The debate on globalization has been raging since the turn of the century. Economists, politicians, businessmen and social commentators from across the world have judged the merits and demerits of this inevitable 21st century phenomenon. Some countries like India and China are largely viewed as beneficiaries of this trend. While others, especially Western developed countries, are viewed as victims due to job losses to lower cost nations. Nothing could be farther from truth, as was witnessed in Seattle last weekend.
07.07.07 was an unusually sunny Saturday in Seattle. The Boeing airfield in the city saw a Boeing 707 land at precisely 7.07 pm. A Boeing 717 touched down exactly ten minutes later at 7.17. The arithmetic progression continued with a Boeing 727 landing at 7.27 p.m., a Boeing 737 at 7.37 p.m., a 747 at 7.47 p.m. and so on. Finally, at 8.17 pm the new generation Boeing 777 made its presence felt on the tarmac. The next day, July 8th, 2007 or 7/8/7 marked the roll-out of the Boeing showpiece, the 787 Dreamliner. The show demonstrated the American giant’s dominance of international skies with more than 10,000 seven-series planes in service.
But what’s Boeing’s success got to do with globalization? Well, old timers may remember that Seattle wasn’t always as thriving a business center as it is today. Back in 1972, at the nadir of a depression, someone put up a large sign at Seattle’s Sea-Tac Airport that read, “Will the last person to leave the city please turn off the lights?”
35 years later, Seattle is a major global commercial center with companies like Microsoft, Starbucks and, of course, Boeing. One of the primary reasons for Boeing’s revival is the booming aviation industry in countries like India and China. Last year India’s national carrier Air India ordered 68 Boeing planes making it the single largest order in Boeing’s history. India’s leading airline Jet Airways has a 30-plane order with Boeing worth $5 Billion. Other than 2 airlines that use Airbus, rest of the Indian airline industry flies Boeing airplanes. In all, Boeing will collect $20 Billion from Indian orders by 2014.
The Indian airline industry boom is a result of the phenomenal economic growth in the country during the last 10 years. Not too long ago, only a handful of Indians could imagine setting foot on an airplane. Today, almost all airports in India are jam packed. The technology and outsourcing boom increased salary levels, leading to greater per capita consumption and overall economic growth. The government opened up the skies leading to greater competition and lower cost airlines. Where 2-3 airlines were ruling the roost till a few years ago, now more than 12 airlines are competing to fly Indians. India has the fastest-growing number of passengers in the world. The number of Indians flying jumped nearly 50 percent last year, and the total is projected to increase more than fivefold by 2020, to 200 million a year. Boeing has been a direct beneficiary of Indians’ new found love for flying.
On the other hand, Boeing has also benefited from the technology prowess of Hidustan Aeronautics Limited (HAL) and Indian software companies like Wipro, Infosys and HCL, all of whom work on various aspects of software development, maintenance and upgrades for Boeing. And working with offshore partners like these may have reduced costs on several fronts, making Boeing more price competitive than Airbus.
Sunday, July 8, 2007. Boeing’s 787 Dreamliner has already bagged 677 orders from 47 customers all over the world. Air India has ordered 27 of these while Jet Airways has ordered 10. The Dreamliner would make it feasible to fly Indian tech professionals from Mumbai directly to New York. And American executives can fly straight from Chicago to Bangalore to oversee their outsourced operations. Boeing, and Seattle, will continue to thrive because professionals need to travel globally…because the world is not flat…yet.
Anupam Mukerji • Mumbai, India • www.mmi-india.com