Leeham News and Analysis
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Leeham News and Analysis
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Culture change needed at Boeing; labor contract talks begin in March and could lead the way
A Leeham News Editorial
Jan. 29, 2024, © Leeham News: If Boeing is to emerge from its latest crisis unscathed, it will need to commit to a culture change. That’s the consensus of industry watchers, and it’s one that we whole-heartedly endorse.
CEO Dave Calhoun will have a chance to show his commitment to that change starting in March, when Boeing Commercial Airplanes top management sits down with the bargaining team for its largest touch-labor union, IAM District 751.
For 20 years, Boeing has prosecuted a scorched-earth fight against its unions, in the name of cost-cutting. It has outsourced work all over the globe. It has built a whole new campus in union-hostile South Carolina, primarily to escape the “hostage” situation it faced before, with all of BCA’s deliveries at the mercy of one unionized labor force.
But while Boeing has won every battle in this long labor war, the result has not been a strategic victory. Instead, in 2024, the company finds itself badly trailing Airbus in both orders and deliveries, with little chance of catching up in the near term. This is in large part due to a series of high-profile self-inflicted failures, of which the near catastrophe on Alaska Flight 1282 on Jan. 5 is just the latest.
Boeing needs a top-to-bottom change of culture, and it can start by rebuilding its relationship with its touch-labor union.
- This year’s talks are the first in a decade.
- Boeing has zero leverage.
- Dropping union animus may be too much to ask.
Talks are the first in a decade
Talks between the company and the IAM 751 will begin on March 8. They had been scheduled for a late February kickoff, but both sides agreed to a delay in the wake of the AS 1282 incident and the subsequent FAA and NTSB investigations.
The contract expires at midnight Sept. 12. If talks follow historical norms, we can expect negotiators to meet off-and-on during the spring and early summer to work on non-economic contract clauses. The heavy lift usually comes at the end. After two-weeks of intensive face-to-face bargaining (typically at a hotel at Seattle Tacoma International Airport), somewhere around Sept. 5, Boeing will present the union with a “best and final” offer. Union members will have several days to review it before voting.
The contract vote would in all likelihood take place on Sept. 11. If it’s approved by a simple majority, it would take effect immediately. If it’s rejected by a two-thirds supermajority, the IAM would go out on strike. (And if it’s rejected by less than two-thirds of voters, the contract would be ratified by default.)
The 10-year IAM contract that expires this year was the result of an ugly battle in 2013-14 that involved Boeing threatening to take the 777X program out of Puget Sound unless the union agreed to a massive package of concessions that included giving up its defined benefit pension, as well as drastic limits on wage increases over the past decade.
A decade later, we’re still waiting for the first 777X delivery, and Boeing’s wage for hourly labor is no longer competitive in the Puget Sound marketplace. In fact, Boeing approached the IAM back in 2019 to ask for talks on raising pay, after reports that people were leaving entry-level jobs at Boeing to take better-paying roles as baristas or auto mechanics.
The 10-year contract bought a decade of labor peace for Boeing. But it’s expiring during a time of union resurgence, and it’s doubtful the union will settle on or near terms of previous recent contracts.
Boeing has zero leverage
Bank of America analyst Ron Epstein told us last week that he sees the AS 1282 incident as having stripped away any leverage Boeing had going into the negotiations with the Machinists. We think he’s absolutely right.
At last week’s Aviation Week suppliers conference in Universal City (CA), Epstein said 751 will seek a 40% wage hike over three years, pension improvements and job security in the form that the next Boeing airplane will be built in the greater Seattle area.
Union negotiations are all about raw power: Which side has the most leverage, and the most ability to cause the other side pain. Unlike any time in the past two decades, Boeing doesn’t have any real leverage:
- There’s no new airplane program to dangle, promising thousands of jobs in return for wage or benefit concessions.
- There’s not much work left to threaten to take away, particularly now that the FAA has throttled Boeing plans to increase production rates until it’s satisfied with changes to the manufacturing process.
Boeing’s constant outsourcing of parts and subassemblies has backfired. If a Boeing whistleblower is correct, it may have been Boeing mechanics who failed to reinstall the bolts that were supposed to hold the door plug in place – but the problem originated with supplier Spirit AeroSystems, either in Wichita, where the plug was placed in the fuselage, or a factory in Malaysia, where the door plug was built.
The FAA is going over Boeing production processes with a microscope and a hammer. Given that, further outsourcing threats would seem somewhat hollow.
Boeing is running out of allies
Boeing’s also fast running out of allies. For years, it could count on Washington state politicians to lean on the unions to keep them in line, and sometimes pro-business Democrats in “the other Washington” would step in as well. The company has spent tens of millions of dollars on lobbyists and campaign contributions to ensure this.
But the support is drying up. Outgoing Washington Gov. Jay Inslee has complained about being “mugged” by Boeing in 2014. In the current crisis, it’s striking to that the Senators calling loudest for the FAA to punish Boeing have been Maria Cantwell from Washington and Tammy Duckworth from Illinois – both Democrats from the two states where Boeing used to have corporate headquarters.
Take it a step further, and it’s unlikely that one-time Boeing board member, South Carolina’s former governor Nikki Haley, will spend any of her scarce political capital on the cause of a toxic aircraft builder. Her opponent, former president Donald Trump, likely won’t come to Calhoun’s rescue, not after Calhoun publicly complained about the Air Force One deal Trump personally negotiated with ex-Boeing boss Dennis Muilenberg.
On the other hand, President Biden is eager to shore up support among working-class voters. If the Machinists go out on strike, we won’t be surprised to see Biden on an IAM picket line, reprising his visit to the UAW this past summer.
Dropping union animus may be too much to ask
Calhoun himself isn’t likely to be directly involved. Ever since Boeing’s headquarters move to Chicago, CEOs delegated the task of negotiating contracts with their largest labor force to lower-level executives in BCA. But there’s no doubt he’ll be signing off on any big checks that the Machinists will seek.
We aren’t privy to the union’s opening ask (although see Epstein’s comment above), but it’s likely to be a combination of the contract gains won by the UAW and the Seattle Machinists’ Wichita union siblings last year. A 40% pay increase over three or four years seems a likely starting point, like it was for the UAW. An end to mandatory weekend overtime – like Wichita Machinists got at Spirit — is another one. The UAW convinced the Big Three to reduce the amount of time it takes new hires to get to the top of the pay scale to three years; at Boeing it’s currently six.
And given the history, it’s a pretty solid bet that IAM 751 will seek to restore some sort of defined benefit pension for its members.
Boeing will likely have to acquiesce to much of this. After Covid, the MAX-8 grounding, delays on the 777X, delays on the KC-46, off-and-on production halts on the 787 in Charleston and the end of the 747’s run, the company needs to simply build and deliver airplanes for a while – as we reported in our 2024 preview, just before the door plug flew off AS 1282.
The GEntrification of Boeing
The problem is that we’re talking about a senior leadership team that is steeped in Jack Welch’s GE management style, which is laser focused on cost containment generating free cash flow to boost share price, at the expense of all other factors.
Calhoun’s an old Welch protégé, and he was brought on to Boeing’s board by another one (Jim McNerney) just in time for the decision to punish the IAM by moving the second 787 line to Charleston.
Their mentor’s playbook relies on threats, playing one set of stakeholders against the others, to win concessions from all. Asking Calhoun to make peace with his unionized workforce may be simply too much to ask.
But we don’t see how Boeing can weather a strike in 2024.
Boeing has overcome existential crises in the past. A case in point was the 747 program. Coming on the heels of the Super Sonic Transport program’s collapse, the 747 was a Hail Mary that required a whole new aircraft built in a factory that was being completed as the first planes were assembled.
Boeing succeeded – and the 747 changed the history of aviation – in large part because its workforce went to superhuman lengths, famously sleeping in their cars in muddy lots so they could cram a few extra hours of work into each day.
After two decades of constant outsourcing, contract concessions and headquarters moves, Boeing doesn’t inspire that kind of loyalty anymore. To get somewhere close, Calhoun and his team will need to make fundamental changes from the bottom up, and that will require them to acknowledge that the course they’ve charted for Boeing for 20-plus years ultimately was wrong, and a new one is needed.
If they’re able to do that, we’ll see the first signs as the IAM talks get underway in March.
A 40 percent pay raise in 3 years is so outlandish, it is laughable. Boeing needs a new CEO and board shake up first, no doubt. IAM 751 laborers aren’t exactly demonstrating they ‘deserve’ a huge new contract with massive increased pay, imho.
The second line for the max is hopefully back on the table as well by then, which would offer significant added headcount.
Boeing also has the option to consolidate some production from other groups like defense. The F-15EX is actually selling pretty well, and St. Louis is unlikely to host much new products any time soon. There might be some drone/stealth projects they could also toss into some of the big empty buildings in Washington, or the Aurora fabrication projects (like the X-65).
No, a 40% pay raise over 3 years is not outlandish. Its well in line with current gets from Unions.
The Shakeout may well occur before the contract talks get serious.
Calhoun has all 3 BCA programs in distress (or coming out of distress) and he was supposedly put there to correct the Boeing fall and has not done so.
And he was there when the issues were begun in the first place that lead to the MAX crash, AF1 negotiation, KC-46A, T-7A
And yes there is a new program in St. Louis, its called the T-7A. FA-18 production is terminating soon and you have another facility down there.
