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Boeing

by Charlie CrayCrocodyl.org

For the latest company profile on Boeing, visit our corporate malfeasance wiki, Crocodyl.org.

According to the company Boeing is "the world's leading aerospace company and the largest manufacturer of commercial jetliners and military aircraft combined. Boeing designs and manufactures rotorcraft, electronic and defense systems, missiles, satellites, launch vehicles and advanced information and communication systems. As a major service provider to NASA, Boeing operates the Space Shuttle and International Space Station. ... Boeing has customers in more than 90 countries around the world and is one of the largest U.S. exporters in terms of sales."

Headquartered in Chicago, Boeing employs more than 150,000 people across the United States and in 70 countries, with major operations in the Puget Sound area of Washington State, southern California and St. Louis. Total company revenues for 2006 were $61.5 billion.

Boeing is one of the largest U.S. federal defense contractors. Its has traditionally also been willing to make huge gambles on developing new generations of planes--seen most recently in the 777 series that will become available in the mid-1990s.

Global Fortune 500 position: 87
Ownership status: Publicly traded
Number of employees worldwide: 159,000
Chief executive officer: W. James McNerney, Jr.
Corporate accountability
Accountability overview:

Former CEO Harry Stonecipher was ousted on March 6, 2006, after it was revealed that he had a relationship with a female vice-president at Boeing. The "Palm Springs fling," as it became known at the company, followed a three-year stretch of widely publicized corporate misbehavior highlighted by the jailing of Boeing's former CFO, for holding illegal job negotiations with Darlene Druyun, a senior Pentagon official; the indictment of a Boeing manager for allegedly stealing 25,000 pages of proprietary documents from his Lockheed Martin (his former employer), and a judicial finding that Boeing had abused attorney-client privilege to help cover up internal studies showing that female employees were paid less than men.

As Business Week put it, "Scandals involving multiple forms of misconduct in geographically scattered lcoations enveloped nearly every division at Boeing, leaving little doubt that the legendary company, even as it began to enjoy a cyclical boom, was plagued by a poisonous culture."

Labor: 

Like all the major aerospace companies, Boeing has been less than enthusiastic about the unionization of its employees. The International Association of Machinists did, however, eventually succeed in winning collective bargaining rights for many of the company's production workers.

The bargaining power of the Machinists has fluctuated with the erratic condition of the aircraft market. During the uncertainties of the early 1980s Boeing, along with competitors, got a lot tougher at the bargaining table. In 1983 the Machinists signed a contract with Boeing that substituted lump-sum payments for wage increases and instituted a two-tier pay structure. The pact prompted other companies to demand concessions. The industry was booming in 1986, but Boeing again got the Machinists to take lump sums instead of increases in base pay.

In 1989, while the company was flooded with orders and falling behind in filling them, the Machinists went on strike to pressure the company to make up for the six years without an increase in the base wage. The workers--many of whom welcomed the strike as a respite from exhausting amounts of mandatory overtime--stayed out for 48 days and then accepted a settlement that included both lump-sum payments and moderate increases in base pay.

With between 157,000 and 180,000 employees (depending on who you ask), Boeing is almost always involved in labor negotiations. The company's contracts extend from a four-member bargaining unit in Antelope Valley, Calif., to a 1,711-strong United Autoworkers Union local in Philadelphia, Pa. Its two biggest contracts are with the International Association of Machinists District Lodge 751 and the Society of Professional Engineering Employees in Aerospace.

Environment and product safety: 

In 1990 a federal jury found that the company did not knowingly dump toxic material in dump sites in the 1950s and 1960s but concluded that the company had done so in the following decade. Boeing thus was found partially responsible for the clean-up of two heavily contaminated sites in Washington.

In 1990 the company also settled a class action lawsuit brought on behalf of 700 people who had allegedly been hired by Boeing for jobs that involved exposure to electromagnetic pulse radiation and were monitored for health effects without their knowledge. The lead plaintiffs' counsel charged that the 700 persons were used as human research subjects without their consent. The settlement, in which Boeing admitted no wrongdoing, involved payment of $500,000 in cash and an annuity to the family of one employee who claimed that he developed leukemia as a result of the exposure. The company also agreed to pay for regular medical examinations over ten years for the other class members, who reserved the right to bring claims for compensation if they develop adverse health effects.

