Northwest now is supported in part by viewers like you.

Thank you.

There's a reason they call Seattle the jet city.

And that reason is Boeing, builder of the bombers that won World War Two and the Cold War.

And the first American commercial jet and employer to hundreds of thousands of people providing for families educations and a vibrant community.

But Boeing is in deep trouble and has been for a while.

Yes, the company is probably too big to fail and there will be a turnaround.

But at what cost in lives, confidence and market share.

Tonight, two of the top analysts watching Boeing, Scott Hamilton with Liam Dot Net and Foundation for Aviation Safety executive director Ed Pearson and our Steve Kiggins with more on the story of this region's most important corporate citizen.

Boeing is the discussion tonight on Northwest.

Now.

Nobody who grew up around here, including me, would take any pleasure in doing this show.

But Boeing is in so much trouble.

We'd be remiss not to do it.

A report issued last month by a panel of experts sharply criticizes Boeing's safety culture.

The Justice Department is investigating and the FAA has given Boeing 90 days to come up with a companywide plan to fix its safety and defect problems.

This follows the 737 max program chief getting blown out in February.

But the recent blow out of a window plug on a 737 max nine was the very last straw and a very lucky break in that nobody died.

Otherwise, Saturday Night Live would not have been able to absolutely roast Boeing or its collateral victim, Alaska Airlines.

Everyone stopping by my cubicle all want to know about that little boy whose shirt got sucked out the plane.

Some airlines give you a little wing pin when you get off the plane, but Alaska gives you a commemorative photo of your flight.

For more on this story, Northwest Now's Steve Kiggins.

There's now intensified regulatory scrutiny across production and quality control across the entire 737 max program.

And Boeing insists it's encouraging its employees to step forward with concerns without fear for retaliation.

But tonight, we speak with a former employee who believes the culture of the company cannot change if executive leadership remains.

Growing up, all of them talk about Boeing's one of the better companies.

Devon Fisher says he followed a long line of family members who helped build America's aviation industry at the Boeing Company.

He was hired back in 2011 at the Renton factory installing interiors on the 737 when he identified a procedure that could damage materials.

Fisher spoke up to management.

They wanted the plane out the door to go to paint in transport seats.

Move.

So if there's not one in the beginning, one of the end bolted down, they'll scratch the zero, which at that point is considered structure.

It doesn't affect fly ability, but I also have to redo my job again.

Fisher says his repeated warnings earned him reassignment to another crew and his eventual firing in 2019.

Betrayed, maybe kind of like lied to, obviously.

Fast forward to January 20, 24.

Alaska Airlines Flight 1282 suffered decompression when a cabin door plug ripped away from the fuselage and around 16,000 feet shortly after takeoff.

A preliminary NTSB report reveals four balls that secured the door plug were missing.

A march Senate committee hearing with the head of the NTSB shed light on the agency's investigation and the culture at Boeing.

The expert review panel found that Boeing employees are still afraid to speak up.

There is a way for employees to speak directly to the FAA or is there a way for people to speak directly to NTSB to aid in this investigation?

Yes, In fact, I received a whistleblower report myself during a fourth quarter 2023 earnings call to shareholders.

Boeing CEO David Calhoun insisted employees should speak out.

Use your voice.

Speak up.

Focus on every detail.

We will seek out and act on your feedback.

It's that confidence from above that Fisher hopes prevails.

And Boeing's troubles pass.

We need to get all new managers need to take a whole new approach to it.

Now, Boeing has not been able to locate those records detailing Fisher's allegations, but the company says it takes them seriously and doesn't tolerate retaliation.

Now, in regards to the Alaskan Airlines incident, the United States Department of Justice has since opened a criminal probe into Boeing to determine whether or not the company may have violated a deferred prosecution agreement in connection to two fatal 737 max crashes that killed 346 in Renton.

Steve Pickens Northwest.

Now, long time observers have said for years that Boeing's merger acquisition, McDonnell Douglas, corrupted Boeing's culture, a culture that used to be focused on engineering and safety that became dominated by financiers who thought that they could outsource everything and just squeeze suppliers to increase profits.

