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Boeing engineer breaks silence on MAX 737 (kuow.org)
163 points by erentz on July 5, 2019 | hide | past | favorite | 105 comments

This comment from a 'boeing engineer' has basically no information content.

- He's not a Boeing engineer, he's 'a senior member of the union'. Apparently he was an engineer sometime in the past, now his job is to push anything that will benefit members of the union, which is what he is doing here. He has no specific information about the MAX to offer.

- Cost savings is always the root cause of every engineering failure, so long as you have the benefit of hindsight. I mean once you know what the problem is you can spend money to fix it, and they should have spent that money right off the bat, right? I mean, if they knew there was a problem, which they must have or else there is nobody to blame. We need someone to blame! Of course projects that don't try to limit costs can't fail since they are canceled and never built. Except for the Space Shuttle, which went massively over budget again and again and still had a terrible safety record, which absurdly was blamed on cost cutting. https://www.wired.com/2016/01/to-cut-costs-and-save-time-nas... So no matter how much money you spend, when something fails you are going to be blamed for not spending more. If you budget $1 Billion and then decide to spend $10 Billion to improve safety, whenever something goes wrong they'll say you should have spent $11 Billion.

- Trying to vilify people and attempting to create an environment to produce massive punitive damages and lawsuits, or to bring political pressure to change staffing decisions dramatically decreases safety. The FAA has spent almost a hundred years building up an environment of cooperation with a shared responsibility to understand failures and enable the changing of the entire aviation industry whenever necessary to promote safety. This has been fabulously successful. Trying to place blame and attack people for past decisions will only lead to a closing of the culture and an attempt to hide information in the future. Compare aviation to the auto industry in how they adapt and improve safety, it's night and day for exactly this reason. Creating an environment where companies have to be afraid to admit mistakes does not help us find the root causes of problems and change the system to prevent those problems in the future.

My friend made it slightly under a year at Boeing after working for another airline as a maintenance mechanic. The level of quality control at Boeing was so abysmal he quit to work on busses, paying all $20k in relocation back to Boeing.

He takes pride in the quality of his work and adherence to the rules, but Boeing's managers let him know that reporting unwired bolts & incorrectly installed hardware per policy was something they did not do. Very sketchy, not something anyone wants to be signing off on as personally liable!

The management loves to circlejerk about the "Boeing process", but lots of shit is slipping through these days that would have been unacceptable (and firable) only 2 decades ago.

If your friend wanted to go on record, i'm sure there'd be plenty of reporters eager to hear about it. As long as the only whistleblowers about Boeing's quality control are union execs and anonymous friends of internet commenters I have a hard time giving that too much weight.

Its already ruined his life and pushed him back to the bottle, I doubt I could entice him to do anything relating to Boeing.

Edit: Here is a piece New York Times did on exactly what I'm talking about: https://www.nytimes.com/2019/04/20/business/boeing-dreamline...


Edit: Here is a piece New York Times did on exactly what I'm talking about: https://www.nytimes.com/2019/04/20/business/boeing-dreamline...

Go to Georgetown and start talking to people, the quality issues are well known. First shift often signs off on wiring down all bolts in a section without doing their job, second shift comes in and ignores the problem, with third shift cleaning up the mess (or as much as they can find).

Its a caustic work environment that has been bred since the company split in two.


Read the article and stop with the personal attacks please! Boeing's dangerous business practices are well documented.

> Cost savings is always the root cause of every engineering failure, so long as you have the benefit of hindsight. I mean once you know what the problem is you can spend money to fix it, and they should have spent that money right off the bat, right?

I once heard it said that any reasonably smart person can build a bridge that doesn't collapse. It takes an engineer to build a bridge that just barely doesn't collapse, by an acceptable safety margin that still provides economy. So yes; any unforeseen failure exists because of that tradeoff.

The counterexample you name, the Space Shuttle, is just a series of fundamental mistakes compounded together--a boondoggle machine designed for a dozen different mission profiles, most of which never happened, and introduced serious regressions in survivability and launch escape compared to Apollo.

