tv Peter Robison Flying Blind CSPAN October 21, 2022 4:04am-5:04am EDT
bloomberg in 1995 peter robison has served as a london correspondent seattle bureau chief and a feature writer for bloomberg business week. he is a recipient of the gerald lobe award the malcolm forbes award and four best in business awards from the society for advanced business writing business editing and writing a native of saint paul, minnesota with an honors degree in history from stanford. he lives in seattle with his wife and two children. a former math teacher previously contributed to fortnite and the industry standard now a pulitzer prize winner dominic gates covers the aerospace industry for the seattle times. he's had this beat since 2003. they're here tonight to discuss peter's book flying blind, the 737 max tragedy in the fall of boeing. please join me in welcoming dominic gates and peter robinson.
okay. well, first of all, thank you all for coming. i'm dominic gates. this is peter robison. and before i start throwing questions adam, let me just say a a few things about the book. and i'd like to begin by since the subtitle of the book is includes the fall of boeing. i'd like to begin by recalling the great legacy of boeing. and what it means to this region and to the world. boeing give the puget puget sound region a great part of its social fabric all those blue-collar jobs, very highly paid. engineering work that was world class. was all here for a hundred years and generations of families have
grown up with boeing and it's created the economy of the pacific northwest and of course it gave the world an iconic line of like the 747 that have just shrunk the world incredibly in my lifetime. so this is a company that is given the world a very great deal. now the fall from public favor recently. obviously began with the two crashes of the max in 2018-2019. and since then it seems like nothing is going right for boeing everything that could go wrong has gone wrong. right now the max is back in the air, but obviously the pandemic has really hit the airline industry and boeing. but they've got all sorts of manufacturing problems and they're not delivering that have
they've delivered fourteen seven eight sevens in the last year. they were supposed to a month. so it's definitely one of the low points in boeing's history. and the question that this book sets out to answer as peter wrote. in how did a company that prided itself on its engineering prowess that had perfectionism in its dna? go so wildly off course. that's the question he sets out to answer and i have to say that i think this is a great book. i think it'll become the go-to book for boeing. what i find. i'd like to just mention three things. i found very impressive about it. first of all, there's he really nailed the cultural shift that has happened in bowing over the last two decades. and if you've ever talked to
boeing people, i'm sure there are some here you'd often have heard that oh the merger with mcdonald douglas ruined everything ruined the culture. and that's perhaps too easy a conclusion, but he with deep research and lots of exclusive interviews. topside this cultural shift incredibly well and and it's really worth reading for that to get a perspective on how we got here. the other thing is that he's a wonderful writer. there are so many arresting sentences in the book. i'm just going to read one of them. it refers to the theer worthiness directives that the faa issued one week after the lion air crash, and i remember reading that so well because you know when i when a plan crashes very far away, unfortunately it often doesn't get a lot of attention here in the united states. bad weather poor airline old
airplane something like that as the usual picture. now this was odd. this was a new plan and the weather was perfect, but still. what had happened nobody really knew but a week later boeing issued a bulletin and the faa followed with an error worthyness directive and i remember reading it and it said, oh there's this system that pushes the nose down if the sensor goes wrong. telling pilots what to do if that happened. and for me, and i'm sure every space reporter in the world. it was like what? bullying was telling us that week afterwards. there's something wrong with a plan. but it wasn't the wording of it. here's what here's what peter wrote. the faa were those directive was so pedestrian on its face. it's neutral wording like an iphone bug alert. but so paradoxically earth-shattering. and and i feel it was i feel that from that moment on i as an
aerospace reporter knew this was going to be a big investigation. we have to find out what happened here. and finally before i ask go to questions, i will say that the other thing i really admire about the book is the way he's on flinching in his conclusions. he really? very succinctly he documents it all it's footnoted. he very succinctly says what he means. those of you who know boeing will remember jim mcnerney. who is ceo for 10 years and who really solidified this culture that was focused on the financials. and before mcnearney came to boeing. he was at 3m for four years. three amethysts company that makes office products, but was very famous for lots of inventions including the post-it note. and so peter writes this in just over four years mcnerney doubled
