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Jaydee
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41 minutes ago, deicer said:

While I wholeheartedly agree with your sentiments about taxes, that wasn't the point of the pic I posted.

It's about margins.

Companies are entitled to make profits, and if you look at most of the one's now making obscene profits, they were profitable before, during and now in the pandemic.

 

I disagree.  Margins don't count if the company is paying the fair tax on their profits.  If Apple is making a 300% margin and paying taxes on the profit - it all works out.  If Apple is making a 300% margin and booking it off-shore and avoiding the taxes - that's the problem.

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I always thought that skiers were a somewhat civilized lot that loved getting outdoors and enjoying nature……some apparently take it a little too seriously…

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Canadians can generally take pride in resolving our differences without resorting to the weaponization of our own feces. But a recent story in Ski Canada documents how an argument among elite skiers descended into what can best be described as “fecal vandalism.” Specifically, two Whistler-area skiers had their Toyota Tacoma smeared with human excrementafter running into a pair of fellow skiers who objected to their using the same stretch of backcountry land. The leading suspect for the poop-smearing, meanwhile, appears to be a prominent North Vancouver lawyer.

 

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14 hours ago, Seeker said:

I disagree.  Margins don't count if the company is paying the fair tax on their profits.  If Apple is making a 300% margin and paying taxes on the profit - it all works out.  If Apple is making a 300% margin and booking it off-shore and avoiding the taxes - that's the problem.

Yes that is also fair.

However, Apple, oil companies, etc, charging more for something that is already manufactured and in the system is what is causing our spike in inflation.

So while the proper tax being paid is going to help governments, it does nothing for the consumer and only leads to increased reliance on government handouts because the people can't keep up.

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36 minutes ago, deicer said:

 

However, Apple, oil companies, etc, charging more for something that is already manufactured and in the system is what is causing our spike in inflation.

So while the proper tax being paid is going to help governments, it does nothing for the consumer and only leads to increased reliance on government handouts because the people can't keep up.

I mostly find the topic of Economics to be quite circular;  inflation causes increased reliance on government, increased reliance on government creates more government debt, increased government debt causes more inflation.  What causes what?  I don't know where it begins or where it ends.  It's like the classic philosophical argument about the validity of free-will vs fate.

All I know is that the current ability of large corporations to register their profits in low-tax (or no-tax) jurisdictions hurts all of us.

I'm not arguing against Capitalism.  I just believe that corporations should be held accountable to the laws of the country - one of which is paying their taxes.

 

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Seeker I believe you are missing HIS point.

The inflation we are seeing RIGHT NOW is due specifically to greed and nothing more. 

If a business turned a profit before and now turns a larger profit during the pandemic then the issue is purely greed.  There is not justification for a price increase for the same product except to increase profit.  All other factors are either the same or severely diminished.  There are only a few major factors at play but greed wins out.

Supply issue have been purely manufactured.  Once a tax was imposed on every container stuck on the dock (I believe it was $100 per container per day) they started moving very quickly to clear the backlog because thousands of containers equated to hundreds of thousands of dollars per day.  Funny how that works

 

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I’m envious, I wish my world were that simple. I admit to not understanding finances but soldier 101 suggests that when money is cheap and plentiful, prices rise. When other things don’t make sense, like a labour shortage during periods of high unemployment…. things just tend to get worse and everyone says "this is different.

To me, the current job numbers stand as proof of poor previous management, they’re nothing to crow about. Sometimes spin recovery is as simple as letting go of the controls and closing your eyes for 6 or 7 seconds.

So, I just look around and take note of what I see. Any one in manufacturing will tell you how hard it is to get stuff and how much that stuff costs, ask a car salesman about chips or a carpenter about lumber. Try and source ammunition, buy a gun or even get loaded on a course to do either.

If you want to fix that, it seems to me that making supply line problems worse is a good place to start stopping. If you invoke vaccine mandates for drivers, many of the old guard will retire. If container ports only allow unionized drivers onto the property slow gets slower. If you ban tractors more than 10 years old (for air quality) slow gets slower still. If you want to invoke emergency powers, do it to start stopping as opposed to stop starting.

Slow leads to shortages, shortages lead to hoarding and both lead to higher prices. I’ve had similar conversations with Greek and Venezuelan colleagues, they’ve assured me that I was misinformed and unable to grasp the subtleties of financial machinations.

LOL, just like you are about to do. Right?   

I'm having trouble believing anything I read. Look at the Alec Baldwin thing. First it was a prop gun, then it was a real gun, then it was loaded with live ammunition, then he didn't pull the trigger. 

Soldier 101 suggests it was always a real gun, it was a live round, and (AND) he pulled the trigger.  So i say let go, close your eyes and count to 7, level the wings and ease out of the dive... It wants to fly and all you have to do is leave it alone. The biggest barrier to recovery is the nut at the control yoke.

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4 hours ago, boestar said:

Seeker I believe you are missing HIS point.

The inflation we are seeing RIGHT NOW is due specifically to greed and nothing more. 

If a business turned a profit before and now turns a larger profit during the pandemic then the issue is purely greed.  There is not justification for a price increase for the same product except to increase profit.  All other factors are either the same or severely diminished.  There are only a few major factors at play but greed wins out.

