The blame game surrounding Boeing’s 737 Max debacle
Wednesday, October 30, 2019
Oct. 29, 2019, marked one year since the Lion Air crash of a Boeing 737 Max 8 that killed 189 people in Indonesia. We can directly blame a company’s financial priorities, company employees who decided to leave information out of training manuals, an agency that watched its inspection autonomy wither over decades, or investors pressuring Boeing to compete with France’s Airbus.
Or, we can blame all of the above.
Amidst much attention, Boeing has shaken its leadership up while establishing a controversial manufacturing partnership in Brazil. The international public and crash victims’ families have initiated investigations, released a report, and are pursuing legal action. But will safety concerns trickle down to real-world changes?
The U.S. economy can scarcely afford more transportation manufacturing challenges after General Motors (GM) finalized a new United Auto Workers (UAW) contract that includes shutting down three plants. With a 1.1% durable goods drop in September, no doubt related to transportation industry manufacturing troubles, GM has resolved imminent financial disaster. What about Boeing?
The economic impact here is widely felt, affecting “everything from capital-goods investment to exports to industrial production.” In fact, Barron’s most recent summary of Boeing’s economic impacts states “domestic business investment in aircraft in April-June was 24% lower than the average rate in 2018. That probably took about 0.2 [of a] percentage point or so off of GDP growth.”
With such far-reaching impact, it’s wise to look busy. Newly appointed Commercial Airlines division CEO Stan Deal was replaced in the Global Services division by Ted Colbert. Deal takes over Kevin McAllister’s position. In this shuffle, Boeing President and CEO Dennis Muilenburg lost his status as board chairman to David Calhoun, who will serve as non-executive chairman.
Will leadership changes launch the 737 Max back to the skies? The Justice Department is investigating the crashes.
Indonesian investigators recently released an independent 353-page report, citing “nine reasons” the crash occurred. They included a cockpit issue; an untested sensor; pilot training deficiencies; operator switch-ups mid-flight; maintenance log missing pages; and earlier employee failure to report malfunctions. All of these issues are mentioned in the report, which also honed in on the plane’s Maneuvering Characteristics Augmentation System (MCAS) software failures.
Boeing pilots were not trained to understand software changes or did not properly ensure adequate information was available to all pilots. The Indonesia report ultimately blames Boeing for the crash.
When Ethiopia endured a 737 Max crash that killed 157 last March, the alarm went off again. Attorneys representing crash victims’ families have been hired, and sensitive materials have been subpoenaed from American and Southwest Airlines.
Boeing turned over this kind of sensitive material to Congress this week, as Muilenburg testifies about MCAS failures. There are rumors a pilot removed info from a training manual, which would be a pivotal issue as culpability is established.
The New York Times’ reporting highlighted a chain of command malfeasance.
Who’s in charge of airline safety? Boeing’s company philosophy emphasized sovereignty over design and approval processes. It aggressively lobbied to pass designs swiftly through the FAA. This cozy relationship between the company and a government agency, via the Transport Airline Directorate, was reported as far back as 2012.
A more independent inspection/certification process requires more staff, which translates to congressional dollars. Boeing moved in the opposite direction, wiggling out from under remaining governmental protocols via the Reauthorization Act of 2018. It was able to secure majority control over future aircraft certification processes, although the 737 Max was certified prior to this Act.
Current airline certification culture prioritizes Boeing’s market dominance, requiring rapid product release. Simply stated: careful inspections stall sales and growth.
If you thought the blame game ends with Washington, consider how one lawmaker blames Boeing investors. Rep. Peter DeFazio, D-Ore., chair of the House Committee on Transportation and Infrastructure, emphasized how Wall Street created “a pattern at Boeing of extraordinary production pressures.”
How many fall guys can there be in a deadly debacle with so many decision-making layers?
Perhaps Congress should also inquire after Boeing’s “Brazil strategy:” the recent 80% purchase of commercial airline manufacturer Embraer, in a deal worth $4.2 billion that still awaits antitrust clearances.
Public scrutiny, litigation, settlement expenses, and increased regulatory authority threaten Boeing’s bottom line. Moving some 737 Max manufacturing abroad conveniently skirts safety issues.
This move rewards President Jair Bolsonaro with a financial windfall at a time when the Brazilian government’s role has many countries calling for product boycotts and economic sanctions. The EU is considering sanctions on Brazil and is investigating Boeing’s Embraer acquisition as a single-aisle airline market antitrust violation.
As Muilenburg’s testimony in Congress winds down this week, the focus is mainly on honoring crash victims and acknowledging mistakes, as MCAS failures were concealed from pilots and the public with documented proof. One senator referred to the 737 Max as “flying coffins” while others acknowledge Boeing is rectifying software mishaps by offering Southwest rebates and pilot training now.
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