I once spoke to a hedge fund guy who had a large stake in Tesla going back at least 10 years at this point. I was curious... don't you get worried about every other company announcing a push into electric cars? GM and Ford are making big pushes, as are many of the European companies. His response: the best engineers want to build sexy new things and they don't want to live in Detroit.
Construction Physics recently ran a great article on why companies don't design new aircraft from scratch (rather, you see 5 or 6 iterations of the 737) [1]. The gist of it is that it's extraordinarily expensive to design a new aircraft from the ground up and that changes to regulation or the global economy can have a huge impact on which planes are desirable (e.g., big vs small, fuel efficient vs fast), so any new plane is an enormous gamble. So I understand why the bean counters look at a build-from-scratch approach as a bad idea. At the same time, it is very hard to quantify the long term impact of losing the engineering culture that comes along with building new planes from scratch. There's a wealth of knowledge that you lose if you don't do it very often. You also get happier and better engineers when you give them tasks that are more interesting. This stuff doesn't show up on accounting statements, but it's hard to deny that there's a long term effect.
Unfortunately, it doesn't really seem like a return to engineering culture is what they are going to do. The head of their commercial business [2] resigned according to this statement, but his replacement will be Stephanie Pope, a woman with an accounting/MBA background who has risen through the ranks at Boeing in primarily financial positions (she may indeed be very talented, but certainly doesn't have an engineering background).
[2] Boeing is divided into four divisions: defense, commercial, boeing capital and global services (I'm not really sure what this last one does, but the division that we primarily think of when we think Boeing is their commercial one).
> but his replacement will be Stephanie Pope, a woman with an accounting/MBA background who has risen through the ranks at Boeing in primarily financial positions
An engineering company run into the ground by accountants is going to be run by another accountant. Yeah Boeing is fucked.
GP didn’t imply that an engineering background guarantees success, just that the lack of an engineering background is detrimental to success (which one could argue against, but you didn’t).
In some ways this whole industry creates it's own problems because airlines don't want to get pay to get their pilots certified for new planes. So Boeing tried to engineer their way out of the problem and hack in some changes to make an entirely new design fly like an old 737-800. Southwest Airlines was a major contributor to this as the largest purchaser of 737s in the world, because you know, god forbid Southwest's pilots had to get certified to fly a new plane once every 50 years.
> Southwest Airlines was a major contributor to this as the largest purchaser of 737s in the world, because you know, god forbid Southwest's pilots had to get certified to fly a new plane once every 50 years.
I would guess Southwest's goal is more of a staff flexibility thing: if all their pilots are certified to fly all their planes, scheduling could be much easier and more effective. I don't know anything about airline management or pilot certification, but my guess is pilots are typically certified to only fly one kind of aircraft at a time, and don't typically maintain multiple certifications.
However, as much efficiency that strategy may have gained them over the last several decades, it's not one that's reasonable to maintain anymore.
They make millions of dollars every year. They can afford the training, they'd just rather have better metrics and not pay for expensive training, just to make the stock look better.
The also spend millions of dollars every year. I don't think many airline companies are actually very profitable right now. Take a look at any airline stock for the last 10 years, they were at a plateau before the pandemic, they are just at a lower plateau after.
> Full year 2023 operating revenues were a record $26.1 billion, a 9.6 percent increase, year-over-year
> Full year net income of $498 million, or $0.81 per diluted share
I'll say again... They have _plenty_ of money (record-breaking, even!) to train their pilots on the differences between two aircraft models. It's not that they can't afford it, they'd just rather not spend the money unless absolutely forced to, because a better stock price is their primary goal/motivation.
They must be bleeding somewhere because their stock is doing horribly. Record profits and yet investors are not optimistic about it for some reason. Also, I'm not sure if we are taking into account inflation? Like I recorded record income this year personally, but I don't feel very rich. If you look at their google page:
I highly doubt that an engineer would make a great CEO, but a CEO with no engineering background isn't going to know when what the engineers are saying that goes against what the business people are saying will matter. The bean counters will always be against anything cutting into the profit margin even if that extra expense the engineers are pushing for will actually make or break the thing.
I think this is a mass generalization of accountants. Accountants are a wide varying type but the attention to detail is the key distinguishing factor.
The only distinguishing feature of an accountant is that they care deeply that left column = right column. They care that you can track where your money goes, not that every budget is squeezed for profit. In truth, the right accountant might be a boon because she will listen to the engineers rather than think she knows better because she was an engineer decades ago.
She may end up being a terrible CEO, but let's consider our biases here.
> The bean counters will always be against anything cutting into the profit margin even if that extra expense the engineers are pushing for will actually make or break the thing.
I think they key point is: you can't competently make a tradeoff between two domains if you don't understand both of those domains.
Engineers want to make the best engineered thing, and have a harder time prioritizing costs. Accountants/business types want to make some money number go up this quarter, and will reject good engineering ideas to penny-pinch. Someone needs to be able to (competently) keep both groups aligned.
The biggest issue with what you just said is "this quarter". The shortsightedness of "this quarter" is the downfall. It is possible that for the greatest good in "number go up" measurement, that this quarter "number not go up" is acceptable if it means "number go up" is possible for longer later.
> The biggest issue with what you just said is "this quarter". The shortsightedness of "this quarter" is the downfall. It is possible that for the greatest good in "number go up" measurement, that this quarter "number not go up" is acceptable if it means "number go up" is possible for longer later.
