I want you to imagine just for a second being
handed this ultimate, incredibly high -stakes
assignment. You aren't just building a new product.
You are being asked to rebuild an entire nation's
shattered aviation industry completely from scratch.
Right. And you have to somehow catch up to global
competitors who have, what, a 15 -year head start
on you? Exactly. And you have to do all of this
on a razor thin budget. You're essentially being
asked to construct this modern technological
marvel out of the ashes of a post -war economy
while the rest of the world has already fully
moved on to the jet age. Yeah, the story of how
Japan actually attempted to pull that off in
the 1950s and 60s is just wild. So our mission
for this deep dive is to understand the NAMC
YS -11. It was Japan's very first post -war commercial
airliner. It really is a fascinating piece of
history. OK, so let's unpack this, because looking
at the sources, it's this unbelievable collision
between, like, brilliant world -class engineering
and truly catastrophic business management. Catastrophic
is definitely the word. You have to look at the
environment in Japan during the mid to late 1950s
because it completely forced their hand. The
Ministry of International Trade and Industry,
or MITI, they looked around and realized their
domestic air routes were entirely reliant on
aging American Douglas DC -3s. Right, those old
World War II era workhorses. Exactly. So they
desperately needed a short haul airliner. And
MIT specifically mandated that it be built domestically.
The whole goal was to jumpstart their dormant
aerospace sector and prove to the world that
they could compete globally again. So MIT forces
the creation of this brand new entity in 1959,
which becomes the Nihon Airplane Manufacturing
Company, or NAMC. But the crazy thing is, NAMC
wasn't even a real company in the traditional
sense, was it? No, not at all. It was essentially
a paper company. The Japanese government held
a 54 % ownership stake, and the rest was just
divided up among various manufacturers, suppliers,
banks, even insurance companies. I read that
NAMC had literally no factories of its own, like
no dedicated infrastructure. None. They relied
entirely on the existing infrastructure of these
massive, fierce rival conglomerates. We're talking
Kosaki, Fuji, Mitsubishi. The government was
basically trying to harness the collective industrial
might of the nation by forcing these bitter competitors
into a joint venture. It sounds exactly like
one of those bizarre group projects in school,
you know, where the teacher forces the kids who
hate each other to work together and the students
are just using the project to practice their
own handwriting. Because the partner companies
didn't view NAMC as this unified mission, did
they? They really didn't. They viewed it as a
sandbox. They were using the government's money
and this project to train their own employees
and test out manufacturing techniques that they
could then just take back to their parent companies.
Which is a terrible way to run a business, but
despite that underlying corporate dysfunction,
they did actually manage to assemble what a lot
of people called an absolute dream team of engineers.
Oh, absolutely. We are talking about legendary
figures in Japanese aviation history. You had
Jiro Horikoshi. Wait, the guy who designed the
Zero? Yes, the very same man who famously designed
the World War II Mitsubishi A6M Zero fighter.
And you had Toruo Tojo, who was this incredibly
capable engineer. He actually later went on to
become the chairman of Mitsubishi Motors. And
they gave the project this incredibly literal
name, which I love. The YS just stood for Yusu,
which means transport and Sekai meaning design.
So transport design. Very utilitarian. Super
utilitarian. And the 11 came from the engine
and specification. plans. But what's funny is
they revealed the mock -up to the public on December
11th, 1958, and they leaned heavily into the
date for marketing. They used this catchphrase,
uh, let's meet on the 11th at Sugita in Yokohama.
So naturally, the public just started calling
it the YS11. Right. But internally, the designers
were super stubborn about it. Yeah, they absolutely
refused to call it that. They referred to it
exclusively as the YS11. Typical engineers. But
OK, I want to push back on this dream team label
for a second because you call them a dream team.
But I look at this roster and I just see guys
who spent their entire careers designing World
War Two fighter planes. That's a fair point.
I mean, designing a nimble, unpressurized fighter
plane meant to like outturn an enemy is entirely
different from building a safe, economical, pressurized
bus for the sky. Were they just the wrong guys
for the job? Because the early flight test reports
from 1962 show them struggling massively with
just the basic blueprint. Well, that is really
the core of the engineering struggle here. It
wasn't that they were the wrong minds. It was
that they were operating in a complete vacuum.