Supply issue have been purely manufactured.  Once a tax was imposed on every container stuck on the dock (I believe it was $100 per container per day) they started moving very quickly to clear the backlog because thousands of containers equated to hundreds of thousands of dollars per day.  Funny how that works

 

Corporations are supposed to be greedy - it's not a bug, it's a feature.  If a corporation makes too much money it will entice a competitor - this eventually benefits the consumer in the form of more choice and lower prices.

As for missing deicer's point;  he posted a one sentence meme that states "the last 2 quarters have had the highest profit margin since the 50s".  A little detail missing there, wouldn't you say?  Is this for every company? Most companies?  The average for all companies?  Also no detail one the possible causes; maybe this is because the pandemic taught companies how to be more efficient, maybe it's because of increased demand, maybe it's because the government is effectively subsidizing the market by handing out free cash?

We should not care about profits except to calculate the tax bill.

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The world's largest shipping company said it's giving away $80 million in bonuses to employees as it sets to make record profits this year

htan@insider.com (Huileng Tan)  11 hrs ago
image.png.4ca54dd6c143392959874ee6993d38d7.png%7B© Md Manik/SOPA Images/LightRocket You've probably bought something that travelled on a Maersk ship this year. Md Manik/SOPA Images/LightRocket
  • Maersk said it will give $1,000 each to about 80,000 employees worldwide.
  • The Danish shipping giant posted its most profitable quarter in its 117-year history last month.
  • Maesk is set to report the biggest profit in Danish corporate history.

Maersk — the world's largest shipping company — said it will reward its employees with a $1,000 cash bonus each as the Copenhagen-based firm looks set to report record profits.

The bonus applies to about 80,000 of the Danish company's employees worldwide, bringing the total amount to $80 million, reported Denmark's Borsen newspaper and Bloomberg, citing an internal memo. The 400 most senior managers will not get the bonus.

"In a massive team effort our colleagues across the globe have risen beyond the call of duty to respond to our customers' needs," CEO Soren Skou said in the memo, per Bloomberg. "And this has not been easy given the unknowns and disruptions that we had to deal with, the impacted supply chains, congestions, and capacity shortages," he said.

Maersk posted its most profitable quarter in its 117-year history last month, more than quadrupling its third-quarter operating profits to $5.9 billion as the global shipping and supply chain crisis led to record container freight rates.

The shipping company expects its fourth quarter to be equally as profitable, with a gross profit between $6 billion to $7 billion, as shipping rates and consumer demand showed no signs of abating.

In fact, this year is such a bumper year for Maesk that the shipper was set to report the biggest profit in Danish corporate history, according to Sydbank A/S analyst Mikkel Emil Jensen, per Bloomberg.

Maersk also gave a $1,000 bonus to most employees last year when it reported a $2.9 billion in profits.

Read the original article on Business Insider
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The end result of the Lefts “feel good” discipline policies.

Oxford High School Appears To Have Used Controversial ‘Restorative’ Discipline Practices Prior To School Shooting

 

On Tuesday, November 30, a 15-year-old boy allegedly used a firearm belonging to his father to open fire on classmates, killing four students. The morning of the attack, school administrators met with the boy’s parents and showed them disturbing notes found that day indicating the boy was willing to do harm to himself and others. The boy also was caught searching for ammo on his phone just days before the shooting.

But, rather than disciplining the child, the school simply gave the parents the option of pulling him out of class or leaving him in school following a meeting with school officials.

https://www.dailywire.com/news/oxford-high-school-appears-to-have-used-controversial-restorative-discipline-practices-prior-to-school-shooting?utm_campaign=dw_newsletter&utm_medium=email&utm_source=housefile&utm_content=non_member

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5 hours ago, deicer said:

$80,000,000 distributed to employees, leaving $5,900,000,000 in profit is only a ratio of 1.35%.

Compare that to the executive bonuses.  Yes, the article says senior executives won't get that amount, however, what are they getting?

Why would we care?    

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If you need more proof inflation is manufactured...

https://bringmethenews.com/minnesota-business/fresh-off-3-1b-profits-report-says-general-mills-set-to-increase-grocery-prices

General Mills is warning wholesale buyers about an impending price increase that will almost certainly be passed on to shoppers. 

That's according to a recent CNN Business report, which saw copies of letters the Minnesota-based company sent to retailers. The letter explained that come mid-January 2022, prices on many of its products would go up by as much as 20%. That includes products across many of its well-known brands, including Betty Crocker, Annie's, Progresso, Pillsbury, Yoplait and more.

How is General Mills doing?

In its 2021 fiscal year (which runs June-May), the company reported net sales of $18.1 billion, a 3% increase from the year prior, as well as an operating profit of $3.1 billion (up 6% from the previous year).

CEO Jeffrey Harmening, meanwhile, had a base salary of $1.25 million, with another $5.25 million in stock awards, with total compensation for the year at $15.57 million. The 2021 compensation for Group President Jonathan Nudi totaled just under $5.65 million, while CFO Kofi Bruce received just under $3.45 million.

general mills.jpg

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The brainwashed are a force to be reckoned with alright.

