This is F%$#ed Up and Sh%$ (Still Cannot Make Planes Edition)

Elizabeth Lund, who was appointed Sr. VP of commercial aircraft safety at Boeing has announced her retirement.

She's only been in the position since just after the door blew out of the 737, so I think that she has concluded that she was in a no-win scenario:

Elizabeth Lund, senior vice president of quality at Boeing Commercial Airplanes and one of the company’s most prominent female executives, will retire next month, the company said Monday.

Lund, 59, was given the job of restoring Boeing’s quality control after a door-sized fuselage panel blew out in-flight on Alaska Airlines Flight 1282 in January.

With Boeing in crisis ever since, she has been constantly under the spotlight, required to answer questions publicly from regulators and Congress about how the serious lapses happened, and explain the plan to fix the quality management system.

In an internal message to employees, Boeing Commercial Airplanes CEO Stephanie Pope wrote that Lund had planned to retire this year after more than 33 years at Boeing. Pope thanked Lund “for her strong leadership during a challenging year and her remarkable contributions to Boeing.”

………

A month after the Alaska Airlines fuselage blowout, Lund was tapped to lead the quality organization after the Federal Aviation Administration gave Boeing 90 days to come up with a plan to fix its management of product quality.

Interviewed by the National Transportation Safety Board in June, Lund admitted that a major push in 2019 to cut the number of Boeing quality inspectors by Ernesto Gonzalez-Beltran, then head of quality at Commercial Airplanes, had been a mistake.

“We are undoing much of what was done there,” Lund told the NTSB. “We have undone it, and I don’t think that we appropriately controlled and looked at all the risks when they did it.”

Later that month, Lund made a misstep at a press briefing when she commented on details about the Alaska Airlines incident that had not previously been publicly disclosed. She was rebuked by the NTSB for breaking strict disclosure rules about ongoing accident investigations.

As a result, Boeing was sanctioned and its access to the NTSB’s investigative information on the incident was withdrawn.

Out after 10 months means something, and it ain't good.

In related news, someone at Bloomberg (of all places) has run the numbers on the machinist deal, and observed that, given the insane cost of living in the Seattle area, the post strike wage increases amount to a barely living wage.

When Covid-19 brought the US economy to a standstill in the spring of 2020, America’s top executives called for a “national conversation” about the need for workers to return to work, warning of an “economic catastrophe” if they didn’t. I wrote at the time that a conversation we also needed to have was one about giving workers the security of a living wage. So, when I read the news that Boeing Co.’s machinists approved a new labor contract on Monday, locking in a hike of nearly 44% over four years, it was clear to me that the deal they struck was inevitable.

A shocking percentage of full-time workers don’t earn enough to raise a family, and that was true even before the recent spike in inflation made everything a lot more expensive. As much as two-thirds of full-time workers age 25 and older can’t cover the basic necessities for a family of four with one parent working, according to wage data from the Bureau of Labor Statistics and living wage estimates from the Massachusetts Institute of Technology.

………

In the Seattle area, where Boeing produces most of its aircraft, a living wage is roughly $50 an hour for a family of four with one adult working, according to MIT’s living wage calculator, or about $104,000 a year based on a 40-hour work week. It’s probably no coincidence then that Boeing’s labor deal will raise the average machinist’s annual wage to $119,000 over four years. Assuming 3% annual inflation, a living wage for a family of four will be closer to $117,000 in four years, very nearly matching what Boeing’s workers agreed to.

………

Why should investors care? Because Boeing demonstrates that cutting corners with your workforce carries a cost. 

Now it seems as if Boeing merely delayed a reckoning, one that Covid may have accelerated but which would have eventually come. I can imagine Boeing executives saying a decade ago that they couldn’t afford to pay workers more, even though their own financial statements would have betrayed them. The truth is they couldn’t afford not to. How much of the company’s recent travails — the design flaws, the loose bolts, the sliding quality, the rumored coarsening culture — could have been avoided with greater care for its workforce? Most of it, I suspect.

Again, this article is remarkable because of the source, an asset manager and Bloomberg columnist.

Even he realizes that creating a disaffected workforce through relentless squeezing of the workers, costs the company big in the long run.

After all, they are the source of Boeing product and Boeing profits, not the overpaid and pampered executives, particularly in the case of Boeing.