In 1991 U.S. EPA fined the company $620,475 for improper storage of hazardous wastes and deficiencies in its training practices regarding toxics. That same year the company was sued by a group of employees who charged that Boeing had concealed the dangers of a substance (Ferro CPH2284P) they were exposed to on the job.

Anti-competitive and consumer protection: 

Boeing's position as a military contractor was tarnished in 1989, when it pleaded guilty and paid a fine of $5 million in connection with charges that it illegally obtained classified Pentagon planning documents.

Subsidy Disputes

In 2004 the US and the EU agreed to discuss a possible revision of the 1992 EU-US Agreement on Large Civil Aircraft provided that this would cover all forms of subsidies including those used in the US, and in particular the subsidies for the Boeing 787. The 787 was the first new aircraft to be launched by Boeing in 14 years.

In October of 2004, the US requested a WTO consultation on European investments in Airbus. At the same time, the US unilaterally withdrew from the 1992 EU-US Agreement. The WTO complaint claimed that Airbus violated the 1992 bilateral accord when it received what Boeing deemed to be “unfair” subsidies from several European governments. The EU retaliated by filing its own complaint, contesting that the U.S. violated the accord when by providing tax breaks to Boeing. On January 11, 2005, Boeing and Airbus agreed that they would attempt to find a solution to the dispute outside of the WTO, but in June 2005, Boeing and the United States government reopened the trade dispute with the WTO, claiming that Airbus had received illegal subsidies from European governments.


Brief company history: 

William Boeing formed the "Pacific Aero Products Co." in 1916, following the flight of one of two "B&W" seaplanes built with the assistance of George Conrad Westervelt, a U.S. Navy engineer. The company changed its name to "Boeing Airplane Company" the following year. The company sold its first plane to the government of New Zealand.

Boeing's firm trained flight instructors during the First World War and was one of the few postwar survivors from among the slew of aircraft companies that sprang up to meet the enormous needs of the U.S. and Allied armed forces. The Coolidge administration moved to assist the development of the industry by setting long-term aircraft procurement plans for the army and navy and by encouraging the growth of private carriers through the awarding of lucrative airmail contracts. Among those carriers was Boeing, who won a contract to shuttle mail between Chicago and San Francisco under the name Boeing Air Transport Co.

The new climate brought with it a spate of mergers. Boeing joined in the fun, acquiring several small carriers, and in 1928 he formed a holding company called Boeing Aircraft and Transportation Co. The following year it became part of a larger holding company, United Aircraft and Transportation, that also included various carriers, the Pratt & Whitney engine business, and other operations. Boeing, who was named chairman of this company, went on to grow quite wealthy by exchanging his stock with the holding company--a process that came under Congressional scrutiny in 1933. An irate Boeing retired from the company and sold his holdings.

The consolidation of the industry that had been promoted by Postmaster Walter Folger Brown came under attack after the Roosevelt administration took office. Senator Hugo Black led the charge, which resulted in the passage of the Air Mail Act of 1934. The law established a (short lived) ban on private transport of airmail and a more permanent requirement that aircraft producers and air transport companies be separated from one another.

This resulted in the United holding company being split into three independent firms: United Air Lines, Boeing Aircraft in the Northwest, and East Coast-based United Aircraft (renamed United Technologies in 1975), which included Pratt & Whitney and Sikorsky Aviation, a pioneer in helicopters.

The aircraft industry expanded during the 1930s, despite the Depression, thanks to the growth of the airlines. Boeing first took the lead with the development of its 247, 60 of which were ordered by United Air Lines. But then Douglas Aircraft, at the request of TWA, created the DC-1, the first of its highly successful DC (Douglas Commercial) series. Boeing, meanwhile, was one of the firms involved in producing the famous "flying boats," the huge planes commissioned by Juan Trippe of Pan American to fly across oceans and alight on water where there were no airfields.

When wartime mobilization began, Boeing began producing hundreds of B-17 Flying Fortresses for the army. A later model, the B-29, was the plane used in the dropping of the atomic bombs on Hiroshima and Nagasaki in 1945. The company also produced a series of bombers, including the renowned B-52.