Another problem is the shortsightedness of "this quarter" can actually work for a long time, until it doesn't. People who kick the can down the road don't always realize what they're doing, because they never stuck around to pay the piper for that decision they made. Then problems are easy to excuse as the incompetence of the last guy(s), and the can-kicker can imagine themselves as some great business leader.
Most of these "bean counters" don't even work for Boeing. They're institutional investors and hedge funds who only care about share price. In other words, Wall Street. Boeing's mistake was in listening only to these folks and using share price as their sole success metric. Goodheart's Law took over.
Capitalism before the late 20th century had as its mantra "Build a quality product. Keep the customers and workers happy and the share price will take care of itself."
Around 1980 that changed to "Bump the share price and to hell with everything else."
No one is arguing it's a guarantee engineers are always good executives. Also looks like Welch was a chemical engineer before GE, so not sure how much of that knowledge transfers.
An engineering background doesn't protect from the incentive to squeeeeeeze -- the best you can hope for is that it calibrates the C-suite instincts for having squeezed too far to a level more sensitive than "doors are literally falling off." But that's just hope, and hope vs incentives is a game that, well, has a favored player.
Only meaningful competition does. For example, competition with Comac is not meaningful due to politics, but competition withing the country with Douglas and Lockheed was.
Yep. The Boeing/Douglas merger didn't just put the wrong people in charge, it removed competition. US antitrust is in a sorry state and we are seeing the consequences.
Yeah he was at the helm but the engineering occurred before him and he navigated it ok all things considering. He was the most competent of their ceos in the last 2 decades probably
Boeing has declined in quality over the last two decades. They used to be considered great. How could he be the best if their tailspin started around 20 years ago?
For better or worse, the commercial side is what matters.
If an F-15 has a wing disintegrate in flight, we might hear a blurb about it on the news and maybe a pilot and a few people on the ground die. Tragic, but it's not a blow to the confidence in air travel. If something happens with a 737, there's hundreds of deaths, the public won't get on that plane, the FAA and NTSB release extensive reports, and the backlog for aircraft gets even longer for airlines.
Another company sucked dry by business school vampires.
Is that really the case? I've never been given the ability to pick the aircraft when flying.
I traveled last month for a wedding and made it a point to book a flight scheduled for Airbus planes. Turns out the return trip was changed and I flew Boeing on the way back.
Delta didn't do anything wrong there, I just have no say in what plane I book a ticket for.
I primarily fly Delta and at least part of the reason is that they don't buy the Max. Prior to the last couple years I primarily flew Southwest, who does fly the Max.
That doesn't mean I'll never be shuffled to a flight run by another airline but most of the time I won't be on a Max. That said they do fly Boeing, they just don't fly the Max (or the renamed 737-8).
Agreed. I've always had a good experience with Delta. The only flights I ever remember having issues with in 30+ years were on other airlines.
I do appreciate that Delta doesn't fly Max, and I also don't fault them for swapping planes from Airbus to Boeing on a particular flight. If I really care enough I'll have to just drive.
I would guess it's usually secondary to the airline's reputation. Various airlines have gone bust following crashes, such as PanAm and Swissair, whereas other airlines trade on their safety record, such as Quantas. Part of that is buying planes with a good safety record and grounding any planes they believe to be unsafe.
The recent Boeing crisis does seem unusual in that it seems the media focus has bypassed the airlines entirely and gone straight for Boeing, but I've not heard anyone in the real world actually change their ticket directly based on the aircraft involved. Personally, as a passenger, I'm more concerned about maintenance and pilot training, as that's far more likely to lead to my untimely death than Boeing.
Even with the 737 MAX crashes... don't get me wrong here, Boeing were absolutely at fault for how they handled the MCAS system, they deserve the backlash, and caused one of the holes in the Swiss cheese that led to the crashes. However. The crash investigation reports back up that poor training and safety culture at the airlines were also major factors. Runaway trim is something they should have been able to handle, and problems had been reported on previous flights on those planes, but they didn't want to take them out of service for financial reasons. Ethiopian Air and Lion Air already had terrible safety ratings before those incidents.
All this is to say, I think the bigger risk for Boeing is that good airlines will worry how their reputation would be affected by an incident, and ground or stop buying their planes. Any airline is probably two major fatal accidents in a short space of time away from bankruptcy.
> I've not heard anyone in the real world actually change their ticket directly based on the aircraft involved.
Interesting that you went absolute here when my GP comment actually called out that I picked a flight specifically to avoid Boeing planes. I wasn't aware of the change after I booked so I didn't change my flight, but I did pay slightly more when to book on Airbus.
I'm afraid that I don't consider this conversation to be in the real world just yet! Perhaps I'm showing my age?
What I meant was that places like HN/Reddit don't tend to be very representative of the offline meatspace, and my experience in the latter is that few people would ever check which airliner they're flying on, let alone change a flight because of it.
>Ethiopian Air and Lion Air already had terrible safety ratings before those incidents.
Ethiopian Air actually has a great safety record, believe it or not, and Lion Air pushed Boeing for a MAX simulator, which Boeing pushed back on to wave attention away from the existence of MCAS by regulators. That's in spite of, yes, some serious quality related concerns with the airmanship culture that was loudly echoed by Langscheiss who should be ashamed of himself for such a display of Americanist chauvinism in the face of what was so clearly a fouled up attempt at rollout of a design by Boeing without the due care and communication involved with putting such machines under into the hands of unsuspecting pilots.
