Boeing Keep your seatbelt low and tight in flight, especially when seated next to a plugged door

[morrobay]

A former Boeing employee known for raising concerns about the firm's production standards has been found dead in the US.

https://www.bbc.com/news/business-68534703

 

[berkeman]

A former Boeing employee known for raising concerns about the firm's production standards has been found dead in the US.

https://www.bbc.com/news/business-68534703

Looks like it was a suicide. Maybe he had more demons in his mind than he could deal with. Unfortunately, this loss of information could slow the process of fixing things at Boeing.

It said the 62-year-old had died from a "self-inflicted" wound on 9 March and police were investigating.

 

[morrobay]

He was found before he was scheduled to continue giving testimony. https://www.thetimes.co.uk/article/boeing-whistleblower-found-dead-in-truck-wjw5dwrql

 

[Vanadium 50]

Looks like it was a suicide.

That's just what they want you to think...

It's tragic, but probably unrelated, other than that the change in corpoarte culture, as they say, did not go well. The realy question is whether the owners of the company will fix things. Boeing is owned primarily by institutions in the form of mutual funds. Many owners of these funds are motivated by bottom lines as well" I suspect many don't know if they own Boeing indirectly or not. (Full disclosure - I do. There are very few US companies I do not own a tiny piece of)

Calhoun has caused the company to lose $50B worth of value. That's 10x the development cost of the MAX. I would argue that to maximize shareholder value, the Board should fire as many of the leaders of the company it can. But I doubt that's going to happen.

 

[DaveE]

Boeing is owned primarily by institutions in the form of mutual funds.

This is the root of their problem. They operate in a market capitalist economy that values short term performance over long term investment for longevity or greater returns later. McDonnell Douglas understood this and that's why they took over the C-suite. The gigantic capital investment required to compete at this level precludes other domestic competitors. The US is too large and too free market oriented for the government to invest (although their military business sort of addresses this), and the private sector won't do it either.

The 737 max (et. al.) had to be done or Airbus would own that market. Lacking the foresight many years ago to invest in a new platform, they are desperately trying to keep up. I truly believe they would love to have high quality manufacturing operations, but I suspect they can't afford it from a short term perspective. At least that's how they behave.

Don't get me started on executive compensation in corporate America, except to say it's all about short term performance on Wall Street. That's what investors want.

 

[russ_watters]

It's tragic, but probably unrelated, other than that the change in corpoarte culture, as they say, did not go well. The realy question is whether the owners of the company will fix things. Boeing is owned primarily by institutions in the form of mutual funds. Many owners of these funds are motivated by bottom lines as well" I suspect many don't know if they own Boeing indirectly or not. (Full disclosure - I do. There are very few US companies I do not own a tiny piece of)

This is the root of their problem. They operate in a market capitalist economy that values short term performance over long term investment for longevity or greater returns later.

That's something I really don't get. They behave and CEOs seem to be judged on short term value changes, but most institutional investors are investing for the long-term. I can see how a small layoff can seem like a good profit move that won't backfire, but shifting from an engineer-run to a businessman-run company seems pretty obviously foolhardy. I mean, I'm sure the businessmen are delusional enough to think it won't matter, but it's tough to believe the investors are. That said, these things going on at Boeing are pretty fraud-adjacent.

 

[Vanadium 50]

Mutual funds are under the same pressures as everybody else. Am I going to go with CREF over Fidelity if one portfolio has 2% and another 1.9%? Probably not. What if one has a return after fees of 8.9% vs 9.0%? I'd be thinking really hard about that - over 30 years that tiny difference adds up.

You might say that well-run companies make more money in the long run, but the evidence is that the fees needed to pick funds that pick well-managed companies is larger than the cost differential.

You also might argue that fund managers can put their feet down and insist that all companies are well-managed. This is good for the economy as a whole, but individual fund managers are compensated based on how they do relative to their peers. A rising tide lifts all boats...except theirs.

 

[morrobay]

This Boeing culture that takes profits over lives needs to be taken criminally accountable https://www.reuters.com/article/idUSKBN1WJ2K6/.

 

[Greg Bernhardt]

Passenger on Boeing flight that suddenly dropped says pilot told him he lost control after instrument failure​

https://www.cnn.com/2024/03/12/aust...uries-new-zealand-tuesday-intl-hnk/index.html

United Airlines reports fifth flight incident in a week as jet turns back due to ‘maintenance issue’​

https://www.cnn.com/2024/03/12/aust...ines-sydney-san-francisco-intl-hnk/index.html

 

[Vanadium 50]

criminally accountable

In the US one cannot jail people for being bad. They have to have actually committed a crime. What crime should they be charged with?

 

[Borg]

Passenger on Boeing flight that suddenly dropped says pilot told him he lost control after instrument failure​

https://www.cnn.com/2024/03/12/aust...uries-new-zealand-tuesday-intl-hnk/index.html

The way that people treat the Fasten Seat Belt sign on an airplane has always fascinated me. Many seem to think that they're no longer in a moving vehicle when it's off.

 

[Greg Bernhardt]

The way that people treat the Fasten Seat Belt sign on an airplane has always fascinated me. Many seem to think that they're no longer in a moving vehicle when it's off.

Always fascinated to see the pilot announce there will be turbulence or we're landing in 30s and then watch as people get up to use the bathroom.

 

[Borg]

Always fascinated to see the pilot announce there will be turbulence or we're landing in 30s and then watch as people get up to use the bathroom.

Yeah, the toilet is the last place I would want to be when things start flying around.

 

[morrobay]

In the US one cannot jail people for being bad. They have to have actually committed a crime. What crime should they be charged with?

