We keep hearing how bad corporate behavior happens because the cost/benefit analysis simply views bad outcomes as costing a certain number of dollars, and then you throw in the probabilities, and you can justify pretty much any appalling decision.
The best possible outcome of the 737 Max disaster would be a legendary business school case study showing management of technical endeavours by bean counters is a terrible idea.
That case study should come along with case studies like the Superconducting Super Collider [1], where insufficient counting of beans may have led to the demise of an important scientific instrument. The Higgs could have been discovered in ~2000 had the instrument simply turned on.
I came here to say something along these lines. Letting accountants drive engineering is a fatal mistake, but so is engineering without any thought to costs and profits. I’ve walked away from more than one startup whose business plan was, “Let’s design the thing, and only after that will we think about COGS and competitive pricing.” That way lies madness, and Juicero.
Juicero adds another function to the discussion: marketing. Juicero was an example -- a very comical example -- of marketing over everything else: technology and bean counting.
Yes, a balance among all three functions is necessary. However, the 737 Max case is definitely about letting bean counters dictate engineering choices: saving design costs by pulling the ancient 737 design off the shelf; the software fixes to the problem introduced by those engines on that frame; and then pretending that the plane was just like an old-school 737, hiding all the complexity and compromises from pilots to avoid recertification costs. And even the decision to charge extra for redundancy of the critical sensor driving the software.
Juicero may also have had the opposite problem: the dangers of letting engineers play unsupervised.
It appeared to be, and maybe should have been, a cheapjack gizmo swaddled in marketing glitz to justify its ridiculous price. But someone did a teardown and discovered that it actually did contain a very expensive, precision-engineered, completely unnecessary two-ton press. To squeeze fruit pulp out of a tube.
AvE's style is very entertaining. I always end up coming away with understanding a little bit more about physical engineering and manufacturing after watching something of his.
And all the bits around said overkill press were designed from flat stock with features cut in it to hold things. It was reminiscent of all the terrible "we only know a few manufacturing techniques and the world if full of nails that we will hit with those hammers" type designs that engineering undergrads who have no real world experience crank out. I say that as someone who used to work for the machine shop for a ME program.
They probably could have cut the cost by a huge amount by using an aluminum casting (though with more engineering effort they probably could have used plastic but that would have upped the tooling complexity and I dunno if their planned volume would have made that worthwhile) and machining all the features to hold the moving bits into it (bonus points for doing it all with one tool and one holding fixture) and designed their press mechanism around the gearbox of some power tool you can find at Harbor Freight for under $50.
New engineers being new engineers I would put serious money on all their machining having stupidly tight tolerances. New engineers love doing that for some reason.
> New engineers being new engineers I would put serious money on all their machining having stupidly tight tolerances. New engineers love doing that for some reason.
Im a mere software engineer but I see a lot of over engineering in new grads in the field as well. I sense it comes from either wanting to dick wave, or fear of being thought of as too amateur.
I think it comes from wanting to do things "right." Sloppy design is highly visible and frustrating to an engineer (hardware or software), and we want to avoid that. It takes some more experience to realize that hyperfocusing on a single optimization misses the big picture and hurts other important factors.
The "AOA-Disagree" display, as far as I understand, isn't an enhancement to the redundancy of the AOA sensors. That would be different software for the MCAS. It is just a display of the AOA disagree condition, and MCAS operation is the same.
High-energy particle physics would be more than a decade ahead of where it is now.
Moreover, as SSC was planned as a 40 TeV machine, and LHC reaches 14 TeV now (at presumably much higher luminosity), SSC might have discovered something that still has not been observed.
There is also an excellent chance that the standard model is the story up to 100TeV and these expensive programs take away attention from better science endeavors.
This super-high energy stuff is generally a boondoggle. You could scale up the energies involved by another 2 orders of magnitude and get precise experimental data describing a new, even more ephemeral state of matter. Any practical benefit to the human race will be collateral damage ("we got better at building magnets and detectors because our toy demanded them")
Right, but in one case hundreds are dead and in the other case we made a physics discovery 15 years later. Not sure if this is the bullet-proof equivalency you think it is.
We don't know the counterfactual world. Maybe we spend $12 b building it, then we don't run the DARPA AV challenges and the world is behind on CV instead. Maybe that's better, maybe that's worse.
I think direct restrictions by the government, stricter regulations/inspections, loss of contracts, etc. would be more powerful and direct impactors than a handful of quarters in red ink with an asterisk.
Capitalism is not the only or best tool to guarantee safety.
It appears that the critical decisions on the Max design were made during Raymond Conner's tenure as head of Commercial Airplanes. He was a sales executive. His successor, Kevin McAllister was also a sales executive, and worse, was ex-GE. No doubt he was hired during James McNerney's stint as Boeing CEO. McNerney was also from GE under Jack Welch.
The bad news is he was replaced with Stan Deal, a sales executive.
The good news is he's not just a sales guy, he's held a number of jobs. He also has a bachelor's degree in aerospace engineering. So there's some hope.
I'm calling it now - the US Government will pass a law so Boeing can't be sued out of existence, or they will bail them out. Because "too big to fail".
Good. Corporations should be punished when corporate greed leads to negligence which leads to the loss of human life en masse in exchange for short term profit.
I don’t see how this is a bad thing for the market, if anything there will be more pressure to make safe aircraft.
What are you talking about? The shareholders, the board, and the upper management collectively are the company. The rest is just employees and assets. Employees don't own the company, they just work there for money and can be let go at any time (subject to employment law). Assets are owned by the company.
Your analogy makes no sense at all.
The company should die. Its assets of course are still worth a lot of money, and I'm sure some other aircraft manufacturer might like to buy those assets for pennies on the dollar, and also hire the employees right away to get production up to speed as quickly as possible (but on a different design).
As one of only two real airplane manufacturing companies (the other being AirBus), I don't see how getting rid of Boeing would help consumers. If anything, AirBus would have latitude to let its own quality control slip, but now their planes would comprise 100% of fleets instead of 50%.
The thing is, this isn't someone directly deciding that Boeing shouldn't be in business and that them not being there will help consumers, but instead decisions made by boeing have now severely hurt their reputation and the rest of the market no longer sees them as trustworthy. You can't really mandate that the rest of the world see them as trustworthy.
Boeing's assets would be sold and someone else would use them to service a market in need of competition. I can think of a few parties who I suspect would be interested. All you have to do is bar AirBus from purchasing those assets.
I doubt AirBus would want those assets anyways. It would make them an obvious monopoly and invite even more regulation than they're already facing.
Companies rarely outright disappear. They get absorbed and operate under new management.
>> Shareholders, the board, and upper management should be punished. But the company should not.
>> In a horse race, if the jockey is terrible you don't shoot the horse.
> What are you talking about? The shareholders, the board, and the upper management collectively are the company. The rest is just employees and assets.
You're splitting hairs. The employees, assets, and their organization are the only part of the company that performs a useful social function. The shareholders, the board, and to a lesser extent the upper management are parasites that can be dispensed with and literally no one else will care.
>> The shareholders, the board, and to a lesser extent the upper management are parasites that can be dispensed with and literally no one else will care.
> Show me an Investor that doesn't care who the upper management is.
Investors are a kind of shareholder.
And if they were kicked out of the street as payment for the mess they had a hand in creating that is Boeing, they're not going to get much sympathy from me for their personal misfortune.
This has always been theoretically true. But only in the modern economy is it significantly true.
Prior to industrialization individual skill was the primary contribution of value to companies so, while a single person might own the premises, the value of the company was in those employees. In the modern economy employees have been commoditization to be interchangeable and the result is that employee power has been severely curtailed without compensation.
Compare a rando factory to a sports team, losing a star player on a sports team can drastically effect your valuation and thus those stand out employees are considered primary assets of the teams (and often times teams will have both injury and sudden contract termination insurance for their players). Your statement that companies generally aren't employees is correct, but it is newly correct and unhealthy for society. Those lower level employees are the only ones actually producing value for the company.
That's true, but they also have nearly zero influence on the company or its direction. And legally, they have zero ownership (unless of course it's an employee-owned company, which Boeing is not), so they simply have no say.
It's just like the assets (buildings, equipment, etc.). The company isn't going to be productive at all without its buildings and other assets. But do the assets get a say in things? Do the assets own the company? Of course not, they're inanimate things. Employees are not much different.
Everything you've said is true of the world we're living in, but they aren't inherent natural laws - our changing culture has devalued employees to the point where they are viewed as having as much of a say as a building, but it's good (while accepting this is the case) to question if it must be the case and consider how else things could work. Given more ownership of the ultimate ends of their labour people are more invested, this is why key employees are often upgraded from mere tools to investors by the issuance of stock options - that sort of thing is never going to happen in a company like Boeing merely because of our culture.
If Boeing had granted partial corporate ownership to technical employees they would advocate much harder for the caution that could have averted this incident, bonuses (and the mere promises of such) are a partial salve to this but have other complications around being non-binding, unaccountable and a form of wage insecurity.
So, I just wanted to mention that this sort of creeping failure isn't inevitable, it's inevitable in the scenario as presented. Given a different company culture this incident likely never would have occurred and giving employees and vested (and vesting HA!) interest in the company is one such route.
I think you have some fanciful ideas that simply are not borne out by reality.
>this is why key employees are often upgraded from mere tools to investors by the issuance of stock options - that sort of thing is never going to happen in a company like Boeing merely because of our culture.