Because of the war. Exactly. Japan had been completely
isolated from global aviation advancements for
an entire decade following the war. During that
lost decade, the rest of the world had mastered
pressurized cabins, they had advanced commercial
adionics, and they developed these complex aerodynamic
models for carrying large passenger loads. So
they were just 10 years behind the curve. The
Japanese engineers simply lacked the foundational
domestic technology to build a modern commercial
airliner. So because they were backed into a
corner by that lost decade, they couldn't just
invent. a modern plane from scratch. They really
had to scavenge. I mean, they basically had to
build a Frankenstein plane. That's a great way
to put it. Like they couldn't build the engines
domestically. So they gave the plane a British
heart. They bolted on two massive Rolls Royce
Dart turboprop engines and they had to look outward
for almost all the modern commercial amenities
to cabin pressurization was entirely foreign
to them. Right. Because a zero fighter isn't
pressurized. Exactly. So they were actually sending
diplomats and airline executives out into the
world to aggressively gather intelligence. I
mean it was borderline corporate espionage. Wait,
really? Espionage. Yeah. They were actively trying
to figure out how foreign planes kept their cabins
pressurized at altitude just so they could bring
that knowledge back, reverse engineer it, and
stitch it into the YS -11. That is wild. But
stitching all those powerful foreign components
onto a domestically designed airframe, that created
some massive aerodynamic nightmares. Oh, definitely.
When the first prototype finally took its maiden
flight in August 1962, the test pilots came back
with these really alarming reports. They reported
poor steering, terrifying vibrations, deafening
noise in the cabin. But the big one, the really
notable one, was this thing called the three
rudder problem. Well, the three rudder problem
is a fascinating example of just unforeseen aerodynamic
physics. So those Rolls Royce Dart engines were
incredibly powerful and they were swinging these
massive 12 foot propellers. Just huge blades.
Right. And the wake or the slipstream that was
generated by those propellers didn't just push
air straight back. It actually created this violent
corkscrew of air that slammed directly into the
right side of the plane's tail. Oh, so it's twisting
around the fuselage. Exactly. So when the pilot
tried to perform a sideways maneuver, that corkscrew
weight completely blanketed the standard single
rudder in turbulent air. The rudder just became
totally useless. Absolutely dead. The airplane
was sharply inclined to the right, totally out
of the pilot's control. And that literally caused
a tailspin and a crash during the early testing
phase. Yeah, it was a severe flaw. To regain
control of the aircraft, the engineers couldn't
just use a standard tail. They had to completely
redesign the impenedge. They broke the steering
mechanism down. So what did they do? They essentially
had to utilize a main rudder alongside these
specialized auxiliary tabs, spring tabs and trim
tabs. So you have three distinct rudder surfaces
acting together, working in tandem just to bite
into the clean air outside that engine wash and
overcome the torque. That is so complex. And
that level of troubleshooting required outside
help, right? NAMC realized they were just completely
out of their depth with these specific commercial
aerodynamic quirks. So they invited the American
Federal Aviation Administration, the FAA, to
come all the way to Japan and help them fix it.
Which is a big deal. The FAA performed informal
project reviews and they worked side by side
with the Japanese engineers to identify and eliminate
these defects. I imagine that was a tough pill
to swallow for the designers. It was. But the
Japanese swallowing their pride and bringing
in the Americans was a highly calculated survival
tactic. Securing an American FAA Part 25 certification
wasn't just about ensuring the plane wouldn't
spin out of control. It was the ultimate stamp
of global legitimacy. Without that FAA certification,
the YS -11 would legally never be allowed to
operate outside of Japanese airspace. It would
be a total commercial dead end before it even
rolled off the assembly line. Exactly. But they
pulled it off, they redesigned the tail, smoothed
out the vibrations, and they earned that certification.
The plane was flying so well that in 1964, all
Nippon Airways actually used a YS -11 to carry
the Olympic torch across Japan before the Tokyo
Summer Games. It became this massive simple of
national pride and technological resurrection.
