Friday, May 11, 2007
The "Big Two"
The "Big Two" Of Airliner Builders.
Could become the "Big Three" and then maybe eventually, the "Big One." And it wouldn't be based either here, or in Europe.
The "Big Two" would be Boeing of America, and Airbus Industries of the ECU. (McDonnell-Douglas was bought out by Boeing on August 1, 1997. Boeing officially retired the last true MD design, the venerable DC-9/MD-80 last year. It had been selling it as the "717. Lockheed-Martin has been out of the business for a long time now.)
I've been ruminating some over Boeing's current position of dominance in a volatile airliner market. Right now, with a backlog of roughly 1,500 737 airframes, 500+ 787 orders, and a strong selling 777, things would appear to be going well for the venerable American aviation pioneer. Part of this can attributed to Airbus's well publicized troubles with the A380, and the huge blunders they made in the initial design of the A350, the supposed competitor to the 787.
Recently, Airbus flew two A380s to two US airports with much fanfare and publicity. This would seem to indicate that Airbus has things under control with this monster aircraft. But let's look at the facts. They've a grand total of 150+ orders for these behemoths. And some of those potential sales may not happen, as cash strapped airlines rethink things. In other words, not exactly flying out the door. Their troubles stem from the design being overweight and other technical problems that have resulted in a two year delay of the first deliveries to Singapore Airlines. (Scheduled to happen this fall. I'll believe it when I see it.) Another problem is the sheer size of this thing. It's not only big, it's heavy. The only airports in this nation that can accept it (That I'm aware of.) are LAX and JFK in New York. The runways aren't the problem, it's the taxiways. The weight requires special reinforced taxiways to support the thing. Its size also dictates special jetways, that covered walkway that fits up against the door so you don't get your pointy little head wet if it's raining. You'll notice that in LA, they didn't use one, mainly because they haven't been built yet. They're in the middle of constructing new terminal and ramp facilities to accommodate the plane.
All well and good. But American industry has a nasty habit of becoming big, successful, and dominant in world markets, then sitting on their butts while foreign competitors catch up. Most notably, it's happened to American auto makers. For the first time in history, a US company is NOT the largest car maker in the world. That distinction recently passed from GM to Toyota. And truth be told, between you and me, I'm not sure GM's gonna get it back anytime soon, if ever. It's their own fault. In the 1970's, arrogant in their belief that Americans will ALWAYS buy American, they built some gawd-awful shit while Honda and Toyota were quietly building decent, low cost cars that would get you from A to B without breaking down half the time. Ford produced crap like the EXP and Granada, and GM gave us the lowly Chevette. By the mid-Nineties, GM and Ford finally realized they had a fight on their hands, but it was too late. They both make some pretty decent cars now. I own one, a Buick Regal. It's a fine, reliable car, one of my favorites of all the ones I've owned over the years. The fit and finish is about as good as any Asian car I've seen. But why didn't they do this 20 years ago, instead of alienating an entire generation of car buyers (And their children.) who will NEVER BE BACK?
Whew! So, you ask, where the hell am I going with all of this??
I'm hoping that Boeing isn't going to make the same mistake it made about a decade ago when it was sitting on it's hands while Airbus was catching up, and indeed overtaking it. It had several mature designs that sold well, but were coming to the end of their useful years. This included the 727 tri-jet, early low-tech models of the 737, and 757 & 767 aircraft. It was finishing up the 777 design, and didn't really have much else on the plate save for a stretch of the 747, another mature design. Now that the 787 design is being slowly assembled and readied for first flight, I'm wondering what they're going to do next? A new version of the 747? A newer version of the 737? Both planes have been around for a long time. Mature designs as it were. For now, the 737 and the A320 are fighting head to head. I have to wonder when they'll get serious about a completely new design to replace the 737. It needs to be a design that will push technology and design, in my opinion.
