Tuesday, November 26, 2019

737 MAX: The Case Against Boeing

The title of Alec McGillis' The Case Against Boeing is misleading. Samya Stumo, one of the victims of the second 737 MAX crash was the daughter of a niece of Ralph Nader:
They were the first American family to sue Boeing, accusing the company of gross negligence and recklessness.
McGillis certainly does discuss some of the ways the culture of Douglas led to Boeing's malfeasance, including blaming the pilots:
Boeing seemed to believe that pilot error had caused the crash. In its response to an initial Indonesian government report, it highlighted the contrasting reactions of the crew on the doomed flight and the crew the day before, saying that the pilots on the second day had not followed the standard “runaway trim” procedures.
But that's not really what the article is about. Follow me below the fold as I try to tease out the real story McGillis tells, and then add more news on the topic.

Nader understands that Boeing needs to be held responsible, because:
Taken together, the reports suggested that Boeing had put all the risk on the pilot, who would be expected to know what to do within seconds if a system he didn’t know existed set off a welter of cockpit alerts and forced the plane downward. “An airplane shouldn’t put itself in a position where the pilots have to act heroically to save the plane,” the veteran U.S. commercial-airline pilot told me. “Pilots shouldn’t have to be superhuman. Planes are built to be flown by normal people.” Gregory Travis, the pilot and software engineer, said, “MCAS sealed their fate. Everything that comes after that is noise.”
But Nader also understands that the major responsibility lies with Congress. Since the crash, Nader and his family:
have made more than a dozen trips to Washington—a routine they expect to continue: they recently found an apartment in town. They have met separately with two dozen members of Congress, and with the heads of the Federal Aviation Administration and the National Transportation Safety Board, and testified before a House committee. ... They got a meeting for themselves and eleven other victims’ families with Elaine Chao, the Secretary of Transportation.
McGillis writes:
The government used to provide a counterweight to corporations that compromised safety. Owing in great part to the activism of Nader and his allies, in the late sixties and early seventies agencies such as the National Highway Traffic Safety Administration, the Occupational Safety and Health Administration, and the Consumer Product Safety Commission were founded to protect citizens.
Especially with today's culture of short-termism, companies will tend to do whatever they can get away with to cut costs and shorten product cycles. It is up to government regulation to push back against this to protect the public from the risks it engenders, especially in areas where lives hang in the balance. But:
As early as 1971, however, there was a backlash. That year, Lewis Powell, prior to serving on the Supreme Court, wrote a memo calling on corporations to more aggressively fight regulations. He singled Nader out as a threat, “a legend in his own time and an idol of millions of Americans.”
...
By the early nineties, it was plain to Nader that the government was failing to regulate air safety. In “Collision Course,” a book that he co-wrote with Wesley J. Smith, they warned, “It is an unfortunate fact that government oversight and enforcement is so underfunded and understaffed that regulators and inspectors must rely upon the integrity and good faith of those they regulate to obey the rules.” They continued, “If a company is determined to cut corners, there is every likelihood that it will succeed, at least for a while.”
Douglas Boeing was determined to cut corners with the 737 MAX.

