The Journal. - The Failures Inside Boeing's 737 Factory

Episode Date: April 4, 2024

In January, a door panel blew off a Boeing 737 MAX plane during an Alaska Airlines flight. Informal communication logs between workers at the Boeing plant where the plane was assembled reveal disarray, repeated production delays and crews who apparently didn’t follow procedures. WSJ's Sharon Terlep reviewed the logs and explains what they reveal. Further Reading: - The Disarray Inside Boeing’s 737 Factory Before the Door Plug Blowout  - Boeing’s Next CEO Will Have ‘Massive Job’ at Company in Crisis  - Justice Department Opens Probe, Interviews Crew in Alaska Airlines Blowout  Further Listening: - A Hole in a Plane and a Headache for Boeing  - The Pressure Inside Boeing  - How the Grounded Boeing Jet Shook the Airline Industry  Learn more about your ad choices. Visit megaphone.fm/adchoices

In November 2022, Boeing CEO Dave Calhoun hosted investors at the company's flagship production facility in Renton, Washington. Welcome, everyone, to Renton, to our delivery center. This is the source of all truths if you want to know anything about Boeing. Calhoun said the company was finally moving beyond a pair of deadly crashes and the aviation slowdown from the pandemic. And he made a bold promise.

The company would deliver hundreds of its best-selling plane, the 737 MAX. I'm excited about all this. It's been tough. It's been a heavy haul for everybody. But Boeing's promised recovery unraveled this year, after one of its jets had a major problem in January. We begin tonight at 10 o'clock with breaking news. An Alaska Airlines plane heading

to Ontario was forced to make an emergency landing. A passenger video taken on board the Boeing 737 MAX 9 plane shows the gaping hole. A huge hole blown in the fuselage of the plane, 16,000 feet up in the air. Federal investigators quickly zeroed in on the likely cause. The panel that blew out was not properly secured. The bolts meant to hold it in place were missing. Our colleagues have been digging into what happened. Talking to Boeing executives, federal officials, and the workers who helped build that exact plane.

And what they found showed a factory in disarray, repeated production delays, and crews who apparently didn't follow procedures. Welcome to The Journal, our show about money, business, and power. I'm Kate Linebaugh. It's Thursday, April 4th. Coming up on the show, the failures at Boeing that led to the Alaska Airlines blowout. Attention all soccer fans. From Orlando to Los Angeles, take to the fields of the USA for your next vacation.

Ready to kick off? Discover exciting games and events. Plus, find amazing hidden gems in cities full of adventures, delicious food, and diverse cultures. You'll love it so much you'll want to extend your stay beyond the matches. Get the ball rolling on your soccer getaway. Head to visittheusa.com. At Boeing's Renton factory last September, crews were assembling the 737 MAX 9 jet that would be delivered to Alaska Airlines. Boeing was trying to produce 38 new 737s a month, but the Renton factory was running behind.

Employees and managers were communicating with each other on Boeing's internal messaging system, as they usually do. They're called SAT messages, which is Shipside Action Tracker. And they're one of the multiple channels that crews have to communicate and to track the process of the plane. It's something that's more informal than some of the other layers of documentation. So it's more like Slack. It's a quick and convenient way to communicate. That's our colleague Sharon Turlough. She was able to review messages exchanged by a crew working on the jet that would be delivered to Alaska Airlines.

In this log, she found a chain of messages exchanged over 20 days that documented problems with the particular part that blew out of the jet, what's known as a door plug. So a door plug is a door-shaped piece that is put in the side of a fuselage, so the body of a plane, where a door could go, but in this model plane there is no door. And so you plug up that hole with a door plug. The problem the workers spotted with this door plug had to do with faulty rivets. Rivets are fasteners that hold metal parts together. with faulty rivets. Rivets are fasteners that hold metal parts together. Based on the logs you reviewed, when did a problem first show up? The problem was noticed right away, and it was flagged as being in need of repair. What day was that? That was September 1st. How common is it for there

to be a problem like that? Common. I mean, it's pretty common, especially there's a lot of pieces to an airplane. So just the fact like there's inevitably going to be problems. So this would have been not a shock. Boeing's Renton factory is an assembly plant. Crews of workers put together different parts from different suppliers. A big supplier is Spirit Aerosystems, which makes the fuselage, the main body of the plane. How involved are employees of Spirit Aerosystems in the Boeing production line?

Quite involved. They're Spirit workers in the Boeing plant. So the fuselages arrive, and then as issues come up with them, the spirit workers who are employed by Spirit, but working at Boeing, are on hand to try to fix them. According to the log's tracking work on the Alaska Airlines jet, Boeing managers told Spirit employees that they needed to fix the faulty rivets right away. employees that they needed to fix the faulty rivets right away. But six days later, a Boeing worker wrote in the log that the problem with the rivets persisted. On September 7, 2023, in all caps, the entry said, condition still exists. Rivets were just painted over. What does that mean,

rivets were just painted over. What does that mean, that they were painted over? Well, it means that the rivets were faulty, but covered in a fresh coat of paint. So, I mean, what's unclear and what's not described here is, did somebody paint over them just not knowing that they were faulty, or was that the effort to fix them? So I think we don't know, you know, why they were painted over or what that person was thinking. But they were painted over and it was clearly alarming to the person who found the painted rivets. Okay. Then September 11th, there's another log entry. Yeah, damaged rivets are not acceptable, need to be removed and replaced. Network packet has been delivered to Spirit.