I think that's because reality cares little for imagined, invented or theoretical ideas. It may be hard to believe, but firing a bunch of people (all at once) during the course of an ongoing labour shortage might actually aggravate the situation.

This lesson in reality will continue until the goddess of reality is satisfied that we collectively accept her right to exist. If you don't believe that stay the course, she's just getting warmed up...

https://torontosun.com/business/money-news/canadian-employers-facing-labour-shortage-accommodate-the-unvaccinated

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And I always find it interesting how people can simply ignore the reality that maybe (perhaps) other factors may be in play, and that things might, just maybe, be more complicated than they think.

Let me propose the notion that airline tickets are expensive because greedy airline Captains are padding their gold plated pensions. Bet I can find a few people who agree with that sentiment too.

Sure I’ve been retired for a few years but I’ll  bet the people making that assertion have overlooked a few additional considerations. Maybe things like the systemic inertia in meeting a sudden surge in demand, the expense of bringing crews back on line, the fact sim time might be scarce, that sim techs need to be hired back, or parts may be tied up in supply lines, or that you fired 3 of your top TRI/TRE pilots because of mandates and 3 more just retired out of sympathy.

So you tell your CSAs to con me into thinking that all of those hundreds of cancellations are due to weather. Maybe you want me to believe that the weather only affected your airline. Well, my point is I don't believe it. You need a better story.

In short, I’m pointing out that with a few key strokes I still have the ability to find out the weather for myself and I don't like being lied to. I'll even suggest that government and media lies have reached a point where average people are looking around and noticing that none of it lines up with what they see with their own eyes. I think the general public is starting to feel like young soldiers in foreign desserts when they read about what the media says they're doing.

deicer suggested that supporting the notion of capitalism and the profit motivation which drives it is the result of brainwashing. That's a bit too simplistic for me, y'all need a better story.... ridiculing my POV (or that of others) won't get you there. I can still read a TAF and interpret a wx chart, who do you think those CSAs are fooling? 

 

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While this thread is about 'reality', where I am going with it is if a company has lost money, and needs to raise prices to stay viable, that is totally understandable.  Airlines took a kicking, yet they aren't raising prices in a usurious fashion.

If you noticed, I am posting about the companies that are healthy and profitable, yet are raising prices at rates greater than inflation, and then blaming it on inflation.

Local businesses and restaurants and companies aren't doing this, so why are certain big corporations?  Because they can.

It isn't brainwashing, it's in the financial statements and other documents made public.

As I posted before, right wing media has become propaganda supporting the corporate agenda.  I dig beyond that.

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And further to my post above, here's a good summation of that point with regards to Boeing and how they followed the Jack Welch school of thought of profit above all.

Good synopsis of a sad tale:

 


Boeing Was Set on the Path to Disaster by the Cult of Jack Welch

PLANE GREED

The once-great company was gutted by a series of bosses who put making money ahead of making airplanes–and 346 people died. Now a new book adds to the list of damning indictments.

Clive Irving

 

Updated Nov. 29, 2021 4:21PM ET / Published Nov. 29, 2021 6:36AM ET 

 

On April 20 this year, a group of the largest stakeholders in Boeing took part in a virtual version of the company’s annual general meeting. A few hours before the meeting opened online, they learned something that took them by surprise: The retirement age for the top job, CEO of the aerospace colossus, was suddenly being raised from 65 to 70.

This meant that the current CEO, Dave Calhoun, who was 64, could enjoy at least another five years in the job. A move like that would normally indicate that the stakeholders were so pleased with the way a company was being run that they thought the best way of keeping it that way was to leave the boss in place rather than replace him.

But this was Boeing, and the company had never been in worse shape. Calhoun had been in charge since January 2020. In that time, its previously stellar reputation for engineering excellence had been publicly shredded after two crashes of its newest jet, the 737MAX, had killed 346 people, because of serious failures in Boeing’s safety regimen. At the same time, other airplane programs, both commercial and military, were plagued with problems, and its effort to catch up with Elon Musk’s SpaceX program supplying astronaut-carrying capsules to NASA suffered repeated and ignominious failures.

If any of the stakeholders were puzzled why they were expected to fall into line and approve Calhoun’s extended tenure, they didn’t reveal it. They, and the company’s board of directors, swiftly ratified the deal. In fact, the relative serenity of Calhoun’s ascendancy (which, given the haste of the deal, had the hallmarks of a coup) indicates something larger than just how passive Boeing’s board and main stakeholders are: It’s a reflection of how far in America personal greed has superseded the old standards of corporate governance and eradicated any sense of personal accountability for a catastrophic management record.

More seriously, the Boeing case seems to show how easy it has become to insulate senior executives from the consequences of actions that lead not only to the horrendous deaths of hundreds of people but to the lifelong anguish and suffering of the victims’ families. Inevitably, airplane crash investigations disappear down numerous rabbit holes of technical obscurity; more often than not culpability is a collective, not individual act and has so many fingerprints that the simple villainy of homicide is impossible to ascertain.