What are you talking about? I don't know about Boeing specifically, but stock options were very commonly awarded to engineers back before the big 2008 market crash. I had them when I worked at Intel. They sure didn't cause any change in my behavior; the effect of any one engineer at a company that large is usually pretty negligible for the company's stock price, and stock options are a very small portion of an engineer's overall compensation package. After the market crash, it seemed like stock options mostly fell out of favor (because they all became worthless!), and these days companies now offer RSUs, if they offer anything at all. Stock options were a big deal in the dot-com days because tech companies' valuations were inflating so quickly, so those options represented a LOT of potential profit, but not so much after the 2000 crash.
Anyway, the point is, you're talking about stock options like they'd solve this problem, and as if they aren't already common. I'm not sure how common they are now (they don't see to be so much), but they absolutely were in the past, and I don't see any evidence that it made a difference.
>If Boeing had granted partial corporate ownership to technical employees they would advocate much harder for the caution that could have averted this incident
What makes you think they didn't? Or that it would make a difference? Stock options don't give engineers any authority to override executive decisions by management. They can either do what the executives say, or get fired and lose all those options (unless they've vested). Either way, it gives them no real power.
The simple fact is that a company is not a democracy, and is much more like a dictatorship (or a cabal I guess, with the board picking the dictator but having the power to replace him at will). I can't even imagine any large company working well with a democratic style leadership when competing with others with traditional management. The simple solution is that companies like Boeing have to have very strong regulation to oversee their operations and make sure they make safe products, and that's the government's job; there's countless examples throughout history showing that expecting any organization to police itself effectively without some kind of checks by outside organizations doesn't work well. The FAA and by extension the US Government totally failed in their job here, and so did the foreign regulators to a certain extent (by trusting the FAA too much).
>Given a different company culture
Boeing's company culture is a product of the country it resides in. I don't see how you're going to change Boeing's culture without changing America's culture.
If you own an S&P 500 fund like SPY, you are a shareholder. A lot of folks have BA in their retirement accounts. Litigating against shareholders in a case like this would serve no purpose that I can see.
I guess where I was going is that it’s likely that you yourself or your parents or your siblings are shareholders. If you have a 401k with an index fund, you probably own a piece of BA. should you be prosecuted?
This thread of comments began with CryoLogic saying this:
> Good. Corporations should be punished when corporate greed leads to negligence which leads to the loss of human life en masse in exchange for short term profit.
I read CryoLogic's usage of "punished" as meaning "losing money due to drop in stock value" (which is what occurred in this case). Regular people holding shares in Boeing absolutely should lose money due to the dropping stock prices. They take risks making investments and they must accept that. So no I don't mean that regular shareholders should be prosecuted. I don't think anyone here has argued for that.
Like punishing Bombardier for selling an airplane in a market segment Boeing didn't even have a plane? Or massive subsidies from Washington state? Boeing already enjoys massive government aid.
Why? If anything, it's going to become the most intensively analyzed airplane with the most widely broadcast flight envelope in aviation history. I personally hope that the Max gets back in the skies soon. I can't wait to get on board one, and enjoy the better connections and cheaper tickets that this economical airplane brings.
Because everyone failed (I suspect intentionally, in some cases) to properly vet the plane in the first place. I have no reason to trust that the same people will do a better job the second time around.
I won't avoid the plane forever -- but I will certainly give it a few years before I fly in one. Better safe than sorry.
It won’t be the same people this time. Regulators that previously accepted “the Boeing employees the FAA outsourced it to say it’s fine” will not be doing so this time.
> But he said such a new review was necessary because there were parts of the original MAX design that EASA “had not completely certified ourselves, because we had delegated some of the tasks to the FAA.”
> In practice, one Boeing engineer would conduct a test of a particular system on the Max 8, while another Boeing engineer would act as the FAA’s representative, signing on behalf of the U.S. government that the technology complied with federal safety regulations, people familiar with the process said.
> Many regulators around the world were willing to accept the FAA's approvals rather than do their own certifications. Many of those will no longer do so.
Yes, and that's great for those other nations. I live in the US, though.
Chances are you'll still benefit. If the US approves the plane, but the EU rejects, that's substantially more information than you'd have under the old regime, and it's likely Boeing wouldn't fly the plane even in the US if that happened - the liability and PR risks would be incredibly high.
The second point - that Boeing's ability to have their own engineers act as the FAA's representatives is likely to go away or curtailed - protects you, too.
You can't ignore the politics. They already talk about a "temporary" transitional solution so that the plane can take off sooner and a long term(i.e a 3rd sensor) solution they may use at a later time. If safety is not your thing I can understand your eagerness.
This might fly with the FAA (ha ha, pun intended) but it's hard to believe that the European regulators would be so accommodating. Especially since they have competitor Airbus in their backyard.
Considering the fact that a high-priority campaign to fix the 737-MAX was started on the day of the Lion Air crash (if not before) which failed to deliver in time to prevent the Ethiopian Air crash. Then the August and October deadlines for return to flight were missed; we are now looking at a date in early 2020, and the European Union indicates that they aren't going to believe Boeing. This isn't looking good.
Oh yes, the joys of a cramped 737 with the added benefit of in-flight nose dives. The post-9/11 trend of every domestic flight being a 737 (or Airbus equivalent) is generally just as bad as TSA.
Boeing needs to come out with a redesigned medium-range narrow-body airliner that doesn't hug the ground, has ample leg room and overhead bin space, and sell it domestic carriers as the future of air-travel instead of releasing the airplane equivalent of Windows XP Service Pack 8.
You do know that the seat spacing isn't fixed by Boeing, it's adjustable by the airline. Boeing can introduce a plane with 60" seat pitch and the airlines will just turn it into 30" and pack in twice as many passengers.
Same with seat width. The 787 was originally designed for eight-abreast, and many airlines turned it into nine-abreast.
It's an airline industry problem, not a Boeing or Airbus problem. Most seats are purchased primarily on price.
I can't afford first class, so my response is less travel. A lot less travel.
> It's an airline industry problem, not a Boeing or Airbus problem. Most seats are purchased primarily on price.
And we have a race to the bottom because there's no standardization, so the prices can be gamed like this.
An airline ticket needs to be defined to provide a minimum, standard set of amenities; and at a minimum airfare search sites need to highlight tickets that don't meet that standard as nonconforming.
Even if it really is examined so thoroughly as to be the safest plane ever, it's still going to be a pretty lousy flying experience because it's a crappy old narrowbody chassis that's decades behind in technology and refinement. They need to just scrap them and start building some Airbus designs.
How many additional major problems did they find when they re-vetted the plane? If it is again zero, then I'm still concerned about the quality of their vetting.
That's a simple but crude method of avoiding the 737 Max. You'll have more flight options if you just check any flight you plan to book on https://flightaware.com
Until they change your plane due to maintenance at the last minute. It happened to me that I ended up in a 737 Max despite specifically picking flight plans with different airplanes at time of booking.
Now I only fly airlines that never had the Max in their fleet.
$100 billion doesn't seem like much of an impediment in a world with $300 trillion of investable assets. It's only an impediment if you can't recoup the investment, which is much more difficult if revenues are split 3 ways rather than 2.
>Its bad when an industry dominated by two players has one of those players hurt and the market can't replace them.
it is the best opportunity for a new maker to emerge and shake, if not break, the duopoly. Boeing for the years ahead wouldn't have a plane to replace 737 MAX while the market will be squeezed by Airbus.
Here's the $100bn question: why does it have to cost $100bn? Is it natural, i.e. the actual complexity of the product, or is it artificial (regulatory overhead, procurement process, etc...). It so much seems like this may be some of both...
Mostly the cost of complexity. For $20+ billion Comac can barely get a decent aircraft off the ground, and that's a state-owned enterprise with what amounts to an unlimited budget and likely more than a small percentage of industrial espionage.
> and that's a state-owned enterprise with what amounts to an unlimited budget
I don't think that helps your case. I would expect a state-owned enterprise to be over-budget, especially if managers knew they had "what amounts to an unlimited budget".
Depends on the state. In the US most such programs are just Military Industrial Keynesian Stimulus. Which why why they are full of fail if you think functional results are the goal rather than 'white people welfare'
There's quite a few competitors in the narrow body space like the 737: Airbus, Bombadier, Embraer, Irkut, COMAC, etc. The lack of competition is in wide body aircraft (With Airbus and Boeing being the only players although there will be the Craic at some point in the next couple of years).
> although there will be the Craic at some point in the next couple of years
The CR929? That thing? [0]
I think that if people are still complaining about Boeing's safety record and obfuscation when that goes into service, the'll start to relearn what real obfuscation looks like... (Russian airliners do not have the best safety reputation, to say the least)
If you're refering to the C series, that's now essentially a product provided by Airbus (under the A220 monikker).
> COMAC
Not viable. Not for the next couple decades. The reason is not that the Chinese are not able to build an airworthy plane in a few years time. The main problem will be the service offerings to an international clientele. Let's just say that China's pencheant for cutting corners is not conductive to trust into their service offerings, including the provision of critical spare parts.
> Will it? Probably never, it's too much of a tool used by the US Government to ever go bankrupt.
Of course, the US government would never allow Boeing to go out of business completely, as in a chapter 7 bankruptcy.
