WTF is going on with Boeing?
To me, what we have here is the result of several realities or dynamics:
-the collapse of the “reality” created in the 20th century as the new 21st century reality unfolds
-what happens when unprecedented wealth inequality takes root in corporations
-stock buybacks have become more important than quality control or company culture
-the loss of values in the connection between society /government/ private sector
-the results of monopolies and lack of competition
-the ongoing collapse of Legacy Thinking
But I am grasping here. The crisis with Boeing is another big -cost-cutting tradeoff that affected the quality of the company's products.
All during the 20th century, there were two major commercial aircraft manufacturers, Boeing and McDonnell Douglas in the United States. I remember as a young boy, actually flying on DC-3’s around the Caribbean with my parents. I thought that all planes were slanted when getting on board.
Then, with jet travel I remember the ascendancy of Boeing. The very first jet I flew on was the Boeing 707 to Europe as a teenager. I remember flying to Australia for the first time on a Boeing 747. Boeing had their “7’s” and McDonell Douglas had there 3’s, 4’s and up to DC-8s.
The two companies merged in 1997, killing any serious domestic competition. The story then and now is that Boeing's engineering excellence lost out to McDonnell-Douglas's bean-counting culture. Then, four years later, Boeing moved from its Seattle location and headquarters, where it had been for 80 years, to Chicago for its headquarters with manufacturing staying put. Then, 20 years later, they relocated headquarters to Arlington, VA, to be closer to its governmental clients.
So, a merger and two headquarters moves in the last 27 years are the background to the current crisis.
The Crisis Timeline
Wikipedia has a very good and concise history of the developing crisis at Boeing in the last six years:
“In 2018 and 2019, two Boeing 737 MAX narrow-body passenger airplanes crashed, leaving 346 people dead and no survivors. In response, aviation regulators and airlines around the world grounded all 737 MAX airliners.[35] A total of 387 aircraft were grounded.[36] Boeing's reputation, business, and financial rating suffered after the groundings, as Boeing's strategy, governance, and focus on profits and cost efficiency were questioned.[37][38][39] In 2022, Netflix released an exposé, Downfall: The Case Against Boeing, claiming Boeing's corporate merger with McDonnell Douglas led to the crashes through a disintegration of workplace morale.[40][41][42][43][44]
In June 2020, the Federal Aviation Administration found several 737 MAX defects that Boeing deferred to fix, in violation of regulations.[45] In September 2020, the U.S. House of Representatives concluded its own investigation and cited numerous instances where Boeing dismissed employee concerns with a 737 MAX flight stabilizing feature (MCAS) that caused the two fatal accidents, prioritized deadline and budget constraints over safety, and lacked transparency in disclosing essential information to the FAA. It further found that the assumption that simulator training would not be necessary had "diminished safety, minimized the value of pilot training, and inhibited technical design improvements".[46] On January 7, 2021, Boeing settled to pay over $2.5 billion after being charged with fraud over the company's hiding of information from the safety regulators: a criminal monetary penalty of $243.6 million, $1.77 billion of damages to airline customers, and a $500 million crash-victim beneficiaries fund.[47]
In September 2022, Boeing was ordered to pay a further $200 million (€180M) over charges of misleading investors about safety issues related to these crashes.[48] In March 2023, Boeing disputed in court filings that the victims of Ethiopian Airlines Flight 302 (the 2019 crash) experienced any pain and suffering in the final six minutes as the plane was nosediving into the ground, citing "speed of sound" as a defence. Boeing's claim was described as "preposterous" by Huffington Post:[49]
Passengers aboard the plane, the plaintiffs argued in court, "undeniably suffered horrific emotional distress, pain and suffering, and physical impact/injury while they endured extreme G-forces, braced for impact, knew the airplane was malfunctioning, and ultimately plummeted nose-down to the ground at terrifying speed."
While the investigations into the crashes of the 737 MAX were proceeding, the Boeing 777X, the company's largest capacity twin jet and the largest ever built, made its maiden flight on January 25, 2020,[50] but also experienced problems. Following an incident during flight testing in 2021, the estimated first delivery of the aircraft was delayed until 2024.[51] After further technical problems were discovered in the aircraft in 2022, the release was delayed again until 2025, six years after the original date.[52][53] “
Then of course, came the Alaska Airlines flight #1282 on January 5, 2024 when a side door blew out and the starry sky could be seen from inside the aircraft. When we all saw that footage, we immediately gave thanks that we were not on that plane.