All this generates in the public an impotent anger. Why are there no penalties to pay? A congressional committee delivered a withering bipartisan indictment of Boeing’s leadership. There have been damning TV documentaries and a series of granular newspaper investigations, to little effect. And now there is Flying Blind, by Peter Robison, a reporter for Bloomberg, that is published tomorrow. Much of the forensic detail is familiar, but the picture it provides of Boeing’s management and its ethical vacancy piles on another layer of disgust.

THE PROGENY OF ‘NEUTRON JACK’

Every attempt to divine how Boeing’s culture went from exemplary to execrable tends to lead to a man who never laid his hands on Boeing, Jack Welch, the infamously bottom-line hatchet man, known as “Neutron Jack” for his ability to vaporize thousands of jobs at General Electric while its CEO from 1981 to 2001 before leaving with a $417 million exit payment. His leadership style, once hailed as a master class in squeezing as much money as possible out of any business, became posthumously toxic. Nonetheless, managers schooled by Welch fanned out to work their magic at other companies deemed in need of it.

Robison tracks in great detail how this influence shaped Boeing—all the way to Calhoun. It begins with Harry Stonecipher, who reached Boeing via one of Boeing’s main competitors, McDonnell Douglas. In 1997, in one of the largest mergers in the aerospace industry, Boeing took over McDonnell Douglas. But, in terms of the cultural consequences, the reverse happened. The chairman and CEO of Boeing was Phil Condit, a talented engineer who had risen to the top through many layers. This was a characteristic Boeing career path, one that I explored in reporting for my book Wide Body, the story of the men who created the legendary Boeing 747 (during which I met Condit). Condit belonged to a cohort known as the aeromen, engineers who had Boeing’s pioneering brilliance in their blood and imprinted it on the whole company—unlike McDonnell Douglas, a company once renowned for its jets that, under more bottom-line driven managers, had lost its luster.

It turned out, however, that Condit became tantalized by the perks of power and particularly by men who got rich by being hard-nosed managers. Stonecipher, who acquired a large chunk of Boeing stock in the merger, impressed Condit as a role model for a change in management style and he gave Stonecipher, as chief operating officer, the green light to set about injecting the Welch bacillus into Boeing, which he did with a relentless drive to cut costs. He ripped into senior managers, charging that they were “hobbyists who didn’t know how to run a business.” The combination of the two men did get results: Boeing’s annual revenue jumped from $23 billion to $54 billion in seven years.

Unlike Stonecipher, Condit remained popular among Boeing’s engineers and in the production plants. But many were dismayed in 2001 when he moved Boeing’s corporate headquarters from Seattle to Chicago. For sure, the company was now an aerospace giant, with plants widely dispersed across the U.S. But the move was sacrilege to the aeromen. Seattle was in the company’s DNA. Its many historic achievements had been nurtured there. Microsoft and Amazon, both created there, remained happily ensconced. But Boeing’s top brass, it seemed, were leaving the company’s history behind them because to them it seemed too provincial.

In 2003, Condit resigned, taking responsibility for a scandal involving Pentagon contracts, although he was not personally involved, and Stonecipher became CEO, only to be fired in 2005 when it turned out that he had been having an affair with an executive in the company’s Washington lobbying team. That did not, however, break the Welch chain. Stonecipher was replaced by another Welch protégé, Jim McNerney, who received, on signing, a pay package worth $52 million and who, every bit as ruthlessly as Stonecipher, thought it a priority to build Boeing into a money-making machine loved by Wall Street rather than perpetuate a culture that had always balanced profits with sustaining Boeing’s hard-earned status as a world leader in the quality of its engineering.

And it was McNerney who, in 2011, took the decision that would eventually tank Boeing. The most lucrative airplanes for Boeing and Airbus are the single-aisle jets, the world’s workhorses. Boeing’s decades-long cash cow, the 737, was rapidly losing market share to Airbus’ far more modern A320 series. Boeing’s best brains had known that this would eventually happen. They thought that the 737 series had reached the natural end of its life cycle and advocated a clean-sheet replacement, a jet that would have rendered the A320 obsolete.

At the time, I spoke to an old friend, Joe Sutter, mastermind of the team that created the 747, mentor to many younger engineers, and regarded as the definitive custodian of the Boeing legacy. He had a unique take on the 737 because he was the only survivor of the team that created it in the 1960s. In fact, he was responsible for a crucial decision that made the design open to evolving into ever-larger models.

The 737 was the company’s response to a competitor that was rapidly dominating the single-aisle market, the Douglas DC-9. Sutter thought that Douglas had made a serious mistake by placing their jet’s engines at the tail, which, for reasons of balance, made it difficult to lengthen the cabin. The 737’s lead designer was about to do the same, but Sutter persuaded him to put the engines on the wing, a decision that Sutter claimed, with good reason, was to make a fortune for Boeing. But now Sutter told me that he agreed with the engineers who believed that the 737 design was at the end of its realistic life. He didn’t enjoy flying on it himself because the cabin was narrower than the A320, making the seating more cramped. The new engine in prospect for the replacement model deserved a new state-of-the-art airplane that could be another world-beater for Boeing and that was what he was recommending. But McNerney, touting the Welch philosophy of “more for less,” ruled out the new jet and opted, instead, for what became the 737MAX, a hybrid of yet another iteration of the old airframe and the vastly improved engine that would give airlines much higher efficiency. The new program would cost $2.5 billion; the clean-sheet jet would have cost $20 billion. (As it turned out, the MAX catastrophe has cost the company well north of $20 billion.)

