Boeing, my dad, and Airplane Economics 101

In the months following Boeing’s now-infamous door panel blowout, speculation has swirled that the company’s troubles can be traced back to its decision to outsource so much of its manufacturing. The piece of fuselage in question was built in Kansas by Spirit AeroSystems, once a subsidiary of Boeing that was spun out in search of financial savings.

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In retrospect, it’s easy to accuse Boeing of putting profits above all else, but I wanted to understand what went into those decisions over the past five decades. I didn’t have to go very far to find answers. I happen to know an economist and aerospace consultant, who worked for Boeing in the '90s when this outsourcing shift was well underway: my dad, Jerry Nickelsburg.

He agreed to help me understand what makes the economics of building airplanes so unusual for this special Father's Day episode of Booming, KUOW’s economy podcast.

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"The manufacturing of aircraft is just a leading indicator of the kind of manufacturing that we're going to see in the future," he told me. "We think about AI driven medical devices, autonomous trucks on our roads, autonomous, taxis and vehicles, air taxis and space travel, and all of the things that are going to be happening in the future, they all involve complex systems integration."

"An aircraft is a collection of parts, but it's also very importantly a system of software packages, and that's the most difficult part of manufacturing. The issues that you see with the Boeing company at the moment, the complexity of putting all of this code together and making sure it works properly, that's going to be an issue with many, many products that we use in the future."

Jerry Nickelsburg is an economist at UCLA, where he directs the Anderson School of Business’s economic forecast. He’s been researching transportation and the economics of commercial aviation for decades. He’s consulted for Delta, American Airlines, and Lockheed Martin, and when I was a kid, he worked as an exec for McDonnell Douglas and Boeing.