WEBVTT 00:00:00.000 --> 00:00:02.000 I want you to imagine just for a second being 00:00:02.000 --> 00:00:05.139 handed this ultimate, incredibly high -stakes 00:00:05.139 --> 00:00:07.910 assignment. You aren't just building a new product. 00:00:08.589 --> 00:00:11.949 You are being asked to rebuild an entire nation's 00:00:11.949 --> 00:00:14.929 shattered aviation industry completely from scratch. 00:00:15.230 --> 00:00:18.589 Right. And you have to somehow catch up to global 00:00:18.589 --> 00:00:20.989 competitors who have, what, a 15 -year head start 00:00:20.989 --> 00:00:23.429 on you? Exactly. And you have to do all of this 00:00:23.429 --> 00:00:25.530 on a razor thin budget. You're essentially being 00:00:25.530 --> 00:00:27.890 asked to construct this modern technological 00:00:27.890 --> 00:00:30.289 marvel out of the ashes of a post -war economy 00:00:30.289 --> 00:00:32.250 while the rest of the world has already fully 00:00:32.250 --> 00:00:34.659 moved on to the jet age. Yeah, the story of how 00:00:34.659 --> 00:00:36.560 Japan actually attempted to pull that off in 00:00:36.560 --> 00:00:40.500 the 1950s and 60s is just wild. So our mission 00:00:40.500 --> 00:00:43.500 for this deep dive is to understand the NAMC 00:00:43.500 --> 00:00:47.719 YS -11. It was Japan's very first post -war commercial 00:00:47.719 --> 00:00:49.979 airliner. It really is a fascinating piece of 00:00:49.979 --> 00:00:51.780 history. OK, so let's unpack this, because looking 00:00:51.780 --> 00:00:54.200 at the sources, it's this unbelievable collision 00:00:54.200 --> 00:00:57.859 between, like, brilliant world -class engineering 00:00:57.859 --> 00:01:01.880 and truly catastrophic business management. Catastrophic 00:01:01.880 --> 00:01:04.400 is definitely the word. You have to look at the 00:01:04.400 --> 00:01:07.040 environment in Japan during the mid to late 1950s 00:01:07.040 --> 00:01:09.620 because it completely forced their hand. The 00:01:09.620 --> 00:01:11.519 Ministry of International Trade and Industry, 00:01:11.840 --> 00:01:14.560 or MITI, they looked around and realized their 00:01:14.560 --> 00:01:17.680 domestic air routes were entirely reliant on 00:01:17.680 --> 00:01:20.739 aging American Douglas DC -3s. Right, those old 00:01:20.739 --> 00:01:24.040 World War II era workhorses. Exactly. So they 00:01:24.040 --> 00:01:26.200 desperately needed a short haul airliner. And 00:01:26.200 --> 00:01:29.200 MIT specifically mandated that it be built domestically. 00:01:29.290 --> 00:01:31.810 The whole goal was to jumpstart their dormant 00:01:31.810 --> 00:01:34.189 aerospace sector and prove to the world that 00:01:34.189 --> 00:01:37.260 they could compete globally again. So MIT forces 00:01:37.260 --> 00:01:39.939 the creation of this brand new entity in 1959, 00:01:40.260 --> 00:01:42.680 which becomes the Nihon Airplane Manufacturing 00:01:42.680 --> 00:01:46.760 Company, or NAMC. But the crazy thing is, NAMC 00:01:46.760 --> 00:01:48.420 wasn't even a real company in the traditional 00:01:48.420 --> 00:01:50.560 sense, was it? No, not at all. It was essentially 00:01:50.560 --> 00:01:52.859 a paper company. The Japanese government held 00:01:52.859 --> 00:01:55.439 a 54 % ownership stake, and the rest was just 00:01:55.439 --> 00:01:57.840 divided up among various manufacturers, suppliers, 00:01:58.159 --> 00:02:00.140 banks, even insurance companies. I read that 00:02:00.140 --> 00:02:03.719 NAMC had literally no factories of its own, like 00:02:03.719 --> 00:02:07.480 no dedicated infrastructure. None. They relied 00:02:07.480 --> 00:02:10.979 entirely on the existing infrastructure of these 00:02:10.979 --> 00:02:14.460 massive, fierce rival conglomerates. We're talking 00:02:14.460 --> 00:02:17.960 Kosaki, Fuji, Mitsubishi. The government was 00:02:17.960 --> 00:02:20.419 basically trying to harness the collective industrial 00:02:20.419 --> 00:02:24.219 might of the nation by forcing these bitter competitors 00:02:24.219 --> 00:02:26.699 into a joint venture. It sounds exactly like 00:02:26.699 --> 00:02:28.759 one of those bizarre group projects in school, 00:02:28.840 --> 00:02:31.479 you know, where the teacher forces the kids who 00:02:31.479 --> 00:02:33.340 hate each other to work together and the students 00:02:33.340 --> 00:02:35.199 are just using the project to practice their 00:02:35.199 --> 00:02:37.580 own handwriting. Because the partner companies 00:02:37.580 --> 00:02:40.560 didn't view NAMC as this unified mission, did 00:02:40.560 --> 00:02:42.919 they? They really didn't. They viewed it as a 00:02:42.919 --> 00:02:45.080 sandbox. They were using the government's money 00:02:45.080 --> 00:02:48.099 and this project to train their own employees 00:02:48.099 --> 00:02:50.680 and test out manufacturing techniques that they 00:02:50.680 --> 00:02:52.520 could then just take back to their parent companies. 