Some 787 production could be returned to Everett, but it would be the -8 and -9 and a viable line is 7 a month. Everett continues to fix 787s with Shim Fit failures so they do have experience on the aircraft. I doubt it could ever happen but its a great ingraining position.
The operations that need to be got back to Seattle are the engineers who should be adjacent to the line like Everett was setup for.
Hear! Hear!
This is so true. LJ85 split engineering and production system development between Montreal, Wichita, and Queretaro to develop (and euthanize) a plane inspired by a tidy composite PJ designed and built in one location, with engineers above the shop floor next to the flight line. Or like Move to the Lake.
https://www.heraldnet.com/business/citing-audit-boeing-quality-inspectors-question-job-cuts/#:~:text=Boeing%20plans%20to%20eliminate%20up,a%20mechanic%20does%20a%20job.
In 2019 Boeing cut 900 inspectors.
Any crisis Calhoun addresses now is one that he and his irresponsible beancounters created yesterday.
So please tell us, Mr. Calhoun, is this part of your commitment to focus on quality and safety?
https://www.reuters.com/business/aerospace-defense/india-pm-modi-says-wont-be-long-before-boeing-makes-aircraft-india-2024-01-19/
Any pause in the ongoing race to the bottom is temporary and illusory.
snapping up some air for the next dive ?
Exceptionalism and Jingoism seem to carry their own death penalty.
there is a book around : Larry Niven, Jerry Pournelle :: “Inferno”
essentially Dante’s Hell populated by historic residents and newcomers and an intriguing mapping of new sins onto the old, classic ones.
Given you have had inflation well over 20% in just the last 3 years ( this latest contract has lasted 8) and given the demand for skilled labor that is actually capable of working with their hands, and comparable industry (aviation mechanics) averages, 40% may even be on the light end!
Agreed.
40% seems like a lot , but the Ken that there has only been cost of living raises totaling less the $2.00 over ten years
I don’t think 40% is enough , with Dave Calhoun getting 45 million in bonuses over four years
Wow, that be a real hedge funder. Way to go. What kind of people or fund managers hold Boeing Stock? Have they got no cares in The World?
Still waiting for a Seattletimes, Aviation Weekly or Leeham reporter to sit outside the factory and ask one of the IAM751 members how they installed the plugged door wrong………………………And still waiting.
Yeah it’s the janitor’s fault. 😂 Can’t imagine how tone deaf it can be.
Update your Google translate.
Stonkholders in a sinking ship. Enjoy the view.
Trying to change the subject. Nice try, go ahead and click that update icon.
So let me repost this again to have an intelligent reply.
Still waiting for a Seattletimes, Aviation Weekly or Leeham reporter to sit outside the factory and ask one of the IAM751 members how they installed the plugged door wrong………………………And still waiting.
What did TC say?
“Culpability for the culture, strategy, direction, priority of that company rests with the Boeing board and nobody else. And that’s where the buck should stop. And that’s where they need to get themselves sorted out.”
Quite simple, really:
(1) Watch all your experieced engineers leave.
(2) Take on masses of under-qualified replacements.
(3) Demotivate all your production line workers by underpaying them (“If you pay peanuts, you get monkeys”).
(4) Repeat point (3) for your suppliers.
What remains — whether unionized or not — isn’t going to do a good job.
Generals have known this for centuries: if the troops aren’t motivated, they won’t fight well.
All the above is true, I agree with you.
There is still a team responsible for installing that plug door and no one seems to be interested in them. Why isn’t John Holden in front of a camera right now? What? You (press) want to talk to him about upcoming negotiations but not knowing how to install a plug door correctly?
If one want to use to further some “throw the bums out” agenda, fine. Boeing’s management has given everyone enough rope. But why isn’t anyone asking the simple question of which employee or employees actually messed up?
You continue to get not understand that workers are assigned tasks they don’t wander around looking for them.
Aircraft assembly is an intensive series of jobs done per the book, inspected multiple times. If the task is NOT in the system, it does not get done.
and if you are a worker that sees something and you get whacked (been there, got boxes of T shirts) you then begin to realize, the only thing I get is pain or fired, I sure am not going to say anything, its not my job and I need my job.
Really man? You really think BA is going to answer a question like that?
“I’m sorry, The incident is currently under investigation by the NTSB & FAA and we are unable to comment on the issue, at this time. Please forward any requests for comment to the appropriate authorities. “
Yes you can discipline the individuals or the team that didn’t do the thing right. But the issues being brought to light, including the MCAS related crashes, demonstrate a cultural shift from “Engineering and Safety” minded leadership to cost-cutting “Financially” minded leadership. The problems are cultural and systemic.
You seemed only focused on the ounce of flesh part of the solution. I have had enough human factors training to know it is more than that.
Asking any IAM member ‘ how they . . .” while allowed to ask- expectingd an printable answer is unlikely for several reasons including union, company, federal rules, contracts, and federal laws against the worker. To do so in a direct answer is in simple terms a big NO NO. IF it were myself in that position as a line worker- I would respond with a well worn phase ending in ‘ and the horse you rode in on ”
But I’m sure you know that
Have a nice day
Fine, protect the line worker (to a point), then where is Mr. Holden? Let’s ask him. It isn’t like the media does not know how to contact him?
Not trying to be flippant or sarcastic as many here are. If we REALLY want to know what and why this happened, then some more digging by media would is in order.
williams:
You need to read the background.
There was not process in place for a post bolt install after the Exit Blank was closed.
That is not an IAM failure. Its a Boeing management fialure.
Its a GAP, totally dropped and nothing to do with IAM.
You do not wander around a mfg facility looking for work.
Why that gap exists is unknown still, but the whole aircraft has a process to every bit and piece of it. You get assigned your tasks, you don’t look for them.
No one was assigned the task of putting bolts back in and no one inspected it because there was no task to inspect.
You clearly do not know how these processes work.
TWA. I welcome any clarification and correction on this matter.
But if what you state is true, then there would be plug doors popping out all over the world. And would definitely happened before now. So we knew how to install plug doors on the 900 but not the MAX because its not on my checkoff sheet?
williams:
You need to read Throwawy detailed layout. So here is the short.
1. Exit Blank is installed and secured and signed off in Withcita.
2. The Blank has no further activity, it has its bolts, its been signed off, it may get inspected when the fuselage gets into Renton. If all goes as planned, the wiring and tubes put in and the interior gets installed.
Stop: End of possible story.
1. Extortioner inspection finds rivet problems (not clear if on the Exit Blank or fusealge) or the Exit Blank Seal leaks (post test)
2. The Exit Blank is on a 4 piece assemly that lets it be pushed up and out. There are very flimsy brakets that keep it from going further. They are just enough to hold the Exit Blank in place.
A: It is fully removed, if it is there is a task asigned to not only put it back in place but also put the 4 bolts back in (spec of bolt, washer, nut and cotter key, I do not know if they torque that bolt, probably not if so its very miniumal, the cotter key keeps the nut from spinning off, if there is a torque, its also listed and logged)
B: The Exit Blank is pushed out, but its NOT removed. There is no process in place for a task that follows up the Exit Blank being put back in place to get the 4 bolts, washers, nuts, cotter key back in.
As far as a task goes, it does not exist in the system and the work flow.
Is that stupidly insane, yes.
How that developed is not known (yet). It may never be.
No one ever explained how the extreme hard crank (impossible to crank without unloaded, ie nose down) got removed from the Flight Sim programs. It happened and quietly has been changed, but NO ONE who flies Sims Noticed?
You can speculate that there was NEVER an Exit Blank that was pushed open. I doubt that, but…… or it was caught each time by the person who closed the door and it never got into a tasking.
All we know is as an activity to put the bolts back in was not tasked (not there) it did not happen.
There is a task to put bolts in if the Exit Blank is taken compelty off the Aircraft.
No one LOOKED. As far as the tracking system was concerned, it had been checked and therefore no one had to look.
Interior installer is not there job to look.
Trans.
I think its a bit more complicated. The plug door gets opened 1 of 2 ways. A planned operation as you describe, or an unplanned operation. Here’s where the process failed. The door was opened to effect corrections on supposed defective conditions. It was unplanned, therefore it was subject to an RISR form. Removal Inspection Ships Records. This is a form where the entire process of undoing stuff is logged and when the task that required the disassembly of the vehicle is completed, provides QA Inspection of the reassembly steps. Issuing a RISR is no big deal, and takes up a minimum of time, but it still gets in the way. Manufacturing looks to have had an out, a semantic battle really, where they could argue they weren’t removing the door, merely opening it. This overlooks the fact that opening the door and removing the door requires the removal of the 4 locking bolts. Manufacturing didnt follow the process and now were where we need to really examine why it is preferable to skip things to save a few minutes than to follow the FAA approved processes. If you combine this failure with the Boeing Ethics recommitment pledge that happened every year when I was there, you see just how little true ethical performance among the employees matters. Thats a tough nut to crack.
Maybe the FAA should have inspectors to verify Boeing’s airplanes are being made correctly, and that parts aren’t left out etc? And also at other plane makers Spirit, Lockheed etc.
They do, its not working.
NTSB will have the definitive of where they see it failing, but it amounts to not enough staff, not trained staff or an FAA failure as well.
The MAX was under increased FAA surveilling and not only the Exit Blank was missed (failure of not having a process) there were quality issue with the Blanks as well as real doors at that location that has been ongoing.
Unfortunately the NTSB takes a couple of years though this may get expedited.
In the meantime in theory the FAA has increased scrutiny but they failed before, so unless the reason the FAA failed is corrected then that last safety net is violated.