See. That's the problem. Company bean counters LOVE mature designs because the engineering has been paid for, and the profit margins are much larger. (GM is especially guilty of this practice.) Bean counters are loath to take risks on new designs. They'd much rather gussy up the old stuff and keep earning profits on it. It wasn't until Airbus came out with new fly by wire designs that Boeing finally realized they had to do something and came out with the 787 Dreamliner. Even that plane isn't so much a physical design change as much as it is materials of construction. (Carbon fiber and composites play a big role in this plane.) So, for now they've got Airbus on ground with their foot on the neck.
They better look over their shoulder. Here's the number three that I mentioned earlier.
Now what did that look like to you? Looked like this plane didn't it? Well, guess what? The former is the latest in Chinese aviation technology. It is the ARJ-21 regional jet, made by the Avici Commercial Aircraft Corporation Ltd., based in Shanghai, China. It's scheduled for first flight by next March, and first deliveries starting in 2009. They've already got orders for about 80 or so. The second one is a classic McDonnell Douglas MD-80 (DC-9) an aircraft that was in production, in various guises, for almost 41 years. If I hadn't told you which was which, would you have been able to tell the difference? Neither would I. Even the windscreen is identical. One major difference I CAN tell you is that this aircraft will cost much less than a comparable capacity 737. MUCH less. And believe you me, China wants into the international aviation market, badly, and will do what ever it takes to get there. It's become an issue of national pride for them. Like I said, Boeing better be looking over their shoulder. I sure hope they're paying attention this time around, because the average airline exec (Bean counters all, hardly a pilot to be seen anywhere on the various boards.) will take a look at the price of this thing, then take a look at what Boeing is getting for a 737. I'll leave it to you the result of that comparison.
I've said before, and I'll say it again. The average American has no idea that China is fast becoming the 2,000 pound gorilla in the international economic neighborhood. When the average American thinks of China, many still have this quaint mental picture of thousands of khaki clad "comrades" silently bicycling along in front of the Forbidden City. That quaint notion will be the economic death of us yet. A man I know who's opinion I highly respect and value has told me that Americans better get ready to experience life as a second rate nation. Before long, our economic status compared to China will be the same as England's is compared to ours now. When that happens, Joe Sixpack will sit there, working for cents on the dollar, and wonder "Whut the heck happened here???" I'll tell you, he was too damn busy watching tripe like American Idol, and buying Chinese made stuff at WalMart. They'll rant and rave as their well paying jobs are shipped overseas to China and India. Then they'll still reach for the cheapest pair of Chinese made shoes they can find. We'll have only ourselves to blame, as we try and get by on an economy based on selling each other insurance and hamburgers. Those are jobs anyone can do, and jobs that anyone can do don't pay very well folks.
When the migration of manufacturing jobs overseas first started, we were told "Don't worry, we'll be working with an information economy. There'll be plenty of jobs." Um, in case you haven't been paying attention, that person in Tech Support has an accent that sounds like Apu on the Simpsons.
If you've stuck with me this far, I thank you, and hope I've given you something to think about in regards to America's economic well being.
Come back later.
I ain't done yet.
Oh, by the way. One of the best selling car in China? Buicks. No, not the ones made here, oh no. They're made there, at GM plants in China.
Could become the "Big Three" and then maybe eventually, the "Big One." And it wouldn't be based either here, or in Europe.
The "Big Two" would be Boeing of America, and Airbus Industries of the ECU. (McDonnell-Douglas was bought out by Boeing on August 1, 1997. Boeing officially retired the last true MD design, the venerable DC-9/MD-80 last year. It had been selling it as the "717. Lockheed-Martin has been out of the business for a long time now.)
I've been ruminating some over Boeing's current position of dominance in a volatile airliner market. Right now, with a backlog of roughly 1,500 737 airframes, 500+ 787 orders, and a strong selling 777, things would appear to be going well for the venerable American aviation pioneer. Part of this can attributed to Airbus's well publicized troubles with the A380, and the huge blunders they made in the initial design of the A350, the supposed competitor to the 787.