00:02:52.560 --> 00:02:54.419 Which is a terrible way to run a business, but 00:02:54.419 --> 00:02:56.360 despite that underlying corporate dysfunction, 00:02:56.900 --> 00:02:59.400 they did actually manage to assemble what a lot 00:02:59.400 --> 00:03:01.860 of people called an absolute dream team of engineers. 00:03:02.080 --> 00:03:04.439 Oh, absolutely. We are talking about legendary 00:03:04.439 --> 00:03:07.500 figures in Japanese aviation history. You had 00:03:07.500 --> 00:03:10.259 Jiro Horikoshi. Wait, the guy who designed the 00:03:10.259 --> 00:03:14.099 Zero? Yes, the very same man who famously designed 00:03:14.099 --> 00:03:16.979 the World War II Mitsubishi A6M Zero fighter. 00:03:17.520 --> 00:03:19.879 And you had Toruo Tojo, who was this incredibly 00:03:19.879 --> 00:03:22.259 capable engineer. He actually later went on to 00:03:22.259 --> 00:03:24.180 become the chairman of Mitsubishi Motors. And 00:03:24.180 --> 00:03:26.400 they gave the project this incredibly literal 00:03:26.400 --> 00:03:29.599 name, which I love. The YS just stood for Yusu, 00:03:29.919 --> 00:03:33.460 which means transport and Sekai meaning design. 00:03:33.800 --> 00:03:36.219 So transport design. Very utilitarian. Super 00:03:36.219 --> 00:03:39.180 utilitarian. And the 11 came from the engine 00:03:39.180 --> 00:03:41.680 and specification. plans. But what's funny is 00:03:41.680 --> 00:03:43.960 they revealed the mock -up to the public on December 00:03:43.960 --> 00:03:47.080 11th, 1958, and they leaned heavily into the 00:03:47.080 --> 00:03:49.800 date for marketing. They used this catchphrase, 00:03:49.840 --> 00:03:53.020 uh, let's meet on the 11th at Sugita in Yokohama. 00:03:53.240 --> 00:03:54.879 So naturally, the public just started calling 00:03:54.879 --> 00:03:58.180 it the YS11. Right. But internally, the designers 00:03:58.180 --> 00:04:00.340 were super stubborn about it. Yeah, they absolutely 00:04:00.340 --> 00:04:02.039 refused to call it that. They referred to it 00:04:02.039 --> 00:04:05.280 exclusively as the YS11. Typical engineers. But 00:04:05.280 --> 00:04:07.020 OK, I want to push back on this dream team label 00:04:07.020 --> 00:04:08.719 for a second because you call them a dream team. 00:04:08.900 --> 00:04:10.439 But I look at this roster and I just see guys 00:04:10.439 --> 00:04:13.479 who spent their entire careers designing World 00:04:13.479 --> 00:04:15.539 War Two fighter planes. That's a fair point. 00:04:15.860 --> 00:04:18.939 I mean, designing a nimble, unpressurized fighter 00:04:18.939 --> 00:04:22.360 plane meant to like outturn an enemy is entirely 00:04:22.360 --> 00:04:25.540 different from building a safe, economical, pressurized 00:04:25.540 --> 00:04:28.720 bus for the sky. Were they just the wrong guys 00:04:28.720 --> 00:04:31.160 for the job? Because the early flight test reports 00:04:31.160 --> 00:04:34.720 from 1962 show them struggling massively with 00:04:34.720 --> 00:04:37.060 just the basic blueprint. Well, that is really 00:04:37.060 --> 00:04:39.079 the core of the engineering struggle here. It 00:04:39.079 --> 00:04:41.240 wasn't that they were the wrong minds. It was 00:04:41.240 --> 00:04:43.240 that they were operating in a complete vacuum. 00:04:43.379 --> 00:04:46.519 Because of the war. Exactly. Japan had been completely 00:04:46.519 --> 00:04:49.459 isolated from global aviation advancements for 00:04:49.459 --> 00:04:52.860 an entire decade following the war. During that 00:04:52.860 --> 00:04:54.879 lost decade, the rest of the world had mastered 00:04:54.879 --> 00:04:57.339 pressurized cabins, they had advanced commercial 00:04:57.339 --> 00:05:00.079 adionics, and they developed these complex aerodynamic 00:05:00.079 --> 00:05:02.360 models for carrying large passenger loads. So 00:05:02.360 --> 00:05:04.699 they were just 10 years behind the curve. The 00:05:04.699 --> 00:05:07.060 Japanese engineers simply lacked the foundational 00:05:07.060 --> 00:05:09.439 domestic technology to build a modern commercial 00:05:09.439 --> 00:05:11.819 airliner. So because they were backed into a 00:05:11.819 --> 00:05:14.139 corner by that lost decade, they couldn't just 00:05:14.139 --> 00:05:17.170 invent. a modern plane from scratch. They really 00:05:17.170 --> 00:05:19.769 had to scavenge. I mean, they basically had to 00:05:19.769 --> 00:05:21.990 build a Frankenstein plane. That's a great way 00:05:21.990 --> 00:05:23.689 to put it. Like they couldn't build the engines 00:05:23.689 --> 00:05:26.089 domestically. So they gave the plane a British 00:05:26.089 --> 00:05:29.930 heart. They bolted on two massive Rolls Royce 00:05:29.930 --> 00:05:32.850 Dart turboprop engines and they had to look outward 00:05:32.850 --> 00:05:35.509 for almost all the modern commercial amenities 00:05:35.509 --> 00:05:38.810 to cabin pressurization was entirely