Boeing, Boeing, gone — or in a just world, it would be
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add Boing Boing Boing to the pilots list
In today’s news, United Airlines placing pilots on unpaid leave due to Boeing’s failure to deliver new planes
It’s been a long, slow descent for this company, a slow crash when the new Wall Street financial whizzes took over and focused on improving cash flow and impressing their fellow Harvard MBAs with their business acumen. The decay set in over two decades ago and has accelerated but, thanks to our bloated, corrupt system of a military contractor/government partnership, it continues to hang on, thereby defying Herbert Stein’s observation that “If something cannot go on forever, it will stop.” It should stop, but neither Republicans nor Democrats will pull the plug.
In 2001, the company moved its headquarters away from the 42,000 sweat-stained engineers and mechanics who built the product and shifted to Chicago, professing a need to buffer top management from “the influence and distractions of its production plants.”
Not everyone was impressed by the whiz kids’ brilliance:
Boeing left its Seattle home after 85 years following its 1997 merger with St. Louis-based rival McDonnell Douglas - a decision that angered rank-and-file mechanics and engineers.
Boeing was seeking a post-merger headquarters in a neutral location separate from those existing divisional power centers.
But some critics viewed Boeing's Chicago move as a symbol of a company that prized near-term profits and shareholder returns over long-term engineering dominance - a charge repeated after crashes of 737 MAX jets that killed 346 people in 2018 and 2019.
"It began as a way of signaling that they would make future investments without regard to any legacy loyalties," Teal Group analyst Richard Aboulafia said. "To some, it has merely become a way of indicating that they will not make any future investments at all."
The troubles began then, and got worse. This example is revealing:
The Air Force said Friday that it won’t accept delivery of any more KC-46 tankers until Boeing’s manufacturing process is cleaned up.
Boeing grounded the tankers just over a week ago after loose tools and bits of debris — known in the aviation world as Foreign Object Debris, or FOD — were found in various locations inside completed airplanes, the airframes of which are built on the 767 assembly line in Everett.
… “I don’t want to overblow it,” [USAF Asst. Secretary Procurement Will Roper] told Defense News. “If the issue goes away and we have no cause for concern in the future, I’ll just treat it as growing pains. … If we have this issue again, then — it’s already serious — but it will be a much more serious endeavor.”
“In the past, final FOD sweeps of any area of any aircraft that’s about to be closed up would have been done by a quality inspector.
However, Boeing is in the process of transforming its quality-control procedures, aiming to change work procedures and introduce automation so that many fewer such secondary checks are necessary.
One change already implemented is that mechanics can close up many areas of the airplane without an inspector taking a final look. And as part of what Boeing calls its Quality Transformation” program, the company intends to cut nearly 1,000 quality-inspector jobs over the next two years.”
A relative of mine has done very, very well over the past decades by developing housing projects in and around Fayetteville, Arkansas, and he attributers his success to Walmart, whose headquarters are there. Walmart, he tells me, requires its suppliers to keep someone close enough to corporate headquarters that they can appear there, in person, within 30 minutes of being notified of a problem. That has resulted in huge growth around the city, as companies moved in entire corporate divisions just to service their Walmart account.
That’s hands-on management; Boeing took the opposite approach and moved away from its own employees and suppliers, and, having failed in Chicago, in 2022 it moved to just outside of D.C., closer to the great Mother Teat of them all, the federal government.
New York CNN Business, May 9, 2022 —
Boeing is moving its headquarters from Chicago to a suburb of Washington, DC. But some analysts think this move is one in the wrong direction.
Boeing was based in Seattle from its founding in 1916 to 2001. During its heyday it was renowned as an engineering-driven company that made the best, safest planes. But many industry watchers felt that reputation was lost as Boeing shifted to focus on the bottom line — and they point to its 2001 decision to move headquarters from Seattle to Chicago as a stark sign of that ill-advised shift.
The company’s Thursday announcement that it will move once again, to Arlington, Virginia, only gives critics more fuel: By moving into the shadow of both the Pentagon and Congress, Boeing seems to be signaling it has lost the commercial race to Airbus and wants to be seen as primarily a defense and space contractor.