After the war Boeing set out to challenge the domination of the civilian aircraft market by Douglas. The result was the Boeing 707, introduced in 1954. That plane put Boeing in an intense contest with Douglas for the loyalties of the airlines of the world. Douglas was prompted to develop the DC-8, but Boeing gained the lead in the new jet planes and solidified it with the introduction of the 727 in 1964.

The development of fan-jet engines, stimulated by the Pentagon's interest in building the huge C-5A cargo planes, made possible substantially larger commercial aircraft as well. Juan Trippe of Pan Am essentially decided to bet the company on the idea and enlisted Boeing to produce planes with 350 or more seats that would become known as the 747. The purchase agreement for 25 of the jumbo jets was signed in 1966.

The 747 eventually helped usher in a new era of mass airline travel, but the orders were slow in coming in. This put an enormous strain on Boeing's resources, coming as it did when the company was also involved in developing a supersonic transport (a project the company abandoned after Congress ending its financial support). Boeing survived the squeeze and went on to develop a new generation of planes that met the demand for aircraft that could carry up to about 250 passengers.

The market for these planes, designated as wide-body, was already being met by Lockheed with its L-1011s and the DC-10 from Douglas. A new player on the scene was Airbus Industries, a consortium formed by British, French, German, and Spanish aerospace companies. Its first product, the A300, managed to seize a fifth of the international commercial aircraft market by the end of the 1970s.

Once Boeing introduced its new narrow-body 757 and wide-body 767 in the early 1980s, the Seattle company once again took command of the market. As a result the teetering Lockheed, which in the 1970s had been rescued by a federal government bailout program, abandoned the commercial aircraft business in 1981.

This new climate was not without its drawbacks for Boeing. Having spent years and massive sums of money developing new fuel-efficient technologies, aerospace companies were now finding that the new cheapness of oil was making airlines less concerned about fuel costs. This was a particular blow for Boeing, which (along with engine-maker General Electric) was spending several billion dollars developing a new type of engine to be used on its belated entry into the 150-seat market. The project, which Boeing called the 7J7, involved an unducted fan engine, a device that made use of external fan blades that looked suspiciously like propellers but which was designed to burn one-third to two-thirds less fuel than existing engines.

Boeing decided to share the risk and the development cost of the plane with a group of Japanese companies, which were eager to gain access to U.S. aerospace technology. (Those companies have since the late 1970s been major suppliers for Boeing's 767.) Yet the slump in fuel prices and planning problems caused Boeing to delay the project indefinitely.

The Reagan administration's escalation of defense spending fattened the military side of Boeing's operations. In addition to getting more money to build its AWACS airborne command posts, the company began to get more involved in military electronics--though not as much as it hoped to when making a $5 billion bid in 1985 for Hughes Aircraft. Hughes ended up with General Motors instead.

McDonnell Douglas, the product of a 1967 merger of Douglas and the military contractor McDonnell Aircraft, found itself facing intensified competition from Boeing and Airbus in the late 1980s. For customers wanting to replace aging DC-10s with a longer-range widebody, McDonnell Douglas developed the MD-11, which fit between Boeing's 747 jumbo jets and its 200-250-seat 767. Boeing, however, responded by downsizing the 747 and stretching the 767.

During the same period Airbus--which in 1986 began to receive serious acceptance from U.S. airlines for its A320 medium-range plane--brought out a long-range A340 to compete directly with the MD-11. Able to price aggressively because of its government subsidies, Airbus began to take market share from McDonnell Douglas while making Boeing uneasy. In early 1988 Boeing strengthened its position by introducing new versions of the 747 and the medium-range 737. These received an enthusiastic response from airlines, and the company's 10-year-old midsize 757s also began to catch on. By 1989 the main challenge for Boeing was keeping up with the flood of orders.

The company was also busy developing and promoting a new long-distance, 350-seat plane called the 777. Yet the fact that the twin-engine plane would not be available at least until 1995 was causing some potential customers to turn to alternative products from McDonnell Douglas and Airbus. In October 1990, however, United Airlines showed its faith in Boeing by placing a whopping $22 billion order for 68 of the 777s--the largest aircraft order ever made. Not willing to concede defeat, Airbus began talking with airlines about building the largest planes in the world, capable of holding 600 passengers. Boeing, in turn, began to consider producing a "superjumbo" of its own.