foreign 00:05:38.810 --> 00:05:41.189 to them. Right. Because a zero fighter isn't 00:05:41.189 --> 00:05:43.889 pressurized. Exactly. So they were actually sending 00:05:44.189 --> 00:05:46.990 diplomats and airline executives out into the 00:05:46.990 --> 00:05:49.990 world to aggressively gather intelligence. I 00:05:49.990 --> 00:05:52.750 mean it was borderline corporate espionage. Wait, 00:05:52.850 --> 00:05:55.529 really? Espionage. Yeah. They were actively trying 00:05:55.529 --> 00:05:58.430 to figure out how foreign planes kept their cabins 00:05:58.430 --> 00:06:01.029 pressurized at altitude just so they could bring 00:06:01.029 --> 00:06:02.850 that knowledge back, reverse engineer it, and 00:06:02.850 --> 00:06:05.790 stitch it into the YS -11. That is wild. But 00:06:05.790 --> 00:06:07.850 stitching all those powerful foreign components 00:06:07.850 --> 00:06:10.930 onto a domestically designed airframe, that created 00:06:10.930 --> 00:06:13.610 some massive aerodynamic nightmares. Oh, definitely. 00:06:13.850 --> 00:06:16.029 When the first prototype finally took its maiden 00:06:16.029 --> 00:06:19.870 flight in August 1962, the test pilots came back 00:06:19.870 --> 00:06:22.790 with these really alarming reports. They reported 00:06:22.800 --> 00:06:26.060 poor steering, terrifying vibrations, deafening 00:06:26.060 --> 00:06:28.699 noise in the cabin. But the big one, the really 00:06:28.699 --> 00:06:31.000 notable one, was this thing called the three 00:06:31.000 --> 00:06:32.779 rudder problem. Well, the three rudder problem 00:06:32.779 --> 00:06:36.620 is a fascinating example of just unforeseen aerodynamic 00:06:36.620 --> 00:06:39.620 physics. So those Rolls Royce Dart engines were 00:06:39.620 --> 00:06:41.800 incredibly powerful and they were swinging these 00:06:41.800 --> 00:06:44.959 massive 12 foot propellers. Just huge blades. 00:06:45.040 --> 00:06:47.540 Right. And the wake or the slipstream that was 00:06:47.540 --> 00:06:49.459 generated by those propellers didn't just push 00:06:49.459 --> 00:06:52.040 air straight back. It actually created this violent 00:06:52.009 --> 00:06:55.290 corkscrew of air that slammed directly into the 00:06:55.290 --> 00:06:57.850 right side of the plane's tail. Oh, so it's twisting 00:06:57.850 --> 00:07:00.389 around the fuselage. Exactly. So when the pilot 00:07:00.389 --> 00:07:02.910 tried to perform a sideways maneuver, that corkscrew 00:07:02.910 --> 00:07:05.089 weight completely blanketed the standard single 00:07:05.089 --> 00:07:07.649 rudder in turbulent air. The rudder just became 00:07:07.649 --> 00:07:09.730 totally useless. Absolutely dead. The airplane 00:07:09.730 --> 00:07:12.089 was sharply inclined to the right, totally out 00:07:12.089 --> 00:07:15.170 of the pilot's control. And that literally caused 00:07:15.170 --> 00:07:17.430 a tailspin and a crash during the early testing 00:07:17.430 --> 00:07:20.800 phase. Yeah, it was a severe flaw. To regain 00:07:20.800 --> 00:07:22.920 control of the aircraft, the engineers couldn't 00:07:22.920 --> 00:07:25.579 just use a standard tail. They had to completely 00:07:25.579 --> 00:07:28.199 redesign the impenedge. They broke the steering 00:07:28.199 --> 00:07:31.180 mechanism down. So what did they do? They essentially 00:07:31.180 --> 00:07:35.180 had to utilize a main rudder alongside these 00:07:35.180 --> 00:07:38.199 specialized auxiliary tabs, spring tabs and trim 00:07:38.199 --> 00:07:40.720 tabs. So you have three distinct rudder surfaces 00:07:40.720 --> 00:07:43.779 acting together, working in tandem just to bite 00:07:43.779 --> 00:07:46.240 into the clean air outside that engine wash and 00:07:46.240 --> 00:07:48.819 overcome the torque. That is so complex. And 00:07:48.819 --> 00:07:50.839 that level of troubleshooting required outside 00:07:50.839 --> 00:07:53.819 help, right? NAMC realized they were just completely 00:07:53.819 --> 00:07:56.519 out of their depth with these specific commercial 00:07:56.519 --> 00:07:59.420 aerodynamic quirks. So they invited the American 00:07:59.420 --> 00:08:01.959 Federal Aviation Administration, the FAA, to 00:08:01.959 --> 00:08:04.240 come all the way to Japan and help them fix it. 00:08:04.259 --> 00:08:06.800 Which is a big deal. The FAA performed informal 00:08:06.800 --> 00:08:08.980 project reviews and they worked side by side 00:08:08.980 --> 00:08:11.540 with the Japanese engineers to identify and eliminate 00:08:11.540 --> 00:08:13.300 these defects. I imagine that was a tough pill 00:08:13.300 --> 00:08:16.000 to swallow for the designers. It was. But the 00:08:16.000 --> 00:08:18.189 Japanese swallowing their pride and bringing 00:08:18.189 --> 00:08:21.189 in the Americans was a highly calculated survival 00:08:21.189 --> 00:08:24.930 tactic. Securing an American FAA Part 25 certification 00:08:24.930 --> 00:08:27.350 wasn't just about ensuring the plane wouldn't 00:08:27.350 --> 00:08:29.769 spin out of control. It was the ultimate stamp 00:08:29.769 --> 00:08:33.500 of global legitimacy. Without that FAA certification, 00:08:33.799 --> 00:08:36.399 the YS -11 would legally never be allowed to 00:08:36.399 --> 00:08:38.559 operate outside of Japanese airspace. It would 00:08:38.559 --> 00:08:40.940 be a total commercial dead end before it even 00:08:40.940 --> 00:08:43.440 rolled off the assembly line. Exactly. But they 00:08:43.440 --> 00:08:45.860 pulled it off, they redesigned the tail, smoothed 00:08:45.860 --> 00:08:48.320 out the vibrations, and they earned that certification. 