The pithy way of saying it is "Engineering is making something with $1 that any fool could make with $2"

> It takes an engineer to build a bridge that just barely doesn't collapse

Cute saying, but an aircraft doesn't really share this property. You can make a bridge or building stronger by just adding more stuff. Many pyramids and stone bridges have held up admirably even after thousands of years.

You can't make a better aircraft by just adding more stuff. Very soon, it becomes incapable of its primary purpose.

I mean, most things will fly at least somewhat if you bolt on a big enough jet engine :) But I see your point.

The Space Shuttle disaster was a symptom of the US political process.

No, it wasn't a 'symptom' of anything. The Space Shuttle was a remarkable engineering achievement, made at enormous cost, built and managed by great people who had only the best intentions. Yet it still failed in a spectacular way, because the engineering wasn't perfect and the management wasn't perfect. In the end Challenger was destroyed by the failure of a cheap gasket, and the gasket failed because the decisions made and processes which produced the environment in which those decisions were made around making a go/no-go call was imperfect and failed. It doesn't matter what political process is in place, it doesn't matter how good the people are, or how good the engineering is, or anything else for that matter, spectacular failures are inevitable. When one happens, we have to learn from it and figure out how to build organizations and engineering artifacts that are better in practical and achievable ways, not try to use it as some kind of evidence that our pet political theory would have somehow let people make perfect decisions or make rubber gaskets invulnerable to cold weather.

It turns out that if you take some task that is incredibly hard and inherently complex and performed by a very large number of extremely qualified and smart people near the limits of human experience, and you want to do that task in a better way it isn't going to boil down to something simple or obvious.

In fact, if the US political process is so broken, why is it the only process that ends up with space shuttles sitting in hangers? It's certainly not perfect, but since nobody can point to a political process that results in better space shuttles I don't see any evidence that humans have so far developed a better political process if you are measuring it in units of 'space shuttle reliability'.

If you are not aware, I recommend you look up the design process for the space shuttle. It is a perfect example of engineering taking a backseat to politics.

TL;DR version:

The original design of the space shuttle was vastly smaller and simpler, but during the cold war the only way you could get something funded was to have a military dual use. So the Department of Defense offered NASA funding so long as they redesign the entire space shuttle to be able to capture and return Soviet satellites to the US -- a task that it never performed -- which required the design to be massively compromised.

Would you consider the Soviet Burans in Kazakhstan ‘sitting in hangers’?

The design of those shuttles lacked the flaw that contributed to the Challenger tragedy.

So, what was the engineering reason for implementing a US design requiring o-rings?

Umm... you do know the Buran only launched once with no humans aboard before being scrapped?

I’m pretty sure there were plenty of flaws that would have shown up if Buran had flown 100+ real orbital missions.

The Russians had the good sense not to sacrifice a dozen human lives on the altar of their space shuttle program. As a direct consequence of that decision, they also still have the ability to launch manned spacecraft, unlike the United States.

The launcher it was to use was hilariously dangerous. (Saturn V is but in a different way.) The thing would be killed before it even a achieved space. At least they managed to salvage the excellent engines out of the project.

Communism—which is otherwise an intolerably terrible system—led to manned space stations and safer, more reliable manned launch vehicles (namely Soyuz and Shenzhou). It’s a national embarrassment that the US sacrificed billions of dollars and a dozen human lives on the shuttle boondoggle and ended up with no human launch capacity for over a decade and counting.

Doing things that are “incredibly hard and inherently complex” and also unnecessary and dangerous is idiotic. Things like building and flying a space shuttle rather than a normal space capsule. Especially when human lives are at stake.

> It takes an engineer to build a bridge that just barely doesn't collapse, by an acceptable safety margin that still provides economy.

Holy crap, that truck in oncoming traffic just barely avoided hitting us head on!

If that driver hadn't adjusted their speed appropriately for the road conditions and planned on switching lanes a quarter mile back we'd all be goners, bro.

> Apparently he was an engineer sometime in the past, now his job is to push anything that will benefit members of the union, which is what he is doing here. He has no specific information about the MAX to offer.

The executives of Boeing have pushed anything to benefit the company throughout this story, changing their narrative multiple times. Boeing has handled this entire saga so poorly that I truly don't understand the POV that the union is somehow responsible.

