The Moment That Boeing's Culture Started To Rot

Joe Weisenthal (0:10)

Hello, and welcome to another episode of the Odd Lots Podcast. I'm Joe Weisenthal.

Tracy Alloway (0:15)

And I'm Tracy Alloway.

Joe Weisenthal (0:16)

Tracy, this might seem like the most obvious statement in the world, but I'm really worried about Boeing. And I don't mean flying on one, per se.

Tracy Alloway (0:26)

Oh, really? Well, I mean, that's kind of what I would be worried about. But I feel like I need to do a disclaimer before we do this episode, which is that I have a massive soft spot for Boeing.

I think a lot of Americans, actually, maybe still do. My dad flew B-52s, and then he flew 737s for Southwest for a long time. I've been in a 737 simulator with him. I covered airlines, not really aerospace, but airlines for a while. And so I feel like my life has, to some extent, been a little bit entwined with Boeing. A large part of my inheritance, if I get it, is Southwest stock, which I think still kind of correlates with Boeing, given that their fleet is all 737s. So there's my disclaimer upfront.

Joe Weisenthal (1:12)

That is a very good and thorough disclaimer. No, so when I say I'm worried about Boeing, I mean, I guess as someone who flies...

Tracy Alloway (1:20)

As a passenger, yes.

Joe Weisenthal (1:21)

As a passenger occasionally. You know, Boeing is one of the most important manufacturers in the world, certainly to the US economy.

Commercial aviation is one of the areas in which the US, Boeing is still a dominant leader. It's not one of these spaces that's like lost its crown in one way or another to China, the way we've seen in other industrial sectors.

And, you know, as a society, it feels like policy wise, we want to reinvigorate American manufacturing. We know about the importance of complexity, which is something that we talk about a lot on this show. Probably, you know, a Boeing plate. These are among the most complex manufactured products in the world. And so if the preeminent maker of planes in America is having perpetual trouble making planes, that worries me about the country.

Tracy Alloway (2:07)

So there's two things here. I think there's two ways of sort of thinking about what the Boeing story, or at this point, the downfall of Boeing, really says about the economy. And I say downfall because while it's true, it hasn't been superseded by a Chinese manufacturer, it has lost a huge amount of market share to Airbus, its main competitor. So two things. So one, absolutely indicative of, I guess, the path of American manufacturing or industrial capacity within the US. But I also think it says a lot about the structure of the economy and the wider incentives at play.

And you think about concentration of corporate power, Boeing and Airbus are so emblematic of this. You basically have a duopoly, or you had for many years, and now we're kind of moving, I guess, to a monopoly as Airbus sells even more planes. But it's interesting to me both from a manufacturing perspective and also from an incentive perspective. What are the decisions? What is the system in place that leads to an outcome where you have one or two extremely dominant manufacturers of something that's really important?

Joe Weisenthal (3:19)

Totally. And then, of course, just sort of dovetailing on what you said, there's all these questions about sort of financial capitalism versus industrial capitalism and whether is this an area in which desire to boost the stock price through one way or another by increasing the dividend, allocating more to shareholders rather than reinvesting in safety, etc. like that, whether that was the impulse or whether that was a driver of the troubles that we've seen at Boeing, like huge, I just think like core questions for us and the US economy.

Tracy Alloway (3:53)

Boeing is sort of an expression at this point of some of the thorniest issues facing the US economy, it feels like it kind of encapsulates all of them.

Joe Weisenthal (4:01)

So we really have to do a Boeing episode, probably more than one, but we got to start. So I'm really excited to say we literally do have the perfect guest today. We're going to be speaking with Peter Robison. He is the author of Flying Blind, the 737 MAX Tragedy and the Fall of Boeing. He was a New York Times bestseller. He's also our colleague and he's an investigative journalist here at Bloomberg. So Peter, thank you so much for coming on Odd Lots.

Peter Robison (4:29)

Thank you for having me.

Joe Weisenthal (4:30)

There's so many different ways we could begin this and there's so many, Boeing touches on so many things, but where does the story begin in your view or in your book, literally, like when you think about the Boeing saga, where does the story begin?