The Unraveling of Boeing | Landing the Plane | 5

0:06I'm David Brown and this is Business Wars.

0:30By the end of the 2010s, Boeing was in a tailspin. A flawed computer system in their new 737 MAX plane caused not one, but two fatal crashes. 346 people died. The tragedy spurred federal investigations that revealed a problematic company culture that was years in the making. It proved that Boeing had shifted its focus from safety to shareholders. 2024 wasn't much better for the company. A door blew off an Alaska Airlines 737 MAX 9 plane. Factory workers went on strike. And two astronauts got stranded by the Boeing Starliner spacecraft. You could say the aerospace industry is experiencing some heavy turbulence right now.

1:15We're speaking with journalist Sharon Turlip to hear more about what the future could hold. She covers Boeing and global aerospace for the Wall Street Journal. Her recent reporting shines a light on how current and former Boeing employees see a way forward following the corroded company culture and unsafe manufacturing strategies. But first, we're speaking with Ed Pearson. In 2015, Ed was a senior manager at Boeing working on the 737 MAX project. By 2018, he says he and his team were extremely overworked. Ed even recommended that leadership shut down production, saying that for the first time in his life, he was hesitant about putting his family on a Boeing plane.

1:55Business continued as usual, and Ed resigned in August 2018. In the months that followed, Boeing 737 MAX planes were responsible for two fatal crashes. Now, Ed is a self-identified whistleblower who has dedicated his life to aviation safety. He's also the Executive Director at the Foundation for Aviation Safety, and today he's sharing more from his time at Boeing and what needs to happen to create a safer aviation industry. All that's coming up.

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4:38Ed Pearson, welcome to Business Wars. Hey, thanks for having me. I really appreciate the invitation, Dave. Ed, before joining Boeing, you had 30 years of service with the U.S. Navy under your belt. What pulled you toward Boeing? How did you get involved over there? Well, you know, I actually have family that worked at Boeing. My wife's dad worked at Boeing. He also got out of the Navy active duty and then went right into Boeing. And I've always thought highly of the company. You know, I live in the Seattle area, so you know about Boeing. And there's a lot of pride in the region, you know. I would equate it to kind of like if you imagine a small steel mill town where everybody knows somebody that works at the steel mill.

5:14Right. And there's a lot of pride in what they do. And it's like that on kind of a large grand scale. Well, what was your role with the 737 MAX project? What part of the project did you oversee? Well, I was a senior manager. I had two teams that I had responsibility for. And so really, I had one team that was responsible for kind of planning how the build should work, and then another team that was kind of responsible when things went bad and what needed to get done. So I had a kind of a unique position and really professional individuals that I had a chance to work with. I was very proud to work with them.

5:48Yeah. Yeah. It sounds like a real dynamic position since you're moving from what we want to see to what's actually happening and then trying to address those things in real time. You joined the MAX team around, what, 2015 at a time when Boeing was really laser-focused on outperforming the newest plane from its rival Airbus. Could you say a little bit more about the goal of the 737 MAX in terms of competing with Airbus? So the 737 MAX was the result of years of experience and analysis in trying to determine how the company could best compete against the A321neo. A lot of people, including myself, had hoped for a new plane, a brand new plane.

6:32But the decision was made to basically take these next generation model and try to improve upon it. And obviously, there's been some real downsides to that decision. As we look back now, everything was rushed. The design and development was rushed, the certification and the production of the planes, all of it. And it's unfortunately still being rushed. Did you feel at the time, did you feel the pressure on? I'm wondering if you could say something more about the company culture at the time. A lot of people ask about, you know, kind of my perspective on the culture. So again, I'm just one person, but I think that when I got to the factory, I just come out of the flight test organization.

7:14And then I got to the factory and it's such a gigantic complex. It's such a big, gigantic, complicated site that, you know, people there, been there 20 years are still learning. And so I came in that first year, it was just kind of how to get to meeting, you know, one to meeting two without getting lost on the factory floor. And then - That's incredible. Yeah. But then in my second year, which would have been like 2016, 17, we started to see a lot of pressure as the Max plane was beginning to be produced. And it was as that was ramping up that you were seeing signs of communication breakdowns happening.