The fact that the announcement comes the same week Airbus (EADSF) revealed it’s increasing production of commercial jets at its factory in Mobile, Alabama, only seems to drive home that point.
“One company is saying ‘We’re going to build lots of jets.’ The other is saying ‘We’re going to lobby the Pentagon and Congress for defense dollars.’ It’s a big contrast,” said Richard Aboulafia, managing director at AeroDynamic Advisory and a leading aerospace analyst.
Boeing said in a press release that the Arlington move is designed to bring the company closer to its “customers and stakeholders, and its access to world-class engineering and technical talent.”
‘The road not taken’
Aboulafia isn’t surprised Boeing decided to move its headquarters to Arlington, but he is disappointed. A move back to the Seattle area would have sent a strong signal that Boeing is was once again ready to embrace engineering, he added.
“It would have been great for morale and shown an intent to focus on their badly neglected commercial airline products,” said Aboulafia. “Imagine the power if they said ‘We’re going to back to our roots.’ It’s just disappointing. It’s the road not taken.”
Boeing’s engineering and quality problems have posed major challenges for the company. The crashes of two of 737 Max jets that killed all 346 people on board the flights led to a crippling 20-month grounding of the plane. It also was one of the most expensive corporate blunders in history, costing Boeing in excess of $20 billion. But it’s had problems, delays and financial charges for just about all of its other passenger jets too.
While the Max is now back in the air carrying passengers in most markets around the globe, that hasn’t solved perhaps its most serious problem: It’s has fallen well behind Airbus in commercial plane sales and deliveries, particularly among single-aisle jets.
Cozying up to the Pentagon and Congress could help Boeing in its defense and space businesses, but even in those fields it’s struggling to keep up with other defense contractors like Lockheed (LMT) and Raytheon (RTN), as well as upstart space companies such as SpaceX.
Plus, moving to suburban DC doesn’t get Boeing many benefits, said Ron Epstein, aerospace analyst for Bank of America. The company already has nearly 100 lobbyists and a lobbying budget of $13.4 million a year, according to the Center for Responsive Politics’ Open Secrets website, which tracks lobbying. That’s the fifth most of any individual company.
“I don’t think anyone would accuse Boeing of not having enough presence in DC,” said Epstein. “When I saw the announcement, it was a bit of a head-scratcher. You have to ask, what does that get them?”
It’s not just analysts and critics in the media who are questioning Boeing’s culture. Last week, Domhnal Slattery, the CEO of Avolon, one of the world’s leading aircraft leasing companies and a major Boeing customer, suggested the company needs a change in culture — and maybe leadership.
“I think it’s fair to say that Boeing has lost its way,” he said at the Airfinance Journal conference in Dublin on Thursday, in comments first reported by Reuters. “Boeing has a storied history…They build great airplanes. But it’s said that culture eats strategy for breakfast and that is what has happened at Boeing.”
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Rep. Peter DeFazio, the Oregon Democrat who chairs the House Transportation Committee, also blasted Boeing’s move.
“Moving their headquarters to Chicago and away from their roots in the Pacific Northwest was a tragic mistake that… empowered Wall Street bean-counters over the line engineers who built their once-great reputation,” he said in a statement. “Boeing’s problem isn’t a lack of access to government, but rather its ongoing production problems and the failures of management and the board that led to the fatal crashes of the 737 Max.”
“Boeing should focus on making safe airplanes — not lobbying federal regulators and Congress,” he concluded.
… Even Boeing CEO Dave Calhoun admits most of the problems have been self-inflicted.
“I will be the first to admit that they were not events caused by the outside world, but unfortunately, missteps inside,” he told investors in a January conference call. Still, he insisted Boeing has taken steps to improve its attention to engineering.
“Pretty much every single one of their programs has taken a [financial] charge, and that’s across both commercial and defense,” said Epstein. “It’s a hard thing to do, to design and build aircraft. Nobody’s perfect. But Boeing seems to have more warts on their programs than all of their peers. It all goes back to engineering. Is moving to Arlington changing the engineering culture in a good way? It’s hard to see.”
I’m no businessman, but as far as I can see, neither is anyone at Boeing.
