Consolidation in Aerospace?

The figure below came from the final report of the commission on the future of the US aerospace industry.  I found it posted on LinkedIn.  It covers 2 waves of consolidation since about 1980,  with the wave since the fall of the Soviet Union in 1991 the most intense. 

But,  bear in mind that this consolidation process has been going on since about the end of World War 2.  The rocket plant where I once worked closed in 1995,  early in that latest wave.  Laid off in late 1994,  I had to go do something else for a living after that,  being “on the street” along with about 1.75 million other aerospace workers.  The industry could not use hardly any of us.

This consolidation into ever-larger companies that hold ever-larger shares of the market,  has been aided and abetted by the US government,  under the excuse that “larger is more efficient”.  But that excuse has proven to be a lie.  Without competition,  there is no real innovation or efficiency.  Nor is there any incentive to produce good results,  since you get paid anyway no matter what,  in government contracting.

For just one example,  consider the case of Boeing.  In the 1930’s to 1950’s time period,  Boeing gave you the B-17 Flying Fortress,  the B-29 Superfortress,  the B-47 Stratojet,  the B-52 strategic bomber,  and the 707 airliner.  And these were deservedly famous,  marvelously-effective airplanes.  Note that Boeing had many competitors then.  Note also the innovations:  going from propellers to jets,  and from about 200 mph cruise to about 500 mph (600 mph in the case of the B-47).

After all the pictured consolidation,  in recent years Boeing is the only domestic US source of large airliners.  (It doesn’t even build bombers anymore,  that’s now Northrup-Grumman.)  Here of late Boeing has given you the 737-MAX debacle (over 300 dead),  serious assembly and quality control issues with the 787,  and serious certification issues with the 737-MAX,  the 777,  and the 787.   

Consider:  every one of these modern planes flies the same high subsonic speed as the 707,  just a bit more efficiently with better engines,  and in various sizes.  I see evolution,  but not innovation,  in these recent years!  I also see no domestic competition in the airliner business at all,  and there is currently only Airbus overseas! 

I think this consolidation BS has gone way too far!  Competition is demonstrably way more important than any mythical efficiency-of-large-size. 

I think you might better force the breakups with a market share tax,  instead of lawsuits.  Make it suddenly very confiscatory if you exceed a certain critical market share in the relevant business niche.  That would force the divestitures that would break up these monopolies.  It would be self-enforcing. 

As a first guess,  statistics says the minimum size of a credible sample is 22.  So,  as wild guess,  I would say any company then needs about 21 competitors at a minimum.  Evenly-spread,  that’s just under 5% market share each.  If the big one is 4-5 times as big as the smallest one,  then something like 15-25% market share would be about the max we should tolerate before the market share tax kicks in.

We are VERY,  VERY FAR from that competitive market right now!  And aerospace is not the only industry suffering from this,  although it may be the most expensive one.