🚗 🚙 Turn your trusty old car into trustworthy journalism Learn more
Turbulence at Boeing
Jan 30, 2024
Episode 1087

Turbulence at Boeing

HTML EMBED:
COPY
The problems plaguing America's aviation giant and what it means for the future of the commercial aerospace industry.

Boeing’s 737 Max 9 planes are flying again after the recent door-plug blowout incident that had kept the planes grounded for nearly a month. But the company’s troubles are far from over.

In “Flying Blind: The 737 MAX Tragedy and the Fall of Boeing,” author Peter Robison documents how Boeing’s reputation has declined over the past two decades. The recent Alaska Airlines episode is a fresh blow.

“Even though people didn’t die, it’s something that people are seeing in real time. And they’re seeing what’s been described as incompetence, or a lack of focus on on safety, play out and in a terrifying way,” Robison said.

On the show today, Robison explains where things went wrong at Boeing, the 737 Max’s potential fate, and whether Boeing’s crisis could make way for a new competitor in the commercial aviation industry.

Then, Elon Musk’s Neuralink has implanted a chip in a human brain, but it’s not the first company to experiment with computer-brain interface technology. And a one-two punch at UPS: layoffs and a call back to the office.

Later, a listener shares her experience seeking long-term care for a loved one. And as Dry January comes to an end, Summer Phoenix, co-owner of Stay, a new zero-proof cocktail bar in Los Angeles, answers this week’s Make Me Smart.

Here’s everything we talked about today:

We want to hear your answer to the Make Me Smart question. You can reach us at makemesmart@marketplace.org or leave us a voicemail at 508-U-B-SMART.

Make Me Smart January 30, 2024 Transcript

Note: Marketplace podcasts are meant to be heard, with emphasis, tone and audio elements a transcript can’t capture. Transcripts are generated using a combination of automated software and human transcribers, and may contain errors. Please check the corresponding audio before quoting it.

Kai Ryssdal 

Juan Carlos, shall? I love that. I say it. If only life was like Hey everybody, I’m Kai Ryssdal. Welcome back to Make Me Smart, where none of us is as smart as all of us.

Nova Safo 

Yeah, I’m Nova Safo filling in for Kimberly Adams. Thanks for joining us, all of you out there today, Tuesday, January 30, is the day. We’re talking about what’s happening at Boeing today. The company’s 737 Max 9 planes are flying again after the recent door plug incident. A very scary one. Boeing’s troubles go way beyond that door plug though, don’t they?

Kai Ryssdal 

They do indeed. And so, that’s what we’re going to talk about today. We’re going to talk about this ginormous company in the American manufacturing ecosystem. This ginormous company and the American economy as a whole. And also, its role in global commercial aviation, where it is one of two. So, we’re going to get Peter Robinson online to talk with us. He’s an investigative reporter for Bloomberg. He’s also the author of Flying Blind: The 737 Max Tragedy and the Fall of Boeing. Peter, welcome to the program.

Peter Robison 

Thanks for having me.

Kai Ryssdal 

All right. So, look, your book was obviously written before the latest Boeing challenge. It was challenges that you were writing about the earlier two mishaps with 737 Maxes, which killed something like 350 people. Let me ask you this, though, if we thought that was the fall of Boeing, isn’t this really the fall of Boeing?

Peter Robison 

This stuff? That’s a good point. This does feel like even though people didn’t die, it’s something that people are seeing in real time. And they’re seeing what’s been described as incompetence, or a lack of focus on safety play out and in a terrifying way, in a way where you can see a giant hole in the side of a plane. And that being traced back to problems on Boeing’s factory lines, which should have been caught by management, but weren’t.

Nova Safo 

How could they not be? And one of the things that the developments in this story have been happening so fast, ever since this accident, early this month, about four and a half weeks ago now. And one of the things that I find fascinating is the response, also from just the airline industry at large has been, you know, really a lot more critical than I think we’ve perhaps heard in the past, or maybe I just haven’t been paying attention. What’s the difference this time, you think, is this an inflection point for Boeing?

Peter Robison 

What you’re hearing is frustration. You’re hearing just pessimism that Boeing has its problems sorted out after the two crashes. Dave Calhoun, the current CEO, pledged to put safety first, he created a safety committee on the board. And this latest incident makes clear that that wasn’t enough. That something else has to happen there. There needs to be potentially a shakeup of the management and a real return to putting safety first throughout the production system.

Kai Ryssdal 

Alright, so Peter, take us back. What happened to Boeing because this company was a global leader in aviation. It was an innovator in the American economy. It is, as I said, incredibly important to American manufacturing for all of its subcontractors, and all of its influence on the larger economy. Where did it go off the rails?