But a chapter 11 bankruptcy, in which Boeing the business survives but its current stockholders lose everything? Not inconceivable it might happen some day, and I can't see why the US government would feel it necessary to stop that. Customers only care about the firm's products and services still being available to purchase at a reasonable price, if the stockholders lose everything that's not their problem.
In Boeing's current state, I don't think chapter 11 would achieve much. Their total debts aren't that large compared to their overall revenue and assets. Boeing's real current problems are poor management leading to poor corporate culture, and chapter 11 won't necessarily do anything to fix that. (I'm not sure how good Airbus' culture is either, but evidence suggests it may be better than Boeing's.) Even though 737 MAX is a big expensive mess, Boeing makes so much money on the rest of its businesses (its other commercial aircraft models, defense contracts, space, etc) I'm sure they can survive those losses.
So I don't think Boeing will be filing for chapter 11 any time soon. But in 5, 10, 15 years from now? Anything could happen. Maybe they'll turn the corner from this episode, and their business will have a very bright future. Maybe they get stuck in the doldrums, and then chapter 11 might slowly become more plausible as an ultimate outcome.
I think it's more accurate to say it's too important to fail.
Not only does Boeing produce a large number of military aircraft for the US armed forces, but their commercial arm also allows the US to project power world wide.
"Too big to fail" describes a concept in which the government will intervene in situations where a business has become so deeply ingrained in the functionality of an economy that its failure would be disastrous to the economy at large. If such a company fails, it would likely have a catastrophic ripple effect throughout the economy.
The "too big to (let) fail" theory asserts that certain corporations, particularly financial institutions, are so large and so interconnected that their failure would be disastrous to the greater economic system, and that they therefore must be supported by government when they face potential failure.[1] The colloquial term "too big to fail" was popularized by U.S. Congressman Stewart McKinney in a 1984 Congressional hearing, discussing the Federal Deposit Insurance Corporation's intervention with Continental Illinois.[2] The term had previously been used occasionally in the press.[3]
It's not an economic TBTF - it's political and strategic.
Boeing in Chapter 7 wouldn't kill the US economy. It would just dent it badly, and give competitors from other countries (China? India?) an in to a large market.
But the US military machine would be very badly damaged if Boeing failed. And there would be spectacular political fall out, both internally and internationally - some of which is already happening with the tarnished reputation of the FAA.
Aerospace is one of those prestige industries that is as much about promoting national status as about making money. A major failure would be very bad indeed for America Inc - survivable in practical terms, but a disfiguring and ugly wart on the face of the mythology.
I'm not sure that's a proper application of Too Big to Fail. Boeing is a systemically important company, but there is not much of a contagion risk in a Boeing Chapter 11. When a large financial company fails, all their counterparties are left in the lurch.
The government would absolutely provide debtor-in-possession financing if no one else would, but even that is extremely unlikely, since there are so many saleable assets.
It seems pretty likely to me that the government would prefer a Chapter 11 restructuring.
That's not the only, or even original definition of "too big to fail."
Boeing as a company is so critical to the defense industry that the US government wouldn't let it fail. There are things Boeing does for the defense industry that literally no one else is capable of providing.
Even Chapter 11 restructuring is very unlikely as it would be too disruptive to vital industries, unless it was somehow limited to just the civil aviation part of Boeing.
We generally don't nationalize industries over here.
As to breaking up, it might make sense to split of the civil aviation portion of Boeing so that it could fail or be restructured without affecting national security interests.
Recent lows (been pretty flat over the past couple of years). But it's still more than doubled since the beginning of 2017 and still pays a decent dividend yield.
Good article this morning from the Verge [1] about how airlines dependent on a monoculture fleet are in a world of hurt because they can't leave the 737 line (too entrenched operationally) but also can't wait forever for Boeing to get its act together.
The company has an opportunity to revamp their culture in a way that makes safety a core tenet again. Seems like that's the only way to not only survive the fallout but someday look back on this as the costly lesson that it is. "Back when we were that, we used to do that, which is how we learned this, and now instead we're this, and we do this."
...we’ve learnt that his manager commits fraud, that manager commits perjury”... 5xWhy leads to the question “Why are managers under such pressure”, the answer is two-fold: “They want to have a family and a cost of living is high, and they’re ready to die themselves at their desk to make enough money, so they actually care more about the lives of others than their own, which is ironic”, the other is “Because Boeing is fundamentally on older tech than Airbus, so no matter how they press the lemon, they can only squeeze that much.”
See, Boeing was built before Airbus. Airbus benefited from starting at the electronics age, with lessons learnt from Boeing. It had an impact on the design: Airbus is fly-by-wire, Boeing isn’t. Probably all the tech stack of Airbus slightly newer, with slightly newer management methods too (legacy is a curse to get rid of) and easier for them to iterate and upgrade. That alone could explain why each generation of Boeing plane was rushed to the market, including the explosive batteries circa 2010, the broken airframes by Ducommon for 4.7% planes, helped by FAA delegating self-certification of their planes to Boeing itself, and the coup de grace, planes that literally want to aim for the ground in 2019, all of that in 8 years. Ironically they’ve bought McDonnell 20 years ago which was pro at sneaking past FAA regulations. Maybe they’ve “learnt” from MD.
But there are so many others in hiding that we have to throw away the last 20 years of engineering: For example the MCAS had only 1 processor, when all other systems are required to have 2 to 3. We can’t risk 100 lives for each lie Boeing did in the past 20 years.
I’m not sure there is actually a lot to learn that we didn’t know: The FAA shouldn’t delegate Boeing certification to Boeing, managers should not ask employees to drill new holes when the original holes were drilled 3 inches apart and don’t fit, because it endangers the structural integrity, one should not use a hammer to change the shape of the airframe by a full inch, collapsing the I-beam by folding it, compromising the structural integrity, they shouldn’t have lied about changing the features of the MCAS, and the market should have been nicer with their revenue.
Every bankruptcy is sad and unfair. It’s disheartening to fire people who certainly have given all they could to compete with a better competitor. But it’s time to cut the loss, because their failure is ingrained in their engineering and management, and is costing real deaths in real world.
They won't stop playing games which doesn't inspire confidence.
Sociopaths in control is a common dark pattern for big companies. Once entrenched generally impossible to get rid of them, any more than one easily deposes a tyrannical dictator who has acquired the power to silence and quash all internal dissent.
Maintaining corporate capture of the political and socio-economic structures requires management capture by talented jerks to continuously deliver for stockholders short-term results that forsake everything else. However, like most anarcho-capitalist utopian failures since time immemorial, large risks will not be mitigated for the least long-term harm to the public because unlimited greed and consequences of externalities "will solve everything in the markets." Maximizing profit apart from all else and lacking functional public protections that have been co-opted by the trough of corporate influence pedaling will inevitably lead to omnicidal and suicidal outcomes if nothing is done to intervene.
Doubtful. Boeing stock has barely been hurt by this MAX crisis. It also cannot be replaced and the US government is not going to let it go under or be bought by a non-US company.
This doesn’t affect the game theoretic optimal decision making for other companies, since the executives who made these decisions were paid a long time ago and rode off into the sunset. We need to punish individuals for the decisions they make. Create a legal framework to claw back 10x the money they were paid, leaving them in a studio apartment eating ramen noodles. You don’t have to burn people at the stake to create a deterrent level of punishment, but the company suffering doesn’t matter since the execs responsible have long since fled.
> the company suffering doesn’t matter since the execs responsible have long since fled.
Yes, it does matter. If the company suffers enough, perhaps they will be more cautious about this sort of thing in the future, even if the individuals directly responsible are gone.
My understanding is that one of the major selling points of this plane was that pilots of previous 737 models would need very little additional training for the 737 MAX. I think it was something like an hour of reading and they were then considered good to go.
It is also my understanding that IF pilots were fully informed of everything MCAS does and its failure modes, and were trained in how to recognize and handle those failures, and maybe also if the plane has the optional AoA features (display from both sensors, AoA disagree light) which could help recognize when MCAS is using faulty data, then the MAX would be fine.
Question: doesn't there come a point where it is cheaper for Boeing to give up on the very little additional training thing, and go ahead and eat the costs of retraining all the pilots to fully understand MCAS and installing the optional AoA features on all 737 MAXs?
They also need to either add a manual MCAS cutout (separate from the power-trim cutout) and probably add a third AoA sensor too.
The airplane will not be safe as long as the only way to exit a nose-high MCAS runaway situation is to cut out the power trim and move a wheel that physically cannot be moved while the aircraft remains in the nose-high situation. And without a third AoA sensor the chances of a failure remain unacceptably high.
As the plane is headed down, it increases its speed. At a certain point, due to aerodynamic forces, pilots cannot stabilize the plane with the stabilizer trim wheel in the cockpit. The situation is unrecoverable.
All the pilots needed to do was identify the problem as MCAS, use manual electric trim buttons to neutral and then turn electric trim off.
But Boeing never trained pilots how to identify the problem, and told them the old procedure was the correct way of dealing with it.
The old procedure told pilots to turn electric trim off, never turn it back on and return stabilizes to neutral with manual control, which turns out to be impossible.
That's not one, but two pilot training issues with Boeing's official training materials.
A related problem is that because of the no extra training requirements, Boeing explicitly designed MCAS to be near impossible to disable, because if it was disabled then the plane now had different flight characteristics, which the pilots weren't trained to handle.