7:52And then it just became really a chaotic mess in 2018. Really? Really? When you say chaotic mess, could you feel it? You could feel it, that chaotic mess. Well, let me just give you an example. So in a factory, in a modern factory, they put a lot of effort in lean management, you know, try to be as efficient as you can with the resources. And we did it at the factory in Renton, Washington, where the 737 Max is made. And we had small teams that would come together. We had three shifts of people, you know, a day shift, a swing shift, and a graveyard shift. And you had thousands of people rolling in and out of the factory.

8:28And these small teams would work together that would meet and talk and, hey, this is what's wrong and we got to fix this. and what happened last shift, et cetera. And then in 2018, a decision was made to cancel the small team meetings and have this one big giant meeting where you had over 100 people. You had the first line managers all the way up to the head of the program. And it ended up becoming really a pressure cooker because people would stand up and say, hey, my team is 100 jobs behind schedule. I need these parts. I need this. I need that. Tomorrow, I'll be lucky if I'm only 200 jobs behind schedule.

9:08And this went on, and it became this really uncomfortable and awkward leadership communication effort. And people were feeling berated and pressured. And what happens when people feel publicly humiliated and pressured? They stop talking. They stop talking. You talk about this pressure from a meta standpoint. Where was that pressure coming from the sales office or from the very top, the fact that you'd be standing there and sort of having to call yourself out and face all of your coworkers? Yeah, the pressure was very clearly coming from headquarters. So at the time, Boeing's headquarters was in Chicago.

9:48Now it's in Arlington, Virginia, but the new CEO has moved back to Seattle. But at the time, it was clearly coming from the CEO all the way down the company. So all you saw in the CEO and the board of directors and all the senior executives we're talking about is how many planes are going to make. And all the discussion was how many are we going to produce, you know, and how that affected our Wall Street, the stock, et cetera. You had an email exchange with your manager in June, 2018, describing your warning bells from the 737 MAX project. I think you even said something like, for the first time in my life, I'm sorry to say that I'm hesitant about putting my family on a Boeing airplane.

10:30What were you flagging in those emails? And by the way, where did that leave you with your manager? Well, at that time, it was kind of the peak of what I would consider just dysfunctional manufacturing and chaos. We would go to these meetings, these large meetings I was describing, and you just listen to people and it was just miscommunication after miscommunication. And actually, that day I wrote that email was a Saturday, I believe. And I had gone into work on Saturday. And managers don't get overtime, obviously. But I went in because I had some employees, a large number of my employees were working.

11:06And I went in to kind of just check on things. And I drove right past the main exit to the factory. And when I realized where I was at, it was in Bellevue, which was this next city up Route 405. And I realized, wow, I'm really tired. and I'm nowhere near as tired as the employees. Like I'm getting a lot more rest than they are because they're being mandatory overtime. And, you know, what would happen is at the end of their shift, they'd go, you know, I still have these jobs to complete. Their managers will say, well, I'm going to designate you. You're going to have to stay late now for a couple hours.

11:37You can imagine what chaos that plays on people's families, right? With their schedules, with their kids and picking them up to school. And, you know, and so I went back to my office and it just came to a head in my mind that like, oh my God, We are taking really unnecessary chances here and risking the safety of the public. And people are so tired. They're fatigued. Every possible thing you could imagine was going wrong. And I'm like, I've got to stress this. And so I jumped people in the chain. I wanted to go right to the senior person. Oh, yeah. I was very concerned. So what happened? Well, we met myself and the senior general manager of the program.

12:16And before I even sat down, we kind of got in an argument. it. And I, you know, I always respected this guy. He always seemed like he was, you know, really genuine. And as I'm standing there before we sat down, he said, why are you here? And I said, I said, well, I'm here because of what I said in my email. I'm really worried about the safety of these airplanes and the employees. Also, I'm worried about them getting hurt as they're building it because we had a bunch of safety incidents, you know, occupational safety incidents. But I was primarily concerned about the safety of the planes. And he's like, well, Ed, you know, I can't really do anything about it.