The cost savings hindsight argument doesn't address that this was an entirely preventable failure that was caused purely by miscommunication, disorganization, and greed. It's not like the aircraft experienced some unforeseen phenomenon that engineers have never recorded, they introduced a haphazardly flawed feature, they failed to clearly communicate the feature to clients, they failed to properly train the pilots, and people died.

I don't think anybody was suggesting that the union is responsible, just that a union exec is not a "boeing engineer" as the headline claims, and whistleblowing by an actual engineer who worked on the MAX program and has actual knowledge would be a very different story than just more armchair criticism.

I think the task of making a public statement from the engineering point of view, that could be career limiting, is exactly the kind of thing that a high ranking engineering union official should be doing as part of his job representing those engineers. If he is NOT speaking publicly the POV that engineers are grumbling to each other privately, he's not doing his job. This kind of statement is exactly what he should be doing.

The problem is that there is no content in this statement. No matter what the actual situation in the company, no matter what happens and without regard for any facts, a union representative is going to say that the best course of action is to stop using non-union labor and to increase wages for union labor. It is literally their full time job to say this whenever and in the most effective way they can.

>This kind of statement is exactly what he should be doing.

which is kind of my point - he's just doing his job and making a completely predictable and expected statement. I'm not trying to say he shouldn't, but it isn't interesting or newsworthy.

> Trying to vilify people and attempting to create an environment to produce massive punitive damages and lawsuits, or to bring political pressure to change staffing decisions dramatically decreases safety. The FAA has spent almost a hundred years building up an environment of cooperation with a shared responsibility to understand failures and enable the changing of the entire aviation industry whenever necessary to promote safety. This has been fabulously successful.

346 dead passengers is definitely not successful or acceptable. You think the rating/MCAS problem doesn't merit further investigation?

I have no idea how you could possibly think I'm saying it shouldn't be investigated. I also don't understand how you could think that a union representative complaining about the company using non-union workers is the same as investigating the problem?

Investigating, understanding, and changing regulations and future policies and behavior is what we need. A witch hunt with a bunch of vested interests trying to benefit financially and find a scapegoat is not what we need.

This is a great comment. Engineering is about cost cutting. Everything is a trade off performance, safety, efficiency, and cost.

Cost control or cost-benefit trades are certainly a critical aspect of engineering but saying "Engineering is about cost cutting" is way overstating the case. There absolutely is a difference between a short-term cost-driven engineering culture and one that weighs costs with a strategic view. I am actively involved in remediation of an engineering program that suffered from the former. It will cost significantly more money in the long run to have done it that way, assuming the program survives.

> This comment from a 'boeing engineer' has basically no information content.

I found his "3 Business Cultures" quite informative:


> Creating an environment where companies have to be afraid to admit mistakes does not help us find the root causes of problems and change the system to prevent those problems in the future.

'Feelings' ("afraid") are not operative here. A company in a highly regulated industry has a societal and legal duty to be forthright regarding their product. The sort of "fear" that companies need to feel is "being afraid of getting caught lying or covering up their mistakes".

Cost trade offs need to be made in a well reasoned way though.

I have no idea if this applies to Boeing. But a "cost cutting culture" can be due to the internal market within the company. The widget department wants to make enough money to meet its budget. So it unilaterally makes changes to the process that affect the quality of the overall product.

It reminds me of the adage "Workplace culture is what you do not what you say you do." I have met too many engineering managers over the years who thought they could cleverly have it both ways by exhorting quality is the highest priority while penalizing or criticizing engineers who objected based on quality or design metrics.

I don't ever continue past the 3rd word of a corporate response for exactly this reason. What they say is always what they "should" say, in line with how things "should" be, rather than reality at the moment. The speaker doesn't even have to be familiar with the issue at hand beyond keywords.

What do you get out of reading the first two words of a corporate response?

A reminder that the rest of the statement will be bullshit and I never should have bothered starting.

I'm sure a3n didn't mean literally "the first two words." I think they meant it as a figure of speech.

I worked at Boeing from '88 to '94, writing test software. I liked it. I liked the people and the atmosphere.