>Runaway trim is something they should have been able to handle...
Uh uh. No, bad MCAS does not present in the same manner as runaway trim. It is not a slow, steady, comtinuous, adjustment of trim, but a rapid, intermittent, escalating, and intensifying application thereof, with a 5 second reset every time you touch one of the electronic trim switches. Further, it was impossible to isolate the Flight Computer's trim circuit (which would solve the MCAS problem entirely) leaving the pilot's the electric switches they'd need to retrim fast enough because of a specific design choice to maintain type certification.
I was too harsh on Ethiopian. I was being too eager to bash out a "hot take" on my phone. So, I withdraw my characterisation of them as terrible.
While Ethiopian's safety record isn't terrible, Lion Air's was/is, despite attempts to change matters. Ethiopian do have a number of ongoing issues though, and Ethopian Airlines, the ECAA, and the EAIB have some troubling tendencies to avoid introspection - perhaps since Ethiopian Airlines is a government-owned flag carrier. Consider their response [0] to the LCAA/NTSB/BEA's investigation of the Flight 409 crash: "biased, lacking evidence, incomplete and did not present the full account of the accident [..] Any characterization of our pilots contrary to the foregoing is pure fabrication that cannot stand any scrutiny". That being said, I would personally fly on Ethiopian, but I definitely have reservations about them.
With regard to both crashes, the NTSB/BEA/EAIB reports all identify crew performance as inadequate. The counter-argument is that since they hadn't seen this specific situation before, their inappropriate responses were due to a loss of situational awareness and task saturation, especially with the AOA causing an erroneous stick shaker and various confusing instrument readings. That said, in both cases, the weather was good and it was daytime, so the pilot responses are nevertheless surprising even given the erroneous instrumentation.
While it's true that MCAS doesn't resemble the most common causes of runaway trim, runaway trim can happen for lots of reasons, and not all present the same way. For example, intermittent shorts can cause rapid intermittent uncommanded trimming. In any case, the response is the same, which (paraphrased) are the memory items: disengage and do not re-engage the autopilot, disengage and do not re-engage the autothrottle, hit the trim cutout switches, hold the trim wheel, and trim manually, then follow the more detailed written procedures. Indeed, in previous flights on the Lion Air aircraft, MCAS issues had occurred and the pilots in those flights recovered using the runaway stabilizer procedure.
The reason they are memory items is because trim runaway can happen FAST and recovering a severely out-of-trim aircraft using the trim wheel is somewhere between difficult and impossible, even with light aircraft, so if the trim is ever doing something unexpected, the first instinct should be to disable AP and then stab trim cutout. The responses from the pilots in both crashes were not to do this, and indeed what they did do was strange and suggests poor CRM and insufficient training. Additionally, with Ethiopian, they hadn't properly disseminated Boeing's updated MCAS training to their pilots following the Lion Air crash.
I'm not trying to defend Boeing, as they massively fucked up, but my point is really that airline training and safety practices are very important, and for me personally, far outweigh the aircraft I'd be flying in (unless BA were trying to get me on a Tupolev). I'm also not American and have long preferred Airbus to Boeing, so I'm not saying any of this because I'm biased in favour of the US. The FAA also clearly hold some of the bag here for not properly regulating Boeing.
PanAm was already on its way out before Lockerbie. Its entire business model was upended primarily by FAA route deregulation and upstarts like People Express, Laker and SouthWest charging substantially less for the same routes they flew, and, secondarily, by the hub and spoke model (PanAm primarily flew huge jumbos that were designed for point-to-point-to-transatlantic routes).
In extremis, yes. In practice, no–shave a nickel off the ticket price and you’ll replace those people.
The purchaser with power is the airline. And even they mostly lean into safety due to the financial cost of cancellations and grounding. Regulators, not markets, make flying safe.
> shave a nickel off the ticket price and you’ll replace those people.
If the concern of Boeing vs Airbus safety is really that low on the list for passengers we really shouldn't have anything else to talk about or regulate. The accidents and issues are well publicized, if people just don't care do we really need further investigations and/or regulation?
> How can the aggregate add up to us caring when each individual piece does not care at at all
It can’t. Where is can is where individuals care a little but don’t want to explicitly bear the cost if it if distributed only across those willing to pay for it.
Most people agree cars should have seatbelts. Were seatbelts optional, and only those willing and able to pay for it could have them, far fewer people would pay for it. Which, in turn, increases the cost to each of them individually.
That gets to a really odd fact of people (as in the collective "we"). Why would we think cars should have seatbelts if we would rarely see the value enough to pay for or use them?
I personally want seatbelts in case someone hits me and causes an accident. I don't actually think they should be required though, especially if many people would choose not to use them if given the option.
> Why would we think cars should have seatbelts if we would rarely see the value enough to pay for or use them?
If everyone pays, the fixed costs are amortised across everyone. (Also, it’s hidden in the purchase price.) That lowers the aggregate barrier to entry.
Think: toll roads versus roads paid for with taxes.
We may be getting off on a tangent here, but seat belt prices aren't really amortized. They are a hidden cost since we aren't told the price, and they are cheaper than if they were an option but that's mainly due to manufacturing efficiencies. Requiring seatbelts would never make them cheaper than having no seatbelts.
Lowering the barrier to entry is only really a benefit to those who would opt in anyway, it forces those who wouldn't want it to pay the cost of that.