the company's annual profits. he did it by going straight at 3m's future. because he slashed jobs. he slashed r&d spending. but he destroyed the the future of the company. so terrific story terrific history great writing and transient conclusions. that's the book. so now i'm going to give peter his chance to talk about it. with a few questions and later on. we'll come to your questions. peter it seems to me a company can't move past a great tragedy like this one that killed 346 people. without at first admitting what it did wrong. do you think boeing has done so thank you. i want to stop and just thank you for that introduction. and it's high praise coming from from you everyone in the room. i think knows the esteem that dominic has held in and the
aerospace industry and has coverage over. the last two decades really and i will try to say what i mean as i did in the book today. so that the question is has bowing ever really admitted. fault, i think it depends on the audience. they just this month as you reported. they admitted fault in a court filing said that their their unsafe design was the proximate cause of the the crash in other audiences. they've had a very hard time admitting fault. you saw immediate left the first crash that it was the pilots. he didn't follow the checklist. it was maintenance mistakes. you saw later. in a smallenberg even after the second crash saying that there was no technical slip or gap eventually there was a melee mouth we own it. and then finally there was an i'm sorry in public but even as
recently as last year dave calhoun the current ceo was suggesting that it was something that american pilots could have handled so i think it's an open question as to whether boeing has ever really truly accepted fault. yeah, i think publicly boeing has said the design of emcast this system this software. that went wrong. that they fail to take into account the reactions of the pilots. they've said that which to me is is also pointing part of the blame out the pilots. but one thing that i've wondered about often and i think in the book you talk about previous generation of of boeing airplanes where somebody stands up an engineer or a pilot stands up in a room when they're doing the design. and somebody has made a suggestion. and this guy stands up and says do you want blood on the seats?
and nobody did that when did when when mcast was being designed we know the pilot who? pull the wall over the faa and deceive the airlines and didn't let them know that mcas was. existed but what about the actual design of emcast? how did that get past this tremendous engineering company where you get all the engineers in a room and you get these pilots who are there to to to stand in for airline pilots and at some point somebody didn't say a single thread a single sensor sits off the system. i don't think boeing's ever addressed that. i think it's a reflection of the way the checks and balances were broken down that there is an example set in the book on the 737 next generation where someone realized that there would be a single point failure introduced in a fuel tank design and he stood up in the meeting and said how much blood do you want on the seat covers and that
got people's attention over time partly because of this cost cutting you mentioned that started in earnest during the mcnerney years a lot of the experienced engineers were being laid off you had fewer people who had the clout to stand up and make that blood on the seat covers declaration and the people that i talked to on the max said that they felt those checks and balances were broken down they when they tried to raise concerns or try to say that more sophisticated flight controls for instance should be introduced. they were summarily shot down. well, i mentioned this pilot who is the only one who has now been criminally indicted. that's mark forkner. who was the chief technical pilot on the max and he was indicted. his actions are clearly inexcusable he he convince the faa not to put this system in the manuals. he convinced airlines not to
have simulator training when they asked for it including lion air. but my question for you is he's one guy. is he a skip goat, who who where else does responsibility lie do you think? it clearly lies with management and that evidence shows. he is a convenient scapegoat as despicable as some of those comments might be there's a story i tell on the book a series of events and in october 2019 after the second crash dennis mullenberg was going to be brought in halt in front of congress. he would become the public face of this deadly blunder and it was a bit before that in that month that a staffer on the house transportation and infrastructure committee, which had been getting regular releases of documents from boeing got a release and and the call from boeing was take a look
at the one on the top and the one on the top was the messages which became infamous where mark forkner this pilot appeared to already know about the potential problems with the software before the plane was delivered during those hearings dennis mullenberg. showed some distance from mr. forkner he was asked about this these messages ted cruz sort of confronted if you remember the scene where ted cruz is confronting dennis muellenberg over these messages and dennis mullenberg said we're not quite at this point foreigner had left the company and he said we're not quite sure what mr. forkner met. we think he was talking about a simulator in development and my reporting shows that he had every reason to know exactly what mr. forkner meant because mr. forkner's lawyer was paid by boeing through boeing zone director and officer liability insurance. so it was a bit of a double game