It appeared that the Welch chain had finally ended when McNerney retired in 2014 with a package of $58.5 million. He was replaced by the son of an Iowa farmer, Denis Muilenburg, whose whole career had been with Boeing. But McNerney had carefully indoctrinated his successor with the Welch doctrine—specifically ruling out what he called “moonshot” gambles on the scale of those that had produced every generation of Boeing’s legendary jets.

Muilenburg hadn’t been a particularly accomplished executive: He was part of a team competing for a Pentagon fighter contract that lost out to Lockheed Martin, and he was involved in another weapons program that was canceled. But he knew how to turn the screws to cut costs and made that a personal priority. At the same time, Muilenburg followed McNerney’s mission of turning the company into an ATM machine for its stockholders. Between 2013 and 2018 Boeing funneled $41.5 billion in stock buybacks to them (and the directors). Under Muilenburg, the stock price tripled. During those years the most influential backer of this policy on Boeing’s board was Dave Calhoun—another Jack Welch acolyte.

BLAME THE PILOTS

In the days following the first MAX crash, of Indonesian airline Lion Air Flight 610 on Oct 29, 2018, killing 189 people, Boeing swiftly settled on their line of defense: The pilots were to blame. In my reporting for the Daily Beast, I pushed back on this, but Boeing doubled down, insisting to me in a long briefing by several senior executives that the pilots could have regained control had they followed “a memory item” in the flight manual— in other words, they should have remembered a procedure used on earlier models to deal with rogue movements of the stabilizer. As it turned out, that would not have saved them. It was obvious that this line was coming directly from Muilenburg. It was preposterous, since the flight manual made no mention that the MAX had a new autonomous control system that was, in fact, responsible for both this and the second crash, of Ethiopian Airlines Flight 302 on March 10, 2019, killing 157 people.

Boeing’s readiness to blame the pilots persisted and was one of the things that most exasperated investigators, particularly the U.S. House Committee that reported in September 2020 that the crashes were the “horrific” result of flawed technical assumptions and a lack of transparency from the company’s leadership. In his evidence to the lawmakers, one of the most respected pilots in the world, Captain Chesley “Sully” Sullenberger, said the chain of errors “began with decisions that had been made years before to update a half-century-old design…we owe it to everyone who flies to do much better than to design aircraft with inherent flaws that we intend pilots to have to compensate for and overcome.” The committee pointed to how Muilenburg had pressured engineers to meet unrealistic deadlines. But Muilenburg pushed back, saying that the pressures existed but “never interfered with safety.”

Muilenburg’s stonewalling did not play well with lawmakers or the public and, in December 2019, he was fired by the board. Although he forfeited bonuses, his exit package was worth at least $62 million. He was replaced by Calhoun. At first, the company said it was a temporary arrangement while they hunted for a longer-term replacement from inside the aerospace industry, not a finance man. Soon, though, it was apparent that Calhoun had taken to the task. He had, throughout, backed Muilenburg’s hard line on the pilots and, astonishingly, appeared reluctant to retreat from it, even while the lawmakers were putting together their damning indictment of Muilenburg’s leadership. He came up with a subtle but insidious new version of shifting the blame in an interview with Aviation Week. He said that if Boeing had learned anything from the crashes it was the need to better understand the “man-machine interface.” This involved “pilot populations and different training. We know the pilot population has changed. We know where we’re selling airplanes and how young the compliance systems are in some of those markets.”

In other words, Calhoun was suggesting a cultural problem rather than a technical one. He implied that pilot proficiency was variable and, by inference, that Indonesian and Ethiopian flight crews were from parts of the world where training was “different.” Apart from gratuitously insulting the dead pilots (whose proficiency was never questioned), he was again shifting responsibility away from Boeing to regional regulatory systems—all of whom have to meet a global standard set by the International Civil Aviation Organization.

The congressional investigators were crystal clear on this issue: “To make the claim that these accidents would not happen to U.S. trained pilots is presumptuous and not supported by fact. Vilifying non-U.S. pilots is disrespectful and not solution based… Boeing does not produce aircraft for U.S. pilots vs. pilots from the rest of the world.”

Pilot proficiency does vary, but not according to what language the pilots speak. It varies by age, experience, and sometimes the mood of the moment. Pilots are human. Decades have been spent equipping cockpits with constantly improving aids that eliminate the chance of pilot error—with spectacular results in safety. The MAX was, in the words of Sully Sullenberger, a death trap because Boeing made it so. Calhoun, apparently just can’t go there.

ANOTHER ‘UNCOMMANDED PITCH EVENT’

Under Calhoun, the Boeing sickness is not in remission—far from it. Its next major airliner program is another iteration of an existing design, the widebody 777. With the disappearance from airline fleets of the two jumbo jets, the 747 and the Airbus A380, the upgraded 777 will be the largest jet in service. It made its first flight in January 2020, but 11 months later a serious problem showed up in a test flight—and, incredibly, it involved the same alarming event that was fatal to the 737MAX: an “un-commanded pitch”—meaning that the jet’s nose pitched upward without any action by the pilots.

