conglomerates: Boeing’s United, the Aviation Corporation of the Americas, and North American Aviation.

All of the Boeing company’s aeronautic properties east of the Mississippi became part of a new company, United Aircraft, operated by Fred Rentschler. The western properties, principally the Boeing Airplane Company, remained in Seattle exclusively manufacturing airframes. Pat Patterson was put in charge of the commercial air carriers which retained the name of United Air Lines and based its operations at Chicago’s Old Orchard (later O’Hare) airport.

In 1934 William Boeing was recognized for his emphasis on innovation and experimentation in aeronautical research and development. He was awarded the Daniel Guggenheim medal, “for successful pioneering and achievement in aircraft manufacturing and air transport.”

In the years leading up to World War II the Boeing company led the way in developing single-wing airplanes. They were constructed completely of metal to make them stronger and faster; more efficient aerodynamic designs were emphasized; retractable landing gear and better wings were developed, along with multiple “power plant,” or engine technology; finally, directional radios were installed which enabled better navigation and night flying. Boeing had established itself as the leading manufacturer of airplanes.

When the United States launched its wartime militarization program, Boeing was called upon to produce hundreds of its B-17 “Flying Fortresses” for the Army. In the European war the B-17 became an indispensable instrument for the U.S. Air Corps. In June of 1944, when production was at its peak, Boeing’s Seattle facility turned out 16 of these airplanes every 24 hours. By this time the company was also producing an improved bomber called the B-29 “Super Fortress.” It was this airplane that dropped the atomic bombs on Hiroshima and Nagasaki in August of 1945.

Boeing’s president, Phil Johnson, died unexpectedly during the war. He was replaced with the company’s chief lawyer, William M. Allen, on the last day of the war. Under Allen’s leadership Boeing produced a number of new bombers, including the B-47, B-50, and the B-52. Boeing’s B-307 Stratoliner, a B-17 converted for transporting passengers, was succeeded by the B-377 Stratocruiser in 1952. The Stratocruiser was a very popular double-deck transport, most widely used by Northwest Orient. It was also Boeing’s only airplane built for the commercial airline market since before the war.

In the spring of 1953 Bill Allen convinced the secretary of the U.S. Air Force, Harold Talbot, to allow Boeing the use of the government-owned B-52 construction facilities for the development of a new civilian/military jet. Boeing invested $16 million in the project, which was intended to put the company ahead of the Douglas Aircraft Company. Douglas had dominated the commercial airplane market for years with its popular propeller-driven DC series.

This new jet, the B-707, first flew on May 15, 1954. American Airlines, a loyal Douglas customer, was the first to order the new jet. Their defection so alarmed Douglas that the company accelerated development of its nearly identical DC-8 passenger jetliner. The government later took delivery of Boeing’s military version of the jet, the KC-135 tanker, alternately known as the “missing 717.”

Boeing, which changed its name to The Boeing Company in 1961, enjoyed a large degree of success and profitability with the 707. The company devoted its resources to the development of a number of other passenger jet models, including the 720 (a modified 707) and the 727 which was introduced in 1964. The 727 was Boeing’s response to a successful French model called the Caravelle. The Caravelle’s engines were located in the rear of the fuselage, uncluttering the wings and reducing cabin noise. Boeing adopted this design for its three-engine 727 which carried 143 passengers. Douglas, eager not to be left out, introduced a similar two-engine model called the DC-9 in 1965.

During this time the company also recognized a demand for a smaller 100-passenger jetliner for shorter routes. As a result, Boeing developed the 737 model. The 737 seemed to run counter to the general trend at Boeing of building larger, more technologically advanced jetliners, but it did have a place in the market and made a profit.

Boeing’s next engineering accomplishment was the creation of a very large passenger transport designated the 747. This new jetliner was capable of carrying twice as many passengers as any other airplane. Its huge dimensions and powerful four-engine configuration made it the first of a new class of “jumbo jets,” later joined by McDonnell-Douglas’ DC-10 and Lockheed’s 1011 Tri-Star.

The 747 program required such a large investment that it nearly forced the company into bankruptcy. One hundred and sixty orders were placed for the jetliner by the time it was delivered in 1969, but no more were placed until 1972. During this period, Boeing was also developing the 2707, a supersonic transport better known as the “SST.” Progress on this aircraft was slow and costly. Despite the support of Senator Henry Jackson, the U.S. Congress voted not to fund further development of the SST. Shortly thereafter Boeing abandoned the project altogether.

In 1969 a new chief executive was appointed to head the organization. An engineer named Thornton Wilson took charge of Boeing in a way reminiscent of his predecessor, Bill Allen, 25 years before. Faced with an impending disaster, Wilson’s response was to pare the workforce down from 105,000 to 38,000. The layoffs at Boeing had a profound effect on the local economy; unemployment in Seattle rose to 14%.

Wilson’s strict austerity measures paid off quickly. Soon Boeing’s jets were rolling off the tarmac and employees were called back to work. After the company’s initial recovery, it received a deluge of commercial airplane orders and military contracts. Boeing started development of two new passenger jet models intended to take the company into the 21st century.