where boeing was holding him at him out as a you're saying. and his deputy patrick gustafson was still a boeing at the time, right? and he was the other guy at the other end of the messages. yeah, which proves astronom at the time said did you ask him and then a smallenberg had to say no. well besides boeing your book. documents a parallel decline within the faa in terms of the oversight that they were. that was their job. what went wrong within the faa do you think? well, i tell that story through the perspective of the faa specialist on the on the ground and and they had their people who who talked about their managers as being people who were just as technically skilled as them going going back to the 80s and the nine and the early 90s people had great feelings about working on the triple 7
the which many people consider many people consider the last great airplane at boeing then things started shifting and this goes back to the to the reagan revolution and the idea that government is the problem not the solution agencies are starved for resources that played out in different ways and different agencies, but at the faa it was with an embrace of this extreme delegation of authority. so i interviewed lots and lots of engineers who who felt that their managers were no longer working to hold boeing accountable. produce the safest design they were seeing their customer ultimately as being the manufacturer and that the goal was to help the manufacturer speed the product to the market. right and you quote richard reed who's an faa safety engineer at the time. do you remember what he he had a kind of a remarkable analogy? he said at the time he was
seeing what was happening and and he was seeing that he his authority was diminishing and he saw it as as congress which hadn't which had intentionally dumbed down the agency and and he he thought of it as he thought of himself as like forrest gump and and him he imagined what he would say if anyone hauled in front of congress to say, why did you certify this plane so quickly and he thought he'd say just like forrest gump when he put his his rifle together so fast he'd say because he told me to congressman. yeah, congress congress, of course did and about turn afterwards and demanded and held his hearings which were actually really good, but you're right before the crashes all the direction of congress was to push the the faa into treating boeing as a customer. those were the words instead of applicant for several years customer was the preferred
language for the manufacturer. by the way, steve dixon has appeared at a couple. he's the faa administrator now former delta pilot. steve dixon has appeared at several of these hearings since then he was appointed after the second crash, but he's been nevertheless pill read in the hearings by the politicians. what do you think of of dixon and his handling of things since since the crashes? he's a former airline executive as you say he's trying to. balance these competing demands right now trying to show that he's heated the message that the agency is reforming itself at the same time. just this year the michael stumo the father of one of the victims on the ethiopian crash got a note from an engineer at the faa. who who said that recently
managers have been saying, you know that they can expect not much to change as a result of those rules and that one of these managers called it, you know quote posing for the cameras. i've heard some of that too. although i've also been impressed somewhat with with some of the changes we see publicly. you know just just before the first crash our local center to maria cantwell, actually. helped write some clauses in in the faa reauthorization bill a month before the crash. increasing the amount of delegation that would be done to boeing but cantrell then reversed completely after the crashes and so last december she helped pass this reform act. and then since then the faa does seem to be getting tougher. they've delayed certification of the triple 7x quite a lot. it's going to take four years it
took one year from first light to certification of the triple seven. in fact, 10 months. and now it's going to be 44 months for the for the new version of the triple 7x so they have got tougher and and i've written several stories about how they're. tightening up a little bit but i wonder do you think it's gone far enough with the faa is is it really going to change? i think time will tell i i think it will depend on whether the cultural shift truly takes hold. i think you you reported recently that the faa was concerned about the experience level of the people that boeing was appointing as as deputies who are meant to represent the faa. there's also there's a there's a brain drain that's taken place over. a generation really that that has to be addressed on both sides, right? well, let's step back from the max just a moment and go back to
that cultural shift that i'm talked about at the beginning. lots of people as i said blame the mcdonald douglas merger, which was 1997 for this change in the in the culture of boeing but that began with phil condit. who was the ceo at the time when phil condott is the guy who moved the headquarters to chicago from here. you write in the book that condit was drawn to the bold vision of capitalism presented by the corporate chieftains. he admired. now actually content wasn't outstanding engineer at boeing before he became ceo. he was the top engineer in the triple seven, which was the last great airplane that boeing built. what happened? what happened? condit after he became ceo he was a great engineer according to the people. i talked to he would have been a great college professor. he was he was.