00:08:49.000 --> 00:08:52.620 The plane was flying so well that in 1964, all 00:08:52.620 --> 00:08:55.879 Nippon Airways actually used a YS -11 to carry 00:08:55.879 --> 00:08:58.519 the Olympic torch across Japan before the Tokyo 00:08:58.519 --> 00:09:01.019 Summer Games. It became this massive simple of 00:09:01.019 --> 00:09:03.179 national pride and technological resurrection. 00:09:03.919 --> 00:09:05.519 Operationally, the plane was finally hitting 00:09:05.519 --> 00:09:08.919 its marks. Yeah, by 1968 the YS -11 program was 00:09:08.919 --> 00:09:11.620 so dominant domestically that it accounted for 00:09:11.620 --> 00:09:13.639 about half of all aircraft production taking 00:09:13.639 --> 00:09:16.129 place in Japan. half of the entire country's 00:09:16.129 --> 00:09:18.429 production. It was a massive industrial footprint. 00:09:18.789 --> 00:09:21.509 Yet, beneath that surface level success, the 00:09:21.509 --> 00:09:24.629 financial structure of NAMC was basically a ticking 00:09:24.629 --> 00:09:26.789 time bomb. And this brings us right back to that 00:09:26.789 --> 00:09:29.610 54 % government -owned paper company setup we 00:09:29.610 --> 00:09:31.210 talked about earlier. Right. The structure was 00:09:31.210 --> 00:09:34.669 just inherently flawed from day one. NEMC, the 00:09:34.669 --> 00:09:36.629 paper company, absorbed all the developmental 00:09:36.629 --> 00:09:39.429 debt and all the financial risk. The actual partner 00:09:39.429 --> 00:09:42.490 companies building the plane, Mitsubishi, Kawasaki, 00:09:42.769 --> 00:09:45.710 Fuji, they had zero of the debt apportioned to 00:09:45.710 --> 00:09:48.750 them. None of it. None. They operated on a system 00:09:48.750 --> 00:09:51.409 that guaranteed them a profit on every single 00:09:51.409 --> 00:09:53.649 part they manufactured, regardless of whether 00:09:53.649 --> 00:09:55.730 the final airplane actually sold it a profit. 00:09:55.850 --> 00:09:58.509 That is insane. It's essentially Hollywood accounting 00:09:58.509 --> 00:10:01.309 applied to aerospace. Like in Hollywood, a studio 00:10:01.309 --> 00:10:04.210 might create an LLC for a specific movie, and 00:10:04.210 --> 00:10:07.210 that LLC hires the studio's own cameras and staff 00:10:07.210 --> 00:10:09.850 at hyperinflated rates. Yes, exactly. So the 00:10:09.850 --> 00:10:11.690 movie might make a billion dollars at the box 00:10:11.690 --> 00:10:14.450 office, but the LLC technically operates at a 00:10:14.450 --> 00:10:16.570 loss because it owes the parent company so much 00:10:16.570 --> 00:10:20.889 money. NAMC was the LLC taking all the losses, 00:10:21.470 --> 00:10:23.649 while the subcontractors just guaranteed themselves 00:10:23.649 --> 00:10:26.610 a profit on every rivet and wing panel. And because 00:10:26.610 --> 00:10:29.389 of that, they had absolutely no incentive to 00:10:29.389 --> 00:10:32.850 streamline production or cut costs. The inefficiency 00:10:32.850 --> 00:10:35.759 compounded daily. Because those partner companies 00:10:35.759 --> 00:10:39.240 viewed the YS11 program more as a subsidized 00:10:39.240 --> 00:10:41.960 government training exercise than a cutthroat 00:10:41.960 --> 00:10:44.159 commercial business, they constantly rotated 00:10:44.159 --> 00:10:47.200 their staff. Oh right, the sandbox thing. Exactly. 00:10:47.559 --> 00:10:49.720 They would send a young engineer over, let them 00:10:49.720 --> 00:10:51.840 learn the ropes of modern aviation manufacturing 00:10:51.840 --> 00:10:54.299 on the YS11 assembly line, and then just pull 00:10:54.299 --> 00:10:56.500 them right back to work on internal proprietary 00:10:56.500 --> 00:10:58.879 company projects. Which completely destroys any 00:10:58.879 --> 00:11:00.940 kind of institutional momentum. You can't run 00:11:00.940 --> 00:11:02.720 a factory when you treat your workforce like 00:11:02.720 --> 00:11:05.259 a revolving door. You also suffer from a severe 00:11:05.259 --> 00:11:08.600 culture clash. Remember, the brilliant minds 00:11:08.600 --> 00:11:11.860 designing this plane were military aviation engineers. 