And this is also the reason why MCAS only used data from one sensor. If the sensors disagreed and MCAS disabled itself, then that would require pilot training.
The whole system would have been designed differently, and more safely if it wasn't for the "no extra training" requirement.
Prior to the first crash in Indonesia, MCAS was not mentioned in the formation to the pilots. Boeing has asked the FAA to remove it from the documentation. The FAA did not know that the MCAS was totally different from what Boeing had initially planed, so they agreed.
After the crash, Boeing published new instructions that mentioned MCAS. But they were of no use for the Ethiopian crash. As you wrote, turning off MCAS also turned off stabilisation, and manual control was not possible because of the excessive speed. The pilots did understand that, so they enabled the electric trim again. Unfortunately, this activated the MCAS which send the plane downside 10 seconds later. They had no way out.
I have a personal theory (based on the graphs from the reports from both crashes) that once the stabilisers go far enough out of trim at high enough speeds, that the even electric trim motor isn't powerful enough to move the stabiliser.
In both crashes, after repeated activations of MCAS has pushed the stabiliser almost fully down, we see the pilots do two quick presses of the trim up button. The graph shows the stabiliser barely moving (much less than a press of the same length earlier in the flight).
I suspect the pilots pressed the trim up button, heard a loud noise from the electric motor straining, or a fuse popping, or something? So they stopped pressing trim up.
Even worse, only trim up was failing, MCAS was still able to command more trim down.
So, your first two points miss something important.
The two sensor setup would basically mandate Level D simulator training. That was a non-starter to maintain the 737 MAX sales pitch, and would also have likely led to inconvenient questions that would have kept sales depressed because of too much attention being called to the actual implementation details of the plane.
That came out in the original 60 Minutes Expose on the 737 MAX iirc.
> Question: doesn't there come a point where it is cheaper for Boeing to give up ... and eat the costs of retraining all the pilots
I thought that perhaps it was worse than this. If much training is required, then you are admitting that it's not the same plane anymore. And if it's not the same plane, then why does it get to grandfather in all the unchanged parts from the 1960s? Meaning... perhaps things like doors? I could be wrong about this, but I thought there were a bunch of mechanical parts which you would have to design differently on a new aircraft, to meet current rules.
Boeing actually benefits from keeping training low, it's actually a barrier to entry for competing planes. Boeing is appealing to airlines that have a lot of Boeing pilots because of the low retraining when upgrading models, this allows Boeing to overcharge those airlines since they can make a margin on the retraining costs the company would otherwise need to put out.
From what I can tell (IANAP) the MAX was specifically designed to maximize this margin by the promise of that hour, possibly this grounding wouldn't have happened if Boeing had stated a slightly higher retraining requirement, and possibly a PHB overrode a suggestion from an engineer for some extra training time to maximize that window. That's all speculation, but it'd be extremely unsurprising.
Can’t believe they left the CEO in charge and just removed him from the chair of the board. Ultimately it’s his culture that made it possible for this issue.
I was just watching the blancolirio channel (a 777 pilot), who previously brought up the 737NG pickle fork crisis that the mainstream media isn't reporting on. Combined with the 737 Max and 2010 737NG Ducommun critical structural parts deficiencies and burying of the internal Boeing blue-ribbon panel's findings, it's only cognitive dissonance and profiteering that keeps a rational person from concluding extensive and pervasive regulatory capture hasn't damaged the quality and fitness of Boeing's products and services designed, manufactured, overhauled or repaired in the past 20-25 years to an unknowably broad and deep systemic level that is fundamental uncertain to know the extent of the risk that lurks because of "self-certification" and other lax practices. Kicking out a couple of managers isn't going to fix much of anything that is already happened, like substandard spars lurking in 737NG's waiting to fail on hard landings, runway overruns and possibly heavy turbulence, leading to fuselage breakups.
I also think there's a bit of the Upton Sinclair effect in play where some Boeing pilot Youtubers including blancolirio and MentourPilot are overconfident and overestimate the quality and reliability of the equipment they fly out of sunk costs and income dependence biases.
Boeing is too big to fail, too big to jail and too big to derail. One or two products may have some minor software patches applied, but they won't ever be told to recall unsafe or defective products because they own the regulators and have outsized influence based on national strategic interests, and lots of lobbyists and campaign contributions.
They are, and now this is just an additional thing that's inspected for and dealt with as part of the regular service life. Every plane you've ever flown in has had an unexpectedly high failure rate of some component that wasn't discovered until it was in service, which resulted in a modification to the published inspection/maintenance/replacement routine.
"Combined with the 737 Max and 2010 737NG Ducommun critical structural parts deficiencies and burying of the internal Boeing blue-ribbon panel's findings, it's only cognitive dissonance and profiteering that keeps a rational person from concluding extensive and pervasive regulatory capture hasn't damaged the quality and fitness of Boeing's products and services designed, manufactured, overhauled or repaired in the past 20-25 years to an unknowably broad and deep systemic level that is fundamental uncertain to know the extent of the risk that lurks because of "self-certification" and other lax practices."
I just want to point out that this is a single sentence, and it is not easy to follow.
Worse than that: Even after the plane was basically grounded by all other significant regulators, FAA was made to take a show flight on board the aircraft, and Trump directly discussed the matter with the company. Grounding was then announced by Trump. Didn't exactly give confidence of FAA acting independently.
Poor Embraer - they were bought by Boing recently, their private jets are some of the best. I hate seeing decaying big players buying smaller "fresher" companies just to see them squeezing any profit/value until the acquired company is ruined.
Boeing stock feels like a great buy if the bottom falls out. There is simply no way the US Government is going to let the only major domestic commercial aircraft business go under.
On the other hand this fiasco has not really hurt the stock price too much so perhaps investors already have decided this is true as well.
Yeah, this seems like it could be a great buying opportunity. Reminds me of Toyota's unintended acceleration debacle which led to the largest auto recall in history. Very similar emotional feel. I had a coworker saying she would never ride in a Toyota again. How's Toyota doing today? Just fine.
Not sure how widely this is known, and thus how much it impacted stock prices, but the unintended acceleration panic was not a real mechanical issue, and thus Toyota was not at fault [1]. The 737 Max is/was a real problem and is/was Boeing's fault.
> the unintended acceleration panic was not a real mechanical issue
Wasn't it software? Isn't that just as "real"?
> Toyota was not at fault
Uh...
A subsequent investigation[47] by Safety Research[48] of the NTHSA/NASA report along with information from Barrs report[49] and Koopmans report[50] revealed that bad software design, antiquated ECU hardware fueled by a poor company culture were the likely cause of the SUA in the Toyota Camry incidents.
In April 2013, Betsy Benjaminson, a freelance translator working for Toyota to translate internal documents, released a personal statement about Toyota covering up facts about the sudden unintended acceleration problem.
This leak of internal documents fueled a criminal investigation by the FBI and the Justice Department that had been ongoing since 2010,[52] and on March 19, 2014, the DOJ issued a deferred prosecution agreement with a $1.2 billion criminal penalty for issuing misleading and deceptive statements to its consumers and federal regulators, as well as hiding another cause of unintended acceleration, the sticky pedal, from the NHTSA.[41] This fine was separate from the $1.2 billion settlement of a class action suit paid to the drivers of Toyota cars who claimed that their cars had lost value as a result of the SUA problems gaining publicity in 2012, and was at the time the largest criminal fine against an automaker in US history.[53] Toyota was also forced to pay a total of $66.2 million in fines to the Department of Transportation for failing to handle recalls properly and $25.5 million to Toyota shareholders whose stock lost value due to recalls. Nearly 400 wrongful-death and personal injury cases were also privately settled by Toyota as a result of unintended acceleration.[53]
>> There is simply no way the US Government is going to let the only major domestic commercial aircraft business go under.
The problem is this knowledge is built into the share price. In other words, the bottom would fall out only if the government started giving signals that it would in fact be willing to let Boeing fail.
Still, bailing out Boeing would be extremely costly, not because of the bailout itself, but because the WTO prohibits government subsidies of aerospace industries in Europe and US. So the resulting punitive tariffs from Europe would hurt a ton.
> The problem is this knowledge is built into the share price. In other words, the bottom would fall out only if the government started giving signals that it would in fact be willing to let Boeing fail.
Well, yes and no: knowledge of bailouts is built in to share price, but that knowledge includes the fact that while government stops important corporations from failing, those bailouts usually don't work to the benefit of pre-bailout shareholders very much (though they are sometimes better for them than standard bankruptcy would be); they are essentially special case bankruptcies, often with partial temporary nationalization.
This is how capitalism is supposed to work in this type of situation. Companies getting around this result is been a big source of pain for our economy.
Boeing is going to be the case study of what happens when you let 'business people' take over an engineering company. A bunch of MBAs deciding to move numbers around on paper and losing sight of the bigger picture.
The 737 MAX and all the issues with the 787 isn't what happens when engineers are in charge, it's what happens at the end of a long line of non-technical people saying "well we can just do ______ right?" Cutting corners and working on influence rather than excellence.
Article detailing the debacle with the 787. From which zero was learned.
In 2001 there was an engineer that carefully analyzed the path Boeing was taking and detailed why it would cause nothing but increased risks and costs. A bunch of business guys outsourcing everything and not understanding why they don't have a working plane underneath all the contract language.
Maybe? But that case study has already happened time and again, yet these sorts of folks are allowed to slowly creep into working systems and break them still.
