Why Boeing is such a shitty company (continued)

Friends,

On Friday, machinists at Rogue Valley International Airport in Medford, Oregon, discovered that a United Airlines plane that had landed from San Francisco was missing an external panel (see photo, above).

The plane was manufactured by Boeing. It was carrying 139 passengers and 6 crew. No one was injured, thank heavens. The missing panel went unnoticed during the flight.

Last week, a Boeing 787 Dreamliner jet went into a dive on a flight from Australia to New Zealand, injuring 50 people. Afterward, Boeing alerted airlines to a potential problem with loose switches on pilot seats, “resulting in unintended seat movement” that could affect the controls.

These latest incidents come after a cabin door blew out on a Boeing 737 Max 9 in January, a few minutes after takeoff. The incident, on Alaska Airlines flight 1282, left a gaping hole in the side of the plane and forced an emergency landing.

Since the Alaska Airlines cabin door blow-out, federal authorities — including the FAA and the National Transportation Safety Board (NTSB) — have launched investigations and required inspections on 171 Boeing planes.

Those inspections have found that bolts and other hardware on multiple planes weren’t tight enough, according to both United and Alaska Airlines. The door panel involved in the Alaska Airlines blow-out was missing four bolts.

Boeing 737 Max planes have been the objects of safety concerns for several years, including in 2018 and 2019 when many countries grounded them after Boeing 737 Max 8 planes were involved in two crashes that killed hundreds of people.

A December 2021 Senate report on Boeing criticized the firm’s chronic understaffing and its downplaying of concerns raised by engineers in the company.

That Senate report was based on the testimony of seven whistleblowers — including some who had previously worked at Boeing — who were concerned about its production practices. Recently, John Barnett, another whistleblower and former Boeing quality control manager, died of an apparent suicide.

What’s the underlying problem? Why has Boeing become such a shitty company when it comes to quality control?

Last month, Boeing did what most big corporations do when they have problems that turn into scandals — change the leadership team. It replaced Ed Clark, the head of its 737 Max program, with Katie Ringgold, who had previously been vice president of 737 Max deliveries, and created a new executive position for Elizabeth Lund, overseeing quality at Boeing Commercial Airplanes. 

Will this be enough? Michael O’Leary, CEO of Ryanair — Boeing’s largest customer in Europe — said the change “smacks of corporate bullsh*t. You’re putting someone in charge of 737s and someone in charge of safety. Why isn’t the person in charge of the 737s in charge of f**king safety as well? Boeing loves talking this corporate bullsh*t that they have a leadership team of 3,500 people, but that’s a committee designing a f**king camel.”

As my friend Harold Meyerson wrote last month in the American Prospect, Boeing’s quality-control problems transcend the leadership team. They first became apparent in 2001, when a Boeing engineer warned against the company’s decision to outsource key parts of the aircraft it assembled.

But Wall Street wanted Boeing to outsource rather than continue producing parts in-house with Boeing’s experienced and unionized workforce. Outsourcing was cheaper. The new crop of Boeing executives came to their posts from the financial side of the industry rather than from careers in production and were quick to respond to the Street’s demands.

In 2005, Boeing sold its Wichita plant to a private equity firm that slashed costs before unloading the plant to Spirit AeroSystems, which has become notorious for its deficient quality inspection practices. Boeing objected to what it said were Spirit’s high costs and inability to meet deadlines. As the workers on the shop floor and their union repeatedly noted, this led to rushed production and deficient oversight.

As The Wall Street Journal reported, a union representative from the International Association of Machinists wrote to union leaders that Boeing’s workers had “great quality and safety concerns,” but their concerns were routinely ignored by senior management.

Boeing’s major global competitor in producing commercial aircraft is Europe’s Airbus. Airbus’s largest shareholders are mainly politically accountable governments that must pay heed to such public concerns as air safety. (Airbus’s four largest shareholders, in order, are the government of France, the government of Germany, the Capital Research and Management Company, and the government of Spain.)

Boeing’s major investors, by contrast, are entirely in it for the profits. (Its four largest shareholders, in order, are The Vanguard Group, Vanguard Group subfiler, Newport Trust Company, and State Street Corporation (a bank and asset manager.)

And because Airbus is a merger of German, French, and Spanish companies, Airbus’s production facilities are centered in nations where workers historically and currently have more power than their U.S. counterparts. Forty-six thousand of Airbus’s roughly 130,000 employees work in the company’s German factories, where workers, by law, routinely discuss production and safety issues with managers in works councils.

In the U.S., the Machinists union workers do have voice and power by American standards but lack mechanisms like works councils through which management must take at least some heed of their concerns.

In other words, Airbus’s clear leadership over Boeing in matters of flight safety stems largely from differences in ownership and worker power — that is, from the European model of mitigating laissez-faire capitalism with a measure of public and worker power, in contrast with the American model of subjecting corporate policy almost entirely to the demands of investment bankers.

Which, if you track the value of Boeing’s stock, hasn’t worked out that well for those investment bankers, either.

Just how outsourced is Boeing’s production? Almost two weeks after the Alaska Airlines blow-out, it was revealed that the door plug that blew out of the Alaska Airlines plane wasn’t actually produced in Wichita. It was produced in Malaysia, where workers’ concerns about speed of production and quality oversight are apt to have even less impact on their managers than in the United States.

The fact that the Malaysian production of the door plug didn’t come to light until 12 days after the blow-out suggests just how profoundly outsourcing can obscure the public visibility required for corporate accountability.