In industrial production environments the workers don’t make many decisions about what work to do or not to do. They have systems, devised by management, to tell them what do to and that system accounts for the work getting done. That system is what failed here. Not the workers.
Swiss cheese.
Somebody made a mistake
because
faulty rivets not fixed properly
because
rivets not caught in Kansas
because
rivets not installed properly in Malaysia
and
gasket replacement procedure incorrectly documented.
Swiss cheese
Its the Swiss Cheese model aka Dr. Reason I believe.
Like most of that stuff its known and then layers of safety are lost and it gets through.
In this case the layers of safety were not even in place.
So its not Swiss Cheese its a gapping hole.
Boeing Failed, Spirit Failed, the FAA failed, Malaysia Supplier Failed.
You can call it Swiss Cheese if you want to but with all of those not working its worse than that.
https://www.heraldnet.com/business/citing-audit-boeing-quality-inspectors-question-job-cuts/#:~:text=Boeing%20plans%20to%20eliminate%20up,a%20mechanic%20does%20a%20job.
In 2019 Boeing cut 900 inspectors.
Bingo. Quality is supposed to verify the bolts were installed to plan. Boeing has been laying off QA. Mechanics are to self inspect. Mistakes happen. Then they blame the “Janitor” for the failure of their process. Boeing management spends all their time looking for corners to cut. FAA needs to bring back 100% QA inspections with teeth for any “escapes”.
Whose little PR Crew does my prolific though poorly-spoken friend ‘williams’ work for, I wonder? Do he and Zelig/WingJoin/Tranny work for the same outfit?
“Blame the Janitors, first of all!”
Too bad Bryce was oddly banned from speaking here- but honest speech is seldom accepted, especially in darker times.
well Boeing has hired-engaged a larger PR crew .
‘ask one of the IAM751 members how they installed the plugged door wrong’
So BA has some 150,00 employees. I believe Scott H is in his 60’s. Maybe by the time he hits 80 or so, he’ll come across the person who had something to do with it.
“Duh. Yah, I’m Scott from Leeham. Are you with the Union? Do you know anything about the door plug and why it blew out?”
Brilliant strategy there, sir.
————————————
Here’s a better idea;
Since management has access to all the records and details in SAM and CMES, why don’t we ask them to produce said records and release them to the public?
What do you think Calhoun would say, if you asked him to do so?
What do you thin Pope would tell you, the new operating officer – if you asked her to do such a thing?
I note the SPEEA contract goes to Oct 2026, and while SPEEA cannot join in any strike or work stoppage by IAM, it does NOT mean they cannot indirectly help. Sort of returning the favor by IAM during the famous SPEEA strike of 2000-2001. Recently Boeing did make some changes for some retirees regarding Supplemental Insurance by changing to Aetna and dropping insurance costs taken out of pension payments to zero ! Also note [no doubt by coincidence ]a Board member was former President Chairman CEO of Aetna. [Ronald Williams]
IMHO- while a 40 percent increase in direct pay may seem excessive- for many IAM workers who must commute to Everett, the gasoline costs may well soak up a good part of that. Will Boeing install Charging stations to cover the Dem pushed all electric cars game. ? WA state is one of the few- very few states in which hydro power from Grand coulee and similar is significant. of course compromise with alternate forms- the overpriced rail system, the re routing of buses, and the traffic issues may also have an effect on any contract settlement. Although prior to the Welch virus, contract negotiations were a bit heavy at times both sides did realize that it was important to keep at least a minimum amount of accomodation, and as a result, all prospered.
But as stated and obvious- that changed to not all propering, just the executives- and implementing the famous ‘ beatings will continue until . .’ has brought more than chickens home to roost !
An excellent overview- thank you.
I don’t necessarily think that a top-to-bottom change in culture is necessarily the top issue. It may be true, but equally it could be something that’s been staring Boeing and the mechanics who work on Boeing aircraft for decades.
Caveat; I don’t know that the door plug was installed using Aircraft Maintenance Manual documentation, I suspect not. But what I’m about to say should apply equally to AMM as to production documentation.
The Boeing aircraft maintenance manuals (AMM) and Illustrated Parts Catalogues (IPC) that I use for B767 & B777 have issues. Namely;
– The AMMs are unreliable in naming all the consumable parts required for a reinstallation task (new bolts, packing, cotter pins etc). Often when an IPC reference is given it’s wrong.
– The illustration in the AMM is generally not the same as the one in the IPC – it’s difficult to correlate the item in the AMM with the part in the IPC. A complicated item, like a Hydro-Mechanical Unit (HMU) on an engine, is particularly difficult. The orientation of the two diagrams is often different.
– The consumable parts that need changing in the AMM ‘belong’ to the line replaceable unit that’s being changed. For instance a packing between an HMU pipe and a connector going off yonder and out of picture is associated in the AMM with the change of the HMU. But in the IPC that packing belongs to the pipe going off yonder. You can find the HMU in the IPC quite easily, but to find the packing you need to find the IPC figure for the proximal end of the pipe going off yonder.
– The purpose of these pipes is not given in the IPC.
Embraer and Airbus are both much better at this than Boeing.
If the above is true for the production documentation used to install the door I can well understand how a mistake was made.
This has been true of Boeing manuals for decades, fixing it will take strong will, brute force, money and time but not a top-down change in company culture. Essentially the change in culture must occur in their information presentation, and aim to support the man or woman doing the change – the mechanic.
@Chris Lee
I feel your pain. Boeing(Airbus/Embraer) doesn’t use AMM/IPC for building jets, they use approved drawings.
Your comment that Embraer/Airbus are much better at it: all I can say is of course they are!
View from an old BA engineer re ‘maintainence – vs ‘assembly ” issues and a bit of history.Before and for aa decade afteer WW2, Douglas had an excellent record re parts, instructions, and AOG issues. Boeing didn’t with an attitude of drive it off the lot its yours. Douglas had great sales and reputation. But by the late 50’s Boeing realized that in order to sell 707-that system had to change. And with the help of IAM and rational management- they changed the system(s) such that Boeing AOG and related became the gold standard- and Douglas and Lockheed and Convair suffered. In the early part of the 60
‘s Boeing could not really advertise for jobs in So cal and many aerospace workers simplyleft LA to come to Seattle and for the most part were well qualified. While those rules changed the rep of boeing was well established, even after the SST layoffs and the ‘ last person to leave turn out the lights ‘ poster. Lockheed dropped out of commercial, Douglas lost track of costs, and that left Boeing in commercial and mcDonnell Douglas and Lockheed and sort of Northrup in military and suvb assembly work on west coast and midwest and Grumman in military in long island. martin sort of morphed into ??
Despite all the trash talk- it wasn’t until the sellout in late 90’s that the beancounters gained total power and the Boeing dirty tricks re unions became fully obvious and all encompassing. Subtle rip offs in pensions and 401k plans became the norm along with questionnalbe tactics.
While AOG seems to have a fair rep- the loss of experience in everyday assembly issues is obvious.
Illigitimi non carborundum !
What you are missing is that the top sets priorities and funding and if those manuals and maint process are as messed up as you report, then its a top down needed.
I watched FedEx buy new 777s for years and let their felicitates run down.
Suddenly it was, oh, these things got old, we are spending far too much on break downs. We need to put money into the fail city to, its the facility that sorts the freight, it ain’t done on a 777.
If you think I am wrong, look at the FedEx 727 fleet. Rather than start a program to get 757s or use 737 converted aircraft, they hung on and on and on. Those required 3 people in the cockpit along with being fuel thirsty beasts with 3 engines.
Then suddenly it was, Oh S&%!* – these are costing us a fortune.
They then determined a 757 was the right option, out of production so they bought used ones and cost a ton of money to convert and they still are fuel thirsty.
We had one piece of 757 junk that tired 6 times to get to Singapore through Anchorage and important stuff failed each time they took off. They finally sent it back to the States (airport hopping if need be) to get converted. It has sat in Florida for 5 years.
So yea, stuff gets limped along until they are forced to and when you are putting all your money into stock buy backs and dividends, of course you are not going to fix a manuals system.
The focus of culture change should be developing a stronger problem-solving culture, and relying on productivity improvements to lower costs.
David Calhoun’s lived experience is not much help in that respect.
Bingo!!!!!!!!!!!!!!!!!!!
I would amend that from not much to Not At All.
An amoeba can’t see.
Let me get this right, all Boeing has to do to improve their culture is give in to the unions demands, starting with a 40% pay increase?
The negotiating will start with asking for 40% but most likely get ~20% over 4 years.
And before any of you beat me up about this I agree the unions have been abused by Boeing mgmt for a long time. They do deserve better. True money talks, but will it really improve morale, I’m not sure given my experience working at Boeing.
I agree with Stan Scorcher. Culture change starts at the top with the board and the executive suite. These folks have championed the removal of quality at the levels that air safety depends on… they haven’t changed this. The so called leaders set the path for a true positive culture.
In a few days the one month anniversary of 1282. All Boeing has done is quality stand downs. The FAA has finally started dropping the hammer as they should have years ago, but is all this enough for ‘change’?
Watch and see. Good piece by the Leeham team.
I agree,
The article didn’t talk much about key politicians in the Washington State legislature having a fine loathing for any successful business. While Boeing may see cooperation with the IAM, there are plenty of politicans that will still scourge Boeing no matter what it does and continute to see them to exist only to tax.
Fortuneately for Boeing, it’s kind of out of sight, out of mind, for Seattle politicians, having a negligable footprint in the city itself, and Amazon is right there to beat up on.
