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Boeing Corp. will suspend production of its troubled 737 Max jetliner in January, but does not plan to lay off or furlough the workers who build the plane, the company said in a statement Monday.
The Boeing 737 Max jetliners have been grounded worldwide since March in the aftermath of two fatal crashes that killed a total of 346 people. A Lion Air jet crashed in to the Java Sea in October 2018 and an Ethiopian Airlines plan crashed near Addis Ababa in March. The company has said the crashes were caused by software failures.
Since then, the company said it has continued to build about 400 new 737 Max airplanes that currently are in storage.
"We have decided to prioritize the delivery of stored aircraft and temporarily suspend production on the 737 program beginning next month," the company said. "We believe this decision is least disruptive to maintaining long-term production system and supply chain health."
As for the production workers, "it is our plan that affected employees will continue 737-related work, or be temporarily assigned to other teams in Puget Sound," the company said.
Boeing is waiting for Federal Aviation Administration to certify its software fixes. As NPR's David Schaper reports, FAA certification is not expected until February 2020 at the earliest. Boeing referred to the certification in its statement.
"This decision is driven by a number of factors, including the extension of certification into 2020, the uncertainty about the timing and conditions of return to service and global training approvals, and the importance of ensuring that we can prioritize the delivery of stored aircraft."
Boeing is temporarily halting production of its grounded 737 Max after the Federal Aviation Administration (FAA) said last week it would not approve the plane’s return to service before 2020.
The decision came after the US planemaker’s board held a regular two-day meeting in Chicago, which started on Sunday.
“Safely returning the 737 Max to service is our top priority,” Boeing said in a statement. “We know that the process of approving the 737 Max’s return to service, and of determining appropriate training requirements, must be extraordinarily thorough and robust, to ensure that our regulators, customers, and the flying public have confidence in the 737 Max updates.”
The Max, which was Boeing’s bestselling plane, has been involved in two fatal crashes that claimed 346 lives. More than 700 Max jets are now grounded worldwide. It is the first time in 20 years that Boeing has halted 737 production and the move could have significant repercussions for the US economy.
Boeing is the US’s largest manufacturing exporter and a shutdown would impact suppliers across the country, hitting the country’s already troubled manufacturing sector. The suspension has already led to the cancellation of thousands of flights scheduled by airlines that were awaiting new planes or had bought ones that are now grounded.
The Seattle Times reported on Sunday that the board was considering a proposal from top management to temporarily shut down 737 production in Renton, Washington from January.
Boeing as yet has no timeframe for restarting production but plans to redeploy its 12,000-strong Renton workforce.
Boeing has said if it did not receive approval to begin deliveries before the end of the year it could be forced to further slow production or temporarily shut down the Max production line, a move that would have repercussions across its global supply chain.
On Thursday, Boeing abandoned its goal of winning approval this month to unground the 737 Max after its chief executive, Dennis Muilenburg, met FAA administrator Steve Dickson. Dickson said on Wednesday he would not clear the plane to fly before 2020 and disclosed the agency had an ongoing investigation into 737 production issues in Renton, Washington.
Dickson said there were nearly a dozen milestones that must be completed before the Max returns to service. Approval is not likely until at least February and could be delayed until March, US officials told Reuters last week.
Dickson told Muilenburg, according to an email sent to lawmakers by the FAA, that “Boeing’s focus should be on the quality and timeliness of data submittals for FAA review. He made clear that FAA’s certification requirements must be 100% complete before return to service.”
Boeing had said last month it expected the FAA would allow it to resume 737 Max deliveries in December.
The FAA told congressional staff in an email last week Dickson was “concerned that Boeing continues to pursue a return-to-service schedule that is not realistic ... More concerning, the administrator wants to directly address the perception that some of Boeing’s public statements have been designed to force FAA into taking quicker action.”
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Comments
I think we who discussed this extensively had a lot more right than we had wrong back in March with that early thread. Who could have known back than that Boeing’s internal watchdogs, engineers & test pilots were concerned about the whole damned system even before the plane went into service, or that the FAA would hide damning information from the public that they had in possession before the two tragic crashes? A lot stinks in all of this.
Without trying to re-construct all the technological issues we and others covered, this model 737 is starting to remind one of Ralph Nader’s classic Unsafe At Any Speed from the 60s. In other words, the problem is so interwoven into the redesign, that no amount of computer tweaking is going to solve it.
Stay tuned.
I've had a LARGE BA position for decades - though I've sold it in bunches over recent months and am now down to just 150sh which I'm keeping for sentimental reasons. Tax time is gonna suck in April, but it's a good problem to have, admittedly. I'll plan to buy back in more at some point down the road, but for now I'm just watching.
Even if these drip-drip-drip events were individually not that significant, and were not representative of deeper company culture/leadership problems, they would still create a negative halo effect. It's not just about the 737Max, though that's what finally focused attention.