Peter Robison 

I think it’s clear that the inflection point was the late 1990s, early 2000s. To that point, Boeing was the undisputed leader in commercial aerospace. It had 60% of the market. It had the top selling products in every category. But it needed, it faced a point where it needed to invest. Airbus was coming on strong as a competitor. It had redesigned the A320 to be what many airlines considered a better plane to the 737. And Boeing’s management had a choice then. I was a beat reporter covering Boeing then, and this choice played out with the engineers pushing for a return to investment and product innovation and Wall Street pushing for paying attention to shareholders and pushing for return on net assets. And it was Wall Street’s argument that won out.

Nova Safo 

Where does the Max I mean, the Max program is so crucial to Boeing’s future and yet, you know, we hear quotes like the one we got on in Reuters yesterday from a company CEO, the company is called AerCap. It’s apparently the world’s largest aircraft lessor. In an interview with Reuters, its CEO says something to the effect of “one more incident with the Max line and it’s going to become a very hard sell.” Can the Max recover? Where does it go from here?

Peter Robison 

That’s a really interesting question. And as I was writing my book in 2020 and 2021, after the crashes. The parallel I saw at the time that seemed very relevant was the McDonnell Douglas DC-10. The DC-10 in the early 1970s had a terrible crash outside Paris. 346 people were killed. Eerily, that’s the same number who were killed in the two Max crashes. And that was the result of poor design, and then the McDonnell Douglas leadership covered up the mistakes that they had made. And Boeing in its response to the Max crashes followed almost the same playbook. Boeing’s former CEO blamed airlines, blamed pilots. And the question then became, can Boeing’s reputation survive another Max incident? And what happened with the DC-10 was that there was a third incident in Chicago, where a plane crashed on takeoff in Chicago in 1979. And the DC-10’s reputation never recovered. In this case, airlines don’t have many choices. The Airbus assembly lines are sold out. You do see United trying to potentially maneuver to get an earlier slot on Airbus assembly lines. So, I think what may happen is that the Max will remain a very distant number two and unless Boeing summons the will to invest and develop a new truly innovative aircraft, it’s destined to remain a distant number two in this market.

Kai Ryssdal 

God and you know, developing a new and innovative aircraft. Yeah, developing new and innovative aircraft, let’s say the 787, right? With composites and all the different things that it did. That took I’m going to say decades, but at least a decade and a half. And it was expensive as hell, and it had all kinds of problems.

Peter Robison 

Yeah, that was partly problems of Boeing’s own making because it tried to outsource the design to other companies, which was a complete disaster. And in the case of a new narrowbody people think it may cost $20 billion. If you amortize that, it sounds like a you know, an eye watering sum of money. But if you amortize it over many years, I’ve talked to analysts who say even Boeing with its huge debt of 40 billion could afford it. This has been the story of commercial aviation for decades. It’s extremely risky. Companies have come and gone. And you have to be willing to take those risks to stay in the market.

Kai Ryssdal 

Peter let’s say Boeing never makes another commercial airplane. Is its defense business enough to keep it around?

Peter Robison 

Probably, it’s such an important contract to the to the military that it would stay around. I mean, there are a lot of, you know, Northrop Grumman has exited the commercial side. There are companies that were once in the commercial businesses who stick around in defense, so that that is a possibility.

Nova Safo 

Are there candidates to enter the commercial plane market?

Peter Robison 

Not really, due to all those expenses and the difficulties. The one competitor, potentially emerging, which both Airbus and Boeing have to think about is China. COMAC is the aviation company in China, and it’s developed an airliner called the C919. Which, as one analyst said, it doubled its deliveries last year from one to two. So, it’s not a competitor on the scale of Airbus and Boeing. But I have talked to some people who say it reminds them of the early days of Airbus when people didn’t think much of Airbus as a company. It was getting sales of ones and twos in smaller markets. But with the help of specialty state financing and generous financing deals, Airbus eventually got a foothold.

Nova Safo 

Alright, well, Peter, thank you for taking some time to break this all down with for us. Thank you.

Peter Robison 

Thanks so much.

Kai Ryssdal

Thanks a bunch, Peter.

Nova Safo 

That’s Peter Robinson of Bloomberg, and the author of Flying Blind: The 737 Max Tragedy and the Fall of Boeing, which hopefully is not a permanent fall.

Kai Ryssdal 

Yeah, he’s going to have to write a new afterword. That’s the 737 Max tragedies. Yeah, it’s really sad. I mean, obviously, you know, it’s sad for Boeing and for airlines. But it’s sad for, you know, what it means for American manufacturing and innovation and leading the way right.