Recently, Airbus flew two A380s to two US airports with much fanfare and publicity. This would seem to indicate that Airbus has things under control with this monster aircraft. But let's look at the facts. They've a grand total of 150+ orders for these behemoths. And some of those potential sales may not happen, as cash strapped airlines rethink things. In other words, not exactly flying out the door. Their troubles stem from the design being overweight and other technical problems that have resulted in a two year delay of the first deliveries to Singapore Airlines. (Scheduled to happen this fall. I'll believe it when I see it.) Another problem is the sheer size of this thing. It's not only big, it's heavy. The only airports in this nation that can accept it (That I'm aware of.) are LAX and JFK in New York. The runways aren't the problem, it's the taxiways. The weight requires special reinforced taxiways to support the thing. Its size also dictates special jetways, that covered walkway that fits up against the door so you don't get your pointy little head wet if it's raining. You'll notice that in LA, they didn't use one, mainly because they haven't been built yet. They're in the middle of constructing new terminal and ramp facilities to accommodate the plane.
All well and good. But American industry has a nasty habit of becoming big, successful, and dominant in world markets, then sitting on their butts while foreign competitors catch up. Most notably, it's happened to American auto makers. For the first time in history, a US company is NOT the largest car maker in the world. That distinction recently passed from GM to Toyota. And truth be told, between you and me, I'm not sure GM's gonna get it back anytime soon, if ever. It's their own fault. In the 1970's, arrogant in their belief that Americans will ALWAYS buy American, they built some gawd-awful shit while Honda and Toyota were quietly building decent, low cost cars that would get you from A to B without breaking down half the time. Ford produced crap like the EXP and Granada, and GM gave us the lowly Chevette. By the mid-Nineties, GM and Ford finally realized they had a fight on their hands, but it was too late. They both make some pretty decent cars now. I own one, a Buick Regal. It's a fine, reliable car, one of my favorites of all the ones I've owned over the years. The fit and finish is about as good as any Asian car I've seen. But why didn't they do this 20 years ago, instead of alienating an entire generation of car buyers (And their children.) who will NEVER BE BACK?
Whew! So, you ask, where the hell am I going with all of this??
I'm hoping that Boeing isn't going to make the same mistake it made about a decade ago when it was sitting on it's hands while Airbus was catching up, and indeed overtaking it. It had several mature designs that sold well, but were coming to the end of their useful years. This included the 727 tri-jet, early low-tech models of the 737, and 757 & 767 aircraft. It was finishing up the 777 design, and didn't really have much else on the plate save for a stretch of the 747, another mature design. Now that the 787 design is being slowly assembled and readied for first flight, I'm wondering what they're going to do next? A new version of the 747? A newer version of the 737? Both planes have been around for a long time. Mature designs as it were. For now, the 737 and the A320 are fighting head to head. I have to wonder when they'll get serious about a completely new design to replace the 737. It needs to be a design that will push technology and design, in my opinion.
See. That's the problem. Company bean counters LOVE mature designs because the engineering has been paid for, and the profit margins are much larger. (GM is especially guilty of this practice.) Bean counters are loath to take risks on new designs. They'd much rather gussy up the old stuff and keep earning profits on it. It wasn't until Airbus came out with new fly by wire designs that Boeing finally realized they had to do something and came out with the 787 Dreamliner. Even that plane isn't so much a physical design change as much as it is materials of construction. (Carbon fiber and composites play a big role in this plane.) So, for now they've got Airbus on ground with their foot on the neck.
They better look over their shoulder. Here's the number three that I mentioned earlier.
Now what did that look like to you? Looked like this plane didn't it? Well, guess what? The former is the latest in Chinese aviation technology. It is the ARJ-21 regional jet, made by the Avici Commercial Aircraft Corporation Ltd., based in Shanghai, China. It's scheduled for first flight by next March, and first deliveries starting in 2009. They've already got orders for about 80 or so. The second one is a classic McDonnell Douglas MD-80 (DC-9) an aircraft that was in production, in various guises, for almost 41 years. If I hadn't told you which was which, would you have been able to tell the difference? Neither would I. Even the windscreen is identical. One major difference I CAN tell you is that this aircraft will cost much less than a comparable capacity 737. MUCH less. And believe you me, China wants into the international aviation market, badly, and will do what ever it takes to get there. It's become an issue of national pride for them. Like I said, Boeing better be looking over their shoulder. I sure hope they're paying attention this time around, because the average airline exec (Bean counters all, hardly a pilot to be seen anywhere on the various boards.) will take a look at the price of this thing, then take a look at what Boeing is getting for a 737. I'll leave it to you the result of that comparison.
