\n\n“Experts say that the root of Boeing\u2019s present troubles is a longstanding culture issue. Over the years, the company\u2019s top decision-makers went from detail-oriented engineers to slick suits with MBAs.<\/p>\n\n\n\n
\u201cYou\u2019ve got a management team that doesn\u2019t seem terribly concerned with their core business in building aircraft,\u201d says Aboulafia.<\/p>\n\n\n\n
There\u2019s one name that keeps popping up when people talk about Boeing\u2019s cultural downslide: Jack Welch, the legendary \u2014 and infamous \u2014 executive who helmed the conglomerate General Electric from 1981 to 2001. Welch was known for ushering in a sea change of \u201clean\u201d management that ruthlessly made cuts in both manufacturing processes and the workforce, all in the service of pumping up stock prices. His leadership style included firing the worst-performing 10 percent<\/a> of GE staff every year; he reportedly laid off over 250,000 people<\/a> during his tenure. He inspired an entire generation of business leaders, and this Welchian GE philosophy was eventually brought over to Boeing.<\/p>\n\n\n\n Historically, Boeing was renowned for its boundary-pushing innovations in aviation, which helped put commercial air travel on the map. But in 1997, Boeing bought a rival plane maker called McDonnell Douglas; instead of Boeing culture influencing McDonnell, however, the opposite happened. The engineer-focused company got a heavy dose of the cutthroat GE ethos as McDonnell\u2019s CEO \u2014 a Welch disciple \u2014 became the president and chief operating officer, and later CEO, of the merged company. Other Boeing leaders, including James McNerney and current CEO David Calhoun<\/a>, have also had stints at GE.<\/p>\n\n\n\n In Flying Blind: The 737 MAX Tragedy and the Fall of Boeing<\/em>, journalist Peter Robison describes<\/a> an environment where safety concerns were concealed or downplayed, in part to be faster and cheaper than Airbus, the former underdog that overtook Boeing as the biggest commercial aircraft manufacturer in the world in 2019.<\/p>\n\n\n\n The company began relying more on subcontractors<\/a>; It had its own fuselage plant until 2005, when it sold it to a private equity firm \u2014 that entity became Spirit AeroSystems. Today, Boeing only completes the final assembly of a plane after it sources parts from thousands of suppliers. Outsourcing is cheaper \u2014 but using so many suppliers reduces the fine-tune control and oversight a company has over the parts that make up their product, according to aviation experts<\/a>.<\/p>\n\n\n\n While lean management was the name of the game for Boeing\u2019s rank-and-file, in the past decade the company\u2019s executives spent over $43 billion buying back their own stocks and paying out nearly $22 billion in profits to shareholders<\/a>. By buying back shares and removing them from the public market, the individual value of a share automatically rises even though nothing about the company\u2019s operations has changed.<\/p>\n\n\n\n Those billions represent cash that could have been reinvested in developing the next line of Boeing planes or hiring more quality inspectors. Former Boeing CEO Dennis Muilenburg, who led the company during the deadly Max crashes, reportedly received an exit package of $62 million.<\/p>\n\n\n\n After the merger, there was also \u201can open labor war between the unions<\/a> and the management,\u201d says Hamilton.<\/p>\n\n\n\n In 2000, feeling demoralized and disrespected by the leadership shift, over 22,000 Boeing engineers went on strike<\/a>. One of the chants heard during the strike: \u201cNo nerds, no birds.\u201d As in, if Boeing doesn\u2019t let engineers do their jobs properly, with adequate pay, there would be no airplanes. The engineers got the extra money they asked for, but not the ideological win. Boeing bled about $750 million due to the strike, according to Robison, and kept on with its cost-cutting drive while Boeing\u2019s workers have kept sounding the alarm with<\/a> every<\/a> mass<\/a> layoff<\/a>.<\/p>\n\n\n\n In 2019, the company said it could cut as many as 900 inspectors<\/a> \u2014 the people who make sure the plane is ready to fly. In 2020, it laid off about 16,000 people<\/a>. Some were offered buyouts, a move that the company might have regretted when it had to go on a hiring spree after the pandemic, and after the 737 Max was cleared to fly again. \u201cSo you have a lot of inexperienced workers who now have their hands on the airplane rather than the mature, highly experienced workers who were laid off or took early retirement,\u201d says Hamilton.<\/p>\n\n\n\n Despite the regular rounds of mass layoffs, last summer, Boeing\u2019s CEO Dave Calhoun said he would love to ramp up the production of 737 planes from 50 to 60 per month<\/a>, which would further elevate the pace of work for Boeing workers who already felt pressured to meet unrealistic quotas. A 2019 New York Times report<\/a> interviewed over a dozen people about their experience working at Boeing, who said they saw many safety hazards during assembly \u2014 like debris left on planes \u2014 and claimed that they were fired for raising potential problems.<\/p>\n\n\n\n Boeing\u2019s treatment of its 10,000-plus subcontractors<\/a> has come under scrutiny, too, as the company has demanded ever-lower prices<\/a>. \u201cThey treated their suppliers the way they treated their workers \u2014 as a disposable commodity,\u201d says Aboulafia.<\/p>\n\n\n\n Boeing\u2019s strategy to continually shrink costs doesn\u2019t appear to have paid off. The company hasn\u2019t turned an annual profit in the past five years. Airbus is selling more planes, and recent headlines about Boeing are putting a halo over Airbus\u2019s comparative reputation. In January alone, Boeing lost $35 billion in market value<\/a> as its stock price fell.” <\/p>\n\n\n\n