But it didn't work.

Almost every project Boeing touches has quality control, cost and delivery problems.

As a result, Boeing has lost money market share and trust.

Can Boeing be salvaged?

Joining us now is a returning guest, managing director of Liam Dot.

That and longtime aviation analyst Scott Hamilton.

I want to make sure that I mention this, that you're the author of Air Wars The Global Combat between Airbus and Boeing, which looks like a great book.

I think it's a great place to start.

You know, United CEO Scott Kirby recently said that he's kind of putting a pause, I wouldn't say giving up on, but putting a pause on the max for a while, opting for A320 ones.

He says quality has been a two decade issue.

That's a quote for him.

Boeing, though, still has a big backlog.

So do you think this is the beginning of the end for Boeing or are they just too big to fail?

Well, I don't think it's the beginning of the end for Boeing.

And is it too big to fail?

I guess that depends on how you define failing to go out of business.

No, I don't think that would have happened because of the important defense work that it does.

The industry certainly wants a duopoly, at the very least, if not a third competitor.

Could Boeing wind up in bankruptcy?

I think that would be a pretty good stretch, but I'm not prepared to rule that out.

So you see them carrying on as a manufacturer because of the necessity, because of the demand, but possibly reduced.

Is that a fair characterization?

Well, you know, Boeing has a 50 some odd billion dollars in debt, 25 of which they took on during the grounding of the max, a 21 month grounding, and then the two year pandemic.

They have to pay that back.

I don't remember right off the top of my head what the payback schedule is, but they've got billions due in the next three years.

They're just continuing to lose money in defense.

They're losing money.

And commercial Boeing Global Services is making money, but it's not enough to carry the company, really.

The cash flow was hurt.

Now you've got the FAA is going to have their thumbs on up for an indefinite period.

Know what kind of impact is that going to be?

They just entered labor negotiations with the IAM so 51 touch labor union on March the eighth and they're looking for a 40% wage hike over a four year contract.

Boeing has got a lot of problems and the question really is can they maintain their financial stability for an indefinite period of time or would they decide that they needed to restructure of their debt?

And and I just don't have an answer for that.

You think a government bailout is something that's outside the realm of possibility if things go sideways enough?

Boy, I don't know.

Boeing has very few friends in Congress anymore, but I certainly think that the the members of Congress recognize the importance to defense, the importance to the commercial side.

Boeing is still the biggest exporter for the United States.

I believe.

The job loss of Boeing, if it were to fail, the impact of the economy, the impact of the supply chain, it would be huge.

Now, I would kind of equate this back to I think it was 1972 when Lockheed was engaged in the defense C-5, a program that was engaged in the commercial L10 11 program, and Rolls-Royce went bankrupt, which was flying the engine to the hilt.

1011 the C-5 went way, way over budget.

And because of the Rolls-Royce issue, so did the L10 11.

And Lockheed was on the verge of failure and there was a government loan guarantee that very controversially didn't make its way through Congress.

But would that happen again with the politics of Washington between the Republicans and Democrats that there are today?

I have no idea what the outcome would be.

So the expert panel did their review.

They found a bunch of, you know, non-conforming issues with Boeing's manufacturing processes and the safety culture.

FAA put Boeing on this 90 day a double secret probation to quote an old movie.

Is that feasible?

90 days to fix this kind of broken culture change in 90 days?

And on top of that, I'm going to put another layer on that cake, which is, does Dave Calhoun survive this?

Well, 90 days is when they're supposed to come up with a plan to fix the culture.

So 90 days in terms of fixing is off the table.

The question is, you've got 30 years, basically since 1997 of the development of the culture that we have today.

I hope it wouldn't take 30 years to fix it, but it certainly would take more than 90 days after an approved plan is is presented or adopted by the FAA and by Boeing.

It would take years to change the culture.

And what's interesting is that a few weeks ago, we at Live News had said a major step to fixing the culture is to come up with a good contract with its labor union.

I am so 51.

And then yesterday, March 17th, the Seattle Times came out with a big, almost a four page editorial on that very same topic, which, by the way, they cited our earlier work.