This was disclosed in a letter sent by the FAA to Boeing in May, first reported by the Seattle Times. For decades the FAA had been far too lax in its oversight of Boeing. Now the regulator had finally found its cojones. The tone of the letter was unusually admonitory. Boeing had requested permission to begin the next phase of testing that would lead to the FAA certifying that the jet was ready to be delivered to airlines. Refusing that request, the FAA warned that “The technical data required for type certification has not reached a point where it appears the aircraft type design is mature and can be expected to meet the applicable regulations.” Including the un-commanded pitch, there were 11 issues that needed to be resolved. Moreover, the FAA said Boeing had failed to provide an overall safety assessment of the design, as required—a lapse that had also occurred when the MAX was in development. In short, Boeing had not corrected systemic behavior that was again potentially endangering the safety of an airplane. (The chief engineer of this program was a lead engineer on the 737MAX.)

The 777 flaw was buried deep in software, reflecting a recurring source of trouble in both commercial and military programs at Boeing.

In 2019, the first unmanned test flight of their Starliner capsule, a project competing with Elon Musk’s SpaceX Dragon capsules for delivering astronauts and cargo to the International Space Station, was aborted because of a serious glitch in software that investigators said would have endangered the crew during re-entry to the Earth’s atmosphere. The program was again set back later this year when a launch was abandoned. This time, the problem was corroded valves, not software, a flaw that so dismayed NASA that they switched astronauts due to fly the Starliner to future SpaceX flights, reinforcing Musk’s dominance of the technology and deeply embarrassing Boeing. (Muilenburg had boasted that America would send humans to Mars on a Boeing rocket within a decade). A software glitch also compromised the flight controls of Boeing’s T-7 advanced jet trainer for the Air Force, a $9.2 billion program. This was added to the Air Force’s prolonged travails with a replacement for its aging fleet of inflight refueling tankers, the Boeing KC-46, which should have been a straightforward conversion of a commercial jet, the 767, but has become a textbook case of a seriously mishandled Pentagon contract, making a mockery of the promised budget and deadlines: due to be in full production by 2017, it will not now reach that point until 2024, costing Boeing at least $551 million of its own money to fix. The FAA has also been investigating continuing quality control failures on the production line of the 787 Dreamliner in Charleston, South Carolina.

TOO BIG TO HANDLE?

Failures on this scale across so wide a swathe of programs seriously undermine confidence in Boeing’s grip on its businesses, particularly with its three most vital customers, the Pentagon, the airlines, and NASA. In fact, the sheer technical diversity of the company and the different nature of the markets in which it competes suggests that it may be impossible for any chief executive to effectively master. The 1997 merger with McDonnell Douglas followed the classic General Electric industrial conglomerate model of combining several different businesses into a colossus under a single corporate management. As it happens, this month that original model at GE was finally abandoned. With GE’s performance under fire from investors, Larry Culp, the current chief executive, announced that the conglomerate would be broken up into three separate companies—health care, energy, and aviation. The logical equivalent for Boeing would be to split into defense, commercial aviation, and aerospace.

Whether or not that happens, one thing is certain: Before the merger with McDonnell Douglas, it would have been unthinkable that Boeing’s engineering quality could plunge as far as it has. Had failures on this scale occurred, heads would have rolled. The moonshot gambles that the Welch progeny so openly disavowed were, for sure, not what today’s investors would welcome—the most spectacular of them, the development of the 747, came close to bankrupting the company. But the payoff was immense and the stature of the company was unmatched. And Condit, for all his apparent carelessness with the company culture, had honor enough to fall on his sword for a breach of integrity by others. Not so Calhoun.

When Calhoun joined the Boeing board in 2009 he was already established as one of the super performers at the largest private equity firm, Blackstone. His business ethic had been shaped by 28 years of applying the Welch doctrine at GE (according to Robison, Welch’s speechwriter said of Calhoun, “He’s the guy who was really the most like Jack”) followed by vigorously practicing the very similar doctrine of private equity. Of course, private equity isn’t necessarily malign. Its vices and virtues have been argued for as long as it has been around, about 50 years. At its most positive it has transformed moribund businesses and created new ones. It’s also made many people very rich. But, in the wrong hands, it guts companies, not simply by stripping them of assets but stripping them of profits that should have been reinvested to sustain development. Calhoun represents a particularly aggressive strain of carnivorous capitalism. He’s aggressively anti-union and anti-regulation, and at Boeing he is unrepentant in his zeal to slash and burn. During the course of this year, the workforce will have been cut by 20 percent. Plants have been shuttered, buildings sold off.

After listing the costs to Boeing of the 737MAX catastrophe—direct costs of $21 billion, the loss of orders for the jet amounting to $128 billion— Robison writes in his new book:

“Yet the people who made the most damaging decisions, and laid on the impossible demands, kept rising to the top. Like Jack Welch’s General Electric before it, Boeing became a collection of assets to be shuffled as managers saw fit to make the most beneficial combination for stockholders, not for customers or employees.”

