Boeing’s Troubles, 1960s & Now

As Boeing’s 737 MAX resumes flying after being grounded for 20 months, it’s interesting to see that this was not the first time the company confronted serious problems. In fact there’s a bit of a parallel to what Boeing faced in another 20-month period between 1969-71 that illustrates that even the strongest companies can run into difficulties and nearly perish. Like the remarkable MAX, this parallel involved one of history’s iconic planes.

The 1960s was the Age of Boeing. Its long-haul four-engine 707 (“quadjet”) came in 1958 and dominated transatlantic and transcontinental traffic. Its three-engine (“trijet”) 727 in 1962 filled airlines’ need for smaller intermediate range jetliners. The phenomenally flexible Boeing 737 rounded out jet offerings with a short-haul twin-engine jet in 1967.

Apart from commercial aircraft, Boeing in 1960 acquired the Vertrol Corporation for helicopters. It diversified into the space age – first with Saturn rocket boosters that took men to the moon; then with Lunar Roving Vehicles which helped ’em take a look around. By 1967, the company was also busy developing prototypes for a supersonic transport (SST) program. Boeing was flying high.

Juan Trippe (1921-2016), naval aviator, aviation pioneer & entrepreneur, 1957

In the three years to 1968, the company’s payroll doubled to 142,000 direct employees with thousands more through suppliers and subcontractors. Its order book was robust across a variety of projects.

Amidst the airport congestion born of the prosperity of the 1960s, Boeing considered its largest variant of the 707 to date in order to meet increased passenger demands – a stretched intercontinental model called the 707-820. In 1965, however, Juan Trippe, president of America’s largest airline at the time, Pan American World Airways (and the 707’s flag carrier) asked Boeing to consider designing and building an airplane larger and different than any 707. Boeing agreed, and in 1966, Pan Am pre-ordered 25 of what became known as “jumbo jets” for delivery in three years, a contract worth US$525 million (equivalent to $4.2 billion in 2020). And the wide-body 747 was born.

It became known as the “Queen of the Skies,” over twice the size of the famed 707; and the first airliner with two aisles – dividing nearly 370 passengers fore to aft into three travel classes, the third of which, “economy,” sat ten-abreast. For all her ability to carry people, she could be easily converted into a freighter with its distinctive hinged nose, raised cockpit, and partial double-deck. And despite its great size, she matched the 707’s speed of Mach 0.85 (600 mph) with four huge new Pratt & Whitney JT9D engines.

So far so good?

Americans remember the late 1960s as a time of turmoil: urban rioting, Vietnam’s Tet Offensive, a rocky presidency, assassinations, the Indian takeover of Alcatraz, Woodstock, Haight-Ashbury, Charles Manson. Most, however, have no idea of a different kind of turmoil developing at Boeing that would plague the company for several years.

Boeing committed to a project before it had the resources to do it. The 747 delivery schedule was tight, and it had most of its full-time employees already involved with launching the 737 and the SST at the time. When it received Pan Am’s order, it did not even have a place large enough to build it. So, in addition to designing a plane from scratch, Boeing had to build a production facility for the largest commercial airliner to that time.

Everett facility under construction, 1966-67

The facility built at Everett Washington was a staggering 43 acres: the world’s largest space under one roof, completed in 1967 at a cost of a billion borrowed dollars to manufacture the forward fuselage sections, the 100-foot swept-back wings, and elevated flight deck. All else – more than half the work – was subtracted to other companies.

In a miraculous 16 months time, the first 747 rolled out in fall 1968 to 26 stewardesses who waited to christen the new plane the City of Everett, and who each represented an airline that had placed orders.

