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How Boeing put profits over planes

The fall of Boeing has been decades in the making.

A white silhouette of a Boeing 737 Max airplane is passing in the sky overhead. The shape has blue scribbles within it. Paige Vickers/Vox
Whizy Kim is a reporter covering how the world's wealthiest people wield influence, including the policies and cultural norms they help forge. Before joining Vox, she was a senior writer at Refinery29.

Imagine being mid-flight when a part of your plane rips out, leaving a yawning hole at 16,000 feet above ground. On a January 5 Alaska Airlines flight, the emergency door plug — usually fitted seamlessly into the aircraft’s fuselage — on the Boeing-made plane blew out. Luckily, the seat next to the panel was empty, and there were no fatalities. Federal investigators are still trying to figure out exactly why the door plug didn’t stay put.

Boeing’s reputation in the public, meanwhile, has taken yet another nosedive.

The door plug snafu follows a raft of malfunctions involving the Boeing 737 Max line of planes — including two deadly crashes over a few months between 2018 and 2019 that killed 346 people.

Other problems keep cropping up, with Boeing planes a common denominator: The failure of a Boeing 737 plane that Secretary of State Antony Blinken had intended to fly on. The wheel on the nose of a Boeing-made Delta plane falling off right before takeoff. A faulty anti-icing system that could cause the engine to break apart if pilots don’t remember to turn it off after five minutes. Misdrilled holes. “Loose bolts” — a pair of words one never wants to hear in relation to their plane — that are peeling back the curtain on decades of safety lapses and costly legal violations at Boeing. The company declined to provide a comment for this story but pointed to the measures it had taken since the Alaska Airlines flight.

“It’s another step in their downward spiral,” says Richard Aboulafia, managing director of the consulting firm AeroDynamic Advisory.

It’s a worrying sign for anyone who ever plans on flying again. Consumers have little choice when it comes to plane manufacturers: It’s pretty much Boeing or Airbus. There are currently over 10,000 Boeing commercial planes in service, and over 13,600 Airbuses.

But depending on where you’re going, when you need to get there, and your budget, you might not even have the option to pick. Southwest Airlines, for example, only has Boeing planes in its fleet; United has mostly Boeings. JetBlue, on the other hand, has mostly Airbuses and zero Boeings. The travel search engine Kayak allows filtering out some Boeing planes but not all of them.

For a certain segment of the right wing, the Alaska Airlines episode has become an example of how “wokeness” ruined a once-great American company — because, in their telling, Boeing and US airlines made too many “diversity hires” of unqualified people from underrepresented racial and gender groups. In fact, the door plug incident is a glimpse into how the engineering giant has become a shadow of itself since about the 1980s, experts tell Vox, due to corporate greed: a culture that ignored its expert workers and put cost-cutting financial efficiency above all.

Boeing’s manufacturing issues don’t begin and end with the door plug

You may be wondering what exactly a “door plug” even is, and how it could have blown out of a plane — one that was just a few months old — while it was in the air.

An airplane’s door plug seals up where an emergency exit would typically exist. The 737 Max 9 can have a maximum of 220 seats, but this particular Alaska Airlines flight had just 178 — and those fewer seats allowed the plane to also have fewer emergency exit doors, according to federal regulations. (It’s not just the Max 9; other Boeing planes also use door plugs.) The plug is held fast by bolts and stops; the question now is whether those fasteners failed due to poor manufacturing, or whether the door was improperly installed. The door was made by the Boeing subcontractor Spirit Aerosystems, while Boeing did the final assembly.

“Boeing ultimately has the final responsibility for quality assurance on the airplane,” says Scott Hamilton, founder of the aviation industry publication Leeham News. It’s worth noting that Airbus, Boeing’s biggest competitor, also subcontracts from Spirit Aerosystems (which is not directly related to the oft-maligned carrier Spirit Airlines).