00:11:12.559 --> 00:11:14.779 They spent their formative years building fighter 00:11:14.779 --> 00:11:17.879 planes based on strict, government -issued performance 00:11:17.879 --> 00:11:21.379 criteria. They cared about speed, altitude, and 00:11:21.379 --> 00:11:23.940 maneuverability. Right, things that win dog fights. 00:11:24.419 --> 00:11:27.639 Right. But they fundamentally misunderstood the 00:11:27.639 --> 00:11:30.049 commercial airline market. Because an airline 00:11:30.049 --> 00:11:32.629 isn't looking at altitude records. They're looking 00:11:32.629 --> 00:11:35.269 at turnaround time at the gate. They care about 00:11:35.269 --> 00:11:38.210 operating costs, how easy it is to access the 00:11:38.210 --> 00:11:41.559 engine for maintenance, and maybe most importantly, 00:11:42.080 --> 00:11:44.340 how many seats you can comfortably cram into 00:11:44.340 --> 00:11:47.159 the cabin. And the YS -11 team had literally 00:11:47.159 --> 00:11:49.899 no staff with experience in marketing to airlines. 00:11:50.440 --> 00:11:52.639 They didn't understand how to pitch fuel efficiency 00:11:52.639 --> 00:11:55.320 or cargo configurations. They were just completely 00:11:55.320 --> 00:11:58.240 outmatched by the seasoned aggressive salesmen 00:11:58.240 --> 00:12:01.820 from rival Western companies. So to compensate 00:12:01.820 --> 00:12:03.279 for the fact that they didn't know how to sell 00:12:03.279 --> 00:12:05.580 the plane's features, they just slashed the price. 00:12:05.600 --> 00:12:07.840 Yeah, it was their solution. They started selling 00:12:07.840 --> 00:12:11.379 planes internationally at a massive loss, specifically 00:12:11.379 --> 00:12:14.279 just to undercut rivals like the American Martin 00:12:14.279 --> 00:12:17.399 Fordo for. They operated on this desperate logic 00:12:17.399 --> 00:12:19.460 that they just needed market share so they would 00:12:19.460 --> 00:12:22.159 bleed cash to get their planes in the sky. And 00:12:22.159 --> 00:12:24.700 that total lack of business acumen is really 00:12:24.700 --> 00:12:27.200 what sets the stage for their disastrous attempt 00:12:27.200 --> 00:12:29.759 to break into the American market. Which is such 00:12:29.759 --> 00:12:33.220 a crazy story. The North American campaign actually 00:12:33.220 --> 00:12:35.919 started with a highly promising success story. 00:12:36.000 --> 00:12:38.759 Believe it or not, Piedmont Airlines, which was 00:12:38.759 --> 00:12:40.799 a major regional carrier in the U .S. at the 00:12:40.799 --> 00:12:43.720 time, was searching for a modern airliner. And 00:12:43.720 --> 00:12:46.519 Piedmont operated out of a lot of small mountainous 00:12:46.519 --> 00:12:48.340 airports, right? Like environments that were 00:12:48.340 --> 00:12:51.379 notoriously tough on aircraft. Very tough. And 00:12:51.379 --> 00:12:54.259 the rugged, over -engineered nature of the YS 00:12:54.259 --> 00:12:56.899 -11 was perfect for it. The president of Piedmont, 00:12:57.039 --> 00:12:59.500 Thomas H. Davis, actually went on record, stating 00:12:59.500 --> 00:13:01.980 the YS -11 was the only plane they could find 00:13:01.980 --> 00:13:04.220 that could handle those specific mountainous 00:13:04.220 --> 00:13:07.440 routes on an economical basis. Wow. So Piedmont 00:13:07.440 --> 00:13:09.419 was so impressed with the aircraft's performance 00:13:09.419 --> 00:13:11.700 that they eventually purchased 21 of them. They 00:13:11.700 --> 00:13:14.870 became the YS - 11's largest international operator. 00:13:15.110 --> 00:13:16.769 That should have been the foothold they needed 00:13:16.769 --> 00:13:19.610 to conquer the market. But instead, they signed 00:13:19.610 --> 00:13:21.730 a deal with the Charlotte Aircraft Corporation. 00:13:22.059 --> 00:13:24.679 Here is where it just goes completely off the 00:13:24.679 --> 00:13:28.279 rails. So NAMC knew they needed a dedicated sales 00:13:28.279 --> 00:13:31.059 agent based in the United States to handle the 00:13:31.059 --> 00:13:34.259 broader North American, Latin American, and Spanish 00:13:34.259 --> 00:13:36.860 markets. And they were approached by a guy named 00:13:36.860 --> 00:13:39.860 Jenks Caldwell of the Charlotte Aircraft Corporation. 00:13:40.100 --> 00:13:41.879 Right. And you would think Caldwell was a major 00:13:41.879 --> 00:13:44.340 international airline broker. But he wasn't. 00:13:44.480 --> 00:13:47.139 He was a used aircraft and aviation parts dealer 00:13:47.139 --> 00:13:50.019 based out of North Carolina. Yeah. Caldwell expressed 00:13:50.019 --> 00:13:52.279 strong interest in modifying and selling the 00:13:52.279 --> 00:13:56.320 YS -11A variant. And NAMC, who were just eager 00:13:56.320 --> 00:13:59.519 for a broader distribution network, an entirely 00:13:59.519 --> 00:14:02.360 naive to international contract law, signed an 00:14:02.360 --> 00:14:04.799 exclusive agency contract with him. It's just 00:14:04.799 --> 00:14:07.539 mind blowing. They gave a used parts dealer exclusive 