I always thought that when Boeing moved its headquarters from Seattle to Chicago that that was the end of something special. They went from being legendary Boeing to just another hyper-corporation who happens to make money doing X or Y or Z.

In my opinion.

Was there something special about the move that ended the era? That in itself doesn't seem harmful to a legendary status.

There was nothing "Boeing" in Chicago at the time. The only thing relevant there in Chicago was United Airlines. They moved top executives physically and culturally away from where everything was being done.

In my opinion, that made the whole company abstract to the executives.

Funny how the opposite can also be true. In 1985, Disney Animation was moved off the Burbank lot to a cluster of buildings about 2 miles away. After the success of Beauty and the Beast, The Little Mermaid, Aladdin, and the Lion King they moved back onto the lot. Their new building was literally next to where the executives are in the ABC Studios building. I've heard complaints that executives would walk over and make creative decisions whereas being 2 miles away they were mostly left alone.

So, executives doing something other than their job and messing it up. Classic.

How would you compare the relative effects on culture, of the executives moving to Chicago vs. the merger with MDC?

I couldn't say, I paid less and less attention to Boeing as they receded further and further into my past. Everything I said above is opinion and nostalgic lament.

It's such a bad move to move senior ranking staff away from junior.

This quote is powerful and resonates: “The cost-cutting culture is the opposite of a culture built on productivity, innovation, safety or quality”

I know investors must see a profit and business must keep moving but honoring the careful balance of these two ideas is a must or what are you really left with?

Very interesting. 777 probably has the cleanest safety record. Basically zero incident stemming from design, engineering or manufacturing defect.

747 was exceedingly safe despite 3,000 deaths. Half of that was due to bombing, hijacking, missile. Seriously.

Ironically, the biggest 747 crash (and, IIRC, the world's deadliest airline-related disaster) happened on the ground due to air traffic controller's fault, that directed 2 airplanes on a collision course in thick fog [0].

[0] https://en.wikipedia.org/wiki/Tenerife_airport_disaster

Small correction: it was not the air traffic controller primarily at fault, but the captain of the KLM aircraft for taking off without explicit clearance.

IIRC, at that time there was no standard unambiguous way to communicate standard procedures and misunderstandings were often (albeit not fatal). It was after that crash when FAA introduced very strict rules on air traffic communication (e.g. the word "clearance" can only be said by the air traffic controller if the clearance is actually granted). Talk about rules written in blood.

"Clearance" is used in many ways to indicate that a clearance has not been granted yet (or has been revoked). From the ATC Job Order manual [0], examples include: “continue, expect landing clearance two mile final” and "CANCEL TAKEOFF CLEARANCE (reason)"

What you might be thinking of is the guidance against using "takeoff", which is "Avoid using the term “takeoff” except to actually clear an aircraft for takeoff or to cancel a takeoff clearance. Use such terms as “depart,” “departure,” or “fly” in clearances when necessary"

[0] - https://www.faa.gov/documentLibrary/media/Order/7110.65X_w_C...

Yep... two 747 crashing.

#2 deadliest is another 747 - JAL123 loaded with 520 passengers.

A mid air collision killing 300+ in 90s, and air india bombing killing 350 in 80s.

These crashes + lockerbie bombing add up to 2000 people.


> From a shareholder perspective, Boeing’s approach to its business has been wildly successful. The company is enduring its second worldwide grounding in recent memory.

> However, worldwide demand for airplanes is riding a high. And Boeing has diverted cash flow into dividends and share buybacks that have helped boost the company’s stock.

I started my career in IBM in the early 2000s, and this sounds incredibly familiar. As the years passed, company messaging and all-hands meetings increasingly celebrated the stock price, stock buy-backs, and later earnings per share. Meanwhile, the engineering teams and products around me felt more creaky and short-staffed, and the quality of many products (and, gradually, the technical leadership) seemed to be declining. Also, layoffs appeared to be picking up steam, and my salary was stagnant. I eventually left in 2010, giving myself a big raise in the process.