I think it's just the classic aging business problems, most people are averagely competent, many companies fail, a company that happens to have an over abundance of particularly skilled people will succeed, but over time the average skill of those people will decrease and the company will flounder.
There are ways to keep standards moderately high, and there are ways to tank it by allowing nepotism, encouraging CYOAism & turf wars, cutting salaries on highly skilled individuals relative to market rates (or laying them off to replace them with college grads)... I think companies (in line with the larger market) are just naturally cyclic and that incredibly long lived companies are quite the exception to the standard life cycle.
I understand GP to be talking about something different - about consequences of putting behind the wheel people who don't care whether the company is making planes or toilet paper, but view it as a vehicle to turn money into more money.
Goodhart's law states that "when a measure becomes a target, it ceases to be a good measure" - because people then start optimizing for the value of the measure, instead of what it's a proxy for. It seems that we've created a class of specialists, whose entire job is to do such optimizations. And we let them run companies, leading to predictable results.
Oh I agree, but I think that that factor has been obvious and evident in the US economy since the 80's. Management people work to maximize their take home, their take home is highly bonus dependent, their bonus is highly dependent on quarterly performance (not long term investment or good foundational decisions)... thus our stock driven economy is maximizing for people who can sell two dollars tomorrow for a dollar today.
I thought the other point (about the luck of selecting high skill employees early in a company lifetime) was also pretty interesting though.
>Boeing is going to be the case study of what happens when you let 'business people' take over an engineering company. A bunch of MBAs deciding to move numbers around on paper and losing sight of the bigger picture.
>The 737 MAX and all the issues with the 787 isn't what happens when engineers are in charge
engineers are culpable in the 737 max too - i'm pretty sure many engineers and test pilots, like that Forkner who was saying one thing to FAA while the other to his colleagues, knew about that ugly situation and the risks entailed, yet didn't blow the whistle even anonymously. Those aspects remind the VW dieselgate.
I remember reading an article back in June about how the Boeing/McDonnell Douglas merger was a watershed moment in the history of both companies going from a strong engineering focus to a business focus. Sadly, many companies have suffered a similar fate (I'm looking at you, Valve).
Valve never had an engineering focus. It was always product/design.
And they still have that focus. People just can’t handle that they’ve shifted from content (Half Life) to platforms (Steam, Vive).
But that transition happened a LONG time ago. Even Team Fortress, Portal, and DOTA are less of Valve properties and more of Indie mods that Valve has nurtured into tentpole properties.
They’re in their third act, from Game Producer, to Mod Publisher/App Store to Next Gen Hardware Platform Company. Don’t expect them to backslide from there.
Nothing of your characterization rings true to me. But maybe I’m missing something.
To me, Valve seems more like a company that zoomed out to look at the bigger picture, and in doing so abandoned what they were.
I don't think that they forgot about the technology side of things - but I do think that in leaving behind so much of what inspired them to expand in the first place, they may have drowned their muse.
At very least, I think they have compromised their ability to dog-food what they're working on.
Sure, I'd agree with that. Obviously companies in different verticals are going to have different benchmarks for what constitutes innovation. But designing "platforms" (to my mind), while certainly a product design undertaking, falls towards the MBA-end of the business maintenance vs. innovation spectrum.
There's a significant amount of deeply technical requirements in the back-ends of real-time platforms (which Valve is going to need to stop Google from stealing their pie) - especially if Google's super-real-time predictive magic is a believable seemless experience.
That will require a great deal of innovation - just not the sort of end user facing magic that the Valve of old produced.
Unfortunately I fully expect the external visage of the new Valve to be a smooth and greasy risk-adverse PR experience - but hopefully they can provide a platform that someone else can use to produce Half-Life caliber games in the future.
I guess I'm not sure exactly which product you're mainly referring to. The steambox/link product appears to have been a flop. If you're referring to some type of on-demand gaming product that they're developing I'm unaware of that, but in general I'm very bearish on cloud gaming. It very much feels like a solution looking for a problem. Most people interested in console/pc-style games will have a hardware budget anyway, and the whole idea seems like a revenue/subscription money grab. Who knows, maybe I'm wrong and that's the way gaming is going in the future, but I know for a fact that latency issues are a big stumbling block and it just doesn't seem like a reasonable use of bandwidth compared to, say, streaming video. That Google "pre-emptive" rendering thing sounded like pure marketing double-speak to me.
I'm not saying they have it, I'm guessing they'll need to. There's already some pretty complicated networking code in steam as it is - if steam adds cloud gaming to the mix, the infrastructure complexity is going to jump significantly.
If cloud gaming becomes something more than a dream, Valve is going to suffer hugely if the don't have a viable competitive offering.
Anyway, ignore me - I'm not sleeping too well today but now, and my brain's a bit melty.
Regarding the preemptive rendering, I think it is potentially viable.
What I'm thinking is branch prediction without the ability to roll back.
You'll need to be able to minimise user noticable mistakes, as well as making any corrections minimally distracting.
I think this is exactly right. They are always looking to the next thing, which leaves a false impression of “not doing anything” because they’re visibly not continuing to do the same thing.
That's a very narrow interpretation of what I said, but ok, I'll bite.
They've followed a similar trajectory. Starting out as a product-focused company in their industry (games), with innovative titles and game engine tech. Then moving on to focuses that have more to do with bottom-line finance than creative effort at pushing forward the industry with Steam. Delivering files [games] via an online internet store was anything but a revolutionary idea. Then moving in an admittedly interesting direction toward platform development with their VR products (Steambox notwithstanding). And I have to give them credit there for investing in real hardware development, but let's be honest, that happened at a time when VR was very buzzwordy and worthy of the corporate boardroom setting. They still haven't invented a piece of platform-changing innovation in the hardware/killer-app space, they're trundling along like everyone else who started a VR company in 2013, albeit with a bunch of previous revenue streams enabling large investment.
> they're trundling along like everyone else who started a VR company in 2013
By what metric? They’re #1 or #2 in that space. Leap Motion, Razer, etc are not in the same position. I really don’t understand what you’re alluding to.
> Then moving on to focuses that have more to do with bottom-line finance than creative effort at pushing forward the industry
Can you give me an example of a decision they made that you think made them money at the cost of holding the industry back?
Would you at least agree they were at the forefront of digital distribution and that was motivated by wanting to move the industry forward?
What about SteamBox and SteamOS, which came in response to Microsoft announcing they were going to require all apps to be distributed through their store? Was that a money grab in your estimation?
The other thing that happened was the separation between the defence and civilian parts of the business was removed. The defence part of the organisation was used to a lower standard of rigor and was used to delivering products which weren't up to quality standards because of the close relationship that the vendor and customer has in the military and the long timelines and large budgets for maintenance, etc.
> They had a goose laying golden eggs and they killed it to save the money on feeding it this quarter.
When are MBAs going to finally start admitting that returning every last penny they possibly can, and more, to shareholders just isn't sustainable?
You have to treat employees and customers well. You have to make a quality product. I think (hope) that most people are starting to wake up and will give more push back on business; demand salary increases, better work environments, be able to take care of the customer, etc.
I can't read the article because of the paywall, but have they also factored in the future cost of lawsuits and compensation payouts to airline operators of the 737 MAX for loss of revenue from the grounded jets?
The loss of passenger seat revenue, along with long term storage fees for the grounded fleets, plus the costs of getting those aircraft airworthy again, not to mention costs of leasing alternative aircraft to fill route demand... the costs would be staggering, and Boeing will have to foot some, if not all, of it.
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[ 4.7 ms ] story [ 219 ms ] threadWe keep hearing how bad corporate behavior happens because the cost/benefit analysis simply views bad outcomes as costing a certain number of dollars, and then you throw in the probabilities, and you can justify pretty much any appalling decision.
The best possible outcome of the 737 Max disaster would be a legendary business school case study showing management of technical endeavours by bean counters is a terrible idea.
[1] https://en.wikipedia.org/wiki/Superconducting_Super_Collider
Yes, a balance among all three functions is necessary. However, the 737 Max case is definitely about letting bean counters dictate engineering choices: saving design costs by pulling the ancient 737 design off the shelf; the software fixes to the problem introduced by those engines on that frame; and then pretending that the plane was just like an old-school 737, hiding all the complexity and compromises from pilots to avoid recertification costs. And even the decision to charge extra for redundancy of the critical sensor driving the software.
It appeared to be, and maybe should have been, a cheapjack gizmo swaddled in marketing glitz to justify its ridiculous price. But someone did a teardown and discovered that it actually did contain a very expensive, precision-engineered, completely unnecessary two-ton press. To squeeze fruit pulp out of a tube.
https://www.youtube.com/watch?v=_Cp-BGQfpHQ
They probably could have cut the cost by a huge amount by using an aluminum casting (though with more engineering effort they probably could have used plastic but that would have upped the tooling complexity and I dunno if their planned volume would have made that worthwhile) and machining all the features to hold the moving bits into it (bonus points for doing it all with one tool and one holding fixture) and designed their press mechanism around the gearbox of some power tool you can find at Harbor Freight for under $50.
New engineers being new engineers I would put serious money on all their machining having stupidly tight tolerances. New engineers love doing that for some reason.
Im a mere software engineer but I see a lot of over engineering in new grads in the field as well. I sense it comes from either wanting to dick wave, or fear of being thought of as too amateur.