Five months later – on February 9, 1969, Sunday – the 747 took its maiden flight. And in one moment, the “father of the 747,” Joe Sutter (1921-2016) saw the plane take flight that epitomized marvels of design, engineering, coordination, and business savvy – “75,000 drawings, 4.5 million parts, 136 miles of electrical wiring, 5 landing gear legs, 4 hydraulic systems, and 10 million labor hours.” For Sutter, who led the development of the plane with a team called “the Incredibles,” the 747 moved “with the stately majesty of an ocean liner.” (Sutter, 747: Creating the World’s First Jumbo Jet, 2006). Boeing and aviation had a milestone success.

Behind the scenes, however, executives were worried. Development costs for the Queen of the Skies and the 737 were higher than expected. Just before the 747 debuted, Joe Sutter relates in his memoir that he had to fire 1,000 engineers from the development team because airline orders were drying up, depriving the company of talent he needed to complete the program that was already behind schedule.

By 1969 the airliner market had become saturated. Boeing made plenty of deliveries on orders already placed, though new orders were falling off. Demand was affected by saturation but also by a national recession that began in the fall of 1969 and worsened into 1970. That year Boeing received a smattering orders from foreign carriers, but not one from an American carrier for any type of aircraft !

Leveraged financially, banks hesitated to extend Boeing credit, and the company turned to layoffs in every department, including hourly workers, staff, management, and engineers – in the aggregate roughly half the company’s headcount.

At the end of 1970, over President Nixon’s objections, Congress ended funding for the SST program, long-plagued by design delays and cost overruns. And Boeing’s woes turned into what came to be called the “Boeing Bust.”

Another wave of layoffs took the company’s direct payroll to a quarter of 1966 levels – the year the 747 project began.

And like most major manufacturers, the damage was keenly felt by Boeing’s slew of suppliers which, particularly after the SST cancellation, caused the national recession to hit hard regionally. Seattle’s unemployment was already double the U.S. figure in 1970; now in 1971 it spiked to three times that number – roughly 14% with all its concomitant economic damage from housing prices to retail sales drops offs.

In April 1971, the gloom of the trend of people leaving the Seattle area was illustrated by humor when two realtors posted a message on billboard near Seattle’s airport that read “Will the last person leaving SEATTLE – Turn our the lights” (at right).

The 747 Boeing story brightened temporarily in 1972 when the company won the AWACs program on the 707 platform. (see Military Aviation Timeline –

The economy recovered. So did 747 demand.

Then the Yom Kippur War in the Middle East caused the 1973 recession and worldwide oil crisis that didn’t see Boeing recover until 1977 when the Company began to grow again longer term. Seattle would never recover its 3%-plus growth rate it had in 1970, however, and to this day its population growth remains low.

The 1960s was indeed the Age of Boeing – good and bad. We tell the story of the 747 in brief partly to bring attention to when one of the most important planes came to be, and also to show that the difficulties of the 737 MAX are not at all the first time the company experienced turbulence with an important plane . . . and survived.

In the 1969-71 period, we see a near-death experience of the company due to cancellation of government contracts, overspending, overpromising, a saturated airliner market, and a recession. It was certainly not for the 747’s lack of merit.

Boeing’s Everett Factory, which today produces the 767, 777, and 787.

The problems of the MAX that led to its grounding were precisely of a mechanical nature, and were only compounded by a recession caused by a virus, and the resultant collapse of travel demand. Indeed the MAX today is not Boeing’s only problem. It recently reported the largest dollar loss in its history – nearly $12 billion – due to the MAX, and delays in its 777x program and equipment flaws found in its latest 787.

One of the themes of this 1960s Project is that innovation is important, is all around us in the United States, lifts living standards, and is difficult and risky no matter the time you live – the 1960s, 1990s, 1840s, now . . . always.

After over five decades, production of the “Queen of the Skies” will end with deliveries of several cargo versions – the huge 747-800 – to UPS in 2022.  The end of an era that began during our era of the 1960s.

The 747 is going away. The innovators at Boeing and the 737 MAX, after a hiccup, will, with luck, be around for many years to come.

Until February 7,

January 7, 2021

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