The person responsible for aviation safety at the FAA is Ali Bahrami. Here is a timeline of Ali Bahrami's career (italics are quotes from McGillis):
  • 1979 Bahrami becomes a senior engineer at Douglas Aircraft.
  • 1989 Bahrami becomes an engineer at FAA
  • 2004 Bahrami becomes manager of the FAA's Transport Airplane Directorate
  • 2003 Boeing lobbyists began pushing for a wholesale shift in regulatory oversight.
  • Change to ODA
    2005 embracing the deregulatory agenda promoted by the Bush Administration and the Republicans in Congress, the F.A.A. changed to a model called Organization Designation Authorization. Manufacturers would now select and supervise the safety monitors. If the monitors saw something amiss, they would raise the issue with their managers rather than with the F.A.A. I.e. manufacturers could hide safety problems from the FAA.
  • 2009 Bahrami becomes manager of the FAA's Boeing Aviation Safety Oversight Office, a forty-person bureau in Seattle dedicated to serving Boeing. I.e. the role of the "Safety Oversight Office" was to promote Boeing's interests.
  • 2011 Boeing announces the 737 MAX.
  • 2013 Bahrami becomes Vice President for Civil Aviation at Aerospace Industries Association, a Washington, D.C.-based trade association that represents the nation's leading aerospace and defense manufacturers and suppliers.  I.e. a lobbyist.
  • 2017 (March) FAA certifies the 737 MAX.
  • 2017 (July) Bahrami becomes FAA's Associate Administrator for Aviation Safety.
  • 2018 (October) Lion Air flight 610 crash.
  • 2019 (March) Ethiopian Airlines flight 302 crash.
  • 2019 (July) Ali Bahrami ... appeared at a Senate hearing. The Wall Street Journal had just reported that the F.A.A. had determined, after the Lion Air crash, that there was a high risk of another 737 MAX emergency within the next ten months, but had decided to allow Boeing to proceed with its software fix without grounding the planes. Bahrami said, “From the safety perspective, we felt strongly that what we did was adequate.”
  • 2019 (July)  Nader's family were called in to meet with Bahrami. As Tor related in a recording that he made immediately afterward, they asked Bahrami what he thought he could have done to prevent the Ethiopia crash. Bahrami said that there was nothing he could have done. (Bahrami does not recall saying this.)
So, while the FAA was certifying the 737 MAX, Bahrami was lobbying on behalf of Boeing (and smaller companies). It is hard to believe he was pushing for more rigor in the FAA's certification process. Before that, he was running an FAA bureau "dedicated to serve Boeing":
The F.A.A. has said that it lacked the resources to oversee the plane’s updates, but the veteran F.A.A. engineer in Seattle told me that this was because of the way its Boeing office was set up by Ali Bahrami, with only a few people assigned to flight controls.
One the 737 MAX was certified Bahrami cycled back through the revolving door to be in charge of aviation safety at the FAA. Obviously, given the deregulatory fervor of the current administration, a lobbyist for aircraft manufacturers would be the ideal candidate to oversee safety at the FAA. And why would anyone think that Bahrami would admit that there was anything he could have done but didn't after those incompetent Lion Air pilots crashed their plane?

But, as Nader wrote in 1993:
It is an unfortunate fact that government oversight and enforcement is so underfunded and understaffed that regulators and inspectors must rely upon the integrity and good faith of those they regulate to obey the rules.
And as he wrote this month in Buffeting Boeing CEO’s Rope-a-Dope in Congress:
Ever since the Congress, under Boeing pressure, ordered the FAA to delegate more self-certifying power to Boeing and other aircraft makers, hearings with the FAA, Boeing, and airlines have been theater. Nothing results except giving in to aircraft manufacturers and carriers’ demands, rubber-stamped by the toady FAA and an indentured Congress.
Lobbyists like Bahrami peddling deregulatory ideology can pour money into legislators coffers and there is little that conscientious bureaucrats can do to counter their influence. The real culprits in the deaths of 346 people are the legislators incapable of resisting lobbyist dollars. In addition to the deaths, there are massive financial losses at too-big-to-fail Boeing and its customers, which the taxpayer will undoubtedly be called upon to repair (see Boeing's blackmail of NASA for an example).