Boeing's military business also began to surge again. In 1991 a team headed by Boeing and the Sikorsky Aircraft division of United Technologies was chosen to build a new generation of combat helicopters for the U.S. Army. The contract could eventually be worth $34 billion. Boeing was also part of a team (along with Lockheed and General Dynamics) chosen to supply 650 Advanced Tactical Fights to the U.S. Air Force--a deal that could be worth $90 billion to the three companies. The Seattle company joined yet another team (including Grumman and Lockheed) to compete for the contract on the U.S. Navy's new A-X attack plane. In 1991 Boeing formed an alliance with the Thomson-CSF subsidiary of Thomson S.A. to pursue opportunities in global military markets.

In May 2005, Boeing announced its intent to form a joint venture, United Launch Alliance with its competitor Lockheed Martin. The new venture will be the largest provider of rocket launch services to the US government. The joint venture gained regulatory approval and completed the formation on December 1, 2006.

Financial information
Detailed financial information
Stock ticker symbol: BA
Total revenue: $61.5 billion
Fiscal year: 2006
Net Income: $2.2 billion
Fiscal year: 2006
Major lines of business/segments: 

Boeing is organized into two business units: Boeing Commercial Airplanes and Boeing Integrated Defense Systems. In addition, the company also includes Boeing Capital Corporation (financing division), the Shared Services Group and Boeing Engineering, Operations & Technology, which helps develop, acquire, apply and protect innovative technologies and processes.

Specialized Information
Major units/subsidiaries/affiliates: 

Boeing is organized into two business units: Boeing Commercial Airplanes and Boeing Integrated Defense Systems. Supporting these units is Boeing Capital Corporation, a global provider of financing solutions; the Shared Services Group, which provides a broad range of services to Boeing worldwide; and Boeing Engineering, Operations & Technology, which helps develop, acquire, apply and protect innovative technologies and processes.


U.S.-E.U.: WTO rules Boeing got $5B in illegal US subsidies
by John HeilprinAssociated Press
March 12th, 2012
The World Trade Organization ruled that U.S. planemaker Boeing received $5.3 billion in illegal government subsidies over a quarter-century. Airbus and Boeing have both complained to the WTO that the other is receiving state aid. They are locked in a long-running trade dispute over a market believed to be worth more than $3 trillion over the next decade.

Spies for Hire: New Online Database of U.S. Intelligence Contractors
by Tim ShorrockSpecial to CorpWatch
November 16th, 2009
CorpWatch joins with Tim Shorrock today, the first journalist to blow the whistle on the privatization of U.S. intelligence, in releasing Spies for Hire.org, a groundbreaking database focusing on the dozens of corporations that provide classified intelligence services to the United States government.

US: Contracting Boom Could Fizzle Out
by Dana HedgpethWashington Post
April 7th, 2009
The surge in the U.S. military contracting workforce would ebb under Defense Secretary Gates's budget proposal as the Pentagon moves to replace private workers with full-time civil servants. The move could affect companies such as CACI and SAIC. "We are right-sizing the defense acquisition workforce so we can improve our contract oversight and get a better deal for the taxpayers," said the Pentagon's director of defense procurement and acquisition policy.

US: Gates Proposes Major Changes to Military Programs, Weapons Buys
by August ColeWall Street Journal
April 6th, 2009
Defense Secretary Robert Gates unveiled a sweeping overhaul of the Pentagon's top weapons priorities. The shake-up, a combination of defense contract cutbacks and policy changes, will stoke a smoldering debate in Congress, with cuts proposed for Lockheed Martin Corp.'s F-22 Raptor and replacement of the president's fleet of Marine One helicopters.

US: Pentagon Weighs Cuts and Revisions of Weapons
by Christopher DrewNew York Times
April 3rd, 2009
U.S. defense executives and consultants are worried about the sweeping changes in military programs that Defense Secretary Robert M. Gates is expected to announce on Monday. Weapons systems like missile defense are likely to endure deep cuts.

US: The Looming Crisis at the Pentagon
by Chalmers JohnsonTomDispatch.com
February 2nd, 2009
Like much of the rest of the world, Americans know that the U.S. automotive industry is in the grips of what may be a fatal decline. A similar crisis exists when it comes to the military-industrial complex. That crisis has its roots in the corrupt and deceitful practices that have long characterized the high command of the Armed Forces, civilian executives of the armaments industries, and Congressional opportunists and pay-to-play criminals.