Nova Safo 

Indeed, and, you know, it’s interesting that he pointed to McDonnell Douglas. Because, correct me if I’m wrong, you’re the pilot in this conversation. The MD-80. Yeah. One of the most beloved planes actually, right? Yep, the MD-80. Absolutely. So, you really can go from a triumph to a fall with one design mistake again?

Kai Ryssdal 

Totally can. All right, we want to hear from you. Whether you are a person who flies airplanes, or a person who rides in airplanes, or works on or around, or is at all interested in aviation. Let us know what you think about Boeing and commercial aircraft challenges, and what’s going to happen now about this industry. Or actually, would you fly on a 737 Max right now? I would be interested to see what people say about that. We are at 508-827-6278. 508-U-B-Smart. We’re coming right back. All right, we’re going to some news. Nova Safo, you are it.

Nova Safo 

Okay. So the story that a lot of people are talking about is Neuralink at Elon Musk’s company conducting its first operation on a human, implanting brain implant to allow people to think and move a computer mouse or potentially eventually do that and kind of interact with a smartphone just by thinking. You know, the part of the story that actually got, that I was, that I found most fascinating is that it’s nowhere near the first company to do this. But because it’s Musk doing it, he has a way of getting attention for these things that nobody else seems to rival. At least three other companies listed in the Wall Street Journal article I read that are already well on their way to doing something similar, which is very interesting.

Kai Ryssdal 

Yeah, it’s totally interesting. And, look, this could be incredible new technology. And it is in the in the case of neuralink, it’s been implanted in a person with quadriplegia. And that could just open, you know, huge new possibilities for people like that, which is great. I, however, am not going to let Elon Musk put a chip in my brain.

Nova Safo 

No. I don’t blame you. That’s a tough sell.

Kai Ryssdal 

Yeah, okay. So, I’ve got two. They are both pieces out of the Wall Street Journal. Not exclusive, that just happens to be where I saw them. First of all, in piling on the wave of layoffs from big American companies of late. Apple, Microsoft, lots of companies. UPS said today it’s going to cut 12,000 jobs. Also, everybody’s got to be back in the office five days a week. That was interesting, super interesting, super, super interesting.

Nova Safo 

But they’re couching it as like, you know, the people who have to show up and carry all those packages are maybe a little unhappy about old office folks still working from home. Yep. Which I guess I could see a case to be made there.

Kai Ryssdal 

No, totally. Just so, it’s a one two punch there of the 12,000 people and everybody’s got to be back in the office.

Nova Safo 

But why? Why are they, what I’m wondering is UPS cannot possibly think that if there’s at least a dip in package deliveries that it’s going to last?

Kai Ryssdal 

Well no. So, I think they staffed up enormously during the goods buying craze of the pandemic, right? When we’re all buying stuff for our homes. Now, as we’ve talked about on Marketplace a bunch times, and you’ve done the reporting on the morning show, right? We are all now doing more services purchasing. And so, there’s fewer boxes full of stuff going places.

Nova Safo 

And yet, and yet every corporate forecast practically, I don’t want to be, I don’t want to say every but they keep underestimating. The demand. Underestimating the consumer spending over and ove quarter after quarter, right.

Kai Ryssdal 

Right, but that’s because the consumers has been incredibly strong for years now. And no matter which economist you ask, and you say, why are consumers so strong? They all go, “I don’t know, man.” It’s kind of amazing. Right? That’s what’s happening.

Nova Safo 

But it seems to me the corporate leaders are even more pessimistic than anybody else has been.

Kai Ryssdal 

I think they’re more afraid. Yeah. Right.

Nova Safo 

Maybe.

Kai Ryssdal 

I think they don’t want to get caught with their pants down so to speak, right? And be on the wrong side of the trade when things eventually, maybe someday possibly probably, I don’t know, slow down right? Look, I’ve been saying this for years. How much longer can consumer go on? And everybody’s like yeah, I don’t know. And the consumer keeps going on, and now with inflation down you know, it came in with a two handle the other day and the six-month inflation well below two. You gotta be like consumers or you know, prices are still in it elevated but consumers are feeling pretty good. So.

Nova Safo 

Gee, it’s amazing what happens when people have jobs. Right?

Kai Ryssdal 

Tell you what, right. Tell you what. Second thing I want to mention. And this is a command really kind of story. I’ll just read the headline of the Wall Street Journal; “A coalition of business groups sued California in an attempt to overturn state law that would require thousands of companies to publicly report their greenhouse gas emissions.” So, this was signed by Gavin Newsom, the governor out here, Democratic governor out here. “In October, it directs companies to calculate and disclose a range of emissions from their own operations, as well as those of their suppliers and customers.” So, look, I will say only this. I have no position on this lawsuit. I don’t know the details of the lawsuit. But there’s no way we control climate change unless businesses get on board.