00:14:07.539 --> 00:14:10.480 rights to sell the YS -11 across the entirety 00:14:10.480 --> 00:14:12.940 of the Americas and Spain without even doing 00:14:12.940 --> 00:14:15.720 a background check. And Charlotte Aircraft proceeded 00:14:15.720 --> 00:14:18.360 to sell absolutely nothing. Nothing. Not a single 00:14:18.360 --> 00:14:21.360 plane. They didn't move a single new unit. So 00:14:21.360 --> 00:14:24.860 NAMC, realizing their massive new market is totally 00:14:24.860 --> 00:14:27.840 stagnant, decides to just bypass their own exclusive 00:14:27.840 --> 00:14:31.340 dealer. As you do. Right. They use a Japanese 00:14:31.340 --> 00:14:34.820 trading company, Mitsui, to conclude these massive 00:14:34.820 --> 00:14:37.440 direct sales agreements with Piedmont Airlines 00:14:37.440 --> 00:14:40.580 and another carrier, Cusero do Sul in Brazil. 00:14:40.720 --> 00:14:42.600 And I'm sure Charlotte aircraft took that really 00:14:42.600 --> 00:14:44.659 well. Charlotte aircraft immediately demanded 00:14:44.659 --> 00:14:47.639 damages and correctly claiming that their status 00:14:47.639 --> 00:14:50.220 as the exclusive regional dealer had been violated 00:14:50.220 --> 00:14:52.179 by the parent company. Even though they hadn't 00:14:52.179 --> 00:14:54.299 done the legwork to secure those massive airline 00:14:54.299 --> 00:14:57.679 contracts. But legally that didn't matter. Because 00:14:57.679 --> 00:15:00.419 NAMC was entirely inexperienced in international 00:15:00.419 --> 00:15:02.879 commercial contracts, they had completely failed 00:15:02.879 --> 00:15:05.600 to vet Charlotte aircraft's capacity to actually 00:15:05.600 --> 00:15:08.059 move new airliners in the first place. But more 00:15:08.059 --> 00:15:10.690 importantly, they forgot to include basic protective 00:15:10.690 --> 00:15:13.049 clauses in the contract. There was no refusal 00:15:13.049 --> 00:15:15.230 to sell clause, and there were no performance 00:15:15.230 --> 00:15:17.970 benchmarks. Nothing that would have allowed NAMC 00:15:17.970 --> 00:15:21.070 to legally terminate the exclusivity if the dealer 00:15:21.070 --> 00:15:23.950 failed to hit sales targets. So Charlotte Aircraft 00:15:23.950 --> 00:15:26.690 sues them. And the fallout from this single bad 00:15:26.690 --> 00:15:29.570 contract is just staggering. The Japanese Board 00:15:29.570 --> 00:15:32.509 of Audit gets involved. There are angry complaints 00:15:32.509 --> 00:15:35.429 raised in the Japanese parliament. The managing 00:15:35.429 --> 00:15:37.990 director of NAMC is forced to resign in total 00:15:37.990 --> 00:15:40.799 disgrace. Because they had no legal leg to stand 00:15:40.799 --> 00:15:44.340 on, NAMC was forced to settle the dispute just 00:15:44.340 --> 00:15:47.159 to terminate the contract. They had to pay Charlotte 00:15:47.159 --> 00:15:51.039 Aircraft 23 million yen. Which is bad enough, 00:15:51.139 --> 00:15:53.240 but the financial penalty was only half of the 00:15:53.240 --> 00:15:55.460 settlement. Right. As part of the direct sales 00:15:55.460 --> 00:15:57.879 deal with Piedmont and Cruzeiro, those airlines 00:15:57.879 --> 00:16:01.500 had traded in 33 of their old used aircraft. 00:16:01.840 --> 00:16:05.019 To make the lawsuit go away, NAMC had to hand 00:16:05.019 --> 00:16:07.779 over the titles to all 33 of those used planes 00:16:07.779 --> 00:16:10.659 directly to Charlotte aircraft. They gave a used 00:16:10.659 --> 00:16:14.600 parts dealer 23 million yen and 33 functional 00:16:14.600 --> 00:16:17.659 airplanes just to tear up a piece of paper, all 00:16:17.659 --> 00:16:20.000 because they didn't consult a competent international 00:16:20.000 --> 00:16:23.259 contract lawyer. This whole fiasco really exposes 00:16:23.259 --> 00:16:26.919 the deep bureaucratic paralysis of NAMC. Remember, 00:16:27.000 --> 00:16:29.320 they were directly tethered to the Ministry of 00:16:29.320 --> 00:16:33.090 Finance and MITI. Yeah. So... If a prospective 00:16:33.090 --> 00:16:35.490 airline requested a slight reduction in the sales 00:16:35.490 --> 00:16:38.090 price or if they asked for a customized delayed 00:16:38.090 --> 00:16:40.990 payment schedule, the NAMC executives couldn't 00:16:40.990 --> 00:16:43.590 just negotiate on the fly. They had to ask permission. 