Again, to quote Wikipedia:
“On January 5, 2024, on Alaska Airlines Flight 1282, a door plug blowout[54][55] occurred on a 737 MAX 9 jetliner after the plane had reached just over 16,000 feet, leaving a door-sized hole in the fuselage and the aircraft made an emergency landing at Portland International Airport successfully with several people onboard injured, although all had subsequently been "medically cleared".[56] The FAA mandated immediate inspections of all 737 MAX 9s fitted with door plugs, thereby grounding 171 aircraft.[57][58][59] United Airlines found loose bolts on jets grounded by the FAA, raising questions about possible systematic problems with the Boeing 737 MAX 9.[60] The FAA announced on January 12 that it was expanding its scrutiny of Boeing, with a production audit of the 737 MAX 9.[61] On February 6, the National Transportation Safety Board released a preliminary report indicating that four bolts used to secure the panel had been removed, and appeared not to have been replaced, at Boeing’s factory in Renton, Washington.[62]
In March 2024, it was reported that the Justice Department opened a criminal investigation into the Alaska Airlines blowout.[63] “
Here is a good slide show on Boeing’s 2024 year and just how bad it has been.
Then last week, we found out that the whistleblower who revealed lack of quality control at Boeing was dead. He had taken his own life after giving testimony. [We have all seen too many thriller movies not to immediately think foul play on a staged suicide attempt]. Whenever a whistleblower dies, it is a very bad sign that something ugly is going on behind the scenes.
Now, this week we learn that the Justice Department has a criminal inquiry into Boeing that includes subpoenas and a grand jury. So the Feds are stepping in.
Back to the list at the top of the column.
-the collapse of 20th-century companies. First, the retailers went: Sears, Montgomery Ward, K-Mart, Marshall Field & Co. Then the banks merged. Then the oil companies merged. Airlines became consolidated.
-The effect that unprecedented wealth inequality has on companies
-. In Boeing’s heyday, mid-century, the compensation for a CEO for a US company was 20 times the average worker. Around the 1997 merger of Boeing and McDonnell Douglas the ratio had increased to almost 384 times the average worker. A CEO making that much more money than the average global worker will surely cause grumbling at the lower level of factory assembly. This would particularly be the case when the CEO and C-level executive's offices are thousands of miles away from most employees.
-lack of competition.
The only real competitor to Boeing on the global commercial airplane landscape is Airbus, from the EU. Yes there is Bombardier and a number of other commercial aircraft vendors, but for the big orders for big planes, it has largely been a Boeing versus Airbus marketplace. What will happen now is a collapse in market share for Boeing globally in the next few years as the time between order and delivery is years. The real question is whether Boeing will survive this rough period.
Right now, when I first hear of another airline crash, near miss or something falling from an airplane, I think “another Boeing plane?” Yup, it was a Boeing plane that dropped a tire while taking off from LAX. Yes it was a Boeing plane that had a missing panel on the bottom part of the fuselage. Air mishap? Probably Boeing. The legendary book by Ralph Nader comes to mind: “Unsafe at Any Speed”
Will Boeing airplanes be linked to the Corvair or the Pinto as manufactured death traps?
-stock buybacks
Boeing spent $39 billion on stock buybacks in the last 10 years. This is done to prop up the share price. The evidence is hard to refute: while making stock purchases of its own stock to increase the return for stockholders, they took their eye off the quality ball – big time! Now Boeing stock has collapsed due to the ongoing quality control issues. It started the year with a share price of $261 and two months later it is down to $183 or a 30% decline at a time when the Dow Jones Industrial Average is up 3% and the S&P is up 9.5% Payback time for the executives that approved the stock buybacks over the last 10 years.
The C-level execs whose compensation is tied to stock price pocketed millions due to the stock buyback and are now giving it back due to the quality collapse issues. Ah, karma!
-the loss of values between society, corporations and the government
When you hear or read that a door blows out of a plane with people on it, when you read that United Airlines found loose bolts on one of their planes, it suggests poor quality controls or possibly intentional sabotage by workers.
The last 40 years has seen the financialization of the GDP in a massive move away from production to finance. When the focus moved to measuring financial returns as more important than customer safety. The values of top quality and pride get lost when social, political and corporate realms are purely focused on the bottom line. We have heard this story behind.
The conclusion is clear: Boeing, one of the great American corporate brands of the 20th century, will either be damaged until it recovers or will not recover at all.
What do you think?
Boeing's motto used to be "Suspenders and Belt Engineering." The saying during the good years was "If it ain't Boeing I ain't going!" I'm actually saddened at the current state of affairs there. And, in my mind it all can be laid at the feet of Allan Mullaly. He succeeded in some areas, was always arrogant and got more so. Wanted to move to Chicago so dragged the headquarters out of Seattle to Chicago and began the degradation process. That process has continued under his followers. I hope to have Boeing around for another 100 years and not go away as that would only leave Airbus.