There are some cost issues with building in Washington State that can’t be rectified with a satisfactory IAM contract.
It will be interesting to see how things turn out about building a new plane. I doubt that will be an issue during the life of this contract has key 737 customers have said they are not interested in paying for the development of a 737 sucessor until there is a breakthrough in technology that doesn’t seem like it’s going to happen any time soon.
There should also be some interesting geography and real estate issues to deal with. Boeing is going to build, later than sooner it now seems, a second 737 production line in Everett. That is quite a hike from Renton where the plane is built now. I suspect the IAM will want something additional from Boeing to get some people to move to Everett. Otherwise, Everett will be like Charleston where there were serious growing pains with a largely inexperianced, new hire work force when it started.
Basically what you are saying is Business should pay no taxes and employees should pay all taxes.
Oh and sending billions to share buy back and vividness and killing off the company that the employees work for that pay the taxes.
Got it in one.
‘The article didn’t talk much about key politicians in the Washington State legislature having a fine loathing for any successful business. While Boeing may see cooperation with the IAM, there are plenty of politicans that will still scourge Boeing no matter what it does and continute to see them to exist only to tax.’
I guess that’s one way to look at it.
Another would be that politicians bend over backwards to keep Boeing happy with subsidies to retain jobs in their state:
https://subsidytracker.goodjobsfirst.org/parent/boeing
TOTAL $74,990,849,922
—————————–
So if the politicians hate a successful business, why keep giving them subsidies? Why not cut them off? Why dole out $75 billion to someone you detest?
Sorry – that dog won’t hunt.
In all fairness to Boeing and Charleston, one needs to look at things incrementally to see how they came to be.
The factory to build the carbon fiber components for the 787 was in Charleston in the first place, because South Carolina agressively courted business, particularly high tech business, with all sorts of tax offers that simply were a non-starter in Washingon.
The problems with Alenia were not shocking, but not really definable at the time and Boeing was perfectly happy to have as many “partners” as possible to risk their own money. You have to go with what you know.
It was always clear the 787 program would consolidate in Charleston. The -10 parts won’t fit in the Dreamliner, and nobody in their right mind would have a massive program depend on 4 specialized 747’s.
To think back, I suspect what was really in everyone’s mind with the IAM’s concessionary contract was that the 797 would be being built in Everett, or not Everett, by now.a
That carrot is what Boeing is going to have a hard time find now.
That is really not correct. CRFP is not Charletson, it came from Japan (Tory) and now a factor in Washington State.
Charleston was not intended to assemble any 787s.
Various parts are built in various places.
Alenia (Leonardo now) builds the tail.
Chance Vought built the fuselage forward of the tail and it was assembled in Charleston.
It was NOT a Boeing facility, it was a CV fcility and right alongside it was a joint facility with Alenia to attach the tail to the fuselage.
CV was an issue in their failure to quality control. Boeing bought it out, issues continued. They then bought out the joint CV and Alenia facility as CV was really no longer there and they had problems with Alenia as well.
At that point Boeing then built an assembly building in Charleston saying it was to provide relief from Everett as Everett could not build all the 787s needed (per month).
The -10 can be built in Evertt, you just need to ship pieces separately and assemble in Everett.
Union Busting in other words.
Charleston was never intended to build any 787s. The stuff out of Charleston was air lifted to Everett, just like the wings, center fuselage and the Nose was.
As I stated on another forum, I think the Government is trying to effect change at the top by making it hard for Boeing to do business. FAA slow walking certs and this production cap will be devastating to Boeing’s bottom line. DOD stating they have no confidence in Boeing management, all of these actions speak loudly. Boeing’s Board does not seem to be listening, even though, the Board too has come under harsh criticism from the FT and WSJ.
We will watch the tone of investors and management at the upcoming earnings call on the 31st.
The Government, huh?
Well, the 2019 grounding of the Max went on for 2 years and BA execs swore it was now the most scrutinized, safest aircraft…EVER.
So the FAA said OK – we’ll put it back in service, now that you have your sh!t together. We trust that you’ll focus on doing things the right way and won’t cut corners.
How’d that turn out?
Making it hard to do business? Boeing is making it hard to be trusted to build safe aircraft.
williams:
It seems you are staunchly pro business at any cost.
I take it that this includes assembly aircraft that will crash and its just luck of the draw for the passengers or avoid Boeing aircraft if they can?
You do know the FAA is mandated to ensure that Boeing adheres to the build certification which means a safe aircrat?
Boeing is not forced to build aircraft, but its what get the CEO his ill gotten millions.
In this case the Goose Laying gold eggs is spot on. They are killing the goose to get one egg.
Boeing has their big boy pants on, they claim to be able to build aircraft per the certification.
The FAA is going to hold them to that now. Two crashes killing close to 350 people and an insanely lucky escape for another group of passengers latter.
Or do you contend the Police exist to assist Executives to drive any speed they want and impaired as much as they like?
As I stated else where Boeing has brought this on themselves. Has nothing to do with Pro Business, just observing. But even outside observers have wondered what the FAA is waiting for on some of these cert issues. Was the FAA embarrassed by the Max situation? Of course, but in some cases this seems to even outside observers to be personal. Then the DOD giving Boeing low marks and making sure it was public, it doesn’t take much of a leap to see that certain entities would like a clean slate at the top of Boeing. It is what it is.
The earnings call will be in couple of days, it will be quickly discernable if management gets the situation, and no I am not just talking financial numbers.
Wow, I am simply stunned.
So, you blow out an Exit Blank that has NO bolts installed and the FAA is after Boeing?
You assemble 120 x 787s with shim fit issues from one end to the other and you never inspected the assemblies that were out or your shim fit program that can not fill a combined void?
Oh, and that does not count the 787s delivered that have a gap but its ok as its in tolerance and just fix it on D check (well other than a pesky few that exceeded it and have to be fixed NOW)
You put in software that was lethal and you used a non cross check system and let it activate with cherry picked data to say its fine and then killed 347 people.
You can’t deliver a tanker on time and with all sorts of deficiencies.
And you don’t want the FAA to do anything and the DOD should ignroe all those issues that Boeing is not fixing.
And all are picking on Boeing? Phew.
Check, let the mayham begin.
“And you don’t want the FAA to do anything and the DOD should ignore all those issues that Boeing is not fixing.”
I didn’t state ignore, you did. I am stating that it appears certain entities seem to want a management change.
willaims:
You don’t say it but when you claim Boeing is being picked on, that is exactly what you mean.
The FAA nor the DOD has stated management change is needed, outside observers have and I proudly include myself in that group.
Its a management failure caused by management.
The FAA has every reason to stop MAX production right now.
DOD pays for a fully finished working product and that is their job to hold Boeing accountable for not delivering what is certified.
Boeing puts its signature on all the documents are two MAX crashes not enough for you? The backstory on those was more than appalling.
We will never know how close the AK Airlines -9 came to fatal damage and a crash.
FAA people will have their view on it, but they do not execute a view, they execute certifications (or are supposed to)
DOD ditto.
But while they can’t say it, I sure can. Calhoun took the big bucks and the buck stops with him despite his fake tears.
You don’t want that responsibility, then don’t become a manager.
I had the company manager wine repeatedly about how abused he was. He VOLUNTEERED (or more accuracy campaigned for the position)
Darn right I had no sympathy. Too bad, we all have to work for a living, we don’t have to be managers.
williams:
You don’t seem to grasp the FAA is mandated to review all processes.
Boeing was the one that got the FAA gutted and shifted to their inspectors.
The FAA has severe staffing issues and Boeing has messed up royally, and the FAA is going to look at each change in depth to ensure there is not another MCAS (on the 777X) and Boeing keep asking for waivers.
They are doing their job (as best they can).
Boeing brought this on itself, the FAA is mandated to ensure that nothing is missed and this was MISSED.
The FAA failed. I don’t know how much is their fault but they should not be in a position to fail. The 737 is a mature program, that door blank goes back to the 900ER.
The FAA has to ask itself, what else are we missing they missed?
If it was me, MAX production and delivery would be totally stopped while they went over the lines
You also missed that the cause of opening BOTH sides of the AK bird, was rivet and or seal issues. Why one side got put back right and the other not? Left side Right side process?
Those Rivets should never have got to where they had to be fixed in the first place.
So you have quality failure on top of quality failure with a GAP.
And Boeing is getting picked on? That is beyond any logic.
Isn’t a bit pointless to be talking about (badly-needed) wage increases for IAM workers at Boeing…when the company simply doesn’t have the money to pay higher wages?
It hasn’t earned a penny in more than 5 years. Increasing its costs — by increasing wages and paying more to suppliers — will only exacerbate its losses.
And the only way that the company can physically pay out more cash is by taking on even more debt. Boeing’s “cashflow” consists 100% of customer deposits — there’s no earnings content in the mix.
I have seen this movie before, it was called Eastern Airlines.
‘And the only way that the company can physically pay out more cash is by taking on even more debt.’
There is another way.
As detailed awhile back, BA spent some $43 billion on share buybacks. As I recall, those shares are still worth around that much, perhaps even a little more.
Scott detailed a couple of years ago how Boeing quietly went to NY to gin up some $30 billion in an equity offering, but wanted some $275-300 a share. The money said no and walked.
But doing so would dilute and drive down the share price, something which the financial engineers are loathe to do, since much of their compensation is linked to exactly that metric.
So here we are, limping along, from crisis to crisis…
Frank P:
Well put.
