5/1/2007 | 2 MINUTE READ

The Auto Industry Isn't That Unique

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There are a lot of similarities between the aviation and automobile industries.


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There are a lot of similarities between the aviation and automobile industries. Beyond transportation, both operate under the watchful—but not always helpful—eye of the government, have customers who panic when fuel prices rise, teeter on the edge of bankruptcy almost daily, are not thought of fondly for their customer service, bet billions on new products, go through boom and bust cycles, have solid safety records, are populated by interesting leaders, and are important to the foreign exchange of the countries they call home.

You can’t get more than a few pages into John Newhouse’s book, Boeing Versus Airbus: The Inside Story of the Greatest International Competition in Business (Alfred A. Knopf, New York), before you start to see the similarities—and it’s more than just Alan Mulally’s defection from Boeing to Ford. The prologue, set in the period between 1970 and 1990, describes a dominant Boeing forging ahead oblivious to the competition. Lockheed builds the much admired—except by airlines—double-aisle L-1011 Tristar, but it is the answer to a question no one asked, and McDonnell Douglas follows suit with the inferior DC-10, a copy of Lockheed’s design. Airbus, meanwhile, builds the airplane the market had been clamoring for—a small twin-engine wide-body—and gets a toehold in the market. The race is on.

As the smaller players exit the LCA (large commercial airliner) market, the battle belongs to Boeing and Airbus. Scrappy, confident, and pushing the fundamentals, Airbus roars past a Boeing that’s too convinced of its invincibility and beset by changes that move it from an engineering-driven maker of commercial aircraft to a diversified holding company run by managers. Decline follows, and Airbus—which Boeing sees as a socialist make-work program disguised as an aerospace company—begins to edge ahead. Soon, it is the leader in the LCA market, and Boeing considers leaving the scene before new management—brought to the fore by scandal—bets the farm on the 787 as Airbus dismissively continues down the “jumbo jumbo” path with A380.

Newhouse, a former foreign correspondent for the New Yorker and senior policy advisor in the Clinton administration, moves the story along, and substantiates it with copious footnotes from articles and personal interviews. It’s not hard to see his left-of-center view of business at times, but more annoying is the structure of the book—it plows the same ground as it tells different parts of the story in separate sections—which makes it feel disjointed and leads you to one conclusion in one area, and another conclusion in the next. However, it might be too much to ask from a non-technical writer to connect the dots on subjects like how two companies can use the same design tools and yet come up with two startlingly different executions of their aircraft, or why Boeing continued to publicly pursue the Sonic Cruiser program when it was apparent the returns were much lower than the investment. The reader is left to figure these things out for himself. —CAS 

Hand holding a crystal ball

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