Right after the time I left, IBM rocketed to all-time highs and became the darling of the Dow, while everything else all around was still in shambles from the recession. I had a hard time reconciling the macro performance of the company with the facts on the ground as I experienced them. It was only much later that I think I understood what was happening, after reading a Sam Palmisano interview (having a hard time finding it).

The way I rationalize what I experienced at IBM is that the company leadership decided to raid the coffers and cash out on value the company had built up over the decades. It's like cashing in your chips at the casino after deciding you've played enough. The way they did this was to cut costs relentlessly and employ "financial engineering" to inflate the stock price. It was basically a transfer of wealth from the investment in the products and the people to the owners/shareholders in the form of higher share values and dividends.

I suppose one can interpret this sort of company decision as a bet against future growth, and an admission that the investment to some degree had run its course. Also, a company like IBM (and Boeing) has built so much value over the decades, that even after raiding the coffers and cutting costs, the embers still burn hot and the business is still huge, though perhaps now hamstrung and unable to grow. Of course, this creates a pretty dismal situation for us grunts on the ground, and the work product undoubtedly suffers, while the brain drain picks up its pace.

The difference of course between IBM and Boeing is that the cost cutting in Boeing has ended up costing many human lives, and the consequences are much much sharper in blood and reputation, and maybe in regulation as well.

That's a great analysis

"We Shall Build Good Ships Here; At A Profit If We Can, At A Loss If We Must, But Always Good Ships."

Collis Potter Huntington. (Newport Shipyards, contractors to US Navy)


Not that it detracts from the claims presented in the article, but the fact that the author is a seemingly high ranking person in his union adds a degree of politics to it.

Why? Is this opinion rooted in the American hatred/demonization of unions? I come from a scandinavian country and it would be pretty normal for a union spokesman to comment on something like this.

What would be his "political" point here?

Personally I didn't read it as having to do with hatred of unions, more just a reminder of political incentives. It's very much in a union's best interest to divert blame from the engineers it represents onto the companies "cost-cutting culture".

It could very well be the truth that the cost-cutting culture is to blame. But it's always worth noting incentives of parties in cases like this.

Why would it be in the union's interest to "divert blame from engineers"? Does it benefit financially from it? Do their members somehow benefit from it? Are you saying that Boeing wants to blame their Engineers and this is now a fight between Boeing and it's employees?

Serious questions, I'm not quite understanding that corporate culture.

SPEEA is a union representing (and collecting union dues from) Boeing's US engineers but not the $9/hr outsourced engineers. [0]

That being the case, the motivation to ensure that the former are not blamed for the 737-Max issue and to call into question the quality of work of the latter is probably clear.

[0] - http://www.speea.org/Join_Our_Union!/FAQ.html ("Where do SPEEA members work?")

> Why would it be in the union's interest to "divert blame from engineers"?

I don't know how it is in other places, but in the U.S. every unionized employee has to pay a fee to the union for the benefits it provides them. These benefits may include protection from corporate leaders if they try to fire you (see also: police officers, tenured teachers).

> Does it benefit financially from it?

Not directly, but there are a lot of employees who would be upset at the union if they paid their dues and still got fired anyways. Other employees would see this and be more hesitant at supporting the union in the future.

Alternatively, if there's a possibility that a lot of employees (>100) can be fired as a result of the fallout from this mess, that's >100 union fees that can no longer be collected.

> Do their members somehow benefit from it?

See protection described above. Note that, for some reason, some American unions believe in protecting their employees even if they deserve to be fired. I think this is where the politicization claims come in. By supporting this union leader you are supporting no accountability for engineers or managers who maybe should be fired. Or so the argument goes, I don't really agree with that line of thinking but it's understandable why people would see it this way, especially given the line between police unions and police brutality.

> Are you saying that Boeing wants to blame their Engineers and this is now a fight between Boeing and it's employees?

Honestly? Kind of. I mean, I'm not Boeing, but they certainly seem to be trying to paint this situation as a technical issue rather than a political/financial one. They sold a separate upgrade to the plane that provided two sensors instead of one, which could have fixed the MCAS problems. Why didn't the original plane just come with two sensors? Etc...

I'm actually interested in your perspective now. How are unions seen in your culture? Are these problems of unions protecting bad employees present in your country, or is it an American thing?

