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Boeing, MD to team up
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December 3, 1996: 8:02 p.m. ET
Boeing, McDonnell Douglas agree to work together to build Boeing jets
From Correspondent Casey Wian
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LOS ANGELES (CNNfn) -- Aerospace rivals Boeing Co. and McDonnell Douglas Corp. reached agreement Tuesday to work together on developing Boeing wide-body jets.
In a rare example of corporate cooperation among industry competitors, the companies said both sides benefit as McDonnell Douglas saves jobs and Boeing can fill a backlog of commercial airplane orders.
Boeing is enjoying one of it most successful years ever and is facing a shortage of engineers as it scrambles to meet demand. The company is behind a record 1,300 orders -- up nearly 20 percent from last year.
"It's not really outsourcing. It's taking advantage of a great U.S. asset that became available when McDonnell Douglas decided not to pursue further wide-body derivatives and to abandon their MD-XX," Larry Clarkson, senior vice president of Boeing, said.
In contrast to Boeing, McDonnell Douglas has not been fortunate this year. Last month the company was knocked out of contention for a major military project to build the Pentagon's next generation of fighter jets. On top of that, it recently scrapped plans to build new long-range commercial planes.
Boeing said it will transfer several hundred McDonnell Douglas employees to Seattle in January to begin developing its 747-500 and 600 series jets.
The deal is perfect for Boeing. Aerospace analyst Nicholas Heymann of NatWest Securities said the McDonnell Douglas engineers will save Boeing money in training costs and assist the company in delivering its planes on time. (170K WAV) or (170K AIFF)
Officials at both companies refused to put a dollar amount on their alliance and would not rule out more partnership arrangements between them in the future. The companies also said they have not decided if any of the work will be done at McDonnell Douglas's plants in Southern California.
The deal is expected to clear anti-trust scrutiny. The companies will continue to compete in the narrow-body commercial jet market.
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