Yeah, it seems to me I have a sneaking suspicion you could change the company culture in the design and engineering areas on the factory floor out on the ramp in about half an hour.

You know, if I were magically wanted to be the CEO from that point above, though, the folks who are deciding, you know, who are so in love with Lean Process is so in love with outsourcing everything, so in love with a lot of the things that we've seen be problematic, that culture.

Do you think that culture from a certain level above is capable of change?

Well, that's where you get to the question of whether Dave Calhoun survives.

And, you know, he's been on the board of directors since 2009.

He became chairman, president and CEO in January of 2020, in the wake of the 20 1819 max crisis, they fired the previous CEO, David Muilenburg, and Calhoun announced a whole bunch of changes for improving the safety culture.

Yet here we are today.

So will he survive?

I haven't heard that the board is ready to make a change.

But then the question is who do you?

Who do you give the job to?

That's a real question, because surprisingly, Boeing has a very thin bench internally to move up the chain.

And even if they had a strong candidate within.

I'm sorry, he's part of the culture.

So I almost think in order to bring somebody in from the outside who who is not part of the culture now, the question, who would that be?

I don't know.

So so I think Calhoun would survive for the near term because there's nobody there to replace him.

Yeah.

Yeah.

Talk to a little bit about the management there.

Otherwise, what do you think the path to recovery is here?

Will we ever be able to see both high production and safety first?

Can those two go together?

High production and good cut and a good price on an airplane and safety first.

What is the solution there?

Is is that possible to do with Boeing?

Well, it said in and yes, what was defined as high production back in 1996 is very different than what high production is defined as today.

But but Boeing was an engineering firm and up up until the McDonnell Douglas merger at the end of 1997.

So, yes, you you can absolutely have safety and high production peacefully coexisting.

Where the problem is and has been is that that the what I like to call the gentrification of Boeing, and that is the the addition of all these people from GE Corp who came from a Jack Welch culture.

The gentrification of Boeing has shifted from an engineering company to one that is there to appease shareholders, and many would argue to further the nest of all the executives at the expense of everybody else.

And you know, the line employees, for example.

And until you are willing to tell Wall Street, we are not going to return 100% of our free cash flow to you for shareholder value, you know, 50% for research and development, 50% for shareholders to me makes a lot of sense.

You balance that, but you got to get rid of the gentrification of Boeing.

Yeah.

You mentioned, you know, a piece of that.

When you take a look at the supply chain, not only not only has there been an aggressive move when it comes to employees and people in-house, but also suppliers as well.

Boeing well-known for trying to wring costs out of the parts that are made.

We're just looking at final assembly here lately.

We're not even looking at parts manufacturing.

I know this is short 30 seconds, though.

I mean, how do we ever even know that the parts are being the oversight on those two to get to final assembly is sufficient?

Well, that that is in fairness to Boeing, a real good question, because the parts go all the way down to the people who make the fasteners.

I mean, right there in Tacoma, you have to gauge which is a really good company.

But even before the max grounding, they were having trouble finding people because it's a very tedious job and they were shifting robotics.

But how does Boeing assure that somebody like Tool Gauge who makes Fasteners is in fact doing what they're supposed to do?

And I don't really have a good answer for that.

Yeah, I think it's a continuing question.

Scott Hamilton, thanks so much for coming in Northwest now.

You're welcome.

Joining us now is the executive director of the Foundation for Aviation Safety, Ed Pearson.

Ed, thanks so much for coming in Northwest now.

I want to start with kind of just a 30,000 foot view of this.

You have so much experience in terms of assembly and production in the Seattle area with Boeing.

Is the consuming public.

The average guy overreacting to this?

Is this catastrophic for Boeing?

Is it going to all be okay in the end?

How bad is all this?

Well, thanks for having me, Tom.

As far as how bad this is, how it is pretty bad.

I mean, we're seeing issues with airplanes that we shouldn't be seeing and we shouldn't accept these as normal.

That's something that I think a lot of reporters, you know, have.

There's kind of a, you know, hey, anything associated with Boeing is, you know, horrible.

