Gus Carlson is a U.S.-based columnist for The Globe and Mail.
A WestJet Boeing 737-700 aircraft taxis to the runway for departure from Vancouver International Airport, in Richmond, B.C., on May 19, 2023.DARRYL DYCK/The Canadian Press
Ask any corporate crisis expert and they will tell you one of the first priorities in helping a company’s leaders manage a serious problem is to determine the things within their control and those that are not.
The logic is simple: Spending time, money and manpower on things beyond the C-suite’s control is a loser’s bet that will exhaust resources and drive down stakeholder confidence without meaningful results. Focusing energy on things executives can influence is a higher-percentage play in the race to resolution and avoiding material damage.
For Boeing BA-N, however, managing its latest crises is not so black-and-white.
The troubled U.S. aircraft maker has suffered a series of self-inflicted problems over the last few years that have added to its vulnerability to a big new problem beyond its control.
Last week, China, the world’s most dynamic growth market for commercial aircraft, halted delivery of all Boeing jets ordered by Chinese airlines in response to the 145-per-cent tariffs imposed by U.S. President Donald Trump on Chinese goods imported into the U.S.
The move affects about 130 Boeing aircraft committed to Chinese airlines – about 160 planes if Hong Kong is included. Each of the company’s best-selling Max 9 passenger airplanes costs nearly US$130-million, so the potential financial hit is very real.
China is disrupting the Boeing-Airbus duopoly. It’s a dangerous situation
Boeing can hardly afford the blow. Almost 70 per cent of its sales of commercial aircraft were to carriers outside the U.S., and China is the largest global market for commercial airline purchases. The company projected that Chinese airlines would buy almost 9,000 planes in the next 20 years. If Boeing is shut out of the market, the spoils will go to its main global competitor, Airbus.
To be sure, the recent tariffs will exacerbate an already bad situation. Boeing sales in China have struggled for years before tariffs were imposed. Icy trade relations between Beijing and Washington during the first Trump administration effectively closed the door for Boeing in China in 2019.
But there’s a dirty secret, a grey area where the crisis elements that are beyond Boeing’s control (a tariff-driven trade war) and those it can control (the quality and safety of its airplanes) converge.
A significant contributing factor to Boeing’s problems in China stems from the company’s own quality problems, namely the worldwide grounding of its 737 Max following two fatal crashes in 2018 and 2019.
After the second crash, Boeing deliveries to China all but stopped as global regulators grounded the jets on safety concerns. Beijing did not allow deliveries to resume until last year.
The sad reality is that Boeing still has not fixed those quality problems within its control.
The U.S. Federal Aviation Administration disclosed last week that it had imposed an airworthiness directive to replace bathroom door latches on more than 2,600 U.S.-registered Boeing aircraft.
The move came after the agency received a report that a passenger had been trapped in a bathroom in-flight because of a faulty door latch that could not be opened from the inside or by flight attendants on the outside.
The FAA did not disclose details of the incident, saying only that the plane was diverted for an unscheduled landing, a precaution taken because the trapped passenger could have been at risk of serious injury in an emergency such as severe turbulence or a medical issue.
The FAA estimated the replacement cost of the latches – worth almost US$500 each – on top of labour could be up to US$3.4-million. It’s a small price in dollar terms for a company as big as Boeing, but expensive in reputational capital for a company that is running low on goodwill.
If you have been following the Boeing story, you might ask, what is it about the company and door latches? They’re small parts but have become emblematic of its quality issues, causing major embarrassment and, in at least one case, a life-threatening inflight situation.
That incident occurred about a year ago when the door latch failed on an Alaska Airlines Boeing Max-9 jet, causing the hatch to blow out of the fuselage over Oregon and forcing an emergency landing.
The incident prompted investigations by the FAA and even the FBI, which determined Boeing could be criminally liable.
The Alaska Airlines crisis led to revelations that linked a wide range of quality-control problems on the company’s Max 9 aircraft to the widespread outsourcing of many elements of the manufacturing process in an effort to reduce costs.
Until Boeing leadership gets a handle on the things it can control, such as putting the quality of its products ahead of cost concerns, it will continue to be uniquely vulnerable to things beyond its control, such as the current global trade war.
