[Bean-counters kill hundreds for a $]
Boeing Engineer Says Corporate Culture Change Behind MAX Issues
July 6, 20190
A spokesman for the union that represents some of the workers who
build Boeing airplanes claims the company’s shift to a “cost-cutting”
corporate culture has isolated employees, alienated suppliers and
customers and ultimately underlies the problems it’s having with its
current airplanes, including the 737 MAX. Stan Sorscher, of the
Society for Professional Engineering Employees in Aerospace (SPEEA),
wrote an opinion piece for the Seattle Times on Friday
outlining the causes and effects of Boeing’s corporate evolution. “The
cost-cutting culture is the opposite of a culture built on
productivity, innovation, safety or quality,” Sorscher wrote.
“Boeing’s experience with cost-cutting business culture is apparent.”
He claims Boeing shifted its emphasis from employee empowerment and
collaboration to one of earning maximum return for shareholders. He
claims that pointing out issues on the factory floor brands workers as
troublemakers and therefore stifles the inherent desire of most
workers to ensure product quality. He also said cost cutting, which is
appropriate for some businesses, is the antithesis of a
“performance-driven” model that governs complex manufacturing. “This
cost-cutting culture is the opposite of a culture built on
productivity, innovation, safety, or quality,” he wrote. “A
high-performance work culture requires trust, coordination, strong
problem-solving, open flow of information, and commitment to the
overall success of the program.”
What will it be, Boeing? Great airplanes that generate cash flow or
great cash flow, period?
July 5, 2019 at 1:10 pm
Gabriel Campanario / The Seattle Times
By Stan Sorscher
Special to The Times
Employees come to work to do their jobs. We aren’t usually aware of
workplace culture, even over a span of years.
We learn culture from co-workers and managers when they make decisions
and demonstrate problem-solving skills. Leadership messages affect
thousands of decisions that add up to success or failure of the
For many years, Boeing competed with Airbus and other producers for
airline customers based on performance of its products. As a recent
news report put it, Boeing now competes for investors with Exxon and
Boeing rose to the top of the airplane business as an engineering
company, focused on performance of its products. Boeing made bold
decisions that “bet the company” and prevailed over competitors.
In the ’90s, Boeing business culture turned to employee engagement,
process improvement and productivity — adopting the “quality” business
culture that made Japanese manufacturers formidable competitors.
In the late ’90s, Boeing’s business culture shifted again, putting
cost-cutting and shareholder interests first.
Some business cultures are well-suited to commodity-like products but
are a bad fit with performance-driven products.
Ask a financial analyst, “Are airplanes commodity-like or
Business instinct is to cast the question as a market transaction.
Airline customers worry about price, delivery dates, training costs,
spares, maintenance and other factors, but, overall, those
considerations come out very close in the end. The last major
innovation in air travel was the jet engine in the 1950s. A business
analyst would say the airplane business is “mature,” the products are
standardized, innovation is slow, so airplanes are commodity-like.
Now ask a different question: “Are the design, development, testing
and manufacture of airplanes commodity-like or performance-driven?”
Whoa. Tough question.
Actually, making airplanes is performance-driven.
Success or failure of an airplane program turns on productivity. The
first airplanes off the production line sell at a loss. Costs come
down over time, the quicker the better. If your business model
emphasizes productivity, employee engagement and process improvement,
costs go down faster. This was the essence of the “quality” business
model Boeing followed in the mid-’90s. The 777 had the best “learning
curve” in the business.
On the other hand, if your industry is mature, and your products are
commodity-like, business-school theory says a cost-cutting model is
Wal-Mart perfected its particular version of the cost-cutting business
model. Amazon adapted that model to its industry. Boeing has adapted
it to high-end manufacturing. These companies are super-stakeholders
with market power over their supply chains. The point of this business
model is that the super-stakeholder extracts gains from the
subordinate stakeholders for the short-term benefit of investors.
Subordinate stakeholders are made to feel precarious and at-risk. Each
supplier should see other suppliers as rivals. Similarly, each work
location should know it competes on cost with rival work locations.
Each state or local government should compete for incentives against
In this model, subordinate stakeholders never say “no” to the
super-stakeholder — not workers, not suppliers, not state
This cost-cutting culture is the opposite of a culture built on
productivity, innovation, safety, or quality. A high-performance work
culture requires trust, coordination, strong problem-solving, open
flow of information and commitment to the overall success of the
program. In a high-performance culture, stakeholders may sacrifice for
the good of the program, understanding that their interests are served
in the long run.
In the productivity-based 777 program, it would have been
career-limiting to withhold negative information from managers. They
needed timely information to find a solution as far upstream as
According to Boeing’s annual reports, in the last five years Boeing
diverted 92% of operating cash flow to dividends and share buybacks to
benefit investors. Since 1998, share buybacks have consumed $70
billion, adjusted for inflation. That could have financed several
entire new airplane models, with money left over for handsome
Boeing’s experience with its cost-cutting business culture is
apparent. Production problems with the 787, 747-8 and now the 737 MAX
have cost billions of dollars, put airline customers at risk, and
tarnished decades of accumulated goodwill and brand loyalty.
Stakeholders throughout the industry want our trust restored. This is
a leadership moment for Boeing executives and its board of directors.
Will Boeing make great products, which generate cash flow, or will it
continue being a company that generates great cash flow — and makes
Stan Sorscher was a physicist at Boeing for 20 years and has been on
staff at the Society of Professional Engineering Employees in
Aerospace union since 2000.