In the original topic, my main point was that if consumers are made aware of the current safety issues Boeing has had and ultimately don't factor that in at all when flying then we really should be done here. The FAA doesn't need to do anything to protect the public if the public has shown that it just doesn't care, and people/media should stop talking about it as though its a controversy when consumers are just as willing to fly Boeing as they are Airbus.
>Is your point that we care in principle but don't functionally care when faced with an actual decision?
Yes this is basically why the only thing capitalism can do is lower prices through squeezing everything, because while large groups of people are principled and care a lot, individual humans are largely irrational (especially when it comes to risk, because the humans who accurately analyzed risk on a population scale were eaten by tigers) and fairly flexible in morals, ideology, and priorities.
> ... shave a nickel off the ticket price and you’ll replace those people.
While it's possible that's true, doing that is also gifting those customers to your competitors. So there's another dynamic there to consider as well. ;)
> that is also gifting those customers to your competitors
To zero practical extent, particularly when you weight for frequent fliers. Most consumers pick the cheapest ticket. Those who don’t go first on loyalty. Frequent fliers who fly based on non-standard factors are well studied and highly in-numerous in any single aspect.
They did do something wrong because you paid for a service and they did not provide it. Unfortunately to defend that contract you would probably have to decline the substitution plane and sue for expenses incurred because of that. They know nobody will put in that effort.
The service under contract is travel from one airport to another on an expected schedule. They do best effort to fulfil that but are under absolutely no commitment to the exact model of plane used.
I may not have any control over which plane I have to fly on, but I sure felt better yesterday when an ordinary 737 pulled up to my departure gate, no winglets or serrated engine covers to be seen.
You can see which plane you are going to ride when you book a ticket via several modern apps these days. You absolutely can choose not to buy a ticket for a plane type you wish to avoid.
None of the relevant contracts allow for you to specify the plane. If you buy a ticket for "an airbus A350" and show up and they ask you to board a 737, if you refuse, you are the one breaking the contract, and the airline does not have to compensate you in any way. Right now a significant majority of all flights happen on the exact model of aircraft the ticket mentioned, but if people start choosing not to fly on boeings, you can rest assured that airlines will start to move planes around so that their expensive planes still make money.
If you want to be guaranteed the plane you signed up for, we need new regulation. That is not a right anyone has currently.
I think I mentioned this in the GP comment, but that's exactly what I did recently. I booked a flight scheduled to be on Airbus planes but there's no guarantee there. Mt return flight was changed after I booked to be on Boeing planes.
Booking a ticket is just a commitment for them to get you to/from specific destinations on time, if possible. Showing the plane scheduled for the flight is helpful for picking seats but its definitely no guarantee.
My wife actually got stuck in DC over night once when they decided they wanted to use a smaller plane. No mechanical issues, I assume they just needed to move the plane for the first flight the next morning and they decided to bump a few passengers off the flight.
They might be. They've been struggling to deal with the threat from Airbus for a decade or two now, and that means there's less of a guarantee their capital allocations to commercial planes will produce a profit.
There's still quite a few brass in the US military who came of age in the immediate post-Vietnam era and remember the BUFFs being the core of the US bomber fleet, and will subconsciously favor Boeing over anything else. That means a better (though not guaranteed) likelihood of winning a contract.
The issue is, a lot of their offerings for things like tankers, AWACS, general transport, VIP transit, etc. are based on airliners.
Airbus is a threat, but they have a huge obstacle Boeing doesn't: they don't build planes in the US except for the A319-320-321. Any defense contract won with an Airbus airframe as its basis (e.g. NG's KC-X submission based on the Airbus A330 MRTT) also includes the expense and possible difficulty building a factory in the US to manufacture them. Boeing may have a bad reputation for screwing up manufacturing, but that's a known quantity vs. the giant question mark that is the quality of a theoretical Airbus factory--- run by a US defense contractor rather than Airbus--- that hasn't been built.
This comment made me curious about the qualifications of the Airbus CEO
>Guillaume's love of flying and aviation dates back to his childhood. He is a qualified light-aircraft pilot and helicopter flight-test engineer with 1,300 hours of flying experience.
Oh, I doubt that. Their bribes to congress are paid in full and they have some of the juiciest government contracts with which to pad their profits with egregious cost overruns.
If bean counters are useless and can’t value engineering, why do you start your comment with a story about a hedge fund guy’s opinion? They are the ultimate bean counters.
Calhoun was a Managing Director at Blackstone which, sure, isn’t a hedge fund but surely is not a glorified accounting firm. If he can be called a bean counter, so can Anonymous Hedge Fund Guy.
There are plenty of extremely strategic CFOs that began their careers as “bean counters.” The terms of all this discussion and theorizing are purely in-group out-group confirmation bias nonsense.
Totally different doesn’t mean you can’t have both. It just means one doesn’t confer the other.
More broadly, I agree with you. Pretending everything would be better under a real engineer is a deluded combination of No True Scotsman and in-group signalling. As HN demonstrates, no group is immune to their siren calls.
Yes and no. They try to integrate more system thinking in order to justify larger risks. He explains it very well with the factors that the hedge fund guy considers that the accountant does not.
Not that I’m a huge fan of hedge funds but I believe the OP’s point is very valid.
The finance organization of a firm is plenty capable of recognizing high-risk projects have strategic value. Apple spent a decade failing to build a car while being run by an operations expert blamed for pushing compromises to the design group and a famously stingy CFO.