12:46And I said, my opinion is you really need to shut down. And And he said, we can't shut down. And that's when I said, well, look, I've seen operations in the military shut down for lesser concerns. And this was how the meeting started. Like this was... Wow. And we sat down, you know, after we kind of calmed down for a second, we sat down and he listened and I did my best. I gave him example after example. And like, we're seeing these kinds of failures in our functional systems testing, like electrical and flight control testing. And the quality data was all messed up. And I lost a lot of respect for this man at this meeting in that hour, hour and a half, because, you know, clearly he had the authority.

13:22He could have just said, OK, we're stopping right now. Let's stop everything. Let's give everybody a chance to get, you know, get caught up on their rest and let's do this right. But instead, what did happen? Well, the meeting ended. He asked me at the end of the meeting, he said, Ed, you know, can you, you know, pay close attention and let me know in about, you know, a month. How's it going? I said, well, first of all, you shouldn't wait a month to figure out what's going on. It's bad right now. But I said I couldn't do it because I'm actually retiring. And I said I'd already made a decision to retire.

13:54So I won't be here in a month. But I want you to know this is really serious. And I shared that information with my colleagues that I had the meeting with him. And he promised that he was going to look at the quality data. I said, you really need to let the customers know if any planes have left this factory, if you find any, because I think there was plenty of evidence that we had a lot of manufacturing defects going on, a wide range of stuff. And I expected him to do that and look at the information and talk to the engineering and quality people. And as I understand, really nothing happened.

14:26And I retired. And then a month later, the Lion Air crash occurred. I have to ask about MCAS, which we focused on earlier in our series. This was the feature that would ultimately cause the plane to fail while in flight. And I know there were a lot of attempts to try to work around it. But it was later revealed that the team working on this feature knew it was flawed, but felt that they had to charge ahead regardless to make deadlines to meet demands. Were you aware of that at the time? No, actually, we didn't know anything about MCAS in the factory. But I want to say that everybody in the world has heard about the MCAS software and the lack of pilot training, both of which were major contributing factors to the crashes.

15:11But what people don't know and what I've been spending the last five or six years trying to point out is that the reason that those systems failed was because of electrical manufacturing defects in the airplanes. The angle of attack sensors fed faulty data to the computer where the MCAS software resided. And what I always wondered is why did those sensors fail? And it's been about a five or six year kind of ongoing investigation. and over the last five or six years, what I've been able to piece together with the help of some other people is that both of those airplanes had electrical defects. It's called an electrical wiring interconnect system or EWIS, which is like the electrical infrastructure of the plane.

15:55And as recently, just to give you an example, as recently as this summer, after I testified to the Senate in April, right after that, I received some documents and I hand delivered these to the NTSB on July 29th. And these documents that I have are actual production records for the Ethiopian plane that crashed. These were the records, one of many production records that I know that are produced for every single plane. My team used to manage that record. They were the administrator for those. And so I knew they existed, but I'd never seen them. So I get this file with like eight or nine of these records.

16:32And it clearly shows that while they were building that plane, they were having electrical installation issues. They had parts that were mislabeled, parts that were not working. And then the second set of documents that I found was the same week that the plane was being built in Renton, Washington, up north at the Everett site, we have electrical center up there that builds a lot of the electrical components for the planes, like junction boxes and power panels and wiring harnesses and wire bundles. And these wire bundles are like a big spaghetti network of wires. You don't see this when you're in an airplane.

17:05Well, the same week that the plane was having difficulty being built in Renton, Washington at the factory, the FAA conducts an investigation, a whistleblower investigation of two whistleblowers who had separately reported that this electrical center was basically making defective parts and they lost control, their quality control, and employees were being told they had one minute to do inspections on these complicated parts.

17:54Mm-hmm. It has to do with electrical wire bundle that was improperly installed. Well, I get a report sent to me, and it's a copy. When the Ethiopian plane was one month old, the plane was coming into land, and it had an uncommanded roll at 1 ,000 feet, which is not good at any altitude, much less down low. Ethiopian Airlines sent a request to Boeing and said, hey, we just had this incident, and we're concerned about it. Can you help us troubleshoot? And Boeing gives them some basic troubleshooting guidance. And then finally tells them, hey, send us the flight data recorder information. Boeing analyzes the data and comes back and says, we suspect that this is an intermittent electrical fault in the wiring, in the EWIS.