This is a financial question, they can put those shares they bought back up for sale?
I know its been discussed but I forget what they status is.
-> Frank P
Such boutique OTC share offerings are directed at big names like JP Morgan, Citi, Deutsche Bank, etc.
If they’ve done their homework — and they have — they’re not going to be interested in purchasing millions of shares of a highly distressed company. Even if they are, they’ll get a much better price by just waiting until the next huge share drop (e.g. after the upcoming Q4 results, or the next negative announcement from the FAA).
Selling off its own stock is not a viable path for BA.
‘Selling off its own stock is not a viable path for BA.’
Why is that?
Will anybody buy for a price worth the effort?
What effect will offering extra shares have on share value?
Remenber those share where bought back to project the company value on a smaller basket of shares thus increasing value per share.
Reverse that and you can watch the birth of a black hole :-=)
Looting of Boeing Set to Continue, Epitomizing Decline of Late-Stage AngloSphere Capitalism:
“Tolstoy wasn’t quite right when he said each unhappy family was unhappy in its own way. Boeing’s accelerating rate of customer-profit harming and passenger-inconveniencing product defects represents an unusually pure and adulterated form of executive looting of a company. However, this pattern of behavior is common in Corporate America in its less extreme form.
Boeing’s unusual position as a “must have” player in a duopoly making perceived-to-be essential products where no way, no how can any other company take up Boeing’s production in less than decades means the malfeasance can continue. And worse, as an important editorial in Aviation Week explains, Boeing’s top brass shows no intention of changing their self-serving ways..”
https://www.nakedcapitalism.com/2024/01/looting-of-boeing-set-to-continue-epitomizing-decline-of-late-stage-anglosphere-capitalism.html
mostly agreed.
But, the FAA can slow down the process and incur huge pain to the Board and CEO who have to answer as to why its ground to a halt.
There is a difference though, its not one or the other.
The Board can be replaced as can all the uppers in Boeing, seamlessly (or maybe to put it another can it get any worse?).
Replacing the top does not mean Boeing stops.
There are so many moving parts here, but….. some “random” thoughts….
1 Calhoun and his board have got to be removed – without fat bonuses
2 Move HQ back to Seattle. Move Spirit back “in-house”.
3 Stop the “them” and “us” philosophy; union employees are people also. Until everyone is singing from the same hymn book you are wasting time.
4 Let’s be really creative here – when Boeing succeeds again (hopefully) the bonuses will be paid to the factory workers first and the executives will be paid last.
5 As stated above, Boeing has very little to use as a bargaining position – but the unions do – hopefully they will be creative and demand the points stated above. If that sounds like “management-speak” coming from a union – so be it!
I know – a pipe dream….. But, it’s possible…..
Some of that works and some not.
I don’t adhere to a top need or any need for HQ is moved back to Seattle. Boeing is a diverse business now and unless they sell it all off, BCA is a 55% part but the other part is various defense, space and satellite business.
Long term Wichita should be brought back in, but short term QC is what is needed.
BCA needs to be able to stand as an equal not the Golden Goose.
So yea, Calhoun and the clowns need to go.
No more stock buy back.
No dividends until debt is paid off and X amounts of profits are in hand.
Boeing isn’t the only aerospace company in US. Are any of the others better managed? Lockheed-Martin, Northrop Grumman, Raytheon, General Dynamics, BAE Systems? They all used to build large airplanes. Could they buy Boeing’s commercial airplane business and run it better?
It could be argued that what’s happening at Boing is largely intentional. Doesn’t its senior management’s
ongoing complacency give one an odd, “I’ve-seen-this-before” feeling?
The comment by Tom Pfotzer on Boing’s travails- found in the NC / Boing link I provided- might
be worth reading. For now, my working hypothesis is that Boing is being slowly and intentionally liquidated.
Vincent:
Its been said a number of different ways but that is a good way to express it in clear terms.
Stock buy backs and dividends and kick backs to bailing CEOs is what we call it but liquidation says it a lot better.
I have said it before, the CEO pillages the company with the Boards concurrence (who is made up of other CEOs) and its all one good old boys club where they cover for each other.
The question is, do we really have in inflection point and does the merry go round come to a screeching stop?
The good news if any is under the current administration the FAA is not going to take its hand off Boeing.
Behind the scenes there may be a conversation to the affect that the FAA can completely stop MAX production.
If the pain is deep enough and it does not go away then the good old boys will throw people to the wolves as needed.
For those of you bashing the workers;
Boeing still makes the 777F. The 767F. The P-8 Poseidon (based on the 737NG). The last deliveries of the NG pax version went out in 2020.
They don’t seem to have any issues making those aircraft. None of them flew themselves into the ground or had doors blown out, or whistled like a harmonica during a pressure test and on and on.
The problems all seem to be coming with the new McBoeing and their aircraft. 787. 777X. Max.
Is it possible that Boeing is asking it’s engineers to push the envelope too far, forcing them to put 10 lbs of potatoes in a 5 lb bag? Then asking the touch labour to deal with it’s subcontracting messes while rushing around to get the planes out the door and into the hands of unsuspecting airlines.
If Boeing had zero track record of producing safe, reliable aircraft – one could make a case that staff just doesn’t know how or doesn’t care.
But those 767’s, 777F’s & P-8’s are still rolling off the line, aren’t they?
Frank P:
You are missing the fact that in all reality, the MAX is a knock off NG (the KC-46A is also heavily modified)
KC-46A has had similar issues. FOD etc.
The Renton lines made more NG a month.
The staff (workers) may care but they can’t fix the mess, they can just do their job.
It managements job to deal with the rest.
If you have a company that allows you to pull the fire alarm when a fire is seen, then you are good.
Otherwise they ignroe it and focus on their task.
Its all about culture but even good culture can’t fix a process gap (good cult-rue would allow someone to say it if they saw it but it looks like no one even saw this one)
Production process is all about loin your job to spec and the system is intended to have every task covered, this GAP was created somehow.
You can’t have employees running around doing someone else’s task, chaos results.
You can have a culture that has an employer yank the stop if they see something developing, but its not their job to fix it.
Its managements job to, oh, argh, we have a GAP, they get into the system, setup the process to get it corrected and ensure it never happens again though something like this should never have enveloped anyway.
This also is not an auto assembly line. One aircraft a day goes through (roughly). Many shifts go into building the aircraft.
Boeing had a process for building a 737 and it has at least one GAP and it may have more.
I did maint. Its a lot more free form and latitude and yes I could raise an alert if I saw a problem.
I reported a Ground Powered Unit to the GSE foreman one day, its surging back and forth. Did you shut it down? Nope, if I touched anything to do with an Aircraft I could be and would be persecuted, I am not stupid.
If it was on fire? Hmm, yea, pretty sure but I would have evidence to CMA, otherwise it was who can we blame so we are not responsible.
For the record:
https://en.wikipedia.org/wiki/Boeing_KC-46_Pegasus
‘In February 2011, the USAF announced the selection of Boeing’s KC-767 bid, which was designated KC-46A’
All under the merged MCD/BA corp
Frank P:
That was an is not your previous point.
Boeing has had issues, 767 had fuel tank sealing issues recently.
So yes there are some programs that are doing fine, but a P-8 does not have an exit there does it?
And the quality control failure in Rivets that had them open both side of that AK Airlines bird? We don’t know which Rivets are involved yet (door or fuselage). But then they get painted over!
The reality is Boeing is failing on both sides of the business.
A 2C x 767 is delivered to Boeing filed and then its heavily modified there. Billions of losses in that program alone.
Boeing has a massive management issue that has lead to a failed culture.
A bit of history- facts – on 767 tanker starting in Feb 2002
Look up Rudy de leon bio- previous asst sec defense until mid 2001.
Mr. de Leon started with his resume, which included the important fact that he had only been with the Boeing Company for the past six months. He continued with the fact that he was here today to discuss — issues: 1) Air Force 767 tanker program;
Mr. de Leon has a team of 12 looking at the Airbus issue, which was commissioned by Phil Condit. — Tankers – the KC135’s are approximately 40 years old. The Air Force wanted leases to make it easier to get a new fleet of tankers, due to budget constraints over the next several years. Leasing the tankers allows the money to come from another pocket where money is available. The Air Force wanted 767s because Boeing built almost all the tankers the Air Force ever had. They were also getting lots of support from Congress, and on 12/21/01 Congress passed the defense budget bill containing provisions to lease up to 100 converted 767 tankers. However, The Washington Post ran an Airbus story the day before Christmas saying Airbus could build the tankers and for 40% less money. Boeing needs to prevail on this issue for the good of Congress, the public, and the Air Force with a contract. – – –
How did that come about ? well right after 911, Then Senator Ted Stevens ( Alaska ) asked a non executive Employee ( whom he knew quite well ) what might be done to help Boeing keep emplooyees —
By that time the basic 767 had met all the Mil spec structural certifications etc as produced at Everett for nearly a decade.
But by 2001- the McDouglas crew in the various executive offices were ascendant- AND Boeing had ended the SPEEA strike which PO’d harry and friends NO end since DERs on strike had shut down deliveries.
And of course the Dryun Sears types were getting their Boeing badges upgraded.
So the powers that be decided that for the 767 Tankers- Everett would put a basic 767 on the delivery line and ‘ sell ‘ it to defense side who would then fly it to ( wichita or maybe st louis ) to be partly disassembled , boom and goodies installed including rewiring to meet mil specs and emp emf issues and then ‘ lease’ it at an exhorbitant cost to Military.