Engineering orgs are totally capable of giving up on engineering without any pressure from outside functions. You can’t build a clean sheet plane because MIT grads want to live in New York City? Is that serious thinking? No.
I am not a hedge fund investor, but was an early-ish Tesla investor. I agree with the thesis. It is also why I have SpaceX equity exposure. The people who are at these orgs are driven by the mission and at the top of their game, which leads to rapid and substantial value creation.
That is not to say there aren't some diamonds at second class orgs, but they are not empowered by the org; on the contrary, the org holds them back, leading to either value destruction or an anemic value creation trajectory as a whole.
Finance is just very refined engineering. There's good and bad engineering, depending on the trade offs. Usually in finance the contrast is short vs long term profit
“Very refined engineering” sounds like a made up concept. There are a handful of top hedge funds which operate like high-functioning engineering firms, but a portfolio manager who speculates that an industrial firm can’t bring products to market because of nonsense like where engineers want to live is absolutely not in that class.
This was back in the 60’s, so they were probably using wind tunnels and scale models to do stuff that a modern computational fluid dynamics system can turn around in an hour.
I’m sure it was very expensive back then, and wouldn’t be surprised if today’s Boeing couldn’t pull it off, but I doubt it’s fundamentally hard or expensive to do design a 747-class airliner using modern technology.
True, but this ignores the fact that Boeing employees were actively "designing new planes" in that time, and thus had the skill set. From your wiki link, some choice excerpts (not one whole paragraph):
> In 1963 [edit: 6 years before], the United States Air Force started a series of study projects on a very large strategic transport aircraft. Although the C-141 Starlifter was being introduced, officials believed that a much larger and more capable aircraft was needed, especially to carry cargo that would not fit in any existing aircraft
> In 1965, Lockheed's aircraft design and General Electric's engine design were selected for the new C-5 Galaxy transport, which was the largest military aircraft in the world at the time.[1] Boeing carried the nose door and raised cockpit concepts over to the design of the 747.
And from some other articles:
> At Boeing, Sutter worked on many commercial airplane projects, including the 367-80 "Dash 80", 707, 727 and 737. He eventually became a manager for the new jumbo-sized wide body airplane, the four-engine Boeing 747. [0]
My only point is they didn't go from zero to 747 in 3 years. They went from having an active culture of building jets, and doing R&D in this area, and having people that had successfully worked on other new jet design projects. They went from that to having a 747 in 3 years. Still incredibly impressive, but if we admit that culture is lacking now, it's entirely conceivable it'd take longer than 3 years to build a comparable jet today. (Look at how much slower north america builds rail now, or anything, compared to the 60s).
> His response: the best engineers want to build sexy new things and they don't want to live in Detroit.
The problem with this is that to make it in the car industry in the long run it's not really about having the best core engineering in terms of product development, but actually having the best & most efficient manufacturing, and the best marketing and sales pipeline.
Not a critique of Tesla here, just that I don't think it magically holds what is stated here. Labour costs, proximity to shipping, proximity to supply chains, etc. are absolutely key. The auto industry is concentrated in the corridor from here (S. Ontario) down to Michigan, etc. for historical reasons, but also logistical ones. Great lakes / St Lawrence shipping, rail connections, cheaper nearby Canadian labour for some things, parts suppliers & other factories etc.
Big battery manufacturing plants are now being built across this whole region now, too.
> global services (I'm not really sure what this last one does, but the division that we primarily think of when we think Boeing is their commercial one).
Global services handles logistics/maintenance for airplanes, probably handles both defense and commercial which is why they spun their own division [1].
Agreed on both counts. I think I'm a great engineer (not so sure about "best") but my family/community are the most important things in my life and I would not sacrifice that to work on something sexy and new.
Additionally, having spent a little bit of time in the suburbs of Detroit (Auburn Hills and Dearborn mostly) I found the area to be absolutely gorgeous and filled with things to do (again probably more for folks with families). Granted this was in Spring. I hear the winters are tough.
Yeah, that's a pretty poor analysis across the board. That great engineers require a sexy thing to work on is empirically false, that engineers won't move to Detroit is historically false, that there is some small cadre of engineers you must monopolize in order to make electric vehicles shows a deep misunderstanding.
OP here. You can disagree with my conclusions, but yes, Toyota's North American R&D Headquarters are near Detroit (in Ann Arbor) [1] and GM's research headquarters are in Warren, MI, a suburb of Detroit.
I'm convinced there is some merit to this. So what would be the "Tesla" place for engineers to work at nowadays? Maybe Volocopter, Eviation, Boom Supersonic and the likes - there is plenty.
Also, I'm convinced elevators and escalators are now more often broken than previously and always thought - what if that can be explained with loss of knowledge? Given how old this stuff is. There likely only ever is "innovation" in how to produce it for less cost and it results in mediocre technical "compromises".
This is nothing more than physical degradation, because replacing the escalator or elevator costs a lot of money, while hiring the cheapest repairperson to service it with spit and bubblegum costs only a little.
America CAN still build stuff just fine, but everywhere you look, the upper management has stopped agreeing to pay for it.
It always seems like management is happier to pay $$ every year for ongoing support costs over $$$ one time and $ every year after for an investment of some sort into future production.