he was this constituency of shareholders was very powerful and that became the group that he judged his own performance on and that if you remember at the time that was the days of jack welch of general electric, which was the ultimate model for any manufacturer in the us and for a company like boeing it was services that meant financial engineering that meant finance so phil condott pursued the merger with mcdonald douglas. he pursued acquisitions the commercial airplane company was seen as a commodity business that could take care of itself. he would move to chicago and focus on the big strategic picture. actually, i interviewed condit before i worked for the seattle times. i did one boeing interview. i interviewed condit at their leadership center in saint louis
in 2000. or the beginning of 2001 just before they announced the headquarters move and in that interview he talked about wanting to shift the idea of what boeing was. that we weren't metal benders anymore. of course all the plans were metal at the time, but he was talking about new connections internet connections to airplanes beaming beaming movies to cinemas via satellite. he wanted boeing to be high tech and plan making was metal bending. really strange, but you mentioned general electric the influence of ge on boeing has been incredible. i mean after. conduit, we got stonecipher who came with macdonald douglas and he was a ge guy jack welch akalite. then we had mcnerney. almost jack welch is successor, was turned on.
and now we have dave calhoun currency. it was also a ge guy. so this influence has been there for years. there's this description in the book. i'll just read it ge was an american institution. it had pioneered inventions that dramatically improved living standards the light bulb the x-ray machine the diesel electric locomotive. the refrigerator the people who worked in its factories and labs and their in river towns and industrial birds around the country thought of themselves as family. welsh was telling investors, he wouldn't flinch from the hard decisions to jettison them. whatever the human or political cost. and actually after he took over within the next five years, he laid off a quarter of the ge staff and got the nickname neutron jack. this was the era of ceos of corporate america being lionized on the cover of fortune magazine.
and jack welch was the absolute top of the pile. so can you talk for a little bit about how ge had such influence over corporate america generally and boeing specifically. yeah, i mean at the time. he was considered. he was the model of what a ceo should look like and what he should prioritize and phil condott knew him had a personal relationship with him stonecipher as you say had worked for him was a protege of jack welch's and so it meant things like fix it. close it or sell it frank and yank you've got to fire the bottom 10% every year financial engineering during those years ge met or b earnings expectations from 95 to 2004, which you can do if you have a
financed unit where you can sell something at the end of one quarter and then buy it back the next quarter and later the sec found that g had bent the accounting rules beyond the breaking point was the wording. so jack welch had this influence through throughout boeing and as you say it continues to this day dave calhoun is of jack walton's former speechwriter said he's the guy most like jack in his book. we get back to very specifically to boeing in a moment, but one last thing you actually broaden out the context of what has happened. even broader you cite the influence of milton friedman in 1970 in reagan's america. wrote in 1970 that accompanied sole responsibility is to increase its profits.
and then you had this rather resting sentence. two generations later in any prosperous american city, the unequal effects are plain tesla's luxury high rises avocado toast. signs and sounds like seattle. now coming if it was some marxist academic writing that i could it be less startling, but it's coming from a business reporter. so it's just kind of a stunning judgment on the business world. do you think corporate america has lost its way? i i am a business report. it's a big question for a business reporter, but i'm business reporter who has seen the story over time and i've seen how it ends when i moved to seattle in 1998, and i was eager to meet you know, these great engineers that boeing was
lionized and books like built to last and in search of excellence, but that was also this period of shareholder primacy that the business roundtable at the time said to clared as part of its corporate governance statement that the first duty of any shareholders, and that'll as long as you take care of profits employees communities the customers they can take care of themselves and fill condit was a chairman of the business roundtable and more recently. you're seeing that shift the business roundtable is recognizing that companies have duties to all stakeholders. yeah, i think one of the saddest things is that one stakeholder group. that really last started boeing is the employees. mcnerney and the other ceos were just so anti-union. and had this mentality that they could get cheaper labor somewhere else. so all the talent here all this