I think these are great questions, but I'm probably not the best person to answer them. Hopefully someone else here has a better understanding of unions.

But, as far as I can tell this isn't a fight, but it's more like marketing to the public in a way that might be beneficial for future negotiations.

I guess a union's purpose is to protect and benefit it's members.

A example scenario I could imagine (complete fiction) might be Boeing tries to look good to shareholders by laying off several teams, blaming engineers and management of them for the safety issues. This could benefit the company financially.

By preemptively making sure the public is aware that corporate culture is to blame it'd likely make a move like that far harder to enact.

Making it clear that this is the fault of the corporation, not the individuals, keeps the union members safe in this case.

This scenario is likely unrealistic. But maybe someone has a better explanation/historical example?

Boeing made changes that reduced the number of higher-paid engineers in the Seattle area, and moved some of the work to lower-paid and offshore engineers. That hurt this guy's union; it would help the union to get Boeing to reverse that.

Not addressing the "political", but the headline says he is an engineer, but in actuality he is 'A senior member of the union representing Boeing’s engineers', an important distinction.

Why can’t he be both?

According to his LinkedIn he left his position at Boeing as a physicist in 2000.


He could be. But, as it happens, he's not. He hasn't worked for Boeing since 2000.

The union position would be in support of local labor, who make and cost more as opposed to the outsourced labor. In practice, I've seen mixed sides to all of this. Boeing itself is a very large, very litigious organization, and there's a lot of issues at play. Boeing is also a major military supplier as well.

In the end, it's probably at least partially true and very biased at the same time. I think the biggest arguments about unions are if they provide value, and if you are required to be part of a union in order to work in a given position/company. There've also been weird reverse-unions where the union is actually on the employer network's side. I've seen this happen locally with regards to nursing workers, the collective is member operated under the various hospitals and providers for fixed, down-ward driven rates.

Union spokespeople are in the business of (literally paid to be) preserving local, union jobs.

They are likely going to speak negatively of even the greatest off-shoring/out-sourcing or other labor cost-savings effort.

> Is this opinion rooted in the American hatred/demonization of unions?

More or less. Unions are viewed as anti-corporate (rather than an balancing factor), anti-job, and anti-right wing by the Republican party. Even someone who believes in unions in the US would see unions as political.

Some of this comes from machine poltics of the early 1900s, but that being a real factor in American democracy has passed from living memory for the most part. It is much more rooted in the corporate supremacy of the 1980s with strikebreaking and what not.

Also, the headline "Boeing engineer breaks silence on MAX 737" is a little bit misleading -- he left Boeing in 2000, long before development on the 737 MAX started and has been working for the union since then.

That means this problem has been going on for over 20 years, and probably longer. Which is kind of scary.

The problem has been going since Douglas bought Boeing with Boeing money. Douglas shifted in the 80s to a state monopoly culture, where politics is more important than engineering and safety (see DC-10), a bit like lockeed martin. Boeing was still a company "a la" Dyson, led by engineers before the acquisition (in 97). I think the first Boeing non-engineer CEO was hired in 2004.

We hear from CEOs constantly and that’s normal, down to what books billionaires like to read, but god forbid someone representing workers gets a chance to be heard.

Not really. As you’ve seen with any other person speaking out from any company, squeaky wheels tend to get disappeared.

A union allows workers to speak out without fear of losing their jobs. The implicit approval gives more credibility to the author.

Is there a link to the source/actual letter?

Haven't read it yet but I'm guessing it's this: https://www.seattletimes.com/opinion/what-will-it-be-boeing-...

"According to Boeing’s annual reports, in the last five years Boeing diverted 92% of operating cash flow to dividends and share buybacks to benefit investors. Since 1998, share buybacks have consumed $70 billion, adjusted for inflation. That could have financed several entire new airplane models, with money left over for handsome executive bonuses."

So many punchlines, but this one is is just sad. 92%.

Excessive buybacks are bound to doom companies. If you can't compete, if you can't innovate, if your destroy your brand's reputation in order to maximize share buybacks, you will no longer have the revenue to continue the buybacks.