Tesla, SoaceX, Rocket Lab, most of the other NuSpace companies, other EV companies like Rivian, the hardware departments of Silicon Valley companies, and defense startups like Anduril are what I immediately think of
Planes and rockets are two sides of the same coin, an engineer can pretty much work at either if they want
Well I guess there are some plane startups like Boom, companies working on green powered planes, and companies working on plane style drones but it’s a lot less common IMO
My hot take on the MAX is that the decision to go for a clean sheet or modernization is immaterial here. Engineering and product development can come up with an analysis that points to the current design having enough room for improvement and be viable in the market.
What was the really big problem and a clearly (in hindsight) wrong decision was to try and get past requirements for a new type certificate requirement for the pilots.
Had they just stood firm and told the airlines that it's not safe to try and monkey-patch the thing to feel like the old one so no retraining however small would need to be made 346 people would not have been killed and the issues would be elsewhere.
Yeah the problem isn’t that they edited the 737 design instead of doing a clean sheet- they did it twice before with nearly no issues and making a 737+++ is what the airlines would prefer over a clean sheet- the issue is the staggering amount of corners they cut in the process. Pilot training is a start but also they clearly poorly thought out MCAS and have poor quality production with the door issues.
Hope they can get someone who truly understands the engineering challenges at the top, rather than trying to squeeze the bottom line as much as possible.
Its sad.
Having followed this story for the past months, it does seem like Boeing started their troubles when appointing non-engineering business and accounting types like Calhoun as their leader.
There is no way they can go back to engineering leadership. An engineer focussed CEO would do some spring cleaning and the board isn't going to vote someone like that in. It's more of the same but this time they'll pinky promise to do better QA. That said, one more failure and if their commercial wing isn't already done, it would be.
A CEO in these companies is little more than just an hat.
Boeing had CEOs with an engineering degree recently and the result was the same or even worse.
The problem is much more deep than the CEO or the people immediately around him, by this point the whole house is rot. But there is an entire generation of managers who made most of their career feasting on Boeing, so not everything was lost... I guess.
The thing that a CEO does that matters is set tone, which is more than just a hat. A CEO with the right background will set the right priorities, and for Boeing right now, that's probably more quality than bottom line. These days it seems that Boeing chasing the bottom line is sacrificing quality, which unironically then hurts the bottom line.
The CEO is chosen by the board. A CEO is a direct reflection of the board.
On the other foot, you have the 144,999 Boeing employees that are not the CEO. Their skills, attitudes, and day to day responsibilities will go largely unchanged.
I agree that the right CEO can have a huge impact, but there is so much inertia against change. It's more likely the board is establishing the next fall guy for the next major scandal in 3-7 years.
The board of directors are elected annually by Boeing shareholders[0]. So we'll change the board of directors when wall street stops caring about quarterly profits.
The Board is capable (and in this case) is also capable of making choices about priorities and can pick someone who sets a good tone (or not). This doesn’t really change my statement.
The workers have their own incentives, but in general, going against the leader’s perspectives is counterproductive. They could all start caring, but it’s in their better interest to care about what the boss cares about.
Not to go full communist, but why not have a third of the board being employees representatives? In Germany its union leaders (which is imho the worst solution, but in Germany, it make sense), and i don't know how northern europe works, but i guess its similar. Its not enough to be a controlling part on its own, but they can still leverage their influence to steer the company a bit, and could represent a block on some decisions, especially controversial ones (the moving of HQ from seattle, and probably other).
Also, it limits drama and backstabbing, as representatives should be accountable to other employees, and have to lead general assembly to talk about huge future changes, like a change of CEO. If a third of the board cannot backstab, and have to talk to literally everybody before making huge decisions, it limits drama _a lot_.
I've made very similar arguments before and I think it's the correct action. Specifically in Germany's situation this was implemented to appease workers so they wouldn't "go full communist", which was a real concern. I think it's pretty clear that we need more voices in the boardroom than those picked by Wall Street.
On the other hand, I can't see a non-engineering type facing up to the cultural conflict after the McDonnell Douglas merger
> clash of corporate cultures, where Boeing's engineers and McDonnell Douglas's bean-counters went head-to-head
I do believe that leadership plays a role in the top and can have a general negative or positive sway on the culture in an org. Im rooting for Boeing to fix their problems. And appointing a person at the top to lead that change is going to speak louder than any press release/marketing effort to improve their image.
A new CEO could revert some of the root causes of the current problems. Put a focus on engineering for new hires. Bring upper management closer to engineering again. It takes a long time to steer a ship as large as Boeing, there is no quick fix. But the decision to find a new CEO could be a step in the right direction.
Lisa Su would be a better example IMO. She has remained laser focused on the turn around of AMD and mostly reserved i.e. tends to under promise and over deliver . Pat Gelsinger has been the complete opposite i.e. tends to over promise and under deliver. Intel has poorly executed a quite a few things while Pat has been CEO.
> Intel has poorly executed a quite a few things while Pat has been CEO.
He's been CEO for 3 years, considering the state of decay of Intel in 2021 that's not a lot of time to turn things around. AMD took ~6 years between Bulldozer and Zen 1 and you could even argue that Zen 2 is when it truly became competitive so that's 8 years.
I'm not saying he's the Intel messiah FWIW, just that the jury is probably still out on whether he will deliver or not.
Curious to know if they'll go with another Jack Welch-lineage executive for the replacement (possible from the MD side of the family), or get a more 'technical' person.
Jack Welch was a 'technical' type. He had a PhD in chemical engineering. Just because somebody isn't a bean counter doesn't mean they won't run the company that way.