00:16:43.690 --> 00:16:45.889 They had to route those requests through multiple 00:16:45.889 --> 00:16:48.330 government organizations for approval. And by 00:16:48.330 --> 00:16:50.409 the time the bureaucracy actually stamped the 00:16:50.409 --> 00:16:52.750 paperwork, the airline had already bought a plane 00:16:52.750 --> 00:16:55.389 from a European or American competitor. They 00:16:55.389 --> 00:16:58.250 just had zero agility. But the final blow to 00:16:58.250 --> 00:17:01.669 this entire fragile system lands in 1971. The 00:17:01.669 --> 00:17:04.309 Smithsonian Agreement. The American government 00:17:04.309 --> 00:17:06.829 completely shifted the global financial landscape 00:17:06.829 --> 00:17:09.349 by switching to a floating exchange rate. This 00:17:09.349 --> 00:17:11.630 led to an immediate and rapid appreciation in 00:17:11.630 --> 00:17:14.529 the value of the Japanese yen. Which means overnight 00:17:14.529 --> 00:17:17.549 the exchange rate became highly unfavorable for 00:17:17.549 --> 00:17:21.009 Japanese exports. So whatever razor -thin heavily 00:17:21.009 --> 00:17:24.349 subsidized margins NAMC was operating on simply 00:17:24.349 --> 00:17:26.779 vanished. It became mathematically impossible 00:17:26.779 --> 00:17:29.279 for the program to ever break even. The debt 00:17:29.279 --> 00:17:32.380 had ballooned to roughly $600 million. It was 00:17:32.380 --> 00:17:35.019 unsustainable. The Japanese government finally 00:17:35.019 --> 00:17:38.559 pulled the plug. Production of the YS -11 officially 00:17:38.559 --> 00:17:42.920 ended in 1974. They built exactly 182 planes. 00:17:43.440 --> 00:17:46.019 The company dissolved. The financial losses were 00:17:46.019 --> 00:17:48.579 catastrophic, and the project was widely viewed 00:17:48.579 --> 00:17:51.240 as a failure. Yet the physical machine they engineered 00:17:51.240 --> 00:17:54.079 absolutely refused to die. It really did. Now 00:17:54.079 --> 00:17:55.960 we should mention that the operational history 00:17:55.960 --> 00:17:58.099 of the plane is incredibly long, though it's 00:17:58.099 --> 00:18:00.279 definitely not without its dark chapters. There 00:18:00.279 --> 00:18:03.059 were over 20 hull loss accidents during its lifespan. 00:18:03.799 --> 00:18:06.900 Like in 1969, a Korean air flight was hijacked 00:18:06.900 --> 00:18:09.359 by a North Korean agent and flown to an airfield 00:18:09.359 --> 00:18:12.450 near Wonsan. The aircraft was written off and, 00:18:12.670 --> 00:18:14.450 tragically, the crew and seven passengers are 00:18:14.450 --> 00:18:16.549 still held in North Korean territory to this 00:18:16.549 --> 00:18:19.769 day. Right. And there were also fatal mechanical 00:18:19.769 --> 00:18:24.289 and pilot air incidents. In 1971, Toa Domestic 00:18:24.289 --> 00:18:27.390 Airlines Flight 63 crashed into Yukatsu Mountain 00:18:27.390 --> 00:18:30.269 on approach to Hakodate Airport, resulting in 00:18:30.269 --> 00:18:33.329 the loss of all 68 people on board. It was the 00:18:33.329 --> 00:18:35.839 deadliest accident involving the type. So it's 00:18:35.839 --> 00:18:38.119 important to acknowledge that history, but despite 00:18:38.119 --> 00:18:40.319 those tragedies and despite the fact that the 00:18:40.319 --> 00:18:44.259 factory doors literally locked in 1974, the longevity 00:18:44.259 --> 00:18:47.200 of the surviving fleet is stunning. By 1994, 00:18:47.420 --> 00:18:49.880 which is 20 years after production ended, there 00:18:49.880 --> 00:18:53.940 were still 112 YS -11s in active commercial service 00:18:53.940 --> 00:18:56.319 around the world. Because they were over -engineered 00:18:56.319 --> 00:18:59.420 in the best possible way. The airframe was incredibly 00:18:59.420 --> 00:19:02.180 robust. It was built to withstand thousands of 00:19:02.180 --> 00:19:04.960 high -impact landings on unpaved or short runways. 00:19:05.079 --> 00:19:07.180 I mean, they flew commercially in Japan all the 00:19:07.180 --> 00:19:09.779 way until 2006. And the kicker is, they weren't 00:19:09.779 --> 00:19:11.859 even grounded because the airframes were failing. 00:19:11.880 --> 00:19:13.779 They were grounded because the Japanese government 00:19:13.779 --> 00:19:15.900 mandated that all commercial aircraft had to 00:19:15.900 --> 00:19:17.740 be fitted with a modern traffic collision avoidance 00:19:17.740 --> 00:19:21.220 system, or TCS. Right. And the cost to retrofit 00:19:21.220 --> 00:19:24.839 these aging analog planes with digital TCS was 00:19:24.839 --> 00:19:27.400 estimated around a million U .S. dollars. per 00:19:27.400 --> 00:19:30.140 plane. It just didn't make economic sense for 00:19:30.140 --> 00:19:31.900 the regional airlines to make that investment. 00:19:32.599 --> 00:19:34.740 But even after they were retired from commercial 00:19:34.740 --> 00:19:37.390 service in Japan the military kept utilizing 00:19:37.390 --> 00:19:40.750 them. The Japan Air Self -Defense Force relied 00:19:40.750 --> 00:19:43.569 on the YS -11 for transport and electronic warfare 00:19:43.569 --> 00:19:46.410 training, and they didn't retire their last active 00:19:46.410 --> 00:19:50.710 airframe until 2021. That is 57 years after it 00:19:50.710 --> 00:19:53.650 first entered service. 