Like most things, a happy medium is good. Too few buybacks, you might be wasteful in your R&D spending. Too much, you get a Boeing situation. A middle ground optimizes for continuing to produce innovations, while maintaining (and hopefully growing) revenues.

In the case of Boeing, it might be challenging to know how much you can cut costs before you materially impact the business. What exactly is essential? I'm certainly no expert in the aeronautical, but who really knows if trimming two sensors down to one has a good ROI? As an engineer, I typically know that redundancy is a good thing. But maybe their historical data showed that those sensors have very, very low chance of failing. Maybe they've never previously even encountered the situation where the second was remotely necessary. They could've backtested the impact of removing the sensor, and found no concerns. We could assume a more ominous intent here, but with Boeing's reputation on the line, I doubt they would've actually been interested in cutting costs at the expense of lives -- we can see the impact that had today on their reputation.

Many little cost-cutting decisions are made, and many are probably likely to be inconsequential. It's easy for us to say, "obviously cutting 2 sensors to 1" was the wrong choice. But you could make the same argument for any other cost-cutting measure they employed, that had no safety impact. The difference here, is unfortunately this one brought a huge public eye on Boeing.

It's good to cut costs (where reasonably possible), and it's good to return value to shareholders. Those are things expected of public companies. They probably compared themselves to their peers, realized that stock buybacks is the current metric to which public companies are being measured by, and over-optimized for it. A lot of people look at their peers to decide what to do themselves, even multi-national companies. This time, it didn't pan out.

Before the 1980s, buybacks were illegal and seen as stock manipulation. We should get back to that. If you can't find a good use for the money, pay dividends.

I strongly agree.

I wonder if it would help for a new kind of union to arise - one that exists only to guarantee good wages for its members -- to force companies to direct more profits toward wages instead of towards stock buybacks.

I wonder what the short term and long term consequences of the buyback ban might be. It could probably an interesting debate topic over drinks that could go on for hours ;-)

Short term, it will probably lead to equity market tanking, especially if it is not coordinated with the rest of the world capital market.

I guess I'm more interested in long term impact on how companies operate, compensates executives, manages assets. Dividend will still be allowed.

Matt Levine has some food for thought on buybacks: https://www.bloomberg.com/opinion/articles/2019-06-24/would-...

To summarize his article: if you take issue with anything, take issue with the profitability and lack of reinvestment. Don't blame buybacks and dividends because in general, they're an outcome. As Levine says: "But in this story the buybacks are the residual, a result of a focus on profits rather than a cause."

"take issue with the profitability and lack of reinvestment"

The problem is lack of re-investment. 92% of Operating cash flow of being plowed into repurchase and dividend is high even more mature company like Boeing.

What's the difference between "operating cash flow" and "profit"? Is it "operating profit", that is, without investing in R&D or capital expenditures?

"Consumed" is kind of a loaded word. It's true that money spent that way can't be invested in capital improvements or R&D. But "consumed" kind of implies "wasted". That's hard to say without knowing what a normal number for an airplane manufacturer is.

And, of course, money spent on "handsome executive bonuses" would also have drawn ire...

Its insanity to me that investors are that important within corporate charters. Not the people it employs, not the community it operates in, not the value it brings to society, not even the amount of money it makes. The returns to investors is 99.9% the reason a corporation exists. Its institutionalized sociopathy, and I'm pretty certain it wasn't always this way (or at least as widespread).

Sounds like that big innovator IBM.

It's included at the end of the article.

"Article" is being generous.

Boeing is trading some 20-25% from its all time high. I find that amazing.

The stock market is basically telling us that this is all just a bit of bad press that will pass.

This story is very similar to a story here on hn from just a few days ago:


Compare BP with Tokyo Electric Power.

I didn’t realize Boeing’s stock had done so well! Now that’s shareholder value.

I am not sure why this is not talked about often enough.

Prior to the 1980s, Japan's economy functioned as a sort of War economy. Companies would spend and invest to gain market share at the cost of margins. share prices were rarely something a company worried about, it was always about product.

This was key to Japan's insane post WW2 success.

Then came the 80s, with it US style shareholder capitalism. and within 10 years Japan's economy collapsed - never to recover.