generations of skills. in some ways was thrown away and and the making people here feel like that meant that they lost. the last some pride in the company let's let's get back to the specifics of boeing i've often. heard people say oh boeing should be run by an engineer. you know, the current ceo is not an engineer. but dennis mullenberg was an engineer. i was phil condott as we said earlier. dennis mullenberg was an engineer when he came in following mcnerney. i remember being full of hope. oh, it's an engineer taking over. and one of the first things he did was he signed a new contract with speer the engineering union they did it very quiet negotiations and came up with his new deal. and i thought wow, that's a great sign, but in fact, otherwise, he just kept very
straight strictly to the mcnerney way mcnerney had taking them for 18 months to chicago to be under his wing to be groomed for the role, and i don't think he straight at all from the sort of financial. focus that mcnerney had taught him so muhlenberg comes off has come off very badly in the max saga. why do you think he failed since he he was this energetic engineering guy? why did why feel so badly? yeah, you would think that being an engineer that engineering would would have primacy in the company and and everything. i've been told you know that dennis mullenberg is a great program manager. he's detailed oriented. he is driven he rides his bicycle 140 miles a week, but it could be that the skills you need in a crisis like the max are not those of an engineer you
need someone with broad. judgment about what to do after something like that in a lot of ways people describe bill allen who was a lawyer is being the best ceo in boeing's history, and he was someone who wrote notes to himself. like don't talk too much. let others talk, you know be be considerative, you know making sincere effort effort to understand labor's viewpoint. at boeing there's there's a story that i tell in the book about a crash that took place of a 747 and in 1985 japan and it the side of the mountain the vertical fan had ruptured and within a month boeing came out and said it was our fault that there had been a bad repair job at a boeing facility and it took the japanese authorities by complete surprise, and i've talked to people who after the
lion air crash. thought if boeing had just made a similar mia culpa and even though it's difficult to do it's hard to admit fall. it could have diffused everything that happened afterwards. by the way, i should say another great aspect of this book is the way peter pence pictures of these personalities. he really gives you a lot of depth about what muhlenberg is like is the person his religiosity. bike riding and his whole intense focus. it's all there in the book and and the same for many of the other leaders and let me talk or ask you about another one which is alan mullally. alan malali many many boeing engineers have said to me. well, if only boeing if only alan had stayed if he'd been made ceo then the company would have been saved. but alan malali of course was in charge of the seven eight seven debacle. he left just before it all fell apart.
you write about how he had become disengaged in the months and maybe half year before he left. and and by the way, there's also news in the book that you will not read anywhere else. also reveal a more sordid reason why mullally was not elevated to the ceo. so tell us about malali. as you say he's a revered figure at boeing he is the person who brought the triple seven home to great success. he really popularized the phrase working together at boeing and this idea that you really need to over communicate that he had a phrase that was that the problem with communication is the illusion that it that it happened. so he brought people together. he was considered technically brilliant. but you know and if you remember
he was, you know, ever smiling boyish had a perpetually upbeat personality, but but that demeanor in according to people i talked to for the book was also held up against him in some ways because it when it became his turn to be considered for the ceo role against jim mcnerney. who was then a board member mcnerney was seen as as more the ceo type that the board source that i talked to said that there are just some people who look like an nfl quarterback and in the same way mcnerney looks like a ceo he to them would pursue a more shareholder friendly predictable strategy and alan was seen as excitable quote excitable. cheerleaderie. we're going to build that plane. there was another risk factor that came up which i get into in the book which was a concern about his personal life and at that time there had been two
consecutive ceos who had resigned because of inappropriate relationships with subordinates. so one person i talked to said that the board couldn't afford to take the risk. for details you can see the book. at this point, let me ask. some of your sources as in many of my stories have to be anonymous because boeing employees cannot talk to me or you probably without a pr person beside them. it's or they lose their jobs. can you talk about your sources and why some of them are anonymous and how you came to trust them? i trust them because they had direct knowledge of the events and just as in. a newspaper or any other article there are situations where people can't be named because it might affect their career their livelihood, but they have important information.