And the rest is history.. so 20 plus years later- the Tanker program is still messed up – only Partly due to pile on so many goodies by Airforce and moving boom operator position and gee whizzed ‘ improvements ‘ that it became like the mouse designed by a commmitte which turned into an elephant. The other part is after a decade the initial wiring on the first few tankers was not done to mil spec because the bean counters apparantly figured it was cheaper somehow to use commercial grade.. and separation specs.
Some corrections:
Airbus owned John McCain, his entire staff was Airbus lobbyists .
So the entire expose aspect was ginned up so Airbus could get a tanker contract.
Yea Boeing pulled shenanigans but a made in USA aspect does have a lot of appeal and people don’t care if most of it is made someplace else.
In the end the Air Force got a good contract and while slow and painful, its getting a USAF spec tanker that can be upgraded down the road.
Airbus had not even made a A330MRT at the point of the contract wars and it took 5 years for a simplified version to get into RAAF service.
We do not know what issues Airbus would have had, but there would have been issues, different but issues.
If Airbus wants to move A330 production to the US I say bless them.
If they want me to pay for it, no, no no.
notice despite the big buck Washington State bonus, Airbus elected to build in non union Alabama where, oh, wow, Jeff Sessions happened to be the big cheese for it and they got all sorts of tax breaks ju7st like Subpoenaing did in Charleston.
So do not try to sell me on Airbus not having a powerful lobby as well.
” So do not try to sell me on Airbus not having a powerful lobby as well.”
I did no such thing- everything between “Mr. de Leon started with his resume….. to …Boeing needs to prevail on this issue for the good of Congress, the public, and the Air Force with a contract. – ”
Was documented and just prior to Mr deleon started- he was asked if that meeting was open and on the record – to which he answered in the affirmative . There was more- much more which I have not and will not publish here despite being over 20 years ago. And yes I wuz there . . . Rudy did comment to the effect that he learned a lot about talking to Engineers and would come better prepared next time- and that was after one stood up and in barely polite terms told him he was wrong and proceeded to explain why and where chapter and verse.
As to Mccain-yes he was for airbus and against Boeing but some- I repeat some of his reasons were well founded.
Bubba2
All I’m saying is that it seems that workers seem to have no problem with aircraft that were developed and produced before the merger (OK, not zero issues, but nothing like MCAS, door, singing fuselages etc) and some of those aircraft are still being produced to day, without incident that would cause a grounding and delivery stoppage.
Those aircraft were even able to deliver a profit to the company.
Compare and contrast with the current crop of aircraft…
“They don’t seem to have any issues making those aircraft. ”
MAX was the most scrutinzed air frame ever ….(until) that blew a doorplug.
collapse of a projection.
with MAX and 787 background information the other frames may still just be nothing more than lucky.
Chain of trust is broken. Statistical fault expectation now is no longer “close to Zero” but “don’t look at though”
Remember Concorde: “safest airplane ever” to don’t enter was a single (fatal) incident.
Who is bashing the workers? Questioning why the media do not do their job is bashing the workers. Acting as if management builds the planes is bashing the workers?
AerCap CEO dismisses calls for Boeing leadership changes
https://finance.yahoo.com/news/aercap-ceo-dismisses-calls-boeing-185431449.html
The head of the world’s largest aircraft lessor AerCap dismissed calls for leadership changes at Boeing and said the planemaker is under no illusion about what needs to be done in the wake of a door plug blowout on a Boeing 737 MAX 9.
“I don’t think that’s helpful at all. Do we really think someone else comes in tomorrow and is going to be able to just all of a sudden (perform) magic overnight?” AerCap Chief Executive Aengus Kelly told Reuters of calls by some analysts for leadership changes.
I think knee-jerk reactions would be ill-advised at this point, but they know what to do….They know what has to be fixed but knowing it and fixing it are two different things.”
Kelly was speaking in an interview on the sidelines of the Airline Economics conference, the first major industry gathering since the Jan. 5 mid-flight scare on an Alaska Airlines jet that raised questions over quality controls.
However, he added that every plane that leaves Boeing factories has to be flawless and cautioned another incident would make the 737 MAX a “very hard sell”.
“They’re under no illusions about the severity of the situation. And every, every single thing that goes out the door there just has to be spot on.”
Air Lease Corp Executive Chairman Steven Udvar-Hay earlier questioned the strategic vision of Boeing’s board and management but stopped short of calling for personnel changes.
Yea the guys at the top are all buddies and its the guys on the line (Airlines) that are getting hit and making it known.
AerCap: He gets to lease old aircraft at high rates because Boeing is not delivering, of course he does not want a change.
O’Leary said United statement was stupid as well and he will take the -10s United does not want.
In reality what United was saying is they have to review the fleet plans because they are not getting the -10 for the foreseeable future.
They may be able to take -9s instead.
They can’t get significant numbers of A321 regardless and they would also have to decide on the engines.
They are stuck with Boeing to a significant degree and they know it, they want correctly built aircraft and sick and tired of the deals Boeing has caused itself.
CEOs rarely call for the ouster of other CEOs. Once you’re in the club you stay in the club.
True
There is a fundamental mismatch between the business philosophy of these Jack Welch clones and the requirements of commercial aviation. Since that crowd is incapable of ever recognizing this, Boeing commercial is doomed. There is no way these guys can pull it out of its decades long nosedive.
That may be true.
For but one of many examples of BA versus workers ala Jack Welchers- not usually hitting the news headlines but ..
https://www.plansponsor.com/boeing-settles-spano-fee-case/
Boeing Settles ‘Spano’ Fee Case
Plaintiffs’ attorney in the case confirms provisional settlement has been reached in class action filed on behalf of 190,000 Boeing retirement plan participants.
Just ripping off the employees – nothing to see hedre move on move on
The case has already resulted in a series of important rulings, following initial class action certification in 2008. A subsequent appeals court ruling from Circuit Judge Diane Wood confirmed that situations in which a retirement plan as a whole is injured at the same time as an individual employee can arise when the entity responsible for investing the plan’s assets charges fees that are too high or when the plan has been reckless in its selection of investment options for participants—and thus that class action suits can be leveled against employers in such circumstances.
Boeing one incident away from 737 production halt, lessor says
https://finance.yahoo.com/news/boeing-one-incident-away-737-125426601.html
If there is one more significant problem “the FAA will stop (737) production”, Air Lease Corp Executive Chairman Steven Udvar-Hazy told reporters at the Airline Economics conference in Dublin on Monday, referring to the U.S. Federal Aviation Administration (FAA).
Wow, Udvar-Hazy saying that?
I told The Seattle Times that the FAA has the “nuclear option” to yank Boeing’s production certificate in its entirety.
Hamilton
Frankly I think they should and not said casually.
Clearly there are Quality Failures on what Boeing is getting (the rivets and or seal that caused the Exit Blank to be opened in the first place)
If they are there, then ???????????????
And how and why did it get so far as a Boeing inspection caught it?
And the FAA either can’t or did not see those issues all along and that is an issue as well.
They simply may not have the staff and like all of use, scrambling and like the best they can they are handed.
I don’t think a one month stop is at all our of reason.
Scott
They do but they won’t. Not even for the next eff up.
Boeing’s impact to the US (and the world) is too important for the economy.
Now I’m sure guys like TW, Frank and some others will fire back.. go ahead.
But I was in some high level meetings with the feds when I was at the big B and they never threatened this. However they did talk much about curtailing their production if they couldn’t produce the safety metrics. And guess what they did last week.
If you’re not aware part of the FAA’s mission, besides air safety, is to promote air commerce. Don’t believe me, look it up.
Agreed the two don’t go together but it’s there.
What he or she just posted.
And don’t forget the political ramifications. This is an election year.
But if it did come down to this, the Government would no doubt put pressure for a new board and exec team.
Airdoc:
All I will fire back with is they might.
It is an election year as well and Union votes are important to Biden in some tippy states.
I am fully aware of the split nature of the FAA and have long advocated it needs to be separated. Its a bad thing.
So yes anyone in the industry knows the FAA has problems and they go back a long ways (DC-10 crashes, 737 crashes, 767 crash)
Removing the entire board, Calhoun and his clowns is not the same as Boeing stopping.
My pet rock can do a better job than Calhoun or the board.
I am not making any predictions how this all plays out.
I do think its stark enough that there might be action at Boeing top, but it would start with Stan and see if it dies down.
Then it is Calhoun and see if it dies down.
Then the board gets in the cross hairs.
Keeping in mind it dies down if Boeing gets an effective CEO and a commitment to no share buy backs or dividends with X terms.
In the end Boeing goes belly up and the US takes it over and then finds management though I don’t believe it goes that far.
@Airdoc
I think you’ve misread me.
I may post what someone like SUH is on record as saying, and I may be as critical as anyone about BA – however, as I have stipulated in the past, BA is too critical to the US to fail.
I also brought up the election year point, in a previous article and how the GOP would make hay out of any grounding/yanked certification.
Is it possible? Yes.
It would require a serious accident, by a US carrier – with many deaths and a direct link back to shoddy/negligent production on the part of Boeing.
————————————-
Let’s say, for sake of argument, that such an event does occur, post election. What then?
Nothing changes with BA being any less important, but there is a certain amount of latitude that this affords. Pulling the Max cert would (IMO) be enough to force Boeing into Ch 11, wipe out the current shareholders and leave the remains to the debt holders.