If you notice, China is following the same exact pattern, running a War economy with a razor focus on market share over profitability. It's what causes great fortunes to be made and lost in China.

Coming back to Boeing, because of the monopolist dynamic here, nothing is going to change. Especially since the people who died were mostly foreign nationals. I doubt even if some unfortunate event like that happens in the EU,NA Boeing would go bankrupt - there would be a lot of noise for a few years, maybe some board members get fired. Too many pension plans and retirement plans depend on Boeing's survival.

One might argue that the US, as a matter of national security, should forcibly fix Boeing. In my mind, the US’s major defense suppliers are too consolidated and too dysfunctional to adequately support the military.

Arguable the US should develop more in-house capabilities (as in government employees producing their own technologies) to compete with Boeing, etc if for no other reason.

Or not by things unless there are two viable independent sources for them, forcing the companies to co-operate but not merge, since if you merge no longer two sources, if you don't co-operate no longer two sources.

I don't think anyone wants Boeing itself to go bankrupt. We want the execs who established this culture to go to jail, and to be replaced with new ones who are now strongly incentivized to do things differently.

> I don't think anyone wants Boeing itself to go bankrupt

I do. Going bankrupt means the shareholders who benefited from this lose their shirt, the company goes into Chapter 11, and the market learns that airplane companies exist to make airplanes that don't fall out of the sky.

Both of you are proposing an emotionally charged witch hunt.

As one of the top comments stated, embracing a punitive culture toward engineering accidents has no long-term benefits. In my work (and this is probably true in any successful organization) even the most severe screw up is examined honestly and without emotion so that it can be prevented from happening again. If the immediate response is to fire a bunch of people or throw them in jail, people are going to do everything they can to avoid responsibility and ultimately fixing the problem.

If in the course of an investigation it comes out that Boeing execs were willfully negligent or malicious, then we can start discussing throwing people in jail and bankrupting companies, but that shouldn't be the first reflexive impulse.

I don't follow. You're implying "US style shareholder capitalism" is poison to other cultures that try to adopt it, but why then do you think it has worked in the US?

There's clearly something unique about the US in that nearly half of the capital in the global stock market is US companies, and the gigantic, relatively young, public companies are very disproportionately American (FAANG, etc.) Is it obvious to you what it is, because I've never heard a convincing, succinct explanation.

Here's a illustration of how skewed the world stock markets are by country:


After living and working in multiple countries around the world: in the USA its easy to make money. In much of Asia there is a huge amount of corruption, and in the EU a huge amount of needless tax and regulation, and in neither areas (apart from a few Anglo countries) is English spoken as the official language.

In the EU companies spend a lot more time optimising their tax situations (for the founder and employees) and cannot easily hire or sell products across borders due to language barriers. The EU needs to adopt English officially and individual EU countries need to adopt English as an additional official language and allow children to be instructed in it

I know the mistake was very costly and we are talking about lives here. But, come on.. is there a chance people are over analyzing. We can try hard and do everything right and still something can go wrong.

They are humans and the airplanes from Boeing have been very very very reliable. It's not like every max 8 dropped from the air. A lot of them, most of them flew alright. I know the people who lost their lives paid a big price but, in hindsight everyone has an opinion.

There was an article about ladders, tools and debris being left inside various parts like the tail. I’m sure management put the workers under extreme deadline pressure, but this kind of negligence isn’t simply a small human mistake. It shows there’s a systematic flaw in their quality assurance capability.

Source: https://www.google.com/amp/s/www.nytimes.com/2019/04/20/busi...

In case you want to hear directly from a former Boeing employee on this: https://www.nytimes.com/2019/04/23/podcasts/the-daily/boeing...

> We can try hard and do everything right and still something can go wrong.

Except they didn't do that. They did many things wrong, and it sounds like what they tried hard to do was cut costs, rush to production, and get a favorable regulatory/certification outcome via the cheapest route possible.

No surprises here. It's called "crapitalism" for a reason.

Please don't post unsubstantive comments here. Especially not unsubstantive ideological battle comments. We're trying for a more thoughtful sort of discussion on this site.


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