To the age-old marketing adage that the customer is always right, the profit-drained Boeing Co. is trying to append one small asterisk: except when times are rough.
Boeing has launched an audacious congressional lobbying campaign to force an offer down the throat of a customer who's been choking on it for 18 years.
The customer is the Pentagon. The offer: buy 55 new and used 747s, the popular civilian jumbo jet, at bargain prices and convert them to military cargo planes.
The problem for Boeing is that the Pentagon already has a plane for that mission, Lockheed's C5. The Defense Department's high command, convinced that the C5 has finally overcome a checkered past of cost overruns and design flaws, wants to add another 50 to its existing fleet of 77.
Boeing, in no mood to take no for an answer, is trying to end-run the military and make its sale in Congress.
That's always a high-risk play, but the giant aerospace company did some strategizing this spring and figured it was worth a flier. Not least among its considerations is that Boeing's profits are tumbling, its civilian customers are recession-struck and there are plenty of 747s parked in hangars around the world, keeping Boeing from making new sales of 757s and 767s.
"This isn't the first time we've ever told the Pentagon that we know better than they what they want," said one Boeing aide, who asked not to be identified, "but I guess you could say this time we've rung the bell a little louder than usual."
They have. The company fashioned the lobbying equivalent of a full-court press, bringing its airline customers, subcontractors, bankers and home-state senators into the fray.
Last week the initial dividend came. The Senate, by voice vote, after a 60-to-39 test vote, adopted an amendment to a military authorization bill that called for the purchase of the 747s rather than the C5s.
Another floor fight is expected next month in the House, where the Pentagon, which many observers say was caught napping by the Boeing strike, is planning a counterattack.
Boeing's Senate move had a bit of serendipity to it, with all the pieces falling nicely into place at just the right moment. In lobbying, as in politics, timing is everything.
On the morning of the Senate debate, for example, the newspapers were full of headlines proclaiming the bankruptcy of Braniff, the nation's ninth-largest airline. That became Exhibit A for the perils-of-recession end of the argument.
But Boeing had other weapons in its arsenal. In times of soaring budget deficits, it made an austerity pitch, claiming that the 747 will save $6 billion over the C5. (The Lockheed forces countered that the saving is closer to $1 billion, and that the Boeing deal would cost more up front.)
And then there was the unhappy past of the C5, which came in $2 billion over budget when it was first produced more than a decade ago, and which is undergoing a $1.6 billion wing replacement operation to correct design failures.
"What would you rather have," one Senate staffer from Boeing's home state of Washington put it, "a used Cadillac or a new Edsel?"
The biggest hole in Boeing's case was the military side of the equation. The Pentagon has found consistently over the years that the 747's fuselage is too small and its doors too narrow to handle outsized cargo such as tanks and helicopters.
The Boeing response: the Pentagon already has enough C5s to take care of its outsized cargo needs; it ought to augment that fleet with 747s, which have a longer range and are cheaper to fly.
The man making most of these arguments was Sen. Henry M. Jackson (D-Wash.), the 30-year Senate veteran who took on the assignment with a verve that impressed his colleagues.
"Scoop pulled out all the stops," said one of his Democratic colleagues, who asked not to be identified. "He's up for reelection this year, and made it clear that he needed this one. He kept reminding people that no one thought Maggie was in trouble." Maggie is former senator Warren G. Magnuson (D-Wash.), who was defeated for reelection in 1980.
While Jackson buttonholed the Democrats, the man who defeated Magnuson, Sen. Slade Gorton (R-Wash.), worked the other side of the aisle, where he was especially effective with his freshman class of GOP senators.
They were joined by Sens. Robert J. Dole (R-Kan.) and Nancy Landon Kassebaum (R-Kan.), who would be pleased to see the refitting work to convert the 747s into military transports performed at Boeing's Wichita plant; and by the two senators from Missouri, Republican John C. Danforth and Democrat Thomas F. Eagleton, who were minding the interests of their home-state contractor, McDonnell Douglas.
The McDonnell Douglas connection is one of the more intriguing aspects of the episode, and it illustrates how, in a three-way battle among defense contractors, the one in the saddle can count on being ganged up on by the other two.
In the mid-1960s, Lockheed, Boeing and McDonnell Douglas entered into a major design competiton to build a new military transport plane. Lockheed won, but it was one of the happiest losses Boeing ever took. "We really got our a---- waxed, right?" a Boeing spokesman said. "Lockheed wins and builds 81 C5s. We lose and build 590 civilian 747s."
At various times over the years Boeing has tried again to interest the military in its jumbo jet, but the issue came into sharpest focus after 1979, when President Carter decided to set up a Rapid Deployment Force (RDF) to move in on trouble spots around the world.
Congress responded by asking the military to do a study of its airlift needs for the RDF, and once again the three contractors competed.
The winner, announced last fall, was McDonnell Douglas' C17. At least that was the apparent winner. Then, a few months later, the Pentagon's civilian brass overrruled the generals' choice, on the grounds that the C5, even with all its past problems, was a known commodity and could be brought on line more quickly than could the C17 paper plane.
Some industry observers say the infighting at the Pentagon between C5 and C17 champions is the wedge that emboldened Boeing into making its move. It apparently reasoned that it could pick up support from disgruntled C17 advocates on Capitol Hill and in the services.
Once Boeing decided to go for it, it came on all fronts. First the company wrote Secretary of Defense Caspar W. Weinberger in March and made the offer. When he didn't bite, Boeing went to the Hill.
This is has been a heavy lobbying season for Boeing, and its operation was already well tuned up. It's been in the forefront of two other large-scale lobby coalition efforts, one to spare the Export-Import Bank from budget cuts (foreign airlines use the Ex-Im Bank credits to buy planes), and another to save the tax-leasing proposals used by the domestic airlines.
For this new operation, Boeing put together a coalition of interested parties, seeking assistance from customers such as Braniff and World, and subcontractors such as Pratt-Whitney. They all coordinated regularly with Jackson's office.
In the five-hour floor debate, Sen. Sam Nunn (D-Ga.), the Armed Services Committee member from Lockheed's home state, carried the Pentagon's argument, producing a long stream of military testimony against the 747.
"If we want to relieve the airline industry, let's get that kind of bill on the floor and debate it," Nunn said. "Let us not do it at the expense of the military of our country."
But Jackson, a longtime friend of the military, proved formidable, claiming that $6 billion was too much to pay for "the convenience of airplanes with big doors."
With the Boeing victory, the action now moves to the House, where Weinberger, who apparently underestimated the force of the Boeing attack, is said to be spoiling for a return engagement.
At a closed House Defense Appropriations subcommittee hearing last week, he reportedly took a strong it's-no-bargain-if-we-can't use-it line, and vowed not to buy the 747s.
There is some talk on the hill of a compromise, of the Pentagon buying some C5s and some 747s. But for the time being Lockheed apparently feels as though it had its pockets picked, and the Pentagon is wondering what to do with an uppity contractor.