57 years. And as recently 00:19:53.650 --> 00:19:56.730 as August 2020, there are still a couple of them 00:19:56.730 --> 00:19:59.390 flying commercial cargo routes in South America 00:19:59.390 --> 00:20:02.670 and Africa. It's the ultimate irony of this entire 00:20:02.670 --> 00:20:05.170 story, you know. The business was this fragile 00:20:05.170 --> 00:20:07.190 bureaucratic house of cards that collapsed under 00:20:07.190 --> 00:20:09.609 its own weight almost immediately, but the physical 00:20:09.609 --> 00:20:12.089 plane was an absolute tank. It forces you to 00:20:12.089 --> 00:20:14.950 really redefine what constitutes a success. I 00:20:14.950 --> 00:20:16.789 mean, if you met your success purely on a financial 00:20:16.789 --> 00:20:19.450 balance sheet, the YS -11 was an unmitigated 00:20:19.450 --> 00:20:21.549 disaster. It lost hundreds of millions of dollars 00:20:21.549 --> 00:20:24.349 and entirely failed to establish Japan as a dominant 00:20:24.349 --> 00:20:26.430 player in the commercial airliner export market. 00:20:26.619 --> 00:20:29.799 Yeah, totally. But if you measure success operationally, 00:20:30.140 --> 00:20:33.039 the YS -11 achieved exactly what MIT originally 00:20:33.039 --> 00:20:36.900 mandated back in 1957. It proved, beyond a shadow 00:20:36.900 --> 00:20:39.480 of a doubt, that Japanese engineers could scavenge, 00:20:39.880 --> 00:20:43.220 adapt, design, and certify a world -class, durable 00:20:43.220 --> 00:20:45.740 aircraft that could fly for over half a century. 00:20:45.930 --> 00:20:48.390 And that is exactly why this deep dive matters 00:20:48.390 --> 00:20:51.170 for you listening. The YS11 is the ultimate case 00:20:51.170 --> 00:20:53.809 study in the limits of pure engineering. It proves 00:20:53.809 --> 00:20:56.569 that technological excellence, having the smartest 00:20:56.569 --> 00:20:59.650 engineers, solving complex aerodynamic puzzles 00:20:59.650 --> 00:21:02.369 like the three rudder problem, building an airframe 00:21:02.369 --> 00:21:05.049 that outlasts its own manufacturer by decades, 00:21:05.430 --> 00:21:07.430 is completely meaningless if you don't have a 00:21:07.430 --> 00:21:09.970 sound business model and a deep empathetic understanding 00:21:09.970 --> 00:21:12.269 of your end user. Absolutely. If you don't know 00:21:12.269 --> 00:21:14.690 what the customer actually values or how to write 00:21:14.690 --> 00:21:17.519 a basic to sell it to them, the greatest machine 00:21:17.519 --> 00:21:19.799 in the world will still bankrupt you. Well said. 00:21:20.519 --> 00:21:22.960 And there is a broader historical context here 00:21:22.960 --> 00:21:24.680 that provides a fascinating parallel to leave 00:21:24.680 --> 00:21:27.539 you with. Right around the time the YS -11 debuted 00:21:27.539 --> 00:21:30.640 to the world for the 1964 Olympics, another piece 00:21:30.640 --> 00:21:32.960 of Japanese transportation technology was unveiled, 00:21:33.759 --> 00:21:37.009 the Zero Series Shinkansen. Oh, the original 00:21:37.009 --> 00:21:39.549 bullet train. Exactly. Both of them stepping 00:21:39.549 --> 00:21:41.670 onto the world stage at the exact same time. 00:21:42.250 --> 00:21:44.450 And what is incredible is that both the plane 00:21:44.450 --> 00:21:46.869 and the train were developed by the exact same 00:21:46.869 --> 00:21:49.890 generation of former military aviation engineers. 00:21:50.109 --> 00:21:53.430 Wait, really? The same guy? Yes. Men like Tadanamiki 00:21:53.430 --> 00:21:55.450 and Tadashi Matsudaira, who designed bombers 00:21:55.450 --> 00:21:58.289 during the war, apply their aerodynamic expertise 00:21:58.289 --> 00:22:01.029 to the Shinkansen. You have the exact same engineering 00:22:01.029 --> 00:22:03.130 pedigree. applying their skills at the exact 00:22:03.130 --> 00:22:05.269 same moment in history. Yet the bullet train 00:22:05.269 --> 00:22:07.849 fundamentally revolutionized global transportation. 00:22:08.349 --> 00:22:10.690 It became a symbol of modern efficiency, and 00:22:10.690 --> 00:22:13.190 it is still evolving today, while the plane became 00:22:13.190 --> 00:22:16.470 a $600 million cautionary tale. It leaves you 00:22:16.470 --> 00:22:19.150 with a profound question worth exploring long 00:22:19.150 --> 00:22:22.450 after this discussion ends. Why did the exact 00:22:22.450 --> 00:22:25.390 same caliber of mines succeed so brilliantly 00:22:25.390 --> 00:22:28.710 on the rails but fail so spectacularly in the 00:22:28.710 --> 00:22:31.410 open market skies? That's a great question. Perhaps 00:22:31.410 --> 00:22:33.289 it comes down to the fundamental difference between 00:22:33.289 --> 00:22:35.650 building a closed, government -controlled domestic 00:22:35.650 --> 00:22:38.210 infrastructure versus trying to compete in an 00:22:38.210 --> 00:22:40.869 established cutthroat global market. Either way, 00:22:40.990 --> 00:22:42.589 it proved that building a great machine is only 00:22:42.589 --> 00:22:45.269 half the battle. You have to understand the world 00:22:45.269 --> 00:22:46.470 that machine is driving into.