BUSINESS: The Ultimate Resource September 2006 Upgrade 48

MANAGEMENT GIANT
William Boeing

William Boeing soared to dizzying heights with his aircraft manufacturing company and airline, founded in 1916 as Pacific Aero Products. Son of a wealthy lumberman, Boeing looked set to carve out a business in lumber, until the day he first saw a manned airplane. From that point onward, until his retirement from the airplane industry in 1934, he strove to turn his obsession with flight into a profitable business. For the most part he succeeded. With the help of some brilliant engineers, he designed and built a biplane that no longer required the pilot to sit on the wing. Incorporating his first company, he turned out airplanes for the military, always improving the technology. When the end of World War I temporarily dampened orders for military aircraft, Boeing switched to commercial planes. He secured contracts to supply airmail and, with the help of pilot and entrepreneur Eddie Hubbard, built a successful airmail operation. But, in 1934, his dreams crashed to the ground when the government of the day accused him of monopolistic practices and ordered the breakup of his company into three separate companies. Disillusioned, Boeing retired and spent the remainder of his years in property development and thoroughbred horse breeding. 1881 Born. 1908 Travels to Seattle. 1915 Takes first plane ride. 1916 Pacific Aero Products Company incorporated for $100,000. 1917 Pacific Aero Products changes name to the Boeing Airplane Company. 1919 Eddie Hubbard flies 60 letters from Vancouver to Seattle. 1922 Becomes Boeing Airplane Company chairman. 1927 Signs contract to fly airmail from Chicago to San Francisco. 1928 Consolidates business as Boeing Airplane and Transport Company. 1929 Boeing Airplane and Transport Company becomes United Aircraft and Transport. 1930 Ellen Church, a registered nurse, is first female flight attendant. United Aircraft and Transport broken up. William E. Boeing resigns as board 1934 chairman. 1956 Dies.

A & C Black Publishers Limited 2006

BUSINESS: The Ultimate Resource September 2006 Upgrade 48

Life and Career

The birth of William Boeing in Detroit, Michigan on the first day of October 1881 goes down in history as one of the most significant days in the development of air travel. After an education in Detroit and Switzerland, Boeing studied at Yale Engineering College. His father was a wealthy lumberman, so in 1902 Boeing went to work for the family lumber interests in Aberdeen, Washington, working his way up to become president of Greenwood Logging Company. In 1908, he traveled to Seattle. It was here that Boeing became interested in aeronautics. On the University of Washington campus during the Alaska-Yukon-Pacific Exposition in 1909, he saw a manned flying machine for the first time. To the modern eye, the contraption in which J. C. Bud Mars took to the skies seems laughable, as well as downright dangerous. To Boeing, the sight of the small gasoline-powered dirigible ascending above the university buildings was a marvel.

Contribution
Boeings next view of the wonders of aeronautical engineering came at the American air show held in Los Angeles in 1910. At the show, barnstormersstunt pilots who performed (hopefully) death-defying tricksentertained an astonished crowd. Boeing left for the return journey to Seattle filled with a burning curiosity about aviation. In the next few years he discovered all he could about aeronautics. He joined the Seattle University Club, where he picked the brains of students like navy engineer Conrad Westervelt. As far as Boeing was concerned, Westerveltwho had taken a few aeronautics courses at the Massachusetts Institute of Technologywas as good as an expert on the subject. Together, Boeing and Westervelt made a study of biplanes, sometimes from close quarters. The unflappable Boeing was a passenger in early biplanes made by firms such as the Curtiss Aeroplane and Motor Company, in which both the pilot and passenger were required to sit on the wing during flightnot an undertaking for the fainthearted. The more he found out, the more Boeing was convinced that it was possible to design a better biplane than any that existed at the time. In 1915, with the help of Westervelt and another engineer, Herb Munter, Boeing established the Pacific Aero club in a boathouse at Lake Union. Together they began work on the B & Wa new twin-float seaplane. Boeing was wildly enthusiastic about the prospects of his new enterprise. He anticipated that World War I would mean the U.S. government would need more planes. He produced two prototype seaplanes, Bluebill and Mallard, taking the controls of Bluebill on its maiden flight. Encouraged by the trials, Boeing founded Pacific Aero Products Co. in July 1916. But things didnt go as planned. Lieutenant Westervelt was reassigned and consequently unable to continue working with Boeing. Worse still, the navy rejected Boeings prototypes. Undaunted, he hired another engineer, Tsu Wong, and built a new improved Model C seaplane. When America entered the war in April 1917, Boeing changed the name of Pacific Aero Products to Boeing Airplane Co., and obtained