Moreover, as SSC was planned as a 40 TeV machine, and LHC reaches 14 TeV now (at presumably much higher luminosity), SSC might have discovered something that still has not been observed.
1. It could have been in Arizona, Colorado, New Mexico, and Utah.
2. It could have been in Maryland, Pennsylvania, West Virginia, and Virgina.
3. With a slight size increase: Missouri, Kentucky, Tennessee, and either Illinois or Arkansas
4. With a big size increase: all 5 of Missouri, Kentucky, Tennessee, Illinois, Arkansas
5. With a big size increase: Kansas, Texas, New Mexico, Colorado, Oklahoma
6. With a big size increase: Texas, Louisiana, Arkansas, Oklahoma
Capitalism is not the only or best tool to guarantee safety.
https://en.wikipedia.org/wiki/Raymond_Conner https://en.wikipedia.org/wiki/Kevin_G._McAllister https://en.wikipedia.org/wiki/James_McNerney
The bad news is he was replaced with Stan Deal, a sales executive.
The good news is he's not just a sales guy, he's held a number of jobs. He also has a bachelor's degree in aerospace engineering. So there's some hope.
https://www.bizjournals.com/seattle/news/2019/10/22/5-things...
I don’t see how this is a bad thing for the market, if anything there will be more pressure to make safe aircraft.
In a horse race, if the jockey is terrible you don't shoot the horse.
For all intents and purposes, those people are the company.
Your analogy makes no sense at all.
The company should die. Its assets of course are still worth a lot of money, and I'm sure some other aircraft manufacturer might like to buy those assets for pennies on the dollar, and also hire the employees right away to get production up to speed as quickly as possible (but on a different design).
I doubt AirBus would want those assets anyways. It would make them an obvious monopoly and invite even more regulation than they're already facing.
Companies rarely outright disappear. They get absorbed and operate under new management.
>> In a horse race, if the jockey is terrible you don't shoot the horse.
> What are you talking about? The shareholders, the board, and the upper management collectively are the company. The rest is just employees and assets.
You're splitting hairs. The employees, assets, and their organization are the only part of the company that performs a useful social function. The shareholders, the board, and to a lesser extent the upper management are parasites that can be dispensed with and literally no one else will care.
> Show me an Investor that doesn't care who the upper management is.
Investors are a kind of shareholder.
And if they were kicked out of the street as payment for the mess they had a hand in creating that is Boeing, they're not going to get much sympathy from me for their personal misfortune.
Prior to industrialization individual skill was the primary contribution of value to companies so, while a single person might own the premises, the value of the company was in those employees. In the modern economy employees have been commoditization to be interchangeable and the result is that employee power has been severely curtailed without compensation.
Compare a rando factory to a sports team, losing a star player on a sports team can drastically effect your valuation and thus those stand out employees are considered primary assets of the teams (and often times teams will have both injury and sudden contract termination insurance for their players). Your statement that companies generally aren't employees is correct, but it is newly correct and unhealthy for society. Those lower level employees are the only ones actually producing value for the company.
It's just like the assets (buildings, equipment, etc.). The company isn't going to be productive at all without its buildings and other assets. But do the assets get a say in things? Do the assets own the company? Of course not, they're inanimate things. Employees are not much different.
If Boeing had granted partial corporate ownership to technical employees they would advocate much harder for the caution that could have averted this incident, bonuses (and the mere promises of such) are a partial salve to this but have other complications around being non-binding, unaccountable and a form of wage insecurity.
So, I just wanted to mention that this sort of creeping failure isn't inevitable, it's inevitable in the scenario as presented. Given a different company culture this incident likely never would have occurred and giving employees and vested (and vesting HA!) interest in the company is one such route.
>this is why key employees are often upgraded from mere tools to investors by the issuance of stock options - that sort of thing is never going to happen in a company like Boeing merely because of our culture.
What are you talking about? I don't know about Boeing specifically, but stock options were very commonly awarded to engineers back before the big 2008 market crash. I had them when I worked at Intel. They sure didn't cause any change in my behavior; the effect of any one engineer at a company that large is usually pretty negligible for the company's stock price, and stock options are a very small portion of an engineer's overall compensation package. After the market crash, it seemed like stock options mostly fell out of favor (because they all became worthless!), and these days companies now offer RSUs, if they offer anything at all. Stock options were a big deal in the dot-com days because tech companies' valuations were inflating so quickly, so those options represented a LOT of potential profit, but not so much after the 2000 crash.
Anyway, the point is, you're talking about stock options like they'd solve this problem, and as if they aren't already common. I'm not sure how common they are now (they don't see to be so much), but they absolutely were in the past, and I don't see any evidence that it made a difference.
>If Boeing had granted partial corporate ownership to technical employees they would advocate much harder for the caution that could have averted this incident
What makes you think they didn't? Or that it would make a difference? Stock options don't give engineers any authority to override executive decisions by management. They can either do what the executives say, or get fired and lose all those options (unless they've vested). Either way, it gives them no real power.
The simple fact is that a company is not a democracy, and is much more like a dictatorship (or a cabal I guess, with the board picking the dictator but having the power to replace him at will). I can't even imagine any large company working well with a democratic style leadership when competing with others with traditional management. The simple solution is that companies like Boeing have to have very strong regulation to oversee their operations and make sure they make safe products, and that's the government's job; there's countless examples throughout history showing that expecting any organization to police itself effectively without some kind of checks by outside organizations doesn't work well. The FAA and by extension the US Government totally failed in their job here, and so did the foreign regulators to a certain extent (by trusting the FAA too much).
>Given a different company culture
Boeing's company culture is a product of the country it resides in. I don't see how you're going to change Boeing's culture without changing America's culture.
If you own an S&P 500 fund like SPY, you are a shareholder. A lot of folks have BA in their retirement accounts. Litigating against shareholders in a case like this would serve no purpose that I can see.
> Good. Corporations should be punished when corporate greed leads to negligence which leads to the loss of human life en masse in exchange for short term profit.
I read CryoLogic's usage of "punished" as meaning "losing money due to drop in stock value" (which is what occurred in this case). Regular people holding shares in Boeing absolutely should lose money due to the dropping stock prices. They take risks making investments and they must accept that. So no I don't mean that regular shareholders should be prosecuted. I don't think anyone here has argued for that.
There's a 5+ year backlog for new A320s, so switching suppliers simply isn't an option.
I won't avoid the plane forever -- but I will certainly give it a few years before I fly in one. Better safe than sorry.
Many regulators around the world were willing to accept the FAA's approvals rather than do their own certifications. Many of those will no longer do so. The EU has already signaled this: https://www.seattletimes.com/business/boeing-aerospace/europ...
> But he said such a new review was necessary because there were parts of the original MAX design that EASA “had not completely certified ourselves, because we had delegated some of the tasks to the FAA.”
Additionally, I expect Boeing's self-certification privileges (https://www.washingtonpost.com/investigations/how-the-faa-al...) to be dramatically curtailed.
> In practice, one Boeing engineer would conduct a test of a particular system on the Max 8, while another Boeing engineer would act as the FAA’s representative, signing on behalf of the U.S. government that the technology complied with federal safety regulations, people familiar with the process said.
Yes, and that's great for those other nations. I live in the US, though.
The second point - that Boeing's ability to have their own engineers act as the FAA's representatives is likely to go away or curtailed - protects you, too.
Nonetheless, I'll avoid flying on that plane for a few years regardless, just for my own peace of mind.
Oh yes, the joys of a cramped 737 with the added benefit of in-flight nose dives. The post-9/11 trend of every domestic flight being a 737 (or Airbus equivalent) is generally just as bad as TSA.
Boeing needs to come out with a redesigned medium-range narrow-body airliner that doesn't hug the ground, has ample leg room and overhead bin space, and sell it domestic carriers as the future of air-travel instead of releasing the airplane equivalent of Windows XP Service Pack 8.
Another option is to high-mount the wing.
You do know that the seat spacing isn't fixed by Boeing, it's adjustable by the airline. Boeing can introduce a plane with 60" seat pitch and the airlines will just turn it into 30" and pack in twice as many passengers.
Same with seat width. The 787 was originally designed for eight-abreast, and many airlines turned it into nine-abreast.
It's an airline industry problem, not a Boeing or Airbus problem. Most seats are purchased primarily on price.
I can't afford first class, so my response is less travel. A lot less travel.
And we have a race to the bottom because there's no standardization, so the prices can be gamed like this.
An airline ticket needs to be defined to provide a minimum, standard set of amenities; and at a minimum airfare search sites need to highlight tickets that don't meet that standard as nonconforming.
In the US, you'll want to avoid Southwest, American, and United.
Now I only fly airlines that never had the Max in their fleet.
Which sadly probably means I'll be flying Spirit from now on, but it'll be worth it.
Its bad when an industry dominated by two players has one of those players hurt and the market can't replace them.
You can't start a competitor to Boeing because it would cost over $100Bn, so the larger outcome is bad for aviation.
it is the best opportunity for a new maker to emerge and shake, if not break, the duopoly. Boeing for the years ahead wouldn't have a plane to replace 737 MAX while the market will be squeezed by Airbus.
I don't think that helps your case. I would expect a state-owned enterprise to be over-budget, especially if managers knew they had "what amounts to an unlimited budget".
