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“With Boeing’s decision to focus on outsourcing the majority of the 787 development, they somehow forgot to consider the increased costs associated with overseeing subcontractors around the world to ensure components were being manufactured to Boeing’s standards. The end result was that quality suffered, timetables were never met, and overall costs were out of control.
Boeing paid their C-level executives millions of dollars annually (in salary, stock options, and bonuses) during this time to effectively run the company. What they did was run the company into the ground. You would think that those highly paid executives would have considered the costs and difficulties of remote oversight as a necessary element to outsourcing before they decided on such a radical change for the company. They missed something so fundamental and obvious that even a business school student would have known about. Shameful!
Compared to the profit-driven culture of Boeing, their main competitor Airbus was more focused on developing aircraft that the industry demanded. In 40 years, Airbus had developed and built thousands of commercial aircraft centered around a family of eight main airframes. (Compare that to Boeing, who developed four airframes during that time, two of which are no longer being made for commercial use.) In 1972 Airbus developed and flew its first plane, the A300, when Boeing was sitting back and enjoying the financial success of the 747 and the 737. Airbus took the same strategy that Boeing had taken back in the 1960s: to build leading-edge, technology-driven aircraft, and make profits secondary to designing safe planes that the industry asked for. They have been growing ever since.
But then Boeing introduced the 737 Max8 and disaster struck:
Just like the development of the 787, Boeing was looking to cut costs associated with any new aircraft. For over thirty years, Boeing had been able to successfully modify the old Boeing 737 “on the cheap” as opposed to developing a totally new aircraft. Today, the Boeing 737 is the company’s only narrow body (single-aisle) airliner, using a 50-year old design, developed in the 1960s.
Unfortunately that Band-Aid strategy with the 737 enabled Airbus to chip away at Boeing’s aircraft dominance. It enabled Airbus to gradually move ahead of Boeing in both technology and in orders of aircraft. Not only has Boeing been cutting corners by retrofitting that older airplane design to increase profits, but they also lost their ability to track market trends in the aircraft industry and to develop new aircraft to meet those evolving needs.
Airbus, however, kept developing planes with new designs and new technology that met the evolving requirements of passengers and airlines throughout the world. Their planes were starting to be considered more advanced, safer, and more fuel efficient than Boeing.
In 2010, feeling increased pressure from Airbus, Boeing considered building a totally new aircraft to compete with the Airbus A320 family. Boeing had been gradually losing business to Airbus for several years by that point. But Boeing executives were shaken when American Airlines (a huge customer of Boeing) decided to start buying Airbus aircraft rather than Boeing aircraft. Decades of executive complacency at Boeing now changed to panic and frantic desperation.
Boeing had to do something. Their first option was to stay on course and work on developing a totally new aircraft that would replace the 737 and be more competitive with the A320 family. Or the second option was to (once again) dust off the old 737 design and strap on larger, even more powerful fuel-efficient engines and call it the 737-MAX8. A newly designed and developed aircraft was going to take several years for development and cost a lot of money. The second option would be completed much faster, would be cheaper, and would (they hoped) generate higher profits.
Each time Boeing had made previous modifications to the 737, those modifications had required detailed engineering and thorough testing to ensure they knew what the modification would do to the airframe. But this most recent modification (adding much larger Rolls Royce engines), became one modification too many. The engines were so large that they had to be built practically into and in front of the wings as opposed to hanging under the wings. (The engines would have dragged on the pavement otherwise.) The plane now became nose heavy and unbalanced under certain flight conditions, and the change in the positioning of the engines seriously affected the inflight performance of the aircraft. They scrimped on testing and (as it has been reported in 2019 and 2020) Boeing even hid some of the negative test results from their airline customers!
Nevertheless, the management at Boeing felt they were under pressure from their investors and the board of directors to produce a plane that could compete with Airbus and continue to bring in revenue, so they continued with the strategy of adding Band-Aids to this old and (now) flawed and sometimes un-flyable aircraft.
Because of these overly large engines, Boeing had to develop software (part of which was called Maneuvering Characteristics Augmentation System (MCAS) to supposedly catch and correct any stability problems caused when the plane was in a nose-high attitude, like during takeoff. MCAS was supposed to monitor any unsafe flight characteristics for the Max 8 and make remedial adjustments in controlling the aircraft.
But it didn’t work. According to Bloomberg News (June 28, 2019), at the same time that Boeing was laying off experienced engineers, they began hiring inexperienced temporary workers from India, making as little as $9/hour to write some of that software! One of the reasons, according to the article, was that by hiring cheap Indian workers Boeing would be in a better position to get future plane orders from India. The software ended up being a disaster, and as you now know, hundreds of passengers died.
Ever since that second Max 8 crash in March 2019, all governments and aviation organizations have grounded this plane. Over a year later and these planes are still grounded! Not only are the flight control adjustments still being worked out, but there are other problems associated with the Max8 that are now coming to light:
• The FAA has announced (CBS News, January 10, 2020), that it will fine Boeing $5.4 million for installing substandard parts on the wings of 178 of these planes. This is after the FAA discovered that Boeing had installed the same parts on other Boeing 737s and had to pay a fine of $3.9 million for that. The FAA said that poor oversight of suppliers by Boeing caused the delivery of defective parts, which could cause a plane’s flaps and other control surfaces to (over time) not work correctly.
• New internal emails have been brought to light that show how seasoned Boeing engineers in Seattle feel about the MAX 8 and Boeing’s current profit-driven management style: “…the plane is being built by clowns and is being managed by monkeys.”
• The fact that the MAX8 has now been grounded for over a year, with no definite return date should say something to you: The fix to make the airplane flyable is not a simple software update. If it was, it would have been accomplished months ago. The indications are now that this plane, as it was built with these engines, is perhaps a structurally unsafe aircraft.
And throughout all the problems, the new problematic discoveries, the hiding of information about the MAX 8, the constant message from Boeing is: “Our highest priority is ensuring that the 737 Max 8 is safe for passengers…” What corporate BS! Their highest priority for the last 20 years has been to make as much money for themselves as possible.
The development of the 787 and the 737 MAX8 shows how greedy and shortsighted those Boeing executives have become in trying to manufacture planes the cheapest way possible. And they keep rewarding themselves handsomely for their ignorance! According to ABC News (January 10, 2020) Boeing finally fired the current CEO (Dennis Muilenburg) who had been CEO during the entire 737 MAX8 debacle. For five years as CEO, he could have worked on preventing the two eventual plane crashes that killed hundreds, simply by getting involved, asking questions, solving problems, not taking shortcuts, and monitoring the development of the MAX8. Instead, his company hid technical data about the problems of this plane in order to more quickly throw something up in the air that could better compete with the Airbus A320. Had he managed the company like any regular business school graduate, he would not now have the blood of 346 dead passengers on his hands.
Yet even though he was fired by Boeing, he still leaves the company with $62.2 million and stock options worth more than $15 million! This is the reward for a guy who many people would call a mass murderer. How can we allow this sort of insanity to exist?