and you did an incredible amount of research a lot of reading a lot of i think possibly you travel. did you travel to muellenberg's home town in iowa. this was during the pandemic. so i traveled to the kitchen to make a sandwich, but no i i really relied on the reporting i'd done over the 25 years and and having visited boeing facilities and and having been to air shows and conferences and meeting airlines and customers over that. time and i did zoom interviews with the people overseas. well, it's marvelously documented all the various points that he makes. we're running out of time. so let me just ask a couple of quick questions as i mentioned boeing right now. certainly. is that a low point in his history? it almost seems like it needs churchillian leadership. to get out of this and to
recover. the leaders right in our day of calhoun the ceo in chicago and the local commercial airplane's chief stan deal. are these the right leaders and what do you think is needed to see if boeing? i spent a lot of time reading. about boeing over the last two years that have really over the last 25 years as i said and the theme that struck me is that investing in the product bill boeing said let no improvement in flying passes by ultimately. succeeds that you know planes like the 747 the 707 the 737 even we're not seen as sure bets at the time but when the investments were made, ultimately there was a payoff. i don't know if that's something. dave calhoun is a tune to with his history. he has a history and private equity. he has a history parachuting
into different divisions at ge. yeah, of course. it's really difficult position for anybody who might boeing now, but they're they're overwhelmed with debt and they probably should launch a new airplane but a bad time to do so and they don't have the money. i'm going to ask two very quick questions and then we'll go to questions from the audience. the max is back in service. is it fixed? would you put your kids on board? the mcat software has been addressed the particular fault with the mcat software. there were other things that the specialists the faa wanted. they wanted shielding around the rudder cables. they wanted an icast system. it's kind of electronic checklist. those have not been put on the plane. i think the statistic i saw was last year was one one in every
3.7 million flights had a fatal crash and has had 200,000 or more than 200,000 at this point, so i'm gonna wait for more evidence for for me from for my kids. not going to fly on it. i don't have to fly anywhere now. okay. well one last question we talked about ge and you've all probably heard the news recently that basically the the house that jack built has collapsed the whole edifice of cheese. they're breaking up. so other companies are because of that are thinking along the same lines toshiba in japan is doing the same. do you think it's possible and would it be a good idea for boeing to break up into its commercial and defense units again? undo the merger and perhaps move back the headquarters to seattle.
it seems really appealing because it it would turn back the clock pre-97 boeing was that at a high point at 2/3 of the market the thing about being a combined commercial and military company is that you get so much synergy. i i think a breakup of boeing could also potentially have other effects you might be tempted to take the stable military and government contracts put those in the the clean co and then put the debt the pension obligations in the riskier commercial airplane business. so i ideally for boeing it come out of this and be combined stable company it certainly an idea that i've heard including from some senior bullying executives in the past not current ones. okay, it's time for audience questions, and i've got a little ipad here to go through. so let me see what we can do.
which of boeing ceos should take the most blame for the 737 max crashes? and dennis mullenberg is the one who was at the helm. at the very end of development and he had the opportunity to dig into the ground truth of what happened after the first crash. okay. does boeing of something to learn from airbus at this point given the problems with the max and the newly the new dreamliner manufacturing issues? airbus has has had a their chief
pilot has always had a lot of class within the organization. i think boeing does have some some things to learn from airbus one. one thing that i learned in reporting the book is that there's a stereotype that europe with its strict labor regulations is at a disadvantage to boeing that became an advantage in some ways to boeing because it had to train its workforce. it had to rely on a highly skilled workforce. so one difference i guess this is also an airbus related question. what role did the competitive landscape play in the failures that led to the engineering problems with the max? i think boeing has. sad that you know, the the many effort cost cutting was because of the specter of airbus.