A & C Black Publishers Limited 2006

BUSINESS: The Ultimate Resource September 2006 Upgrade 48

orders from the navy for 50 planes. A workforce of over 300 was assembled to construct the new planes in the Red Barn on the Duwamish River. The end of World War I was celebrated throughout the allied nations. For Boeing, it was a bittersweet moment. Victory in Europe meant the end of an intense period of activity and without the war to fuel production, prospects looked bleak. Orders dried up. To keep the factory open, Boeing turned to speedboat and furniture manufacture. To all his ventures, Boeing applied exacting standards. The boats were so good that Canadian smugglers used them to evade the authorities. Small military contracts kept the company above water, but it was an entirely different type of business that was to save Boeing from bankruptcy. Although Boeing didnt know it at the time, his future lay in the hands of a man called Eddie Hubbard. Hubbard was Boeings chief test pilot, the second Seattle man to win a license from the Aero Club of America. Hubbard was convinced that the future of the airplane lay in transporting passengers and goods. In March 1919 he delivered the first international airmail to America, flying in from Vancouver, Canada. While Boeing struggled for survival, Hubbard organized an aerial taxi offshoot of the company. In 1920, Hubbard was awarded a contract to carry mail between Seattle and Canada. He left Boeing and started his own firm, buying a Boeing B1 seaplane to use as the delivery plane. It was Boeings first commercial aircraft sale. If this was good news for Boeing, the Kelly Act, passed in 1925, was even better. Until then, domestic airmail was carried under a virtual government monopoly. The Kelly Act allowed the Post Office to grant contracts to carry airmail on certain routes to private operators. In 1926, the Post Office invited tenders for its ChicagoSan Francisco route. Hubbard personally persuaded Boeing to bid. Boeing won, founded a new subsidiary the Boeing Air Transport Corporationand welcomed Hubbard back into the fold to help organize the new company. When it was clear that the transportation of passengers by airline, as Hubbard suggested, promised to be the savior of Boeings airline manufacturing company, Boeing put all his energy into expanding that side of the business. He rushed out over 20 Model 40s in time to start the new airmail contracts on July 1, 1927. In 1928, he brought airline and aircraft manufacturing operations under the aegis of a new companythe Boeing Airplane and Transport Companyand then bought out one of his main rivals, Gorsts Pacific Air Transport. He introduced larger planes that were capable of carrying up to 18 passengers, attended by registered nursesthe first air stewardesses. In 1929, Boeing changed the name of his company to United Aircraft Transport and proceeded to buy out most of the competition. When the balance of the Post Office mail contracts was handed out to private carriers, United picked up the northern routes. Boeings acquisitive activities had, however, brought him onto the radar of President Franklin D. Roosevelt and a new Democratic administration. The U.S. government, in a show of strength, was determined to rid the country of the monopolistic practices that had dominated industry throughout the late 19th and early 20th centuries. Boeing was directly in the governments firing line. All airmail franchises were canceled with effect from March 10, 1934. As a stopgap measure the routes were handed over to the army which, ill-equipped to handle the airmail routes, lost ten pilots in two weeks. When the contracts were offered to private carriers again, aircraft manufacturers were prevented from

A & C Black Publishers Limited 2006

BUSINESS: The Ultimate Resource September 2006 Upgrade 48

bidding. This was a poorly disguised move to restrain Boeings power. As a result of the governments actions, United Aircraft and Transport was divided into three separate companies: United Aircraft Co., Boeing Airplane Company, and United Air Lines. The mail contracts arrived just in time to save Boeing. His company might have survived long enough to pick up lucrative military supply contracts, but the breakup of the government monopoly on airmail distribution made it a certainty and allowed Boeing to bring in much-needed cash and to rebuild the manufacturing business. When the airmail contracts were withdrawn, Boeings company was in a strong enough position to survive without them. Boeing, however, was disgusted with the governments actions. The loss of the mail contracts sapped his resolve. After the breakup of United Aircraft and Transport, the prospect of restructuring and steering his company through another difficult period depressed him. At the age of 50 he retired from the company he had founded and had little more to do with it, other than acting as a consultant during World War II. After retirement he concentrated on property deals, buying tracts of land to the north of Seattle. These became the Blue Ridge housing development. Ironically the first houses erected were bought by Boeing Company managers. Boeing also became a successful breeder of thoroughbred horses. He died in 1956.

Context and Conclusions

Boeing was one of the great business pioneers of the 20th century. Fascinated by aviation as a young man, he turned a passion for flying into a business. Although he was a competent pilot, his skill lay in spotting talented people and getting them to produce results. Navy Lieutenant Conrad Westervelt taught Boeing aviation and introduced him to other enthusiasts. Herb Munter, a brilliant engineer, helped Boeing build his first plane. Another engineer, Tsu Wong, helped improve it. Eddie Hubbard persuaded Boeing of the merits of the airmail industry and passenger airlines. By motivating these and other employees and colleagues and inspiring them with his leadership, Boeing built the first major commercial airplane manufacturer. After the government intervened to clip his companys wings, he left the industry a dispirited and bitter man. But, before he died, he witnessed the introduction of the jet airliner, by the company he founded over 50 years before.

For More Information

Books: Cleveland, Carl M. Boeing Trivia. Seattle: CMC Books, 1989. Serling, Robert J. Legend & Legacy: The Story of Boeing and Its People. New York: St. Martins Press, 1992.

A & C Black Publishers Limited 2006