Nova Safo 

Indeed, and talk about potentially, you know, a really bad public relations move.

Kai Ryssdal 

Oh, it’s such a bad public relations move. Such a bad public relations move. Anyway, that’s me. That’s my news.

Nova Safo 

Well, that’s it for the news. Let’s do the mailbag then.

Mailbag

Hi Kai and Kimberly. This is Godfrey from San Francisco, Jessie from Charleston, South Carolina. And I have a follow up question. It has me thinking and feeling a lot of things.

Kai Ryssdal 

Alright, we were talking last week about nursing homes, nursing homes, only one nurse, nursing home industry. And we wanted to hear from you about your experiences with helping loved ones find long term care, and we got this.

Carrie

Hello, Make Me Smart. This is Carrie from Durham, New York. My mother went into a nursing home two years ago. And I could not have done the application without the help of a Medicaid lawyer. They are worth every penny you spend on them. My mother’s application literally filled a milk crate and took me months to put together, and there’s no way I could have done it without a lawyer. So good luck to anyone out there doing it. It’s a bear. Thanks for making me smart and have a great day.

Kai Ryssdal 

Wow. Wow.

Nova Safo 

Oh, I had no idea Medicaid lawyers were a thing. I really didn’t. That is infuriating. It’s sort of like the same thing with, you know, immigration lawyers. The fact that you have to have one. It’s usual that people who can least afford it have to pay for these almost always. Yes, totally. Yeah. Yeah. Oh, man. All right. Well, before we go, we’re going to leave you with this week’s answer to the Make Me Smart question, which is, I love this question by the way. What’s something you thought you knew, but later found out you were wrong about? This week’s answer comes from Summer Phoenix, co-founder of Stay, a new zero-proof cocktail bar in Los Angeles.

Summer Phoenix

When conceptualizing Stay, one thing we initially thought was that offering a zero-proof alternative might primarily appeal to a niche audience. Since opening Stay, we’ve been pleasantly surprised by the broader acceptance and enthusiasm from a diverse range of guests. It’s been a humbling experience to see how perspectives are evolving and how stay has become a welcoming space for not just those on a sober journey, but for anyone looking for a unique and inclusive social experience. It’s a reminder that growth and learning are inherent in any venture. And we are excited to be part of a movement that is reshaping how people socialize one day at a time.

Kai Ryssdal 

Yeah, that’s very cool. Good for them. Good for them.

Nova Safo 

I am puzzled, why they would think it would be a niche audience in Los Angeles. I grew up in LA. Yeah. And not to lean into a stereotype. but there’s a lot of people watching their calories in LA. A zero-proof place is actually very appealing to me. I’m sure to many people who you know, have to really, you know, watch what they’re intaking.

Kai Ryssdal 

Excellent, excellent point, and addendum to those on a sober journey and those who just you know, want to stay clear headed for an evening or two.

Nova Safo 

Yeah, or, you know, have an audition in the morning. Right, you know, right. Exactly. Exactly. All right. Well, we want to hear your answer to the Make Me Smart question. And please don’t send me emails. Our number is 508-827-6278, also known as 508-U-B-Smart. You can send Kai emails.

Kai Ryssdal 

Yes, send me the emails. Send me all the emails. Make Me Smart is produced by Courtney Bergsieker. Ellen Rolfes writes our newsletter. This program was engineered by Juan Carlos Torrado. Brian Allison is going to mix it down later. Our intern is Thalia Menchaca.

Nova Safo 

Ben Tolliday and Daniel Ramirez composed our theme music. Our senior producer is Marisa Cabrera. Bridget Bodnar is the director of podcasts. Francesca Levy is the Executive Director of Digital. And Marketplace’s Vice President and General Manager is Neil Scarbrough. They call it telepathy, the neuralink chip.

Kai Ryssdal 

Oh, is that right? I’m still not letting Elon Musk put a chip in my brain. It is just not happening.

Nova Safo 

What would he have to call it?

Kai Ryssdal 

Yeah, I don’t know. I don’t know.

None of us is as smart as all of us.

No matter how bananapants your day is, “Make Me Smart” is here to help you through it all— 5 days a week.

It’s never just a one-way conversation. Your questions, reactions, and donations are a vital part of the show. And we’re grateful for every single one.

Donate any amount to become a Marketplace Investor and help make us smarter (and make us smile!) every day.

The team

Marissa Cabrera Senior Producer
Courtney Bergsieker Associate Producer