PURCHASE OF RIVAL COMPANY TO END 75 YEARS OF AEROSPACE COMPETITION.

Byline: Bruce Ramsey Seattle Post-Intelligencer 

The sale of McDonnell Douglas to The Boeing Co. ends a competitive struggle of more than 75 years.

In an industry that runs in brutal cycles, requiring gambles of technology and dollars, Boeing and McDonnell Douglas have gone head-to-head many times: the 707 vs. the DC-8; the 737 vs. the DC-9; the 757 and 767 vs. the MD-11.

But the two contenders are not equals: Boeing, with $19.5 billion in sales last year, is about 36 percent larger.

Most of Boeing's size (80 percent of revenues) is in the commercial market. Most of McDonnell Douglas' (70 percent) is in the military market. In the end, it was a crucial distinction.

That distinction wasn't there at the beginning. The Boeing Airplane Co. and the Douglas Aircraft Co. were both founded on the hope of government contracts. William Boeing founded his company in Seattle in 1914, just as Europe was sounding the trumpets for the Great War. Donald Douglas founded his in 1920, just after the armistice.

Donald Douglas was Martin's chief engineer. He had know-how but no money. Starting with $40,000 from a partner who lost interest and left, Douglas snagged a contract for Navy torpedo planes in 1921. In 1924 the Army Air Corps used Douglas planes on a flight around the world, beginning in Seattle. The trip took 174 days, was covered worldwide, and put Douglas Aircraft Co. on the map.

Douglas went public in 1928, the year before the stock market crash. Its business was all government work.

Boeing's was, too. Its break during World War I was a contract to build flying boats designed by a rival, Curtiss Aircraft. Boeing's employment rose to 337 in 1918, and collapsed to 30 the next year. The end of World War I brought the company's first big layoff.

Boeing was in such bad straits that it turned to making fast boats, selling several to bootleggers. It also made wooden furniture. Both businesses were failures. Then, in 1921, it landed a contract for 200 Army pursuit planes. It had bid aggressively low, but squeezed out a profit. Though no designer, Bill Boeing knew how to run a business and control costs.

In 1925, his company landed a contract to carry airmail, and launched the operation later spun off as United Airlines. By the mid-1920s, Boeing's Red Barn on the Duwamish River was the largest aircraft factory in the United States.

Boeing and Douglas went head to head in the early 1930s to create a commercial market. In 1928, Boeing had built a trimotor biplane, which flopped. It followed in 1932 with a twin-engine monoplane, the 247, which also flopped. Douglas offered the DC-1, then, in 1935, the DC-3. Finally there was a plane that airlines could use profitably. Douglas sold 10,654 of them over the next decade.

Boeing was a war contractor. It built the propeller-driven B-17 and B-29 bombers, and, after the war, the jet-engine B-47 and B-52 bombers.

Then it took on Douglas again, in a race to build the first successful commercial jetliner.

At first, the race looked like a replay of the 1930s: The DC-8 surged ahead. This time, Boeing analyzed its deficiencies, and came out with a larger 707. Its new entry bested the DC-8.

Boeing followed with the 720, the 727 and 737, and battled it out during the 1960s with Douglas' DC-9. Boeing came out on top.

Ten years later, in 1967, Douglas Aircraft was was taken over by McDonnell Co., a St. Louis military contractor.

In the late '60s Boeing made its biggest gamble, the 747. It was too big for its time, and almost sank the company.

And yet the 747 paid off tremendously. Boeing's competitors, McDonnell Douglas and Lockheed, offered planes only two-thirds the size of it. They divided the market, and neither of their entries, the DC-10 and the L1011, broke even. Lockheed left the commercial market.

Douglas rolled out the MD-11 and went head to head with Boeing's 757 and 767. But it was getting to be a lopsided fight. By the 1980s, the world market for large commercial aircraft had three main players: Boeing, Airbus Industrie and McDonnell Douglas - in that order.

McDonnell Douglas was making it on its military business, such items as the Air Force's F-15 fighter. Then, in 1990, came the end of the Cold War and a downturn in commercial aviation.

Defense had been its hole card. Though the market had been shrinking, the company had said it would hang on. ``We do not fear the trend toward consolidation in the U.S. defense industry. In fact, we welcome it,'' Chairman John McDonnell said in September 1994. ``There are fewer and fewer competitors. We can dominate the market.''