Boeing CEO grilled by lawmakers on safety issues

Boeing CEO grilled by lawmakers on safety issues

What you probably already know: Boeing’s CEO was in the hot seat this week when he was grilled by a Congressional panel over the company’s safety and manufacturing practices. David Calhoun, who has been CEO of the jetmaker since January 2020, faced calls from lawmakers to resign over the issues, including the faulty door plug that flew off a 737 Max 9 in January.

Why? Sen. Josh Hawley, R-Mo., was toughest on Calhoun during the hearing, calling out the CEO’s $32.8 million compensation package which he juxtaposed with Boeing’s job cuts and elimination of safety procedures. “You are strip-mining Boeing,” Hawley said, and asked Calhoun why he hasn’t resigned. Just hours before the session, a whistleblower came forward alleging Boeing was not properly storing and tracking parts that had been identified as faulty, and that some of those parts had likely been installed in planes that were then delivered to customers.

What it means: The whistleblower, a quality assurance inspector named Sam Mohawk in Renton, Washington, alleged that he was told to conceal evidence from the FAA and that the company retaliated against him when he refused. Mohawk is one of at least a dozen whistleblowers who have come forward recently alleging safety issues, according to Sen. Richard Blumenthal, D-Conn. A staff memo to the subcommittee investigating the issues said the reports “paint a troubling picture of a company that prioritizes speed of manufacturing and cutting costs over ensuring the quality and safety of the aircraft.”

What happens now? Calhoun said he is sticking with Boeing and is proud of the company’s safety record and its people. He is scheduled to step down by the end of the year once a replacement is identified but the Wall Street Journal has reported that several high-profile candidates have declined the job, including GE Aerospace CEO Larry Culp. Meanwhile, the company is struggling to hire and train new engineers and machinists as a generation of longtime workers retires, taking their institutional knowledge with them.

The big picture: Zooming out for a minute — and bear with me here — it’s important to consider the context of the Boeing crisis. Boeing and its biggest competitor, France-based Airbus, were in a dispute for years over fair trade. Boeing alleged Europe subsidizes Airbus’ production, thus allowing the company to undercut its competitors and drive down airplane prices. This then forced Boeing, which is not formally subsidized by the government, to unfairly compete. The World Trade Organization agreed and ruled in Boeing’s favor. Former President Donald Trump instituted a $7.5 billion tax on European exports back in 2021. The two companies then decided to call it quits on the tariff war so they could focus on their mutual challenger, COMAC, a Chinese company that’s overtly subsidized by the government. All that said, it’s impossible to view the Boeing saga without looking through a lens of global trade and competition, and what that means for American companies that are increasingly competing with sophisticated rivals that don’t have to play by the same rules.

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