the there was there were many opportunities during the past 20 30 years were boeing face this choice, you know, airbus had come out with a plane that was about 20 years newer at the airbus had a plane that that had fly by wire electronic technology boeing didn't there was a meeting i wrote about in 1992 that gordon bethune later become ceo of continental was in where executives in the commercial airplane business went around the room and said should we should we develop a brand new 737 and he got a kick under the table from someone who wanted to vote the other way. he said he said in the next gen is the way to go and the vote was five to three so that there's there been points through boeing's history where it it could have taken the step to invest but it it was always
the more expedient one. because of the base the wide base the 737 had and that the fact the tooling was already paid off the factory was already paid off. mm-hmm. of course, then historically the boeing made the big bet with the 747 and i guess with the triple seven as well when it came time for the it seven. the culture of cost-cutting was already there in chicago and and so they came up with this global outsourcing so that boeing wouldn't have to pay for a lot of it which was a financial disaster. what are the one of the men lessons of the max tragedy? the main lessons i see it it is to listen to what your employees are telling you there. managers had a prime directive
to minimize training on the max there were points in boeing's history when there was also a wish to minimize training but there was an understanding that that was if that was permissible by the design if if we could design a way to make that ethically possible. i think the dictates of management overrode what people on the ground were saying the next question is about the faa. one of the the leader of the certification process here for a long time was alibarami. and then he left to work in industry for the industry association and then he became aviation safety. director at the in washington dc for the faa so he was the faa's top executive in charge of airplane. safety. what do you think of how would
you describe ali barami? he was described as someone who represented the revolving door at work that he so boeing as his customer and he would tell a specialists in the office, you know, leave it to boeing they know what to do. they know the processes. he went to the to the industry lobbying group and made it 300,000 a year salary and then came back to the faa and allowed the max to keep flying after the first crash. hmm. yeah, it seems like these ideas take hold in an organization now whether it's a ceo or somebody like alibarami in a public agency the ceo rises to the top he was an engineer, but suddenly the ceo and he has to have all these this group thing that corporate america tells them is what to do which is to to cut
costs and squeeze suppliers and get rid of unions and suddenly that's what you have to do and then aliburami this whole management level at the faa seemed to think their job was to help boeing to compete against airbus by and to champion american industry in other words. by certifying more quickly and giving boeing the ability to do it itself. so you got a lot of groupthink there. what does boeing actually need to do to build and sell the aircraft their customers want? rather than have them buy airbus. well, what boeing did at the time of its last great airplane that triple seven was to come up with a gang of eight of customers who told it what they wanted. so listen to customers. right didn't they write?
right down in a napkin or something what we're well what we're gonna do we're gonna have a plan that what was it was it was? yeah, we're gonna have a plane that from the beginning everything we delivered and everything works and it was in very plain language on a napkin. during the early days of the max certification fan faa engineers were fond of saying when i'm hauled in front of congress and asked why we did it this way. i'll say because you told us to mr. congressman. well, i guess you've already addressed that one of your sources actually said that. any further comment on that now because they've read the book. peter in the excerpt of your book, i guess they mean the
piece that was published in bloomberg business week this week. in the excerpt you released a huge segment focused on explicit racism within the company. why do you think the pop previous public investigations of the max feel to bring this culture to light? i'm not sure what that's referring to. maybe the the view of the foreign pilots in indonesia and so on as that what that's getting at. i think it's getting at the idea that it there was a perhaps unconscious cultural bias that pilots overseas were not as skilled as pilots in the us and i looked at that that's a part of the book that looks at the response after the first crash. i talked to a paul and erogie is a man who lost five family members. his wife is three children his mother-in-law in the crash in ethiopia and what he said was
that he felt that if the first crash had taken place in the us or the uk or canada where lives matter more than other places, his family would not have have died that you know, he after the first crash they were seen as as quote mere indonesians there was a moment in the there was a close door meeting that pilots at american had with the top executives at boeing and and the american pilots said this could have happened to us on a flight out of miami and it we would have dropped a plane in biscayne bay and then you would have had a real quote shitstorm and the american pilots that i think you know what i mean and that and the boeing executive answered i do. is there a chance the us eventually gets left behind and playing building by europe and then possibly china? there is although it's been such
