The Boeing Company

Text B

Bill Boeing, a wealthy lumberman from Washington State, founded the Boeing Company. In 1916, he set up an airplane factory in Seattle, Washington, a city, which now depends on the aircraft industry. Fascinated with the technology of flying, Bill Boeing when he founded the company promised, “to let no new improvement in flying and flying equipment pass us by.”

During World War II, the Boeing Company established its reputation as a supplier of military aircraft. After the war, in the early fifties, Boeing made the first passenger jet, which soon replaced all of the propeller-driven aircraft in the passenger market. It has also built a number of spacecraft used in the U.S. space program. Over the years, the company has developed a strong reputation for reliable products and the service of those products. It has been number one in worldwide sales for years, controlling over 50 percent of the market for commercial aircraft.

Aerospace products are the number one U.S. export after agricultural products. The country has a long and proud tradition of dominating the industry with technological breakthroughs leading to superior products. But this dominance is now being challenged. Boeing executives argue that they cannot compete against the deep pockets of the four European governments that subsidize Airbus.

Traditionally, the United States has maintained a free-market philosophy, which holds that government should not regulate market forces. In this view, better and more efficient production occurs when world markets are open, allowing the forces of competition to work freely. According to Boeing and other executives, this philosophy has been the backbone of American industrial power from the beginning. For the health of the civil aviation industry, the free-trade argument goes, the United States must convince the EC to stop subsidizing Airbus.

However, there is less agreement than there used to be on the issue of government’s role in industry and trade. Some U.S. officials and academics point out that the free-market philosophy no longer suits global economic conditions. Advocates of this emerging view urge the development of a strong industrial policy that would develop and support important U.S. industries. Such a policy could work through such protective measures as tariffs, import quotas or direct subsidies to industry, and through policies that encourage research in certain high-tech industries.

Those in favour of the traditional free trade and open market philosophy reject the notion of an industrial policy. At worst, it sounds like the centralized planning of a socialist system. At best, it sounds like protectionism, a policy that simply uses government money to protect industries that would fail in the market without it. Even the free traders have to admit that U.S. industry is not as competitive in the global economy as it once was and that, increasingly, it must compete against nations that have strong industrial policies and are unlikely to change them.

	Airbus Industrie	Boeing company
History
Type of company
Place in the world’s market
Products
Reasons for success
Government subsidies
Predictions for the future

C. Interpreting Information

Work in small groups. Read the questions below. Discuss your answers with your group mates. Give your arguments.

1. What is the history of Airbus Industrie and the Boeing Company?

2. What is the nature of competition between the two companies?

3. Airbus Industrie, a four-nation European consortium, was established in 1970 to challenge U.S. dominance in aerospace. How well has the company accomplished its goals?

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