US: 2nd Walkout at Boeing in 3 Years
by MICHELINE MAYNARDThe New York Times
September 6th, 2008
The Boeing Company, whose order books are bulging with demand for its planes, was hit by its second major strike in three years early Saturday, when the union that represents 27,000 machinists in Washington State, Oregon and Kansas walked off the job.

US: Former Colo. nuke plant contractors ordered to pay $925M
AP
June 3rd, 2008
Two companies that worked as contractors with the now-defunct Rocky Flats nuclear weapons plant have been ordered to pay $925 million to residents who claimed that contamination blown from the facility endangered people's health and devalued their property.

INDIA: Gates in India to push US firms
BBC News Online
February 26th, 2008
Mr Gates is expected to spend his two-day visit lobbying for US firms that hope to win a contract to supply India with 126 new fighter jets.

US: Holes in the Wall
by Melissa del BosqueThe Texas Observer
February 18th, 2008
As the U.S. Department of Homeland Security marches down the Texas border serving condemnation lawsuits to frightened landowners, Brownsville resident Eloisa Tamez, 72, has one simple question. She would like to know why her land is being targeted for destruction by a border wall, while a nearby golf course and resort remain untouched.

US: A Mission to Rebuild Reputations
by Dana HedgpethWashington Post
January 17th, 2008
Now those promises -- and the public's perception of the Air Force's ability to spend its money prudently -- are being tested by new contracting and public relations challenges. The Air Force is about to award two key contracts worth a total of about $55 billion, and Boeing is in the running for both deals.

Domestic Spying, Inc.
by Tim Shorrock Special to CorpWatch
November 27th, 2007
A new U.S. intelligence institution will allow government spy agencies to conduct broad surveillance and reconnaissance inside the country for the first time. Contractors like Boeing, BAE Systems, Harris Corporation, L-3 Communications and Science Applications International Corporation are already lining up for possible work.

US: Failure to Launch: In Death of Spy Satellite Program, Lofty Plans and Unrealistic Bids
by Philip TaubmanNew York Times
November 11th, 2007
Collapse of a government funded project to build new spy satellites was all but inevitable.

INDIA: Building a Modern Arsenal in India
by Heather Timmons and Somini SenguptaThe New York Times
August 31st, 2007
India is developing a military appetite to match its growing economic power. With a ballooning arms budget, India will soon become one of the largest military markets in the world, making it an important new target for American arms manufacturers.

US: Boeing unit subject of refiled CIA-flight suit
by Bloomberg NewsChicago Tribune
August 2nd, 2007
A Boeing Co. unit falsified flight plans to disguise the Central Intelligence Agency's transporting of terrorism suspects to secret prisons overseas, the American Civil Liberties Union claims in an updated lawsuit.

US: Muslim Says He Was Abducted By U.S.
by Armen Keteyian and Phil Hirschkorn.CBS News
November 28th, 2006
Khaled El-Masri says he is not after money but answers about why he spent five months in harsh captivity as a prisoner in the war on terrorism.

US: Boeing Settles Cancer Suit
Associated Press
January 12th, 2006
Boeing Co. has agreed to pay $30 million to settle a lawsuit by residents who alleged that pollutants from a company lab caused them to get cancer.

US: Magazine ad "unleashes hell" for Boeing and Bell
by Hal BerntonThe Seattle Times
October 1st, 2005
Boeing and its joint-venture partner Bell Helicopter apologized yesterday for a magazine ad published a month ago - and again this week by mistake - depicting U.S. Special Forces troops rappelling from an Osprey aircraft onto the roof of a mosque.

Boeing Scandal Part of Deeper Problems at Pentagon
by David PhinneySpecial to CorpWatch
January 5th, 2005
Military contractors like Boeing, Halliburton and Lockheed, have become increasingly embedded with the Pentagon bureaucrats who give them lucrative work as the jailing of Darleen Druyun, a former U.S. Air Force weapons buyer, demonstrates.

US: Lockheed, BAE protest Boeing pacts
by Jonathan Karp and Andy PasztorWall Street Journal
October 13th, 2004

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