Operationally, the plane was finally hitting
its marks. Yeah, by 1968 the YS -11 program was
so dominant domestically that it accounted for
about half of all aircraft production taking
place in Japan. half of the entire country's
production. It was a massive industrial footprint.
Yet, beneath that surface level success, the
financial structure of NAMC was basically a ticking
time bomb. And this brings us right back to that
54 % government -owned paper company setup we
talked about earlier. Right. The structure was
just inherently flawed from day one. NEMC, the
paper company, absorbed all the developmental
debt and all the financial risk. The actual partner
companies building the plane, Mitsubishi, Kawasaki,
Fuji, they had zero of the debt apportioned to
them. None of it. None. They operated on a system
that guaranteed them a profit on every single
part they manufactured, regardless of whether
the final airplane actually sold it a profit.
That is insane. It's essentially Hollywood accounting
applied to aerospace. Like in Hollywood, a studio
might create an LLC for a specific movie, and
that LLC hires the studio's own cameras and staff
at hyperinflated rates. Yes, exactly. So the
movie might make a billion dollars at the box
office, but the LLC technically operates at a
loss because it owes the parent company so much
money. NAMC was the LLC taking all the losses,
while the subcontractors just guaranteed themselves
a profit on every rivet and wing panel. And because
of that, they had absolutely no incentive to
streamline production or cut costs. The inefficiency
compounded daily. Because those partner companies
viewed the YS11 program more as a subsidized
government training exercise than a cutthroat
commercial business, they constantly rotated
their staff. Oh right, the sandbox thing. Exactly.
They would send a young engineer over, let them
learn the ropes of modern aviation manufacturing
on the YS11 assembly line, and then just pull
them right back to work on internal proprietary
company projects. Which completely destroys any
kind of institutional momentum. You can't run
a factory when you treat your workforce like
a revolving door. You also suffer from a severe
culture clash. Remember, the brilliant minds
designing this plane were military aviation engineers.
They spent their formative years building fighter
planes based on strict, government -issued performance
criteria. They cared about speed, altitude, and
maneuverability. Right, things that win dog fights.
Right. But they fundamentally misunderstood the
commercial airline market. Because an airline
isn't looking at altitude records. They're looking
at turnaround time at the gate. They care about
operating costs, how easy it is to access the
engine for maintenance, and maybe most importantly,
how many seats you can comfortably cram into
the cabin. And the YS -11 team had literally
no staff with experience in marketing to airlines.
They didn't understand how to pitch fuel efficiency
or cargo configurations. They were just completely
outmatched by the seasoned aggressive salesmen
from rival Western companies. So to compensate
for the fact that they didn't know how to sell
the plane's features, they just slashed the price.
Yeah, it was their solution. They started selling
planes internationally at a massive loss, specifically
just to undercut rivals like the American Martin
Fordo for. They operated on this desperate logic
that they just needed market share so they would
bleed cash to get their planes in the sky. And
that total lack of business acumen is really
what sets the stage for their disastrous attempt
to break into the American market. Which is such
a crazy story. The North American campaign actually
started with a highly promising success story.
Believe it or not, Piedmont Airlines, which was
a major regional carrier in the U .S. at the
time, was searching for a modern airliner. And
Piedmont operated out of a lot of small mountainous
airports, right? Like environments that were
notoriously tough on aircraft. Very tough. And
the rugged, over -engineered nature of the YS
-11 was perfect for it. The president of Piedmont,
Thomas H. Davis, actually went on record, stating
the YS -11 was the only plane they could find
that could handle those specific mountainous
routes on an economical basis. Wow. So Piedmont
was so impressed with the aircraft's performance
that they eventually purchased 21 of them. They
became the YS - 11's largest international operator.
That should have been the foothold they needed
to conquer the market. But instead, they signed
a deal with the Charlotte Aircraft Corporation.
Here is where it just goes completely off the
rails. So NAMC knew they needed a dedicated sales
agent based in the United States to handle the
broader North American, Latin American, and Spanish
markets. And they were approached by a guy named
Jenks Caldwell of the Charlotte Aircraft Corporation.