I've said before, and I'll say it again. The average American has no idea that China is fast becoming the 2,000 pound gorilla in the international economic neighborhood. When the average American thinks of China, many still have this quaint mental picture of thousands of khaki clad "comrades" silently bicycling along in front of the Forbidden City. That quaint notion will be the economic death of us yet. A man I know who's opinion I highly respect and value has told me that Americans better get ready to experience life as a second rate nation. Before long, our economic status compared to China will be the same as England's is compared to ours now. When that happens, Joe Sixpack will sit there, working for cents on the dollar, and wonder "Whut the heck happened here???" I'll tell you, he was too damn busy watching tripe like American Idol, and buying Chinese made stuff at WalMart. They'll rant and rave as their well paying jobs are shipped overseas to China and India. Then they'll still reach for the cheapest pair of Chinese made shoes they can find. We'll have only ourselves to blame, as we try and get by on an economy based on selling each other insurance and hamburgers. Those are jobs anyone can do, and jobs that anyone can do don't pay very well folks.
When the migration of manufacturing jobs overseas first started, we were told "Don't worry, we'll be working with an information economy. There'll be plenty of jobs." Um, in case you haven't been paying attention, that person in Tech Support has an accent that sounds like Apu on the Simpsons.
If you've stuck with me this far, I thank you, and hope I've given you something to think about in regards to America's economic well being.
Come back later.
I ain't done yet.
Oh, by the way. One of the best selling car in China? Buicks. No, not the ones made here, oh no. They're made there, at GM plants in China.
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Oh, by the way. One of the best selling car in China? Buicks. No, not the ones made here, oh no. They're made there, at GM plants in China.
You put a whole lot up here to get my head around in one comment. The source of all the economic problems you list, and some that are still to come, is in your last few words. "______" plants in China, India....etc. Before it became fashionable to send every job overseas, Management and Labor in the automotive industry, both did their level best to emulate petulant children. That contributed greatly to the cost you paid, and it's truly a chicken/egg type thing. I have a post coming on said subject (someday!).
But as companies realized (and were encouraged; thank you Bush 1 and 2!) to relocate offshore, where they paid pennies an hour compared to what they paid here, had no benefit costs, no environmental regulations, there was a stampede. Consumers here were forced into buying those Chinese shoes, as there were little or no options. In turn, companies that were left here, threatened to go overseas, unless they were granted major wage concessions, and many, even after getting them, pulled stakes in a year or so and went across the pond anyway. The consumer was living in a "$20 an hour" economy price wise, but was only making $10 an hour. The family of four went for the cheapest, or for none at all.
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You put a whole lot up here to get my head around in one comment. The source of all the economic problems you list, and some that are still to come, is in your last few words. "______" plants in China, India....etc. Before it became fashionable to send every job overseas, Management and Labor in the automotive industry, both did their level best to emulate petulant children. That contributed greatly to the cost you paid, and it's truly a chicken/egg type thing. I have a post coming on said subject (someday!).
But as companies realized (and were encouraged; thank you Bush 1 and 2!) to relocate offshore, where they paid pennies an hour compared to what they paid here, had no benefit costs, no environmental regulations, there was a stampede. Consumers here were forced into buying those Chinese shoes, as there were little or no options. In turn, companies that were left here, threatened to go overseas, unless they were granted major wage concessions, and many, even after getting them, pulled stakes in a year or so and went across the pond anyway. The consumer was living in a "$20 an hour" economy price wise, but was only making $10 an hour. The family of four went for the cheapest, or for none at all.
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