Global airplane market is a new ballgame

by Don C. Brunell

  • Thursday, August 28, 2008 4:38pm
  • Opinion

by Don C. Brunell
President, Association of
Washington Business

Growing up in the 1950s, major league baseball clubs fielded all-American teams. While fans knew about baseball in Caribbean countries and Japan, they thought foreign players and teams were vastly inferior to ours.
Back then, fans never dreamed that a Japanese centerfielder could approach the greatness of the San Francisco Giants Willie Mays. But today, the Mariners Ichiro Suzuki is the biggest name in professional baseball, last week adding All-Star Game MVP to his already bulging trophy case. Along with Willie Mays and Ken Griffey Jr., Ichiro will go down in history as one of the greatest players ever to roam the outfield.
Today, baseball is an international sport and some of the best players come from other countries. For example, almost half of the Seattle Mariners players are from other nations. Korea, Japan, Australia, Cuba, the Dominican Republic, Puetro Rico and Venezuela are all represented.
The same is true for commercial airplanes.
Fifty years ago, Boeing competed head-to-head with McDonnell Douglas and Lockheed in commercial airplane manufacturing. People thought American companies had a lock on the market and the technology.
The Europeans thought differently. To help their aircraft manufacturers compete with the U.S. giants, Europe established Airbus in 1970 as a consortium of French, German and later, Spanish and British companies.
In the old days, Boeing was a Seattle company that assembled its airplanes in Renton and at Boeing Field. At the time, most people in the Puget Sound area thought outsourcing parts for the 707 and 727 meant they were made in Wichita, Kansas.
How times have changed.
The components for Boeings new 787, rolled out in early July, are made in Korea, Japan, Italy, France, China, Australia and the United States. The fact is, Boeing now assembles not builds airplanes in America. Parts, and even entire sections of the aircraft, are flown in, railed and shipped by sea to Paine Field in Everett.
That trend will continue as worldwide competition for airline sales intensifies. Between 2006 and 2026, airlines around the world are expected to order 28,600 new aircraft worth $2.8 trillion. About one-third of those new planes will replace existing, less fuel-efficient fleets, while the rest will fly on new routes.
Though the increase in air passenger traffic is worldwide, the largest growth is in China and the Asian Pacific, along with North America and Europe. That growth distribution tracks with where the airplane parts are made, because in todays high-tech global economy, the people who buy these airplanes want a chance to make the parts, as well.
While Boeings resurgence overtook Airbus last year, we should remember that Airbus was the leader in 2004 and 2005. Boeing entered this years Paris Air Show with more than twice as many orders as Airbus, but before the show was over Airbus unveiled more than $30 billion in orders, some of which analysts had expected would go to Boeing.
When the show ended in late June, Airbus came away with more firm orders than Boeing.
Many of those orders were for the A350 XWB, a plane vital to its hopes of catching up with Boeings hot-selling 787. Airbus also reportedly received more than 300 commitments for aircraft, as well.
The Airbus orders send a signal that Boeing is far from having a lock on future markets. To remain competitive, Boeing will continue to parcel out manufacturing jobs to foreign purchasers.
The point is Boeing like big league baseball will continue to have an international flavor. So, as much as some may want to turn the clock back, times have changed. Todays global commercial aircraft market is a whole new ballgame.

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