Instead of getting cents on the dollar in some deal hammered out by a trustee, the gov’t could choose to step in and offer to buy the debt, citing national security concerns.
The BoD, Calhoun and all the GE rubes would be deep sixed and perhaps they could find someone competent to lead the company, going forward.
nukular option: “Boeing’s production certificate”
737 or the whole shebang?
Is this “dial a yield”?
🙂
“Verification optimisation”
Not really sure what happened there and I don’t think Scott really got to the bottom of it either.900 quality inspectors were going to be sacked/but weren’t sacked/were reemployed/didnt come back after Covid.
I think we can be fairly certain that this Bluetooth powered saga has something to do with the 737 chaos
I don’t think Boeing has come out unscathed, they have taken a hit and all plans on hold so the ramp up is stopped until fixed. That means money expected is not going to flow into Calhouns hands.
The contract is not the issue, the issue is the Board and CEO and his group.
I do not buy for a second Stand Deal did not have his marching orders from Calhoun.
So yea, the first order of business is to clean out the board and the CEO and his group and then you can start to fix Boeing.
https://fortune.com/2024/01/29/ryanair-boeing-ceo-michael-oleary-doing-good-job-737-max-orders/
Ryanair’s CEO once called Boeing’s leadership ‘headless chickens.’ Now he wants to buy the Max jets that U.S. airlines don’t
O’Leary is beholden to Boeing and he knows it.
Most if not all his posturing is to get a better deal.
So yea, he will take the -10, the head cutting will have been done and he gets a clean aircraft by the time the -10 is delivered.
Of course if they have to change EICAS that billions more and ………..
Calhoun does not get it and like a mindless amoeba, likely can’t get it.
You are mostly correct – but I can assure you that Mr O’Leary is not beholden to Boeing any more that Southwest is.
So *a lot*, then. Nice to see slightly desperate O’Leary pulling *hard PR* for his one supplier.
Evidence to the contrary is welcome.
Edward J:
More accurately he is stuck with Boeing, Airbus won’t deal with him.
O Leary would love cancellations, then he can try to stick it to Boeing.
If there is anything funny in this Boeing finally figured out O Leary was stuck with them to and got a much better deal for the -10.
A good question is will Boeing get the -10 certified. If they have to put a modern EICAS system in it, then its a corporate decision on some more billions into the MAX program.
Depends how you define beholden.
If you mean that their two futures are intricately linked and both Ryanair & SWA owe their market share and profitability to Boeing being able to provide them with new, efficient aircraft to keep them competitive with other airlines…
…then yes, they are beholden to them.
You could make a case that both Ryanair & SWA need Boeing, more than Boeing needs them.
The combined fleet of the 2 are about 1,500 aircraft. Both operators get super low pricing – read; slim margins for BA.
Boeing could survive without selling aircraft to them. What would happen to them, if they couldn’t get 737 Max’s from BA? Run to Airbus?
I re-read the report. The Rivets in question are in the Exit Blank.
That rivet issue includes the Door if its fitted in the high density configuration .
I am guessing the door comes from Malaysian supplier – the Exit Blank/Plug that definitely did.
The report clearly says rivet issues on both.
So, you have Quality Control failures in Malaysia, you have more at Spirit who should catch it as it goes into their fuselage (who the contract to supply them with to be determined) and actually it should be inspected on receipt and the rivet issue fixed there as well as dealing with Malaysia supplier (unless its a Boeing contract then it would be Boeing to correct)
Boeing catches them at Renton but per the report its been going on for a year (or the data went back a year) and NOTHING was done by Boeing, Spirit or the door supplier in Malaysia.
The Rivet issue is an area the FAA should have known about and been tracking.
So there is a failure there to be determined if its a staff issue or failure to do their job.
A production halt is justified. Answers are needed.
This should never have happened GAP wise and problems like this as the guy in the report states, in a healthy produion system it would have been addressed.
The cruel reality is that Boeing no longer builds aircraft. They assemble aircraft. And when the feedstock they receive is compromised, any kind of competent quality flow is compromised. The mechanics at Boeing are drinking from a firehose of poor quality. As alluded earlier, when you have mechanics who can better money working at Starbucks or a Lexus dealership, you are no longer able to maintain a pipeline of capable talent. You can only do so many early retirements or buyouts of your senior talent. You get what you pay for.
Casey:
It is in fact a mixed bag.
Boeing does build the 777 fuselages, wings (and the X) as well as wings for 767 and 737.
The noses I believe all come from Spirit Wichita.
Parts of the 767 are made in Japan (as are the 787 wings)
The 787 was supposed to be a snap together aircraft, we saw how that worked out. Ironic Boeing in fact makes part of the fuselage (rear) as they got that back when they bought out Chance Vought.
But the yanking around of people and the so called buy outs as well as wages is a significant factor.
But, and I keep saying it, the best worker in the world is no better than his manager.
And managers are beat to death (good or bad) with the metrics thing and hands are tied on salary.
So again, starts at the Board and CEO as well as the CEO flunkies and cascades down from there (currently for the worse)
Boeing can be saved, but can and will are two different sides of the coin and right now the odds are biased to not.
Its really one or the other, we are seeing the results of limping along if not outright lip service to quality.
So rather than kicking back in Maine or wherever, the CEO needs to be on the road 7 days a week looking at ALL the Boeing operations, talking to workers (if they will talk to him)
I have had my share of discussions with managers, upshot was, without move from the top they did and could no nothing.
The BS about not micro managing is another excuse because the cause for the issues is cultural and the culture has failed. Not because of the workers but because management encourages and supports stupid stuff and stamps on anyone that raises a flag.
My experience is if someone wants to be a manager you stand a good possibility you don’t want them in that position.
Those who want to be managers need to be screened with a safe product at their core.
Boeing withdraws exemption request for 737 Max 7 inlet de-icing system
This is the corporate version of what Navy calls it damage control, I don’t think this torpedo hit has been remotely evaluated and next they fire Stan.
Its an ugly fact that the two MAX crashes were off shore US and while the damage turned extensive, there was enough sops for Boeing to plead, oh we did not mean it.
This one is on shore and it has too much legs press wise to go away.
The possibility is that the fire goes all the way up to the Executive suites.
Them we see of a sweep it under the rug CEO is put in Calhoun’s place or something effective is done.
As Vincent says, probably the latter, I hope not but its only a hope.
https://www.reuters.com/business/aerospace-defense/boeing-under-microscope-safety-issues-it-reports-results-2024-01-29/
U.S. Senator Tammy Duckworth, who leads the Senate Commerce Committee’s aviation safety subcommittee, said last week she requested that Boeing withdraw the exemption request during a meeting with CEO Calhoun.
Calhoun called Duckworth about the withdrawal decision, she said in a Monday evening interview with Reuters, adding that he thanked her for pushing the company to do “what is absolutely the right thing to do.”
——————————-
If it was the right thing to do, why did you file for an exemption in the first place? Why didn’t you yank the request as soon as the Alaska fiasco happened?
You needed Tammy to tell you what the right thing to do, was? Why do you need to be pushed?
——————————
‘Trade publication The Air Current last week reported that the door plug on the affected MAX 9 reached Boeing’s factory from Spirit AeroSystems (SPR.N), opens new tab with bolts installed, but that the planemaker re-opened it to give access to nearby rivets that had been mis-installed by Spirit.’
Does Reuters not read Leeham? Do they just not like Scott H?
Well – we know who had it first.
..” but that the planemaker re-opened it to give access..” and therein lies the problem – That ” door ” cannot be OPENED. it only has 2 modes ” plugged- installed ” or REMOVED.
When one OPENS a door, you normally do not check the hinges, etc unless it falls off or is an Emergency exit and no paperwork is needed.
But when one REMOVES a door, it must be re- installed and a checklist- paperwork is generated and checked and needed.
By playing word games in paperwork and also the lamestream media- public confusion remains.
‘By playing word games in paperwork and also the lamestream media- public confusion remains.’
Shoot the messenger, huh? I guess that’s one way to look at it. What would you have liked the ‘lamestream media’ to say about this? Nothing – until the NTSB report comes out?
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That ” door ” cannot be OPENED.
Apparently, it can – if you believe the source who posted here. Which is why those 2 straps are there, to keep it held close in place, at an angle. That is the OPEN position; not removed, not closed and secured with bolts.
———————————
‘Public confusion remains.’
While they sometimes get it wrong, the media plays a vital role in holding accountable, those who don’t want to be held accountable. Blaming the media is an old trick meant to deflect attention away from those who wish to avoid scrutiny.
It wasn’t the media that caused that door to blow out. It was Boeing.
Furthermore, if some whistleblower can detail what happened in this accident, surely BA knows what went on. But they haven’t come out and said “Hey everyone, this is what happened” have they?
They didn’t come out when MCAS pushed those 2 aircraft into the ground either, right? They blamed everyone else.
But it’s the media’s fault.
That’s straight out of the Donald Trump playbook, done by people hoping to keep the truth from coming out.
That is interesting, I did not get that reasoning from Bubba’s post.
Glad you got that off your chest.
@williams
Don’t keep us in suspense, then. Please tell us what you took away from it.
UHHH FRANK P ? you said in part ” Apparently, it can – if you believe the source who posted here. Which is why those 2 straps are there, to keep it held close in place, at an angle. That is the OPEN position; not removed, not closed and secured with bolts.”
