Page 2 of
2 BOOK
REVIEW The ultimate
global battle Boeing Versus
Airbus by John
Newhouse
Reviewed by Benjamin A
Shobert
business practices
to conform more closely to those of Airbus. He
points out that the 787 borrows heavily from the
"systems integrator" model successfully used by
Airbus.
Newhouse suggests three reasons
for this change: first, it simply made business
sense to tie together the success of the 787 with
foreign economies,
specifically that of Japan, with that country's
domestic air carriers. Second, by outsourcing
large portions of the 787, Boeing sent a strong
message to its workforce about what the company
was prepared to do in case it had labor problems
on its hands again.
Newhouse expands on
this second point when he writes, "There is no
evidence, however, that Boeing is saving much
money by outsourcing the 787's wing or sections of
the fuselage. Japan is not a cheap labor market.
To the contrary. Neither is Italy. But the
outsourcing does send a message to the unions that
Boeing deals with. It says: 'If you mess too hard
with us, we can always outsource your job to
another place'" (p 169).
Third, the 787's
systems-integrator model is an attempt by Boeing
to break internal paradigms, the incestuous
influence of years of success that set too many
people's feet in concrete and made them resistant
to change, even as Airbus became increasingly
successful. Says Newhouse, "Boeing's engineers are
in the main hostile to 'farming out tribal
knowledge', as some of them put it" (p 28).
It would be hard to imagine how Airbus's
now much-publicized and seemingly plagued A380
super-jumbo could be more different from the 787.
Unlike Boeing's reduced-hub model, Airbus believes
that the largest unserved market potential lies
within Asia, and that the demand here is going to
be for aircraft with capacities beyond those of
the current generation of 747s. As Airbus
officials shared with Newhouse, one out of every
10 flights into London's Heathrow is a 747 jumbo;
using the A380, many more passengers could go
through the airport with no increase in flights.
It remains a very subjective question, and
one Newhouse leaves largely unexplored, how such a
change would impact already congested destinations
like Heathrow. We are left to wonder, at this
early stage of the plane's introduction, how much
of a joy it will bring the average traveler.
Thoughts of these planes disgorging additional
hundreds of people into already strained secondary
security checkpoints, customs lanes and baggage
claims leaves one less than enthused.
Similarly, the A380 does nothing to
rekindle the glamour airplanes once had. Newhouse
quotes Adam Brown, former vice president for
consumer affairs at Airbus: "The A380 is ugly. [It
has a bloated, snub-nosed look.] I concede that,"
he said. "It has to be, though. To be compatible
with the parameters of airports, it is required to
sit in an 80-meter-square box. That box determines
the geometry of the airplane. The wingspan must be
less than 80 meters. Even a stretched version of
the airplane will have to be less than 80 meters
in wingspan" (p 157).
None of this is to
say that the A380 is not in its own right a true
engineering marvel. The plane increases the number
of passengers over the 747, while reducing fuel
burn with an engine system that almost cuts in
half the plane's noise during takeoff.
It
is inevitable, when finished with Newhouse's
superb book, that one will draw conclusions about
what the battle between Boeing and Airbus has to
say on the global economy. The lesson to
individual businesses is one Newhouse's analysis
adeptly and directly draws out, namely, no matter
how successful you might be now, the future is not
guaranteed.
Companies that fear change end
up being surprised at the vulnerable market space
they leave unserved, openings competitors quickly
identify and gravitate toward. These same
organizations also, as Newhouse illustrates with
Boeing, tend to underestimate the sophistication
and progress of their competitors.
When
Newhouse shares one of the dawning moments of
candor from within Boeing that its executives
might not understand why Airbus is successful, we
grimace at the same assumptions that might color
our own business sensibilities: "A cluster of
people within the company had begun to worry
seriously not just about the costs of making
Boeing airplanes but about how these costs
compared with Airbus.
"They knew that
Airbus had adopted lean manufacturing techniques
much earlier. They saw Airbus winning numerous
competitions. They doubted that government launch
aid to Airbus programs explained what was
happening. They concluded that lower production
costs were allowing Airbus to price its aircraft
beneath Boeing's prices. And they sensed what one
of them later called 'a cost crisis'" (p 125).
Newhouse directly shows how both companies
compete for business, trying to use outsourced
portions of their aircraft to enmesh foreign
economies into the interests of themselves, but a
deeper question - about whether developed
economies view undeveloped ones as Boeing once
viewed Airbus - must be asked. When Newhouse
describes a company diminutively viewing its
competitors and overly confident in its strength,
it takes little imagination to see a parallel
between the United States and its current economic
nemesis China.
While it is too early to
predict which company's model will be successful
(or whether they can peacefully co-exist, a
similarly interesting suggestion given the recent
hyperbole over US-China relations), one finishes
Newhouse's book with an appreciation that any
meaningful success will come only when we allow
ourselves to investigate those things we most hold
dear, and embrace the need for change as tightly
as we have embraced our belief in being unique.
Boeing Versus Airbus: The Inside Story
of the Greatest International Competition in
Business by John Newhouse. Knopf, January 16,
2007. ISBN-10: 1400043360. Price US$26.95, 254
pages.
Benjamin A Shobert is the
managing director of Teleos Inc
(www.teleos-inc.com), a consulting firm dedicated
to helping Asian businesses bring innovative
technologies into the North American market.
(Copyright 2007 Asia Times Online Ltd.
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