a strong duopoly for so many years and there are many analysts who are skeptical of another airplane builder including china entering the market china does have the advantage of having a huge market. the max is not flying in china yet and it also has the advantage of having loaned a lot of money to a lot of countries that can buy airplanes so that over time that may change over the next 10 to 20 years. here's a question about the move i'd of seattle was moving work out. i guess not just moving the headquarters to chicago, but also moving work out of seattle because they've done a lot of that. was moving work out of seattle solely about busting the union do you think? it was i think that the cfo at one point said it was to move to more cost-effective areas of the to move to more cost effective
areas. i think there were moments where moving the flight simulators to miami to the pilots who experience that that did feel like a move to bust their union because it happened right in the middle of contract talks. yeah, and i think the choice of south carolina in 2009. directly triggered by the machinist strike in 2008 thing that's enraged mcnerney. he he wasn't going to put it in washington state after that though. it's pretty extraordinary that after we give all the tax breaks. we now don't have the 87 built here at all. it's all in south carolina now. do you see any correlations with boeing's? issues with military aircraft either the p8 which is based on
the 737 or the kc-46 tanker. i guess the question must be any correlations with the max problems in those airplanes. it the evidence is showing that it is a widespread cultural problem that the diminishing the focus on engineering has happened across the company. well, i get i don't know if i got a clear answer to this earlier, but i'm going so i'll ask it again. do you think boeing can be saved? it's at a low point now. i cannot recover kind of recover its laurie. can it kind of recover equality with airbus with the dubai air, but air show just finished if you yesterday. and it was a remarkable performance by airbus full of confidence and boeing had one
max order and that was it and then came home and their executive said very little so can boeing get out of this? i think with investments it it can it's out of very low point especially in the narrow body market where that's basically reversal of where it was 20 years ago. it was two-thirds bowen now, it's two thirds airbus. in in some parts of the market. it's with the a321. it's it's got a five to one gap so it would take a very focused effort. that's why i'm putting it. well, i think people in this region can only hope that that will happen. should boeing rename the max? i thought it's the 7378 right?
i still call it the max. that's a marketing question. yeah. well boeing isn't officially renaming it and i think it would be pretty pointless. but some airlines are leaving the max out if you climb on board some of them. i think we're almost out of questions are out of time. let me see. i'll ask one more. muhlenberg met with the families. i think this was after the annual general meeting in october of 2019. but he wears it they had no mediator or conflict resolution specialist at the meeting with the families. how do you think boeing handled i'll just widen the question. how do you think boeing handled?
treating the families of the victims of those crashes. they didn't meet with them for a long time. i know that the family members felt that they should have met with them earlier. what i've been told is that there was a at that meeting for instance one point of concern afterwards was that at least one family member felt that dave calhoun in public had exaggerated the amount of time that was spent with the with the family members. so it's it's a incredibly difficult situation but in that situation they felt it was compounded by the the exaggeration of the amount of sensitivity that that boeing had shown there. there was a memorial held afterwards which which boeing that was held in ethiopia and to some of the family members.
i talked to they they felt as if it was a commemoration of the bp oil spill staged by bp there was at one point one of the top point there was concern that boeing would be at the service. all and one of the top buying executives answered well before paying for it will be there. which again was felt as insensitive? so those are some of the things i cover in the book. yeah, and actually let me just ask one final question kind of related to this is how boeing communicated with those families. what do you think of billings communication with? us no and the world. i mean the ceo. hasn't given interviews publicly except to cnbc or people like jim cramer who are going to wow the say you're wonderful. they don't talk to me. they don't talk to the press.
they don't even let me ask questions at the earnings. at the earnings calls anymore. not just me. no, press no, no, press questions. it seems like they're really clamped down and the excuse they've given is oh, well, we're waiting to the regulators give the okay to the max. we don't want to get in the way, but everybody's done it now except for the chinese basically. and i've just kind of mystified by the communication strategy of the company at the moment. it's something i've never seen. it's i think almost unheard of for a company to not give regular press interviews. i think the reason is that they don't want him to put his foot in his mouth or was a sure, you saw that the shareholder suit the judge in that suit said that dave calhoun had lied in public
about the board having met immediately after the soon after the line aircraft had each of his public representations was false. so i think it's a shell shock from. backlash all right. well, look, i'm gonna leave it there and first of all peter's book. i think it's available on widely at the end of this month november 30th, but elliott bay bookstore has it right now and it's out in the hall the seattle times will run an excerpt in the pacific northwest magazine on sunday, december 12th. but don't let that stop you from buying the book. i highly recommend it. anybody who's interested in boeing should read it. thank you very much for coming.
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