But the truth of the matter is, you know, every day there's airplane flight operations, you know, but but the reality is we have a serious issues.

There are serious problems.

So you can't stick your head in the sand and say we don't have these issues.

I mean, the 737 max has got a lot of problems.

And not the fact not to mention the fact that it killed 346 people, actually 347 because it was the rescue diver that also perished.

So any case, yeah, I think this is pretty bad in terms of, you know, admitting that these problems exist.

I don't think we're meeting them.

And that's what makes it worse.

And I was going to say, too, you know, a lot of the attention for a panel that falls off or a tire that falls off some of those, you know, kind of fall into the maintenance where things happen every day in the American aviation system when it comes to the stuff.

But fundamental mission, critical parts assembly, the integrity of the airframe, some of those things are what we're talking about.

You mentioned 737 But I think it's important to mention, too, this this spans a lot of different aircraft types, not only on the commercial side, but on the defense side as well.

I mean, this is this is bigger than I think a lot of people see it for being right now.

Do you agree with that?

Absolutely.

This is way bigger than even we're covering right now.

The news, which is pretty pretty, pretty high bar right now.

I think, again, that you have to kind of look at these things in a in a almost airplane by airplane mode.

You know, you have to look at these things and say, what's going on with the 737 max?

What's going on with seven, eight, seven?

You know what's going on with the military planes.

The truth of the matter is the Boeing company and the employees are Boeing know how to make airplanes.

I mean, they they absolutely know how to build high quality, long lasting, incredible products.

I mean, that's a given.

So it's not like the skill is aren't available.

The problem is the focus on producing, getting things out faster than then, higher quality.

And it's as simple as that.

I don't care.

Anybody in any industry, even your industry, in the news industry, you know, if you have a deadline and you're rushed, you know your quality is affected.

And in some many occupations, that doesn't mean that, you know, people's lives are at risk.

But in the airline industry it does.

And so just like in the medical industry, just like in the public safety industry, you know, we have to take these incidents seriously.

We just can't dismiss them.

This is one of the things that's been very frustrating.

Our foundation, we created a foundation just to kind of help alert people to these issues because they're unaware of them.

We had a gentleman who lost his entire family, pretty much his whole family on Ethiopian crash.

He lost his three kids, his wife and his mother in law.

And he told us that, you know, had he been informed, he never would have put his family on these planes.

So that's a good segway into this question about the max crashes.

I want to look back for a second.

Boeing got hit with a $2.5 billion fine for defrauding the government in those max crashes.

It resulted in a consent decree with the FAA that said, okay, Boeing, you're going to go in, dive in and fix this.

We're going to get things straightened out.

You're going to start pushing rework, stop pushing rework down the line.

You know, we're going to fix all this stuff.

So did Boeing just ignore this and how are they going to explain that away if the Justice Department gets serious about filing charges, possibly criminal charges?

How do they explain that away?

What happened to the consent decree?

Have they burned all their rope, in other words?

You know, the the the truth is that the company has been misrepresenting the safety of these airplanes.

We actually our foundation sent a seven page letter to the judge in Texas, because you're referring to the deferred prosecution agreement.

And, you know, a lot of broken promises were made.

A lot of promises were made that we were going to refocus.

We meaning the company was going to refocus on quality and safety.

And, you know, every financial report that came out of every public statement that came out said that this is, you know, everything is great and we're doing a wonderful job.

And improvements the ability of our manufacturing operations.

But the proof is in the pudding.

I mean, the accident with Alaska, the the safety culture audit, the production quality audit clearly shows that the company is is doing more talking than in action, unfortunately.

And it's again, I think what's really important people need to understand is, you know, the FAA has a huge responsibility here.

The airline has a huge responsibility.

But this isn't all in Boeing, Right?

The FAA has been on a basically out of the picture dot out of the picture.

We just had a meeting about 11 days ago with the head of the FAA and the DOT.

And we listed 35 specific problems that we've identified as a small foundation that need to be fixed.

And unless you admit these problems exist, you'll never fix on.

And so that's what we're trying to fight.