The CR929? That thing? [0]
I think that if people are still complaining about Boeing's safety record and obfuscation when that goes into service, the'll start to relearn what real obfuscation looks like... (Russian airliners do not have the best safety reputation, to say the least)
0: https://en.wikipedia.org/wiki/CRAIC_CR929
If you're refering to the C series, that's now essentially a product provided by Airbus (under the A220 monikker).
> COMAC
Not viable. Not for the next couple decades. The reason is not that the Chinese are not able to build an airworthy plane in a few years time. The main problem will be the service offerings to an international clientele. Let's just say that China's pencheant for cutting corners is not conductive to trust into their service offerings, including the provision of critical spare parts.
Will it? Probably never, it's too much of a tool used by the US Government to ever go bankrupt.
Of course, the US government would never allow Boeing to go out of business completely, as in a chapter 7 bankruptcy.
But a chapter 11 bankruptcy, in which Boeing the business survives but its current stockholders lose everything? Not inconceivable it might happen some day, and I can't see why the US government would feel it necessary to stop that. Customers only care about the firm's products and services still being available to purchase at a reasonable price, if the stockholders lose everything that's not their problem.
Out of curiosity, do you think they wouldn't let it even get that far to make sure they stay competitive vs Airbus?
So I don't think Boeing will be filing for chapter 11 any time soon. But in 5, 10, 15 years from now? Anything could happen. Maybe they'll turn the corner from this episode, and their business will have a very bright future. Maybe they get stuck in the doldrums, and then chapter 11 might slowly become more plausible as an ultimate outcome.
Not only does Boeing produce a large number of military aircraft for the US armed forces, but their commercial arm also allows the US to project power world wide.
"Too big to fail" describes a concept in which the government will intervene in situations where a business has become so deeply ingrained in the functionality of an economy that its failure would be disastrous to the economy at large. If such a company fails, it would likely have a catastrophic ripple effect throughout the economy.
https://www.investopedia.com/terms/t/too-big-to-fail.asp
The "too big to (let) fail" theory asserts that certain corporations, particularly financial institutions, are so large and so interconnected that their failure would be disastrous to the greater economic system, and that they therefore must be supported by government when they face potential failure.[1] The colloquial term "too big to fail" was popularized by U.S. Congressman Stewart McKinney in a 1984 Congressional hearing, discussing the Federal Deposit Insurance Corporation's intervention with Continental Illinois.[2] The term had previously been used occasionally in the press.[3]
https://en.wikipedia.org/wiki/Too_big_to_fail
Boeing in Chapter 7 wouldn't kill the US economy. It would just dent it badly, and give competitors from other countries (China? India?) an in to a large market.
But the US military machine would be very badly damaged if Boeing failed. And there would be spectacular political fall out, both internally and internationally - some of which is already happening with the tarnished reputation of the FAA.
Aerospace is one of those prestige industries that is as much about promoting national status as about making money. A major failure would be very bad indeed for America Inc - survivable in practical terms, but a disfiguring and ugly wart on the face of the mythology.
The government would absolutely provide debtor-in-possession financing if no one else would, but even that is extremely unlikely, since there are so many saleable assets.
It seems pretty likely to me that the government would prefer a Chapter 11 restructuring.
Boeing as a company is so critical to the defense industry that the US government wouldn't let it fail. There are things Boeing does for the defense industry that literally no one else is capable of providing.
Even Chapter 11 restructuring is very unlikely as it would be too disruptive to vital industries, unless it was somehow limited to just the civil aviation part of Boeing.
As to breaking up, it might make sense to split of the civil aviation portion of Boeing so that it could fail or be restructured without affecting national security interests.
https://www.theverge.com/2019/10/23/20927213/boeing-737-max-...
See, Boeing was built before Airbus. Airbus benefited from starting at the electronics age, with lessons learnt from Boeing. It had an impact on the design: Airbus is fly-by-wire, Boeing isn’t. Probably all the tech stack of Airbus slightly newer, with slightly newer management methods too (legacy is a curse to get rid of) and easier for them to iterate and upgrade. That alone could explain why each generation of Boeing plane was rushed to the market, including the explosive batteries circa 2010, the broken airframes by Ducommon for 4.7% planes, helped by FAA delegating self-certification of their planes to Boeing itself, and the coup de grace, planes that literally want to aim for the ground in 2019, all of that in 8 years. Ironically they’ve bought McDonnell 20 years ago which was pro at sneaking past FAA regulations. Maybe they’ve “learnt” from MD.
But there are so many others in hiding that we have to throw away the last 20 years of engineering: For example the MCAS had only 1 processor, when all other systems are required to have 2 to 3. We can’t risk 100 lives for each lie Boeing did in the past 20 years.
I’m not sure there is actually a lot to learn that we didn’t know: The FAA shouldn’t delegate Boeing certification to Boeing, managers should not ask employees to drill new holes when the original holes were drilled 3 inches apart and don’t fit, because it endangers the structural integrity, one should not use a hammer to change the shape of the airframe by a full inch, collapsing the I-beam by folding it, compromising the structural integrity, they shouldn’t have lied about changing the features of the MCAS, and the market should have been nicer with their revenue.
Every bankruptcy is sad and unfair. It’s disheartening to fire people who certainly have given all they could to compete with a better competitor. But it’s time to cut the loss, because their failure is ingrained in their engineering and management, and is costing real deaths in real world.
Sociopaths in control is a common dark pattern for big companies. Once entrenched generally impossible to get rid of them, any more than one easily deposes a tyrannical dictator who has acquired the power to silence and quash all internal dissent.
That's not exactly punishing. It looks like any potential government bailout has already been priced into the stock.
Yes, it does matter. If the company suffers enough, perhaps they will be more cautious about this sort of thing in the future, even if the individuals directly responsible are gone.
It is also my understanding that IF pilots were fully informed of everything MCAS does and its failure modes, and were trained in how to recognize and handle those failures, and maybe also if the plane has the optional AoA features (display from both sensors, AoA disagree light) which could help recognize when MCAS is using faulty data, then the MAX would be fine.
Question: doesn't there come a point where it is cheaper for Boeing to give up on the very little additional training thing, and go ahead and eat the costs of retraining all the pilots to fully understand MCAS and installing the optional AoA features on all 737 MAXs?
The airplane will not be safe as long as the only way to exit a nose-high MCAS runaway situation is to cut out the power trim and move a wheel that physically cannot be moved while the aircraft remains in the nose-high situation. And without a third AoA sensor the chances of a failure remain unacceptably high.
This is explained here: https://www.seattletimes.com/business/boeing-aerospace/boein...
But Boeing never trained pilots how to identify the problem, and told them the old procedure was the correct way of dealing with it. The old procedure told pilots to turn electric trim off, never turn it back on and return stabilizes to neutral with manual control, which turns out to be impossible.
That's not one, but two pilot training issues with Boeing's official training materials.
A related problem is that because of the no extra training requirements, Boeing explicitly designed MCAS to be near impossible to disable, because if it was disabled then the plane now had different flight characteristics, which the pilots weren't trained to handle.
And this is also the reason why MCAS only used data from one sensor. If the sensors disagreed and MCAS disabled itself, then that would require pilot training.
The whole system would have been designed differently, and more safely if it wasn't for the "no extra training" requirement.
Prior to the first crash in Indonesia, MCAS was not mentioned in the formation to the pilots. Boeing has asked the FAA to remove it from the documentation. The FAA did not know that the MCAS was totally different from what Boeing had initially planed, so they agreed.
After the crash, Boeing published new instructions that mentioned MCAS. But they were of no use for the Ethiopian crash. As you wrote, turning off MCAS also turned off stabilisation, and manual control was not possible because of the excessive speed. The pilots did understand that, so they enabled the electric trim again. Unfortunately, this activated the MCAS which send the plane downside 10 seconds later. They had no way out.
In both crashes, after repeated activations of MCAS has pushed the stabiliser almost fully down, we see the pilots do two quick presses of the trim up button. The graph shows the stabiliser barely moving (much less than a press of the same length earlier in the flight).
I suspect the pilots pressed the trim up button, heard a loud noise from the electric motor straining, or a fuse popping, or something? So they stopped pressing trim up.
Even worse, only trim up was failing, MCAS was still able to command more trim down.
The two sensor setup would basically mandate Level D simulator training. That was a non-starter to maintain the 737 MAX sales pitch, and would also have likely led to inconvenient questions that would have kept sales depressed because of too much attention being called to the actual implementation details of the plane.
That came out in the original 60 Minutes Expose on the 737 MAX iirc.
I thought that perhaps it was worse than this. If much training is required, then you are admitting that it's not the same plane anymore. And if it's not the same plane, then why does it get to grandfather in all the unchanged parts from the 1960s? Meaning... perhaps things like doors? I could be wrong about this, but I thought there were a bunch of mechanical parts which you would have to design differently on a new aircraft, to meet current rules.
From what I can tell (IANAP) the MAX was specifically designed to maximize this margin by the promise of that hour, possibly this grounding wouldn't have happened if Boeing had stated a slightly higher retraining requirement, and possibly a PHB overrode a suggestion from an engineer for some extra training time to maximize that window. That's all speculation, but it'd be extremely unsurprising.
I also think there's a bit of the Upton Sinclair effect in play where some Boeing pilot Youtubers including blancolirio and MentourPilot are overconfident and overestimate the quality and reliability of the equipment they fly out of sunk costs and income dependence biases.