These new jetliner models, the 757 and the wide-body 767, became available in the early 1980’s. Utilizing advanced technology and improved engines, these jetliners were Boeing’s response to McDonnell-Douglas’ MD series and the European Airbus consortium’s 300 series. The current customer in the commercial jetliner market is more concerned with labor costs than fuel efficiency, owing to consistently cheaper oil. However, Boeing’s newest entries are doubly efficient, requiring smaller crews as well as less fuel. Besides the 757 and 767, Boeing offered an updated 737 for the shorter-range rural “puddle-jumper” market and modified 747s capable of greater range and passenger capacity.

During this period of prosperity with commercial jetliners, Boeing made several attempts to diversify its business. Not all of them were successful. In the 1970’s Boeing entered the metro-rail business, manufacturing mass transit systems for Boston, San Francisco and Morgantown, West Virginia. The systems were modern, computerized, and efficient. They were also prone to frequent breakdowns. After fulfilling its obligation to rectify the systems (at great cost), Boeing decided to discontinue its ground transport business.

Boeing now does most of its business through four principal divisions: civilian aircraft are manufactured and sold by the Boeing Commercial Airplane Company; the Boeing Vertol Company, acquired in 1960, produces helicopters for the armed services; Boeing Aerospace produces strategic and tactical missiles and space products; the Boeing Military Airplane Company builds bombers and tankers as well as high-technology surveillance aircraft.

Boeing’s military business has been more stable than its commercial airlines business. That stability did not, however, ensure the company against debilitating losses in its civilian business during the 747 crisis or during the period after “deregulation” in America when demand for new jetliners declined. In fact, the percentage of Boeing’s revenues from government contracts has been steadily declining. The military divisions, nonetheless, have remained viable and competitive in winning contracts, and designing and developing, and later producing, a wide variety of state-of-the-art military hardware.

Boeing’s major contributions to the military include the KC-135 tanker and the versatile mainstay of the United States Air Force, the B-52 bomber. The company builds E-3 Airborne Warning and Control System aircraft (AWACs) for the Air Force, the North Atlantic Treaty Organization, and Saudi Arabia. In addition, Boeing builds the E-4 command post and the E-6 submarine communications aircraft. Under a consortium led by Northrop, it is presently developing a new bomber intended to replace the aging B-52, designated the B-1B. Boeing’s other (top secret) project is a role in the development of the F-19 Stealth bomber. Boeing’s Vertol facilities, located in Philadelphia, produce CH-46 and CH-47 (Chinook) helicopters.

In the aerospace division, Boeing won a $4 billion defense department contract in 1980 to manufacture the air-launched cruise missile. It builds the MX intercontinental ballistic missile and the Roland air defense missile. The company also provides modernization services for existing Minuteman ICBMs. Boeing’s aerospace business includes the production of inertial upper stage boosters for satellites delivered into orbit by Titan rockets or the Space Shuttle. In addition, Boeing is developing an air-launched missile which destroys satellites.

With its wide variety of products, Boeing is America’s number one exporter. It holds a 55% market share of “the most expensive product in the world not sold by the bidding process.” There are more Boeings in the air than any other airplane. Boeing’s advantage is its size and broad product mix.

Boeing engineers have on their drawing boards an impressive array of futuristic aircraft. Boeing’s three-engine 777, originally scheduled to be introduced with the 757 and 767, attracted little interest and was shelved. Nonetheless, Boeing engineers are developing a new model, the 150-passenger 7J7, scheduled to fly in 1991. This new jet will be the first to employ fuel-efficient propfans, jet engines with rear-mounted propellers. Perhaps their strangest project is the 907 flying wing. Equipped with eight jet engines, this radically designed airplane will carry 1000 passengers, twice the capacity of a 747. Looking something like a boomerang, it is scheduled for service sometime in the next century. If this project is successful, it could allow Boeing to change the future of aviation once again.

Principal Subsidiaries

Astro, Ltd.; Logistics Support Corp.; Boeing Technology International, Inc.; Boeing of Canada, Ltd.; Boeing International Corp.; Boeing Financial Corp.; Boeing Equipment Holding Company; Boeing Leasing & Financial Corp.; Boeing International Sales Corp.; Boeing Environmental Products, Inc.; BCS Richland, Inc.; Boecon Corp.; Boeing Technical & Management Services, Inc.; Boeing Domestic Sales Corp.; Boeing Computer Services Canada, Ltd.; Boeing Engineering & Co. Southeast, Inc.; Boeing Agri-Industrial Co.; BE&C Engineers, Inc.; Boeing Electronics, Inc.; Boeing of Georgia, Inc.; Aircraft Sales & Financing Corp.; Boeing Computer Services (Europe), Ltd.; Boeing Operations International, Inc.; Hydraulic Units, Inc.; Boeing Computer Support Services, Inc.; Boeing Middle East, Ltd.; Astro II, Inc.; Boeing Sales Corp.; Boeing Investment Co., Inc.; Boeing of Mississippi, Inc.; Boeing Offset Co., Inc.; Boeing Petroleum Services, Inc,; Boeing Technical Operations, Inc.