So has Boeing been not Boeing, has the FAA been captured?

That's a term used when a lot of regulatory agencies end up kind of being subservient almost to the industries that they're supposed to oversee and regulate?

What did the FAA get captured?

And and with that in mind, how do we know?

How do we ever know that planes are safe?

You have this delegation issue where Boeing is being asked to certify work, sign off on work for FAA.

And if you can't trust either party, how do I ever get on an airplane again and say to myself, yeah, I'm going to land successfully?

So the FAA, in my opinion and the opinion of people we work with, absolutely.

They're completely they were completely captured for for many years.

You would have thought that losing 346 lives in a $20 billion loss to the company would result in a different outcome.

And unfortunately, they're very reactive.

You know, we didn't want to pull any punches when we met with the head of the FAA and the number two person at D.O.T.. We said that you've become lazy and complacent as an agency and you know, the fact that you have really no footprint in the busiest airplane factory in the world, you know, I think there's like 20 now that they put in which they make sounds like a big deal.

But in a facility that has thousands of employees working seven days a week, it's really woefully inadequate.

So the FAA has got to do a much better job there.

And the delegations authority, if I could just mention that people understanding about the delegation authority and engineering, what people don't understand is they also have that in manufacturing.

So instead of Boeing, instead of the FAA being in the house, they've got Boeing employees doing it.

So the FAA needs to get in the house.

Yeah.

As you say, you can look at both the manufacturing piece and the final assembly piece.

Both sides apparently need oversight.

Do you believe that Dave Calhoun can survive this?

What happens there, do you think?

Well, I think Dave Calhoun, you know, he was the product.

He was on the board of directors for ten years before he took over as CEO after they fired the other CEO.

Honestly, the entire C-suite needs to go.

I mean, that leadership team has failed and they're hurting the company and they're hurting our country and the economy and even potentially our national security.

So the board of directors, you know, and you know, this is kind of a crazy way of thinking about it, but they're so out of touch that I think if they removed that C-suite, it really wouldn't have an impact.

The people that are building these planes are doing it with or without the assistance of the of the corporate leadership.

So I think we could get a lot better leadership that can support these employees and, you know, definitely get back to the manufacturing quality and engineering, you know, quality that we can do.

Yeah, I hear you there.

You mentioned the news business earlier and I remember always our best newscast.

We're always when the news director was out of the joint, he was on vacation or something.

Right.

So I can identify with that.

Here's a philosophical question.

Can low cost, high production and safety coexist?

Absolutely.

I mean, it's been done before.

But again, the fact that you have to again, we're not building like dishwashers here, right?

We're building airplanes.

They have to last 30 years on the air transport people.

I mean, it's really is a life and death type of thing that you need to make these sure these planes can survive for 30 years under all kinds of conditions.

So you first have to build the quality.

You have to look at the how the airplane is designed and the quality.

And you people talk about this, but talking about it doesn't make it happen, mean it doesn't improve quality when you're pushing airplanes out the door and that's all you care about is how many planes.

There's a glut of the last 15 seconds here.

Optimistic or pessimistic that Boeing can deliver something substantial in this 90 day improvement program.

I'm pessimistic that 90 days is going to turn anything around.

I think this is going to take a lot more effort.

There's a lot of problems here that need to be fixed.

Good.

And Pearson, thanks so much for coming in Northwest now.

Great conversation.

Thanks for having me.

Boeing's industrial might and community legacy is usually a source of great pride in the Pacific Northwest.

The bottom line, as much as it pains me to say it, this may be a case where an unfettered free market corporate mentality is failing us.

While consumers generally have the power to make choices to weed out bad products, it's not so in this industry where the decision about what plane to fly is made for us and we're defective products can kill.

I think it's safe to say that it's going to land on lawmakers and regulators to step in and aggressively force Boeing to fix itself.

I hope this program got you thinking and talking.

You can find this program on the Web at kbtc.org.

Stream it through the PBS app or listen on Spotify and Apple Podcasts.

That's going to do it for this edition of Northwest Now until Next Time.

I'm Tom Layson.

Thanks for watching.