Right. And you would think Caldwell was a major
international airline broker. But he wasn't.
He was a used aircraft and aviation parts dealer
based out of North Carolina. Yeah. Caldwell expressed
strong interest in modifying and selling the
YS -11A variant. And NAMC, who were just eager
for a broader distribution network, an entirely
naive to international contract law, signed an
exclusive agency contract with him. It's just
mind blowing. They gave a used parts dealer exclusive
rights to sell the YS -11 across the entirety
of the Americas and Spain without even doing
a background check. And Charlotte Aircraft proceeded
to sell absolutely nothing. Nothing. Not a single
plane. They didn't move a single new unit. So
NAMC, realizing their massive new market is totally
stagnant, decides to just bypass their own exclusive
dealer. As you do. Right. They use a Japanese
trading company, Mitsui, to conclude these massive
direct sales agreements with Piedmont Airlines
and another carrier, Cusero do Sul in Brazil.
And I'm sure Charlotte aircraft took that really
well. Charlotte aircraft immediately demanded
damages and correctly claiming that their status
as the exclusive regional dealer had been violated
by the parent company. Even though they hadn't
done the legwork to secure those massive airline
contracts. But legally that didn't matter. Because
NAMC was entirely inexperienced in international
commercial contracts, they had completely failed
to vet Charlotte aircraft's capacity to actually
move new airliners in the first place. But more
importantly, they forgot to include basic protective
clauses in the contract. There was no refusal
to sell clause, and there were no performance
benchmarks. Nothing that would have allowed NAMC
to legally terminate the exclusivity if the dealer
failed to hit sales targets. So Charlotte Aircraft
sues them. And the fallout from this single bad
contract is just staggering. The Japanese Board
of Audit gets involved. There are angry complaints
raised in the Japanese parliament. The managing
director of NAMC is forced to resign in total
disgrace. Because they had no legal leg to stand
on, NAMC was forced to settle the dispute just
to terminate the contract. They had to pay Charlotte
Aircraft 23 million yen. Which is bad enough,
but the financial penalty was only half of the
settlement. Right. As part of the direct sales
deal with Piedmont and Cruzeiro, those airlines
had traded in 33 of their old used aircraft.
To make the lawsuit go away, NAMC had to hand
over the titles to all 33 of those used planes
directly to Charlotte aircraft. They gave a used
parts dealer 23 million yen and 33 functional
airplanes just to tear up a piece of paper, all
because they didn't consult a competent international
contract lawyer. This whole fiasco really exposes
the deep bureaucratic paralysis of NAMC. Remember,
they were directly tethered to the Ministry of
Finance and MITI. Yeah. So... If a prospective
airline requested a slight reduction in the sales
price or if they asked for a customized delayed
payment schedule, the NAMC executives couldn't
just negotiate on the fly. They had to ask permission.
They had to route those requests through multiple
government organizations for approval. And by
the time the bureaucracy actually stamped the
paperwork, the airline had already bought a plane
from a European or American competitor. They
just had zero agility. But the final blow to
this entire fragile system lands in 1971. The
Smithsonian Agreement. The American government
completely shifted the global financial landscape
by switching to a floating exchange rate. This
led to an immediate and rapid appreciation in
the value of the Japanese yen. Which means overnight
the exchange rate became highly unfavorable for
Japanese exports. So whatever razor -thin heavily
subsidized margins NAMC was operating on simply
vanished. It became mathematically impossible
for the program to ever break even. The debt
had ballooned to roughly $600 million. It was
unsustainable. The Japanese government finally
pulled the plug. Production of the YS -11 officially
ended in 1974. They built exactly 182 planes.
The company dissolved. The financial losses were
catastrophic, and the project was widely viewed
as a failure. Yet the physical machine they engineered
absolutely refused to die. It really did. Now
we should mention that the operational history
of the plane is incredibly long, though it's
definitely not without its dark chapters. There
were over 20 hull loss accidents during its lifespan.