Some of the most powerful passages in Robison’s book are about the excruciating suffering of the families of those who died in the two crashes. He reminds us that these were extremely violent and gruesome deaths for the passengers and the crews, who remained fully conscious as the jets began high-speed death dives with the pilots unable to recover control: the Lion Air jet was ripped to pieces as it hit the sea and the Ethiopian jet scorched a deep crater in the desert, atomizing the victims.

HOW DO THEY SLEEP AT NIGHT?

None of the company’s top executives have been held accountable. In January, Boeing reached a deferred prosecution agreement with the Justice Department. Shifting the blame to lower managers, they admitted that regulators had been misled about the seriousness of changes made to the control system of the 737MAX. They agreed to pay $2.5 billion in fines and compensation to airlines and to the families of victims of the two crashes. That meant that the company itself escaped a criminal conviction that would have led to it being no longer able to bid for federal contracts—including as a defense contractor. This month a lawsuit brought by shareholders alleging negligence by members of the board was settled when the directors’ insurers agreed to pay $237.5 million to Boeing, although the directors denied any wrongdoing and, bizarrely, some of that payment actually flows back to the directors as well as the stockholders who brought the suit. That did not, however, shield individual managers from being charged and, last month, Mark Forkner, who had been the chief technical pilot on the 737MAX program, was indicted on charges that he deceived the regulators. Investigators for the House committee discovered that when other engineers told Forkner that airline pilots would need new training on simulators to adapt to the changes in the control system (the system that led to the crashes), he responded, “Boeing will not allow that to happen. We’ll go face to face with any regulator who tries to make that requirement.”

Robison follows Forkner’s role closely, including a note that Forkner sent to another test pilot boasting that he had been “Jedi-mind tricking regulators into accepting the training that I had got accepted by FAA etc.” Later, though, he admitted to being alarmed that the new automated control system could be triggered as soon as a few minutes after takeoff (which is what occurred in both fatal crashes). That did not, however, prevent Forkner from following the company line when Lion Air, receiving its first 737MAX jets, asked Boeing for simulator training for its pilots who were transitioning from the earlier model. Robison reports that Forkner’s response was to call the airline “idiots” and that, after a few conference calls, he had persuaded them that training wasn’t necessary and wrote to a colleague, “I save this company a sick amount of $$$$.”

Forkner’s defense lawyer told reporters, outside the court in Fort Worth, Texas, that Forkner was being used as a scapegoat: “The truth will show that Mark did not cause this tragedy, he did not lie, and he should not be charged.” Given all the evidence that Muilenburg had applied relentless pressure on the program’s managers to present an airplane to airlines that was little different than the previous model when, in fact, it introduced a critical and, as it turned out, fatally flawed system, Forkner appears to have been more a loyal messenger than a felon. Calhoun has claimed that Forkner was part of a “micro-culture” that did not represent Boeing, but if the case goes to trial, it’s likely that Muilenburg and Calhoun will be deposed, exposing them to discomforting questions about how such a “micro-culture” could have agency on their watch and about their own roles.

Boeing is no longer an industry lodestar. The company has not launched a new jet since the 787 Dreamliner in 2004. Without the incentive of that kind of innovation, the best engineers go elsewhere. The industry is now under great pressure to go green by cutting emissions and noise pollution. Electric power and cleaner fuels like hydrogen are the way ahead. Airbus has a very ambitious program to transform its airplanes. Boeing’s effort is, in its own words, limited to “sustainability rather than step-change, breakthrough innovations.” Indeed, it is still dependent on the 737MAX for the majority of its profits. Despite lost orders and the stigma of the crashes, there are still 3,000 of the jets on order by airlines because it is being sold at a heavy discount. That means that, given the normal lifespan of a jet, it could still be rolling up to airport gates in 2040, although by then it will resemble a relic of another age.

 

 

 

 

 

 

 

 

 

‘Flying Blind’ Review: Downward Trajectory

Focusing on Wall Street and not on its planes, Boeing forgot that its success depended on a reputation for superior engineering.

By Roger Lowenstein

Nov. 28, 2021 4:57 pm ET

A Boeing 737 MAX jet.

Photo: AFP via Getty Images

One business scandal that only just got its 15 minutes of media heat involved the crash of two Boeing 737 MAX airliners. Boeing had insisted after a Lion Air jet tumbled into the Java Sea, in October 2018, that the plane was safe. Less than five months later an Ethiopian Airlines 737 MAX went down too. In total, 346 people died.

An uproar ensued, and the 737 MAX—Boeing’s upgrade to its venerable 737—was grounded while the company worked on a fix. Hearings were held, lawsuits filed, the company’s chief executive was sent packing. Still, once the pandemic hit, the controversy faded. Peter Robison’s “Flying Blind: The 737 MAX Tragedy and the Fall of Boeing” is a disturbing account that will return much-deserved scrutiny both to Boeing and to its regulator, the Federal Aviation Administration.

Flying Blind

By Peter Robison

(Doubleday, 327 pages, $30)

Boeing remains one of America’s leading manufacturers, but it is reduced in reputation as well as equity. The “fall” that Mr. Robison’s subtitle alludes to is the corrosion of a culture that had emphasized quality. Boeing was founded in Seattle in 1916 by William Boeing, a wealthy engineer who took flying lessons and decided he could build a better machine. It quickly became an icon of American engineering, and the attention to quality extended to the top. Typical was Jim Johnson, a longtime executive who made a point of leaving the factory through different doors so he could talk to as many workers as possible. 