> Jack Welch was a 'technical' type. He had a PhD in chemical engineering. Just because somebody isn't a bean counter doesn't mean they won't run the company that way.
He had that background, but was he really a "technical type."?
I've met plenty of trained software engineers who were gunning for management from day one, and they weren't great engineers.
I think what people are saying when they need an engineer at the top is they need someone who understands and will prioritize engineering. You can definitely have an ex-engineer who prioritizes MBA stuff over engineering once they got into management. You're very unlikely to find an accountant who will prioritize engineering.
>He had that background, but was he really a "technical type."?
I think when people talk about technical types they don't mean a programmer or something like that. They mean somebody who is in the actual field, not an accounting/MBA type. GE had a petrochemical division so Welch was technical in that sense.
>I've met plenty of trained software engineers who were gunning for management from day one, and they weren't great engineers.
I don't know enough about Welch to know if this is the case. Are you just hypothesising he could have been like this or are you stating a fact?
>I think what people are saying when they need an engineer at the top is they need someone who understands and will prioritize engineering. You can definitely have an ex-engineer who prioritizes MBA stuff over engineering once they got into management. You're very unlikely to find an accountant who will prioritize engineering.
I'm not sure if it is unlikely to find an accountant who prioritizes engineering. Just because they don't necessarily understand the technical details doesn't mean they can't understand the long term benefits to having quality products and innovation.
Do you have any stats on MBA vs engineering types and their prioritizations?
> I don't know enough about Welch to know if this is the case. Are you just hypothesising he could have been like this or are you stating a fact?
I'm talking about "types" not Welch.
Specifically I'm clarifying what I think people are asking for when they want an engineer leading Boeing, and amplifying the point about how one's degree or starting role doesn't capture what they're asking for.
> I'm not sure if it is unlikely to find an accountant who prioritizes engineering. Just because they don't necessarily understand the technical details doesn't mean they can't understand the long term benefits to having quality products and innovation.
Then you don't get my point, though some of that may be my fault. I meant something a little stronger than "prioritizes. " Maybe "identifies with engineering" is closer to what I was trying to communicate.
I don't think the problem with an accountant is "understand[ing] the long term benefits to having quality products and innovation," it's making the short term decisions about engineering vs. cost to get there. At a minimum, I'd think an accountant would likely require onerous and repeated explanations and business justifications that would discourage that kind of thing.
Indeed, yet an engineer trained in that industry should also have a better sense of when short-term financial concerns are putting the long term mission at risk. Welch was a chemical engineer when he joined GE, so I'm not sure it's a strong counterpoint.
GE has (had) their hands in everything so a chemical engineer is fine for them. I'm not suggesting a chemical engineer would be the most appropriate for Boeing.
It’s crazy that he’s announcing his departure 9 months in advance. He’ll be a lame duck leader for a huge chunk of that. I get it that they want time to find a replacement etc, but 9 months is an awfully long time to be on the way out.
You've clearly never worked at Boeing. 9 months is fast! We're a contractor, and don't expect a response to our most recent quote until 2026, maybe 2025 if they're fast, completion might not be until 2028.
Meanwhile, we're scrambling for our non-aerospace customers who want projects completed in 12 weeks...
He'll be out in three for the most part, with the last six months being for show and to not give the impression that the decision is related to the ongoing legal stuff.
Having the CEO leave doesn’t guarantee safer planes. If anything, I’d want to hear what the company leadership is doing to change production… not necessarily how it’s being reshuffled
Lot of commentors missing the mark re: they need engineering leadership! A publicly traded company is a profit driven enterprise, maximizing profits is their first and last goal. Everything in-between that is called risk. Right now they'll be scrambling to hire the right PR teams and make those risks look less risky so the profit machine can go back to work.
And that's the difference: engineers see risk and ask how do I make it less bad, MBAs see risk and ask how do I make it look less bad.
Making bad planes is terrible for PR and it's terrible for profits. You can have the most spineless, profit driven sociopath in the world at the helm of your organization but as long as they see problems as things to be solved, the problems will get fixed because it is the rational strategy. But if leadership does not consider the possibility that things could actually be better, they're going to be doing damage control until the end of time.
Don't worry guys, they'll replace him with a former McKinsey consultant! A few cookie-cutter "best practices" here, a little outsourcing there, and everything will be fine!
"For years, we prioritized the movement of the airplane through the factory over getting it done right, and that's got to change," CFO Brian West said last week.
Um...so, why did you do that? As CFO, that was undoubtedly due to policies you pushed. So why aren't you taking your hat and leaving?
Why not? We saw from internal Google emails that sales had the ability to stop engineering in order to push more ad sales at the detriment of the product.
Sales can’t do that. The leadership where sales and engineering meet has to make that call. Sales may ask for it, but typically sales doesn’t drive engineering, although they usually have a lot of influence. But engineering needs to be able to explain the risk.
Of course it’s leadership that makes the call. At any large company sales and marketing have a huge influence on the leadership and therefore the product. The engineering teams that align with those goals will get the best funding and will be listened to the most.
Realistically, the US government would nationalize Boeing before they let Boeing outright fail (and they'd probably only do that if bailouts didn't work). Boeing is a huge strategic asset for the US, and I don't think the US is willing to deal with the consequences of Boeing shutting down.