18:36And that information was never passed. None of those three documents, those three sets of documents that I just mentioned to you that all came out in the last six months that we've seen, none of those were shared with the accident investigators. And I know this because we're in touch with the accident investigators in Ethiopia. We have to take a quick break. Our guest is Ed Pearson, former Boeing senior manager and current head of the Foundation for Aviation Safety. We're going to be talking about what's being done to improve air travel safety, both at Boeing and beyond. Stay with us.

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21:19Hey, welcome back to Business Wars. Ed Pearson is a former Boeing senior manager and the host of the podcast Warning Bells, where he covers the latest in safety-related news in the aviation industry. Ed, you've said you intentionally avoid flights on a 737 MAX. I understand you even walked off a plane when you found out it was a MAX. Tell us about that. Yes. Myself and members of our foundation and people that we interact with don't feel like these planes are safe. We're confident in saying that, and we'll back it up. But what happened was I fly regularly. My family flies regularly. I schedule myself on a non-max plane.

21:57And I think this has happened. We hear about this all the time from people. And it got switched at the last minute. And I didn't know until I got on it. When I sat down, I looked and saw the emergency card. And I was like, what am I going to do? So I immediately got up and I couldn't fly. I started to walk off the plane. The flight attendant was closing the front door. and I said, excuse me, I need to get off. And she, you know, she's doing her job. She's like, why are you getting off? And I said, well, I wasn't supposed to fly a Max. And she said, well, what, you know, why not? What do you know about the Max?

22:30And I said, well, I unfortunately don't have time to tell you, but I just want you to know, I don't think the plane's safe and I need to get off. And so I spent the night at the USO for the, you know, for the next flight. Wow. We're talking in early 2025, even after all of the attention that this has received, you're still concerned about flying on a MAX? Absolutely. In fact, I tell my friends and my family not to do it. We've been collecting this information for the last couple of years, and it's just this stunning list of known defects. These are all considered unsafe conditions by the FAA. And what's really startling about it is there's this whole program, just like when your car, you get a recall notice to come in and get your car serviced if there's something serious.

23:13They have a similar process than this in the airline industry, and it's called the Continued Operational Safety Program. And basically, the FAA is supposed to work with the manufacturer to get any kind of defect fixed as soon as possible. And what we're seeing is the FAA has given Boeing like years in some cases to fix these problems. And these are known defects that are hazardous. And this is supposed to be a new plane that shouldn't have these kinds of problems. And in January 2024, Boeing made headlines again when the door blew off an Alaska Airlines flight. This was also a 737 MAX plane. I'm curious, what is the key to fixing this?

23:53Where does it stop? I do have fears and concerns about the safety of that airplane. The company has exasperated the problem because they've removed thousands of quality control inspections on individual airplanes. This was testified to at the Alaska hearing, at the NTSB hearing in August, last August. The company is so determined to increase their production that they have removed longstanding inspections. And during that testimony, the individual mentioned that the Ethiopian plane had 3 ,200 less inspections. So the problem here is that the talk is not translating to what you would think is appropriate actual steps.

24:36And so what you ask what needs to happen, from my vantage point, it's a leadership issue all the way from the top of the company, from the board of directors, all the way down to the floor. Even that frontline brand new mechanic sees something that's not right, needs to be courageous enough to speak up. Shouldn't have to be courageous. It should be normal business. You know, you get these different individuals at different, very key positions that push the pressure down. And then you get these employees at the front lines who, they're human. They make mistakes. You know, they're tired. They're fatigued.

25:11They need proper training. So when you ask the question like, what is it going to take? And it's a reasonable question. My response is going to take ongoing improvements in leadership at all levels. And you're currently working with a foundation for aviation safety. Can you say a little bit more about that and what you're working on there? I had a group of friends that I had either served with in the military or I crossed paths with, and we realized that nobody's really shining a light and informing the public about these issues, right? You don't hear the Boeing company put out press releases and say, hey, we have another defect on the MAX, right?