It's problems with Boeing's marque plane, the Dreamliner, that was years late, plagued by problems that in hindsight look familiar. Safety issues necessitating a partial redesign. A global grounding due to a failure of a new component (a battery). And shoddy manufacturing: "The Department of Justice, which has been looking into problems with Boeing’s 737 Max jet, has broadened its investigation to include the production of the company’s 787 Dreamliner."
https://www.nytimes.com/2019/06/28/business/boeing-787-dreamliner-investigation.html
https://archive.nytimes.com/www.nytimes.com/interactive/business/boeing-787-dreamliner-timeline.html
It's problems with the MAX's predecessor, the 737 NG. "The FAA said Boeing has identified groups of both 737 NG and 737 MAX airplane serial numbers on which these suspect parts [leading edge slat tracks] may have been installed." Thus this month the "FAA [is] seek[ing] $3.9 million fine from Boeing for defective parts on 737 NG planes." Regardless of how minor this particular problem might be (I have no idea), the mere existence of drips about other planes expands Boeing's dark halo across its whole product line.
https://www.reuters.com/article/us-boeing-faa-airplane/u-s-regulators-say-some-boeing-737-max-planes-may-have-faulty-parts-idUSKCN1T30RX
https://www.reuters.com/article/us-boeing-fine/faa-seeks-3-9-million-fine-from-boeing-for-defective-parts-on-737-ng-planes-idUSKBN1YA2F2
Then there's the political. The US is working actively on many fronts to damage its credibility. Even if the FAA were perceived as doing a good job of oversight (you can stop laughing now), other countries would not be especially inclined to trust whatever the US said. Not when it was about American companies and trade.
It seems that the public relations aspect alone could be enough to sink Boeing for years. Hank thinks about the Corvair. I'm reminded of the Pinto, where the manufacturer (Ford) made a rational cost/benefit calculation. It was objectively cheaper to pay for lost lives than to make the vehicle safer. The latest drip from Boeing sounds about the same. Boeing calculated the additional loss of lives was less costly than fixing its vehicle after the first crash. In ignoring the reputational repercussions, Boeing miscalculated.
In addition to msf's observations, consider the current political position of the FAA. While those who are closely familiar with the FAA have known better for a long while, still the FAA was generally perceived worldwide to be a dependable leader in aviation safety regulation. This incident has seriously, and likely permanently, damaged that image. They have lost much "face", and some countries (China, for instance) have made the most of it in their general effort to diminish the influence of the US. Other countries have already stated that they will be making their own decisions with respect to the airworthiness of the 737 MAX, irrespective of the judgement of the FAA.
In actuality, some of those countries simply don't have the technical resources to do anything of the sort, and aviation circles well know this. But the political damage to the FAA and the US is obvious.
At this point one of the FAA's main institutional considerations is to try and recover some degree of credibility, even if it comes at the expense of Boeing. They will be looking at any and every possible issue at Boeing, so as to appear to be on top of things. Delays, expenses, and bad publicity for Boeing are really of minimal concern to the FAA at this point.
I’ve searched in vain for a memorable line from Dickens (I think somewhere in A Tale of Two Cities.) It was in regard to the corrupt and inept bureaucracy ruling France at that time, wherein high ranking official jobs were awarded not on the basis of ability, but rather as payment for loyalty / homage paid the ruling monarch. It ran something like this:
“... ships commanded by officers with no knowledge of seamanship ... Priests of the most worldly and detestable character ...” (Apologies to Dickens)
... (Deleted)
Related: Boeing stock was down. Elon Musk is grinning.
@Gary - The Wright Brothers biplane wasn’t certified to carry fare-paying civilian passengers.
Just wondering about a possible shakeup in management, which has been rumored in the press in recent days.
Yuppers - Big shakeup just announced at 9:05 AM.
Story: https://investors.boeing.com/investors/investor-news/press-release-details/2019/Boeing-Announces-Leadership-Changes/default.aspx
From the Seattle Times article on Oct. 11 reporting Mullenburg's earlier ouster as Chairman:Did you believe Calhoun then about the need to divide labor, or do you believe Calhoun now, or ...?
Combining roles, especially in times of crisis, does not inspire confidence: https://corpgov.law.harvard.edu/2016/07/26/chairman-and-ceo-the-controversy-over-board-leadership/
https://www.nbcnews.com/science/space/boeing-s-starliner-makes-safe-return-earth-after-clock-error-n1106336
Late night comics will have a hey-dey.
How about ... “Boeing CEO clocked after clock screw-up” ?
I really liked the part where Boeing said, in effect, that if humans had actually been piloting the spacecraft they would have been able to compensate for the problem. (As long as the operation manual and pilot training covered the issue adequately, that is.)
No, that wasn't a comment about this software glitch. It was the JPL administrator talking about a different glitch:
https://www.boeingstore.com/products/boeing-airplane-wall-clock
But seriously, note the difference between the responses of Lockheed and Boeing... Lockheed admitted owning the error- Boeing is still hemming and hawing, a year later.
Yep - I remember the other “metric conversion” mishap. Something a decent high school math student would have flagged early on. (Your tax dollars at work
Great read from today’s NYT. Went to press just hours before Mullenburg got canned:
“In recent simulator tests, pilots did not use the correct emergency procedures ...”
https://www.nytimes.com/2019/12/22/business/boeing-dennis-muilenburg-737-max.html
Derf
Calhoun has the ball
https://newrepublic.com/article/156092/boeing-axes-ceo-company-hits-new-heights-self-denial