I was actually wondering - what is the last company that the US actually nationalized? In 2008, some banks were shutdown and their assets handled by the govt but not sure that qualifies.
At the end of the day if you’re not a plane-need who is motivated by building cool planes, you’re not going to be interested in making cool planes. Boeing got taken over by people who wanted to make money, not make cool planes.
I've got a kind of hot take that I'd like to talk about:
First, is there something similar to a CTO at Boeing? (Like chief engineer?) If so, then I think he/she is ultimately responsible.
I've been an executive tech leader for a couple of years now. And when talking about technology, the bucket stops with me.
As I was learning to perform those roles, I got "pushed" by sales, finance, and business in general. Of course initially I yielded most of the time, but as I've grown I've learned that I can and MUST push back when executive technical decisions are being taken by policies cutting corners and the like.
So, the question in Boeing case is, if the engineering practices where sloppy, why didn't we have a couple of tech VPs resigning? before shit happened? Why didn't we have the CTO equivalent resigning? (Presumably after having pushed back with the executive team to stop the bad practices?
For me, that sounds as bad Technical executive leadership.
I've resigned from a startup CTO position because I ultimately disagreed with the return to office policy and couldn't find a middle ground with the CEO.
And I'm a nobody who had to put ads in LinkedIn to find a new job .
Surely engineering executives at Boeing would have no struggle finding a new project.
> ARLINGTON, Va., March 25, 2024 /PRNewswire/ -- Boeing [NYSE: BA] President and CEO Dave Calhoun today announced his decision to step down as CEO at the end of 2024, and he will continue to lead Boeing through the year to complete the critical work underway to stabilize and position the company for the future.
I hope you're being sarcastic. Bailing out companies that fail to do the right thing only encourages that behavior. The opposite should happen, the government should take them to task possibly leading to them going out of business.
It is in the interest of the public that Boeing remains competitive in this space. Otherwise, companies like Airbus would no longer be incentivized to pursue technical excellence as a competitive advantage. For them too it would become a sensible business decision to count beans and cut corners. Overall, everyone would be worse off.
Market-dominating companies have problems like that. If we strike them off for this, that’s not sustainable.
Public bailouts are unsustainable, too. But it would be worse if the company isn’t kept around. It would be good if there was a way to somehow penalize the people at Boeing for acting this way, with total negligence towards lives of their passengers. So that this would stand as an effective deterrent for the future. I think this is what everyone wants, not the downfall of
Boeing.
Honestly I think the best thing here would be to subsidize the regulation for getting new planes approved as a long term debt to the government.
Government helps ease the cost and increases the speed of confirming new plane designs, in exchange for a long term commitment by the company to provide planes for various US subsidized air routes.
Yeah no thanks, guy. The gov't takes enough of my money already; now you expect me to give up more of it to bail out an incompetent corporation and encourage other companies to do the same?
Startups have no clean slate advantage in an industry where every single part of your plane has to be approved and whose design stems from gigantic numbers of operations.
Designing commercial airliners requires insane amounts of money, time and know how.
Boeing and Airbus are in near-monopoly status where the only possible competitors can be state-sponsored .
Bombardier, an established airplane company, couldn't find any customers for the C-Series (now the A220) until they gave away the plane to Airbus for free. Now it sells like hotcakes.
Companies simply were not willing to take a risk on a new plane without establishment backing.
No corporation would accept Tesla's "Full Self Driving" claims. Plenty of individuals think "good enough."
Boeing's dumping complaint made it impossible for Bombardier to sell the plane until they laundered it through Airbus. It wasn't just "airlines were afraid of the risk of a new plane".
IIRC the main reason they struggled to find customers wasn't because of safety concerns, but because of Bombardier's financial uncertainty. The program's costs far exceeded budget and the company was on the brink of bankruptcy. The final nail in the coffin was when Boeing convinced US regulators that Bombardier was dumping in order to enter that market segment. This resulted in a 300% duty, which indirectly forced them to sell to Airbus for $1.
Airbus took over the debts for the project. They paid $1 for 50% of the shares, not sure how much they paid for the rest, but in any case, they assumed the financial burden which was what was dragging Bombardier down.
Construction Physics recently ran a great article on why companies don't design new aircraft from scratch (rather, you see 5 or 6 iterations of the 737) [1]. The gist of it is that it's extraordinarily expensive to design a new aircraft from the ground up and that changes to regulation or the global economy can have a huge impact on which planes are desirable (e.g., big vs small, fuel efficient vs fast), so any new plane is an enormous gamble. So I understand why the bean counters look at a build-from-scratch approach as a bad idea. At the same time, it is very hard to quantify the long term impact of losing the engineering culture that comes along with building new planes from scratch. There's a wealth of knowledge that you lose if you don't do it very often. You also get happier and better engineers when you give them tasks that are more interesting. This stuff doesn't show up on accounting statements, but it's hard to deny that there's a long term effect.
Unfortunately, it doesn't really seem like a return to engineering culture is what they are going to do. The head of their commercial business [2] resigned according to this statement, but his replacement will be Stephanie Pope, a woman with an accounting/MBA background who has risen through the ranks at Boeing in primarily financial positions (she may indeed be very talented, but certainly doesn't have an engineering background).
[1] https://www.construction-physics.com/p/a-cycle-of-misery-the...
[2] Boeing is divided into four divisions: defense, commercial, boeing capital and global services (I'm not really sure what this last one does, but the division that we primarily think of when we think Boeing is their commercial one).