In the two fatal crashes involving the Max 8 in 2018 and 2019, the problem started with the introduction of a bigger engine and the way it was sold. Airlines might have been hesitant to order new planes, as pilot retraining is expensive, but Boeing claimed the fuel-efficient new engine was essentially the same. According to Bloomberg, Boeing engineers had been told by managers that the redesign shouldn’t require deep training.

In truth, the 737 Max generation was not the same as its predecessor. The placement of the engine had changed, which altered how the plane flew during takeoff, its nose sometimes tilting too high. Boeing installed software that would compensate for this danger, but the sensor could give incorrect readings — and the plane didn’t have a backup sensor. Pilots struggled to use the software, or to override it and take direct control.

It turned out that Boeing had never given pilots detailed information on this new software, as reporting by the Wall Street Journal revealed in 2019. Boeing hadn’t added a backup sensor as a failsafe because it assumed pilots would be able to correct the mistake.

In 2019, the Federal Aviation Administration grounded the Max 8 planes for two years, after regulators in many other nations had already grounded them. The government — and lawmakers — aren’t faultless here. Repeated budget cuts to the FAA have led to less-than-ideal oversight of both airlines and aircraft manufacturers. Until the deadly Max crashes, the FAA allowed Boeing, like other aircraft manufacturers, to “self-certify” that their planes met air safety rules, because the FAA doesn’t have the staff to do all the certifications itself. After the agency grounded some Max planes for a flaw in the de-icing system, Boeing asked for an exemption because engine disintegration would be “extremely improbable.”

Weak enforcement of regulation means that Boeing isn’t held accountable to the degree that it should. “The mantra in Washington for years has been ‘starve the beast, big government bad,’” says Aboulafia. “Sometimes you kind of need that [big government], whether it’s monitoring drinking water or keeping the air travel system safe.”

While the Max 8 was out of commission, customers canceled orders and fled to Airbus. Then came the pandemic, when few people were flying. Even after air travel came roaring back, Boeing struggled to repair its image and compete against the gains Airbus had made in the intervening years. After years of setbacks and costly mistakes, 2024 was supposed to be Boeing’s comeback.

Boeing’s biggest defect? Its corporate culture.

Experts say that the root of Boeing’s present troubles is a longstanding culture issue. Over the years, the company’s top decision-makers went from detail-oriented engineers to slick suits with MBAs.

“You’ve got a management team that doesn’t seem terribly concerned with their core business in building aircraft,” says Aboulafia.

There’s one name that keeps popping up when people talk about Boeing’s cultural downslide: Jack Welch, the legendary — and infamous — executive who helmed the conglomerate General Electric from 1981 to 2001. Welch was known for ushering in a sea change of “lean” management that ruthlessly made cuts in both manufacturing processes and the workforce, all in the service of pumping up stock prices. His leadership style included firing the worst-performing 10 percent of GE staff every year; he reportedly laid off over 250,000 people during his tenure. He inspired an entire generation of business leaders, and this Welchian GE philosophy was eventually brought over to Boeing.

Historically, Boeing was renowned for its boundary-pushing innovations in aviation, which helped put commercial air travel on the map. But in 1997, Boeing bought a rival plane maker called McDonnell Douglas; instead of Boeing culture influencing McDonnell, however, the opposite happened. The engineer-focused company got a heavy dose of the cutthroat GE ethos as McDonnell’s CEO — a Welch disciple — became the president and chief operating officer, and later CEO, of the merged company. Other Boeing leaders, including James McNerney and current CEO David Calhoun, have also had stints at GE.

In Flying Blind: The 737 MAX Tragedy and the Fall of Boeing, journalist Peter Robison describes an environment where safety concerns were concealed or downplayed, in part to be faster and cheaper than Airbus, the former underdog that overtook Boeing as the biggest commercial aircraft manufacturer in the world in 2019.

