Accredited Investor? We Have a Deal Available Right Now! Click Here to Schedule a Call and Get Full Access

Opinion | Boeing’s Problems Started Long Before the Alaska Airlines Mishap

What Boeing has missed, as it tried to dump costs and speed production, was the chance to ensure that safety was a cultural core and a competitive advantage. Corporations can choose to push back against the Wall Street-driven notion that safety equals cost, and thus lower profits. In the late 1980s and ’90s, the aluminum giant Alcoa, under its chief executive Paul O’Neill, made safety the top priority demonstrating that a culture built around safety can actually be efficient, because accidents and defects decrease when employees know the company cares about their well-being. While assembling an airframe isn’t as dangerous as working with molten metal, when employees know they’ll be supported in building the safest possible aircraft as opposed to the cheapest, the end product will benefit — and buyers will have more confidence.

Choices made by Boeing’s leaders also had consequences. In 2011, the chief executive at the time, W. James McNerney Jr., made what became a fateful decision by greenlighting the 737 Max, rather than investing billions in developing a new short-haul aircraft. His decision wasn’t necessarily a bad one — there was looming competition from the Airbus A320neo — but it committed Boeing to a flight path the company proved unable to navigate.

Mr. McNerney’s decision meant rushing development of the 737 Max while at the same time managing the Federal Aviation Administration so that the certification of redesigned jet — whose engines had been physically moved forward — would not require retraining of pilots, thus saving customers time and money. Being good at managing the agency charged with ensuring your product’s safety can put the whole process at cross purposes. That combined with the decline in the company’s other competencies contributed to the two fatal crashes in 2018 and 2019 that prompted the 737 Max’s grounding for nearly two years. And even before the Alaska Airlines 737 Max 9 incident, Boeing had been having significant problems assembling its 787 Dreamliner on its South Carolina production line.

And just when Boeing needed experienced employees the most, it suffered a brain drain. In late 2022, many Boeing engineers started heading for the door to lock in pension payouts (which could be hurt by rising interest rates) they had accumulated. When full airframe production returned after the pandemic, a lot of the talent didn’t.

Safety and production problems have put Boeing well behind Airbus, which delivered 735 aircraft in 2023 to Boeing’s 528. Boeing’s chief executive, David Calhoun, has promised full transparency as the investigation into what caused the plug blowout on the Alaska Airlines flight unfolds, although the company doesn’t seem to have lost any orders. That’s because there are two major airframe makers in the world; Boeing is one of them. The company still has strengths, among them the ability to integrate complex systems — avionics, powertrain, electric, hydraulics, landing gear, flaps, elevators and even your seatback entertainment system — into a functioning passenger plane.

Source link

Related Articles