Please list what pics you refer to and what straps- AFIK and I could be wrong they are fastened pull cords/straps to pull out the inflatable slides when used as a real emergency exit . As to your view re open and removed- my point WAS and IS that the paperwork that lists/allows/allowed the term “open” is what allowed the fiasco to happen. When used as a plug – one can only remove and supposedy REPLACE it- as what apparantly happed to replace a seal or to paint it. your response IMHO provesmy point
Have a nice day/evening
‘ U.S. Sen. Tammy Duckworth said Calhoun told her last Thursday he was “very confident that they would have a fix before 2026.”
https://twitter.com/dominicgates/status/1752170728710082843
AW: Boeing has firm orders for 361 -7s. Southwest is by far the largest customer with a commitment for 313 aircraft plus 97 options. Allegiant has ordered 24 -7s and has options for 25 more
Calhoun recently announced measures to strengthen QA.
Has anyone asked him how it became weak in the first place? I assume it was part of the irresponsible cost cutting that he and his beancounter posse have engaged in for the last 15 years.
Whenever he fixes a crisis, it is one that he and the other Welch clones created.
https://www.aviationpros.com/aircraft/commercial-airline/press-release/53082706/boeing-boeing-announces-immediate-actions-to-strengthen-quality
“We fixed it- it’s safe, now. Trust us.”
https://www.heraldnet.com/business/citing-audit-boeing-quality-inspectors-question-job-cuts/#:~:text=Boeing%20plans%20to%20eliminate%20up,a%20mechanic%20does%20a%20job.
In 2019 Boeing cut 900 inspectors.
Southwest won’t be happy with this news — they’ll now be waiting a LOT longer for their MAX 7s:
“Boeing to withdraw MAX 7 exemption request as safety scrutiny intensifies”
https://www.channelnewsasia.com/business/boeing-withdraw-max-7-exemption-request-safety-scrutiny-intensifies-4084281
Things are really gaining momentum now.
We already have UA openly discussing defecting to Airbus. Will a Southwest defection to the A220 be next? Or will the airline have to take MAX8s at a steep discount? Either way, the reputational damage to BA is horrific.
It will be interesting to hear what the BA board has to say about this on the upcoming earnings call.
‘Or will the airline have to take MAX8s at a steep discount? ‘
Where are they going to get slots, at 31 a month? As well, there are ~30 Max 7 airframes sitting in Renton. What happens to them? Another billion up in smoke?
Is the supply chain, all of a sudden, going to be able to switch out parts ordered for a Max 7 and flip them into a Max 8? SWA has orders for over 300 of them.
Airbus is building about 6 A220/month and hope to increase the rate to 14/month in 2025. They have an order backlog of 500+. Gonna be a long time before Southwest would be able to get many slots. But I guess it would be better than the possible ‘never’ for MAX-7. In the meantime I suspect they will continue to take MAX-8 instead.
It’s another topic, but it’s a major challenge for SWA to change anything. They have their way of doing things (most of which is very different from other airlines) and it has served them quite well. Except when it hasn’t. Over the past few years they have begun to adopt industry standard processes in a few areas, so maybe they could eventually embrace having a different airplane from a different manufacturer.
@Thomas
The Max 7 will now have to be changed, to meet cert requirements, right? How much time does that add to an EIS?
If the Max 10 is in the same boat as the Max 7 and United have thrown in the towel, will SWA follow? Boeing gave a lot of cash to them to keep those orders intact ($460 million, IIRC), do they once again cut a cheque to them?
The only thing SWA has changed is admitting DEN is a hub. Eventually SWA will have to move to a new aircraft, I do not expect that soon even with this delay.
“A report by the market research company shows net trust dropped 12 percentage points [from 32 to 20] among U.S. adults from December 2023 to January 2024.
https://www.cnbc.com/2024/01/30/boeings-reputation-is-taking-a-hit-survey-shows.html
Boeing Management does not care about the reputation. Airlines are in a bind, some have committed to Boeing, some have a mixed fleet but are so big they need Boeing, Airbus has sold out and do you guy an very expensive asset and ot make money with it?
As was stated, the Current Managements goal is to liquidate the company slowly so no one notices and they waltz off into the Sunset with their millions.
Its been working.
Its getting found out and then actually having to do something (the Board not Calhoun, he is incapable even if the board backed him). Calhoun just knows pillaging and its like a skipping record, can’t break out of that track (nor wants to)
https://www.abc.net.au/news/2024-01-30/boeing-737-max-production-defects-ignored-aviation-regulator/103400468
That’s an excellent and damning (of Boing) article. TFTL.
https://reuters.com/business/aerospace-defense/united-exec-says-loss-skills-may-have-contributed-boeing-problems-2024-01-30/…
“Loss of skills contributor ”
That is effect not cause.
UPS to cut 12,000 jobs
What can be said is Boeing has an avalanche going.
It may stop, it may keep going.
Its not the blow by blow of day to day but what happens over time.
Its going to be 6 weeks before it starts to become clearer and it may well be months before the last dart hits the board (double pun)
The possibilities have all been covered
Stay tuned
Went thru’ UAL 10-K of 2021 & 2022:
UAL’s expected delivery in following year/ actual number delivered
2022
737 MAX 53 / 34
2023
737 MAX 135 / ??
2023 Q4 (per 2023 Q3 10-Q)
737 MAX 73 / ??
2024
737 MAX 100 / ??
Airbus vs. Boeing
https://pbs.twimg.com/media/GFJurNsW0AA_tgc?format=jpg&name=large
OK, x-axis is time. But the y-axis ?
what metric is displayed? air pressure, average temps .. 🙂
Not strictly an apple vs apple comparison, but close:
https://www.google.com/finance/quote/AIR:EPA?window=5Y&comparison=NYSE%3ABA
“The NTSB hasn’t yet released information about the logs’ role in the accident. A finding that record-keeping played a role in the mishap would be even more problematic for Boeing after years of quality issues at the planemaker.”
https://www.bnnbloomberg.ca/boeing-s-dual-record-logs-eyed-in-737-max-9-door-blowout-1.2028637
Feeling life goes in circles:
-> It’s Boeing Q4 2023 results day.
“This is a defining moment for Boeing and we remain focused on our enduring values of safety, quality, and integrity in all that we do, as we work to safely return the 737 MAX to service,”
Oh, my mistake. That’s actually from the Q2 2019 report
https://twitter.com/AirlineFlyer/status/1752699790972887473
Interesting!
-> “Calhoun said the “engineered solution” on the 737-7 engine inlet will be ready in “9 months” and CFO Brian West said it’ll be around a year.
https://twitter.com/jonostrower/status/1752724620451660239
That seems like a very fast timetable for something that they’d
previously gone to the trouble of seeking an exemption for.
I wonder if that timetable (either one) will hold.
MAX-7 Certification and EIS dates?
“Boeing & Airbus will at some stage have to set up FAL in India”
https://timesofindia.indiatimes.com/business/india-business/boeing-airbus-will-at-some-stage-have-to-set-up-final-assembly-lines-here-piyush-goyal/articleshow/107332155.cms?from=mdr
Good luck getting Boeing’s IAM union to agree with that.
Your right, and that’s why Airbus will set up FAL in India, just like they did in Alabama and China The EU workers realize the FAL is less than 8% of the total cost of the aircraft…so they make the main structures (e.g. fuselage/wings) and ship them to the overseas FAL sites.
Reminder, 40% of all commercial aircraft deliveries in the 20 years will be in Southeast Asia and China
Do Seattle workers want all of nothing or something of 40%
Actually, it could work for Boeing….what the real reason for single aisle FAL in China, to get order for twin aisle higher priced aircraft from China
So let’s use 737 aircraft for the India FAL (e.g. 6 a month rate), Dreamlifter for 737 wings from Renton to India, Spirit fuselage tube …rail from Wichita to the West Coast port and then ocean to India. Tail section, China direct to India?
So who in the US benefits, Renton..737 wing production, Spirit fuselage tube, Charleston with selling more 787’s and Everett selling 777x to India (maybe)?
How will Boeing set up shop in India ( or China at that )?
They don’t have a well run shop at home.
How do you expect to work a transfer?
This is not just going cargo cult and bending planes from wire.
TATA is more advance than bending wires.
Tata has FAL Airbus C295 and Airbus Helicopter FAL
If Boeing can’t transfer FALs to Southeast Asia, then they will continue to lose 737 market share.
https://www.youtube.com/watch?v=a_eht83p0ks
https://www.airbus.com/en/newsroom/press-releases/2024-01-airbus-partners-with-tata-group-to-set-up-indias-first-helicopter
Tata Lockheed Martin Aerostructures delivers 200th C-130J Super Hercules empennage
https://economictimes.indiatimes.com/news/defence/tata-lockheed-martin-aerostructures-delivers-200th-c-130j-super-hercules-empennage/articleshow/102566879.cms?from=mdr
“Tata can do more than bending wire”
Obviously. So can Alenia and Spirit.
It is not about Tata but about Boeing.
You can have a perfectly trained horse for lympic “High School of Classical Horsemanship” performance.
Put an BMBA-cowboy on top and nothing useful will happen.
You are probably right Boeing is creature of habit and goes back to the same “first tier suppliers” program after program As for Airbus they started their China FAL in 2008 and have delivered more than 600 aircraft in 14 years of operation.
Boeing does their “offset” in India with engineering packages, but no real mfg.
India has given Boeing a window of opportunity with the latest orders, if Boeing don’t step up this time, the window will close and over the long term Airbus will get the bulk of new commercial aircraft orders
These decisions will lead Airbus to 70% market share for single aisle and erode Boeing market share for twin aisle