That starts with a criminal investigation. For example knowingly using sub standard parts. For some reason... the FAA does not have criminal investigators? So then the FBI is required. https://www.forbes.com/sites/marisa...n-of-boeing-737-max-incident/?sh=31e38dd64a2b

 

[morrobay]

https://www.npr.org/2023/01/26/1151565489/boeing-criminal-fraud-charge-737-max-crashes

 

[morrobay]

https://www.justice.gov/opa/pr/boei...aud-conspiracy-and-agrees-pay-over-25-billion

 

[russ_watters]

This Boeing culture that takes profits over lives needs to be taken criminally accountable https://www.reuters.com/article/idUSKBN1WJ2K6/.

In the US one cannot jail people for being bad. They have to have actually committed a crime. What crime should they be charged with?

The entry-point is that they were charged with and admitted to conspiracy/fraud:
https://www.justice.gov/opa/pr/boei...aud-conspiracy-and-agrees-pay-over-25-billion

One could see other more severe charges branching out from that(literally, people died in part because of the fraud), but it looks like they settled so I'm not sure it will. IMO, that's insufficient.

[oops, scooped]
[edit]
Note that there is precedent in pharma for executives going to jail for corporate misconduct that lead to deaths. It's probably difficult to detangle how decisions were made and who was responsible if they are complex, but the idea is that ultimately the leadership team is responsible if they knew or should have known (in both the below and for Boeing they clearly knew):
https://www.odtmag.com/contents/vie...former-synthes-executives-jailed-over-deaths/
IMO this was still insufficient though.

 

[berkeman]

What crime should they be charged with?

DoJ now investigating
https://www.cbsnews.com/news/justic...oeing-737-max-9-door-blowout-alaska-airlines/

 

[Vanadium 50]

For example knowingly using sub standard parts.

Is that a crime? I just used a cheap Chinese lightbulb in my fridge until the real one showed up from Amazon. I wonder how long I will be sentenced for,

 

[Greg Bernhardt]

Is that a crime? I just used a cheap Chinese lightbulb in my fridge until the real one showed up from Amazon. I wonder how long I will be sentenced for,

If that lightbulb ends up killing people...

 

[russ_watters]

Is that a crime?

If you lie about it on federal documents, yes.

 

[Vanadium 50]

Sure...you can put the company on trial. The outcome can be a fine or something called a "consent order", but nobody is going to jail. And the execs get to keep their jobs and most likely their bonuses.

 

[Vanadium 50]

Every time a submarine is launched, there is VP from General Dynamics on board. It's in the contract (at least it was). That caused a very different attitude towards safety.

 

[russ_watters]

Sure...you can put the company on trial. The outcome can be a fine or something called a "consent order", but nobody is going to jail. And the execs get to keep their jobs and most likely their bonuses.

In the pharma example I gave, the execs lost their jobs and went to prison because of the fraud they committed that got people killed. What it takes is primarily the will to hold them accountable for their decisions/actions.

Ironically, financial fraud is easier to prosecute because the numbers have to add-up. So there are often clearer-cut cases to be made and therefore harsher prison sentences for Enron, for example.

 

[gmax137]

Every time a submarine is launched, there is VP from General Dynamics on board. It's in the contract (at least it was). That caused a very different attitude towards safety.

One of the power plants I worked at was the first to use Bechtel's pre-stressed concrete containment buildings. Part of the pre-op testing was a "hydro" where they used a bunch of big diesel air compressors to pump the containment up to 125% of design pressure. The story was, they had the Bechtel lead civil engineer on site taking data from the strain gauges draped around the building.

 

[DaveE]

In the US one cannot jail people for being bad.

..., or stupid, greedy, etc.

Plus, the very first thing a corporate officer does, unless they are stupid, is review with a lawyer how to not be personally responsible for what their company does. It may be a criminal investigation, but ultimately it will just be another line item on the P&L statement, maybe; plus some temporary bad PR. When a company is faced with existential, or even significant, competition, the DOJ might be the least of their concerns.

Which reminds me of a (humorous?) response to Mitt Romney's campaign statement (and the Citizens United decision?) "corporations are people" -- "I'll believe that corporations are people when Texas executes one".

 

[DaveE]

In the pharma example I gave, the execs lost their jobs and went to prison because of the fraud they committed that got people killed. What it takes is primarily the will to hold them accountable for their decisions/actions.

Ironically, financial fraud is easier to prosecute because the numbers have to add-up. So there are often clearer-cut cases to be made and therefore harsher prison sentences for Enron, for example.

Both are cases of personal fraud, not corporate malfeasance. The difference between them is a bit murky when stock options are a significant part of executive compensation; but sometimes it is obvious.

 

[russ_watters]

Both are cases of personal fraud, not corporate malfeasance. The difference between them is a bit murky when stock options are a significant part of executive compensation; but sometimes it is obvious.

I'm not sure whether that's true, applicable or why it matters. Can you elaborate on what your point is?

 

[Vanadium 50]

Sure, the feds can even pit a company out of business. They did so to Arthur Andersen. But there was still a need for accounting and so many of the partners simply moved elsewhere.

Berardino did OK too - he moved to biotech. If I were feeling snarky, I'd ask why Elizabeth Holmes didn't put him on the board of Theranos. He sounds like just the kind of director she was looking for.

For those of you too young to remember:
The optimist says the glass is half full.
The pessimist says the glass is half empty.
Arthur Andersen asks "How much would you like us to say is in the glass?"

 

[DaveE]

I'm not sure whether that's true, applicable or why it matters. Can you elaborate on what your point is?

My point is that Dave Calhoun isn't going to jail, or even trial. The only effect he'll see is a drop in his investment portfolio or a BOD that might sacrifice him for Wall Street. It is all (only) about the corporation's value on Wall Street.

Ultimately it will just be another line item on the P&L statement. That was my point.