By the early 1990s (when Mr. Johnson left), Boeing had adopted the business-school approach to maximizing shareholder value, including cost-cutting and share buybacks. The headquarters moved to Chicago, away from the plants, and the workers were scattered.

Mr. Robison is upset that Boeing followed the unremarkable philosophy of the Business Roundtable (recently revised under woke pressure) that the first duty of any company is to its shareholders. He says that Boeing focused on metrics that “tend to favor investors over employees and customers.” This is an easy but misworded critique. In the long term, the interests of shareholders and customers are aligned. A manufacturer that disregards either customers or employees will eventually not have profits to distribute. 

In fact, Boeing forgot that its long-term success depended on its reputation for superior engineering. Executives like Alan Mulally, project leader in the 1990s for the costly but highly successful Boeing 777, were passed over for the top job. The corporate metamorphosis was accelerated by the 1997 merger with rival McDonnell Douglas. The executive suite was colonized by such figures as McDonnell’s Harry Stonecipher, a Jack Welch protégé who was explicit about changing the culture. His intent, he said, was to run Boeing “like a business rather than a great engineering firm.” Increasingly that meant doing whatever it took to hike the share price. Phil Condit, the CEO who orchestrated the merger, pushed his managers to quintuple the stock in five years, which suggested that his eye was on Wall Street and not on the planes. 

Financial engineering was in vogue across corporate America, but airplanes like the 737 depend on real engineers. Drab but dependable, the 737 had found its niche after the airline industry was deregulated in the late 1970s. Carriers needed fleets of short-haul planes that could siphon traffic into feeder hubs; the 737 became their workhorse.

By the 2010s, the 737 was providing a third of Boeing’s profit but was in need of an overhaul. Mr. Robison, an investigative reporter at Bloomberg, argues convincingly that concern for costs compromised this effort. He portrays his subject under intense pressure from Airbus, its European rival, and making a questionable decision to upgrade the 737 rather than, more expensively, design it anew.

Test flights showed a tendency for the MAX to pitch up. Designers corrected the problem on the cheap, with software that pushed the nose down. Somewhat perilously, a single sensor measuring the angle of the wings against oncoming air could force the plane into a downward trajectory. An optional cockpit indicator—alerting pilots that the sensor might be faulty—was not included on cheaper models. And the sensors, which sat outside the plane, were vulnerable to bird strikes or improper installation. 

Pilots could correct for a bad reading, but they had to follow steps from a written manual rather than, as in newer planes, being prompted by an electronic checklist. Since they had only about 10 seconds to make a correction, training was key. Yet Boeing went to great lengths to get the 737 MAX certified without the requirement that pilots train on a simulator. Lion Air, the Indonesian airline, requested such training, but Boeing said it wasn’t necessary.

During the pre-crash certification process, Boeing misled the FAA on the importance of the software (this later led to an indictment of a supervisor). Still, the FAA, as Mr. Robison shows, was compromised by years of having adapted its regulatory role to promote manufacturers. Even after the first plane went down, it kept the MAX flying—despite an agency analysis predicting more crashes. Nor would Boeing’s CEO, Dennis Muilenburg, admit that the company had been at fault. After the Lion Air crash he went to a ribbon-cutting. The board awarded him a $31 million paycheck, including a bonus. After the second crash, he woodenly stayed on script: “We followed exactly the steps in our design and certification processes.”

Yet various insiders had protested Boeing’s level of risk-taking. One manager sent a note to the 737 factory head: “Frankly right now all my internal warning bells are going off.” The brass was said to have pressured Boeing’s internal regulatory unit. Said one eyewitness, “it was push, push, push, shove, shove, shove, to get the airplane into the customer’s hands.” In the end, cutting corners was not only tragic; it was bad business. Far more money was spent on lawyers, victims’ families, retooling and lost flight time than on Boeing’s supposedly quick fix.

 

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Mama told me when I was young
Come sit beside me my only son
And listen closely to what I say
And if you do this it'll help you
Some sunny day oh yeah
Oh take your time don't live too fast
Troubles will come and they will pass
Go find a woman yeah and you'll find love
And don't forget son there is someone up above
And be a simple kind of man
Oh be something you love and understand
Baby be a simple kind of man
Oh won't you do this for me son if you can
Forget your lust for the rich man's gold
All that you need is in your soul
And you can do this oh babe if you try
All that I want for you my son is to be satisfied
And be a simple kind of man
Oh be something you love and understand
Baby be a simple kind of man
Oh won't you do this for me son if you can
Oh yes I will
Oh don't you worry you'll find yourself
Follow your heart and nothing else
And you can do this oh babe if you try
All that I want for you my son is to be satisfied
And be a simple kind of man
Oh be something you love and understand
Baby be a simple kind of man
Oh won't you do this for me son if you can
And baby be a simple real simple man
Oh be something you love and understand
Baby be a simple kind of man
 
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