Yves Smith's FAA Pushes Back on Boeing Pressure to Recertify 737 Max by Year End; Agency Also Considering Major Revamp of Certification Process is a must-read. Smith starts by pointing out that, while Boeing may be desperate to get the 737 MAX flying again, the FAA is equally desperate to regain its credibility:
The reason to think the FAA’s recent noises might be precursors to real action, as opposed to more better optics, is that the 737 Max debacle has led the agency to lose its most valued asset: that of having its aircraft certifications be accepted without independent vetting by other aviation regulators. Losing that would put American manufacturers at a serious disadvantage relative to foreign competitors. The stakes are so high that the FAA’s incentives are to do whatever it takes to get back to status quo ante.
This is a problem on the desk of the new FAA Administrator:
And the FAA chief might be up to the task. The current FAA “Administrator” is Steve Dickson, who was sworn in on August 12, meaning he is the new guy who isn’t hamstrung by having to defend past decisions. He’s also been a pilot, first a fighter pilot and later flew commercial jets, including 737, and had retired from being the senior VP of flight operations for Delta, which included safety. Note that Delta did not buy the 737 Max. He’s also a law school graduate (which means not easily intimidated by suits).
Source
The "American manufacturer" that would suffer the most if the FAA's certification wasn't accepted overseas would be Boeing. Ignoring the long-term downside of rushing the FAA's recertification is typical of Boeing's short-term focus on the stock price. It  had poured $60B in cash on its stockholders ($17B dividends + $43B stock buybacks) since 2013 to pump it. As I wrote back in July:
Suppose instead of buying back stock, Boeing had invested in its future. Even assuming an entirely new replacement for the 737 series was as expensive as the 787 (the first of a new airframe technology), they could have delivered the first 737 replacement ($32B), and be almost 70% through developing another entirely new airframe ($11B/$16B). But executive bonuses and stock options mattered more than the future of the company's cash cow product. Instead:
Blowing these $43 billion on share buybacks has caused Boeing to have a “total equity” of a negative $5 billion. In other words, it has $5 billion more in liabilities than in assets. This company is out of wriggle room. If it can’t borrow enough money to make payroll, it’s over.
Short-termism is a cancer that is eating US corporations, but the guys who took the decisions will suffer no consequences for killing the company, they'll retire rich.
Remarkably, Boeing's stock has failed to slump since the 737 MAX crashes and the problems with NASA's Commercial Crew Program became public. Their desperation to keep it that way has led them to pump the stock in another way:
Boeing has continued to push the notion that the 737 Max would be certified to fly as of various dates that proved to be a crporate fantasy as new problems and concerns emerged. The latest was an announcement last Monday that it expected the 737 Max to get a green light in December, which goosed the stock.
In FAA pushes back on “pressure” to return Boeing 737 Max to service, Jon Ostrower writes:
Both the FAA and other stakeholders viewed the Boeing statement as overt public pressure to recertify the 737 Max by the end of 2019. President of Southwest Airlines Pilots Association on November 13 wrote that Boeing was “increasingly publicizing” that it may have to shut Max production as it is running out of room for aircraft storage.

“There is some concern that this is simply another tactic to push the RTS timeline up, force operators to resume making payments on MAX aircraft, and transfer some costs, logistics, and responsibilities of storing and restoring the MAX to revenue service to respective operators,” wrote Capt. Jon Weaks in a letter to the Southwest Airlines pilot corps.
Boeing's arm-twisting didn't sit well with Dickson, who seems to be a sophisticated political operator:
The FAA has apparently had enough of Boeing trying to pressure them via the media. Interestingly, Dickson responded not by publicly slapping down Boeing but by making a countermove that had the same effect, of circulating a memo and including his “I’ve got your back” message in what appears to be a regular weekly video to the entire agency that is posted on YouTube. By sending them to the entire agency rather than, say, a narrow group overseeing the 737 Max review, this message were guaranteed to get to the press pronto.
Dickson memo, courtesy The Air Current
But in addition to messaging the whole organization, Dickson took specific action:
Dickson also sent a memo to the head of the 737 Max team which appears to also have been circulated widely within the FAA, which was likely no accident.
And who is the "head of the 737 MAX team? Ali Bahrami! My guess is that Dickson wasn't merely pushing back on Boeing, he was also putting Bahrami on notice that his freedom of action was severely constrained because the boss was looking over his shoulder.

Other countries' regulators appear to be taking a harder line against Boeing, as evidenced by Natalie Kitroeff and David Gelles' Canadian Official Calls for Removal of Key Software From 737 Max:
A manager at Canada’s aviation regulator believes that Boeing should remove software that played a role in two deadly crashes of its 737 Max before the plane is cleared to fly again, according to emails between global aviation regulators this week that were reviewed by The New York Times.
...
“The only way I see moving forward at this point, is that MCAS has to go,” the official, Jim Marko, the manager in aircraft integration and safety assessment at Transport Canada Civil Aviation, wrote in the email. He sent the email on Tuesday to officials at the Federal Aviation Administration, the European Union Aviation Safety Agency and Brazil’s National Civil Aviation Agency.

1 comment:

David. said...

In O-rings and production pressure, Daniel Little reviews a 2009 book by a senior engineer at Morton Thiokol (MTI) descfibing the process by which, under pressure from NASA management, who were under pressure from Congress, MTI management over-rode their engineers and approved the fatal launch of the Challenger space shuttle.