Boeing is too big to fail, too big to jail and too big to derail. One or two products may have some minor software patches applied, but they won't ever be told to recall unsafe or defective products because they own the regulators and have outsized influence based on national strategic interests, and lots of lobbyists and campaign contributions.
We have ample evidence...there are thousands of the things flying every day.
The 737NG has one of the best safety records of any airliner in service, EVER.
I don't think so:
https://www.youtube.com/watch?v=IaWdEtANi-0&t=36m16s
Source https://en.wikipedia.org/wiki/Boeing_737_Next_Generation#Str...
I just want to point out that this is a single sentence, and it is not easy to follow.
On the other hand this fiasco has not really hurt the stock price too much so perhaps investors already have decided this is true as well.
1 - https://en.wikipedia.org/wiki/Sudden_unintended_acceleration...
Wasn't it software? Isn't that just as "real"?
> Toyota was not at fault
Uh...
A subsequent investigation[47] by Safety Research[48] of the NTHSA/NASA report along with information from Barrs report[49] and Koopmans report[50] revealed that bad software design, antiquated ECU hardware fueled by a poor company culture were the likely cause of the SUA in the Toyota Camry incidents.
In April 2013, Betsy Benjaminson, a freelance translator working for Toyota to translate internal documents, released a personal statement about Toyota covering up facts about the sudden unintended acceleration problem.
This leak of internal documents fueled a criminal investigation by the FBI and the Justice Department that had been ongoing since 2010,[52] and on March 19, 2014, the DOJ issued a deferred prosecution agreement with a $1.2 billion criminal penalty for issuing misleading and deceptive statements to its consumers and federal regulators, as well as hiding another cause of unintended acceleration, the sticky pedal, from the NHTSA.[41] This fine was separate from the $1.2 billion settlement of a class action suit paid to the drivers of Toyota cars who claimed that their cars had lost value as a result of the SUA problems gaining publicity in 2012, and was at the time the largest criminal fine against an automaker in US history.[53] Toyota was also forced to pay a total of $66.2 million in fines to the Department of Transportation for failing to handle recalls properly and $25.5 million to Toyota shareholders whose stock lost value due to recalls. Nearly 400 wrongful-death and personal injury cases were also privately settled by Toyota as a result of unintended acceleration.[53]
The problem is this knowledge is built into the share price. In other words, the bottom would fall out only if the government started giving signals that it would in fact be willing to let Boeing fail.
Still, bailing out Boeing would be extremely costly, not because of the bailout itself, but because the WTO prohibits government subsidies of aerospace industries in Europe and US. So the resulting punitive tariffs from Europe would hurt a ton.
Well, yes and no: knowledge of bailouts is built in to share price, but that knowledge includes the fact that while government stops important corporations from failing, those bailouts usually don't work to the benefit of pre-bailout shareholders very much (though they are sometimes better for them than standard bankruptcy would be); they are essentially special case bankruptcies, often with partial temporary nationalization.
American Airlines still exists, but all the previous stock was voided during bankruptcy.
Shareholders are last in a long line during bankruptcy, this is pretty terrible advice.
The 737 MAX and all the issues with the 787 isn't what happens when engineers are in charge, it's what happens at the end of a long line of non-technical people saying "well we can just do ______ right?" Cutting corners and working on influence rather than excellence.
Article detailing the debacle with the 787. From which zero was learned.
https://www.forbes.com/sites/stevedenning/2013/01/17/the-boe...
In 2001 there was an engineer that carefully analyzed the path Boeing was taking and detailed why it would cause nothing but increased risks and costs. A bunch of business guys outsourcing everything and not understanding why they don't have a working plane underneath all the contract language.
http://seattletimes.nwsource.com/ABPub/2011/02/04/2014130646...
They had a goose laying golden eggs and they killed it to save the money on feeding it this quarter.
I think it's just the classic aging business problems, most people are averagely competent, many companies fail, a company that happens to have an over abundance of particularly skilled people will succeed, but over time the average skill of those people will decrease and the company will flounder.
There are ways to keep standards moderately high, and there are ways to tank it by allowing nepotism, encouraging CYOAism & turf wars, cutting salaries on highly skilled individuals relative to market rates (or laying them off to replace them with college grads)... I think companies (in line with the larger market) are just naturally cyclic and that incredibly long lived companies are quite the exception to the standard life cycle.
Goodhart's law states that "when a measure becomes a target, it ceases to be a good measure" - because people then start optimizing for the value of the measure, instead of what it's a proxy for. It seems that we've created a class of specialists, whose entire job is to do such optimizations. And we let them run companies, leading to predictable results.
I thought the other point (about the luck of selecting high skill employees early in a company lifetime) was also pretty interesting though.
It was. I never thought about regression to the mean in context of employees of a company before. So thanks for bringing that up.
>The 737 MAX and all the issues with the 787 isn't what happens when engineers are in charge
engineers are culpable in the 737 max too - i'm pretty sure many engineers and test pilots, like that Forkner who was saying one thing to FAA while the other to his colleagues, knew about that ugly situation and the risks entailed, yet didn't blow the whistle even anonymously. Those aspects remind the VW dieselgate.
And they still have that focus. People just can’t handle that they’ve shifted from content (Half Life) to platforms (Steam, Vive).
But that transition happened a LONG time ago. Even Team Fortress, Portal, and DOTA are less of Valve properties and more of Indie mods that Valve has nurtured into tentpole properties.
They’re in their third act, from Game Producer, to Mod Publisher/App Store to Next Gen Hardware Platform Company. Don’t expect them to backslide from there.
Nothing of your characterization rings true to me. But maybe I’m missing something.
I don't think that they forgot about the technology side of things - but I do think that in leaving behind so much of what inspired them to expand in the first place, they may have drowned their muse.
At very least, I think they have compromised their ability to dog-food what they're working on.
That will require a great deal of innovation - just not the sort of end user facing magic that the Valve of old produced.
Unfortunately I fully expect the external visage of the new Valve to be a smooth and greasy risk-adverse PR experience - but hopefully they can provide a platform that someone else can use to produce Half-Life caliber games in the future.
If cloud gaming becomes something more than a dream, Valve is going to suffer hugely if the don't have a viable competitive offering.
Anyway, ignore me - I'm not sleeping too well today but now, and my brain's a bit melty.
What I'm thinking is branch prediction without the ability to roll back. You'll need to be able to minimise user noticable mistakes, as well as making any corrections minimally distracting.
I'm imagining auto-aim on steroids.
They've followed a similar trajectory. Starting out as a product-focused company in their industry (games), with innovative titles and game engine tech. Then moving on to focuses that have more to do with bottom-line finance than creative effort at pushing forward the industry with Steam. Delivering files [games] via an online internet store was anything but a revolutionary idea. Then moving in an admittedly interesting direction toward platform development with their VR products (Steambox notwithstanding). And I have to give them credit there for investing in real hardware development, but let's be honest, that happened at a time when VR was very buzzwordy and worthy of the corporate boardroom setting. They still haven't invented a piece of platform-changing innovation in the hardware/killer-app space, they're trundling along like everyone else who started a VR company in 2013, albeit with a bunch of previous revenue streams enabling large investment.
By what metric? They’re #1 or #2 in that space. Leap Motion, Razer, etc are not in the same position. I really don’t understand what you’re alluding to.
> Then moving on to focuses that have more to do with bottom-line finance than creative effort at pushing forward the industry
Can you give me an example of a decision they made that you think made them money at the cost of holding the industry back?
Would you at least agree they were at the forefront of digital distribution and that was motivated by wanting to move the industry forward?
What about SteamBox and SteamOS, which came in response to Microsoft announcing they were going to require all apps to be distributed through their store? Was that a money grab in your estimation?
When are MBAs going to finally start admitting that returning every last penny they possibly can, and more, to shareholders just isn't sustainable?
You have to treat employees and customers well. You have to make a quality product. I think (hope) that most people are starting to wake up and will give more push back on business; demand salary increases, better work environments, be able to take care of the customer, etc.
The loss of passenger seat revenue, along with long term storage fees for the grounded fleets, plus the costs of getting those aircraft airworthy again, not to mention costs of leasing alternative aircraft to fill route demand... the costs would be staggering, and Boeing will have to foot some, if not all, of it.
2005 - United Technologies Corporation (UTC) acquires Rocketdyne from Boeing and merges it with subsidiary Pratt & Whitney.
2007 - Raytheon acquires Sarcos.
2008 - Rockwell Collins acquires Athena Technologies.
2009 - Raytheon acquires BBM Technologies.
2010 - Raytheon acquires Applied Signal Technology.
2012 - UTC acquires Goodrich Corporation and merges it with subsidiary Hamilton Sundstrand to form UTC Aerospace Systems (UTAS).
2013 - Rockwell Collins acquires ARINC.
2015 - Raytheon acquires Websense and Foreground Security.
2016 - Raytheon acquires Stonesoft from Intel.
2017 - Rockwell Collins acquires B/E Aerospace.
2018 - UTC (51 in the Fortune 500) acquires Rockwell Collins (415 in the Fortune 500) and merges it with UTAS to form Collins Aerospace.
2019 - UTC (46 in the Fortune 500) and Raytheon (114 in the Fortune 500) announce an intent to merge, forming Raytheon Technologies Corporation (RTC).
--- Speculation time ---
2020 - UTC and Raytheon merge to form RTC.
2022 - RTC acquires Boeing.