Like in 1969, a Korean air flight was hijacked
by a North Korean agent and flown to an airfield
near Wonsan. The aircraft was written off and,
tragically, the crew and seven passengers are
still held in North Korean territory to this
day. Right. And there were also fatal mechanical
and pilot air incidents. In 1971, Toa Domestic
Airlines Flight 63 crashed into Yukatsu Mountain
on approach to Hakodate Airport, resulting in
the loss of all 68 people on board. It was the
deadliest accident involving the type. So it's
important to acknowledge that history, but despite
those tragedies and despite the fact that the
factory doors literally locked in 1974, the longevity
of the surviving fleet is stunning. By 1994,
which is 20 years after production ended, there
were still 112 YS -11s in active commercial service
around the world. Because they were over -engineered
in the best possible way. The airframe was incredibly
robust. It was built to withstand thousands of
high -impact landings on unpaved or short runways.
I mean, they flew commercially in Japan all the
way until 2006. And the kicker is, they weren't
even grounded because the airframes were failing.
They were grounded because the Japanese government
mandated that all commercial aircraft had to
be fitted with a modern traffic collision avoidance
system, or TCS. Right. And the cost to retrofit
these aging analog planes with digital TCS was
estimated around a million U .S. dollars. per
plane. It just didn't make economic sense for
the regional airlines to make that investment.
But even after they were retired from commercial
service in Japan the military kept utilizing
them. The Japan Air Self -Defense Force relied
on the YS -11 for transport and electronic warfare
training, and they didn't retire their last active
airframe until 2021. That is 57 years after it
first entered service. 57 years. And as recently
as August 2020, there are still a couple of them
flying commercial cargo routes in South America
and Africa. It's the ultimate irony of this entire
story, you know. The business was this fragile
bureaucratic house of cards that collapsed under
its own weight almost immediately, but the physical
plane was an absolute tank. It forces you to
really redefine what constitutes a success. I
mean, if you met your success purely on a financial
balance sheet, the YS -11 was an unmitigated
disaster. It lost hundreds of millions of dollars
and entirely failed to establish Japan as a dominant
player in the commercial airliner export market.
Yeah, totally. But if you measure success operationally,
the YS -11 achieved exactly what MIT originally
mandated back in 1957. It proved, beyond a shadow
of a doubt, that Japanese engineers could scavenge,
adapt, design, and certify a world -class, durable
aircraft that could fly for over half a century.
And that is exactly why this deep dive matters
for you listening. The YS11 is the ultimate case
study in the limits of pure engineering. It proves
that technological excellence, having the smartest
engineers, solving complex aerodynamic puzzles
like the three rudder problem, building an airframe
that outlasts its own manufacturer by decades,
is completely meaningless if you don't have a
sound business model and a deep empathetic understanding
of your end user. Absolutely. If you don't know
what the customer actually values or how to write
a basic to sell it to them, the greatest machine
in the world will still bankrupt you. Well said.
And there is a broader historical context here
that provides a fascinating parallel to leave
you with. Right around the time the YS -11 debuted
to the world for the 1964 Olympics, another piece
of Japanese transportation technology was unveiled,
the Zero Series Shinkansen. Oh, the original
bullet train. Exactly. Both of them stepping
onto the world stage at the exact same time.
And what is incredible is that both the plane
and the train were developed by the exact same
generation of former military aviation engineers.
Wait, really? The same guy? Yes. Men like Tadanamiki
and Tadashi Matsudaira, who designed bombers
during the war, apply their aerodynamic expertise
to the Shinkansen. You have the exact same engineering
pedigree. applying their skills at the exact
same moment in history. Yet the bullet train
fundamentally revolutionized global transportation.
It became a symbol of modern efficiency, and
it is still evolving today, while the plane became
a $600 million cautionary tale. It leaves you
with a profound question worth exploring long
after this discussion ends. Why did the exact
same caliber of mines succeed so brilliantly
on the rails but fail so spectacularly in the
open market skies? That's a great question. Perhaps
it comes down to the fundamental difference between
building a closed, government -controlled domestic
infrastructure versus trying to compete in an
established cutthroat global market. Either way,
it proved that building a great machine is only
half the battle. You have to understand the world
that machine is driving into.