The company began relying more on subcontractors; It had its own fuselage plant until 2005, when it sold it to a private equity firm — that entity became Spirit AeroSystems. Today, Boeing only completes the final assembly of a plane after it sources parts from thousands of suppliers. Outsourcing is cheaper — but using so many suppliers reduces the fine-tune control and oversight a company has over the parts that make up their product, according to aviation experts.

While lean management was the name of the game for Boeing’s rank-and-file, in the past decade the company’s executives spent over $43 billion buying back their own stocks and paying out nearly $22 billion in profits to shareholders. By buying back shares and removing them from the public market, the individual value of a share automatically rises even though nothing about the company’s operations has changed.

Those billions represent cash that could have been reinvested in developing the next line of Boeing planes or hiring more quality inspectors. Former Boeing CEO Dennis Muilenburg, who led the company during the deadly Max crashes, reportedly received an exit package of $62 million.

After the merger, there was also “an open labor war between the unions and the management,” says Hamilton.

In 2000, feeling demoralized and disrespected by the leadership shift, over 22,000 Boeing engineers went on strike. One of the chants heard during the strike: “No nerds, no birds.” As in, if Boeing doesn’t let engineers do their jobs properly, with adequate pay, there would be no airplanes. The engineers got the extra money they asked for, but not the ideological win. Boeing bled about $750 million due to the strike, according to Robison, and kept on with its cost-cutting drive while Boeing’s workers have kept sounding the alarm with every mass layoff.

In 2019, the company said it could cut as many as 900 inspectors — the people who make sure the plane is ready to fly. In 2020, it laid off about 16,000 people. Some were offered buyouts, a move that the company might have regretted when it had to go on a hiring spree after the pandemic, and after the 737 Max was cleared to fly again. “So you have a lot of inexperienced workers who now have their hands on the airplane rather than the mature, highly experienced workers who were laid off or took early retirement,” says Hamilton.

Despite the regular rounds of mass layoffs, last summer, Boeing’s CEO Dave Calhoun said he would love to ramp up the production of 737 planes from 50 to 60 per month, which would further elevate the pace of work for Boeing workers who already felt pressured to meet unrealistic quotas. A 2019 New York Times report interviewed over a dozen people about their experience working at Boeing, who said they saw many safety hazards during assembly — like debris left on planes — and claimed that they were fired for raising potential problems.

Boeing’s treatment of its 10,000-plus subcontractors has come under scrutiny, too, as the company has demanded ever-lower prices. “They treated their suppliers the way they treated their workers — as a disposable commodity,” says Aboulafia.

Boeing’s strategy to continually shrink costs doesn’t appear to have paid off. The company hasn’t turned an annual profit in the past five years. Airbus is selling more planes, and recent headlines about Boeing are putting a halo over Airbus’s comparative reputation. In January alone, Boeing lost $35 billion in market value as its stock price fell.

In the aftermath of the fatal Max crashes, the grounding of the planes cost Boeing about $20 billion. It paid another $200 million in a legal settlement in which its shareholders claimed it had made misleading statements about the Max planes. It lost billions more from canceled orders. “The big criticism is that they’re solely focused on finance, but they’re not even good at that,” says Aboulafia.

Boeing has taken some steps to address the safety of its planes post-Alaska Airlines incident: It appointed an independent adviser to go over the company’s quality management system, it’s inspecting how Spirit is installing the door plugs on Max 9s, and it’s allowing airlines to come into Boeing facilities to inspect assembly, too. The company also says that it has increased the number of quality inspectors by 20 percent since 2019.

But saying “mea culpa” is one thing. “The only thing that matters is restoring the links between the people at the top and the people who build the planes,” says Aboulafia. “Those links have not been restored.”

Calhoun, Boeing’s CEO, admitted during a Fortune interview last summer that the company did have a culture problem — but it wasn’t putting profits over safety. The problem was that they had a “hard time being honest with one another.” Then he offered an example of a leader who had always been honest, giving “pure clarity every step of the way” — Jack Welch.

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