Kelly Ortberg said Boeing can't afford another mistake. The company's CEO was referring to the multiple issues it has had with the 737 Max, the 777X, and its Starliner space program, among others. These reputation blows were massive, leading Ortberg to state only a cultural change would put things back on track. In fact, he would have framed it better if he said Boeing needed a cultural revival. His company was once known as an engineering powerhouse, a creator of robust and trustworthy products. How does that relate to the automotive industry? Well, Mercedes-Benz was once known for the same thing, which makes Boeing's descent into mediocrity something it shares with the German automaker.
The first thing to ask is: what happened? In Boeing's case, the beginning of the end of its high-reliability reputation is attributed to a merger with McDonnell Douglas in 1997. The idea was for Boeing to absorb the smaller company, but that led to a culture clash that turned things upside down. Instead of pursuing engineering excellence and innovation, bean counters from McDonnell Douglas managed to beat Boeing's engineers for control of the company. That led the aircraft maker to maximize profits by updating old projects when the best call was to create new airplane models. The 737 Max is the apex of that strategy, which led to the death of 346 people in two crashes. That could have been easily avoided if we were talking about what Boeing was before the merger.
Curiously, Mercedes-Benz's die-hard fans usually state that the start of its demise occurred in the same way and around the same time. In 1998, Daimler and Chrysler announced a "merger of equals" that created DaimlerChrysler, a company that would not last for long. In 2007, Daimler "sold" Chrysler to Cerberus Capital Management – it actually paid Cerberus to take the American automaker and its brands. Jürgen Schremp, the Daimler CEO who conceived the "merger of equals," resigned in 2005.
Photo: Mercedes-Benz
Unlike what happened at Boeing, the culture clash in that merger was more related to the German executives taking over Chrysler and imposing their ideas than to engineers and bean counters fighting each other. That said, if Mercedes-Benz were still an engineering powerhouse at the time, it should have turned Chrysler into something similar, not the other way around. That must mean that the transformation at Mercedes-Benz was due to something else, contradicting the people who use the merger as the explanation for the culture change at the company. A personal experience may shed some light on that.
By 1999, I was starting my career as an automotive writer and got to drive the Mercedes-Benz C 43 AMG. It was fast but also felt numb due to the recirculating ball system its steering used. Although it was recognized for being robust and trustworthy, it did not match what BMW offered at the time. The second-generation C-Class adopted the now traditional rack-and-pinion solution. It felt much better to drive, but it also marked the company's first concession to solutions that did not focus on longevity. The company's reputation for reliability eroded ever since.
In 2023, Consumer Reports said, "Every single Mercedes model is predicted to be below or well-below average" when it comes to how long it will last. Ask W123 owners how they feel about new cars from their beloved company. Those who still drive a W114/W115 will also weep when they talk about new Mercedes-Benz models. The angrier ones will tell you the brand is dead or that it does not make cars anymore.
Photo: Mercedes-Benz
Whatever Mercedes-Benz connoisseurs will point out as the cause for the company's cultural change, the German carmaker never said it needed a revival of that mindset. It is right the opposite. A few years ago, it said it would go all in on battery electric vehicles (BEVs), which have a much more limited lifespan due to how long their battery packs will last. More recently, in February 2024, it announced it would "adjust" to BEV demand instead of focusing on having them represent half of all its sales by 2025. Like John Lennon quoted Allen Saunders in "Beautiful Boy," "Life is what happens to you while you're busy making other plans." Mercedes-Benz's latest plans were not to recover its former glory as the maker of innovative and long-lasting automobiles.
Both the German automaker and Boeing focused on becoming more profitable by abandoning what made them big in the first place. That strategy did not last for long when you consider how many decades these companies have endured. The main danger is that this goal may drag them down with it when it fails. Boeing's CEO already realized the aircraft maker needs to recover its reliability reputation as soon as possible. After all, nobody wants to fly in something that may present problems.
Photo: Boeing
With cars, that does not seem to be as much of a "life or death" concern, but it is still relevant. Nobody wants to be left stranded somewhere or to discover that fixing their cars will cost them a lot of money. People do not want to buy used cars that they do not trust, which leads to higher depreciation rates.
If Mercedes-Benz's profit was 54% lower in Q3 2024 compared to Q3 2023 (the company's worst result since the international health crisis), there must be a reason, but the company does not seem to find it. It should ask its most loyal fans what it is. It may also ask Kelly Ortberg, especially if the Boeing CEO manages to achieve the cultural revival his company so desperately needs.
Google News