All of this is like for Spirit to deal with. Yes, they are waiting for Spirit to deal with the problem. A few days later, on September 14th, a Boeing worker sent another message that said Spirit still had not started the repair. So this means that the plane is getting further and further to completion, but this problem hasn't been fixed yet. So the other production crews, all the other people putting on the wings and the people putting in the chairs and all of that stuff is happening. Yes. Moving along apace that stuff is happening. Yes. Moving along apace, as they say. Yes.

But this rivet issue on the door plugs is not progressing. Correct. And the plane itself is progressing. The plane is moving further and further down the line. the line. Is it common that the production of an airplane keeps moving forward while there's still a problem with one part? Yes, that's very common. And it's something that Boeing has for years tried to do less of, if not stop altogether. And they have a name for it. It's called traveled work. if not stop altogether, and they have a name for it. It's called traveled work.

Traveled work. Can you explain that? Yeah, so traveled work is exactly as you described. When the airplane continues moving forward, even though not everything has been completed. So, you know, there's positions that the plane has in the factory, and each position has many, many jobs that need to be done. And if some of those jobs aren't done, the plane will continue to move forward. And at that point, that's called traveled work when you have to do the work out of position. And why is that a problem? Well, it's a problem because you need to then document it and

track it. And so it complicates things. And physically, it can be a problem because each workstation is designed to do certain jobs. So it means the tools are there. It means the station is set up ergonomically to do something. It means the crews that specialize in that job are at that position. And in some cases, the work isn't done until the plane's actually outside the factory. So you might be working on a plane and you're like outside, not even in the factory anymore. Did the workers say they were under pressure to complete these projects?

So, you know, and that was interesting. So one of the workers we talked to said no. They said they did not feel time pressure. Another worker said, yeah, there's pressure, but there's kind of always pressure. So there's a lot of workers that we've talked to in the scope of reporting this, who talk about all the pressure to move the plane. The workers we talked to who were part of this incident, and we, you know, we didn't talk to all of them. They didn't say we made a mistake because we were forced to move fast. Okay, so looking back at the logs, was there any point where the Boeing employees escalated this issue, this doorplug issue, to a higher level of management? Several where it says, you know, where they call a tier change and it goes from one to two and then two to three, which means an escalation where they're trying to get more attention and it's increasingly urgent. On September 18th, Boeing employees wrote that replacement rivets had finally come in. And then on the 19th, it says per Spirit management, this job is committed to be done today. Spirit is in possession. And then later on the 19th, it says final Boeing quality stamp is required. And it notes that there will be a final quality inspection. And then on the 20th, it says everything has been addressed, essentially.

What did Boeing say to you about these logs? Boeing is not able to. They are firmly prohibited by federal authorities from talking about this specifically. What Boeing has said publicly is that the documentation required to do this type of job, they don't believe exists. And so they've acknowledged that this should have been documented and they don't think it was. The messages that Sharon reviewed were not the formal documentation that Boeing requires. That paperwork to verify that a repair has been completed and inspected

was not started and filed. Spirit Aerosystems declined to talk specifically about the situation, but says its manufacturing process needs to improve. What did these messages reveal to you? You know, it revealed a lot of people who really, really wanted to get this done properly, but were stuck in just confusion and bureaucracy, really. I mean, they weren't able to get the part. They weren't able to meet these deadlines. So real confusion and frustration.

OK, so they were frustrated with how long this was all taking. Okay, so they were frustrated with how long this was all taking. But based on the log, it looks like the job had gotten done. Yeah, it looks like everything's been addressed. The door plug is back on and one would assume bolted on and everything's fine. But everything wasn't fine. That's next. That's a no. But a banana? That's a yes. A nice tan? Sorry, nope. But a box fan? Happily, yes.

A day of sunshine? No. A box of fine wines? Yes. Uber Eats can definitely get you that. Get almost, almost anything delivered with Uber Eats. Order now. Alcohol in select markets.

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And hiking with them. Is that a squirrel? Bear! Run! Collect more moments with more ways to earn. Air Mile. At the end of October, Alaska Airlines received the 737 MAX 9 that was assembled at Boeing's Renton plant. And in early January, the door plug that crews discussed in those logs, it blew off the plane. And immediately, Boeing was in crisis. The fallout to Boeing has been extensive. So you have the federal investigators trying to figure out what went wrong from a safety point of view. The FBI is looking into whether there's any criminal implications here. There has been, you know, an acknowledgement by Boeing that they need to

really overhaul their safety and quality procedures. So there's been quite extensive fallout. This blowout prompted other airlines that also have 737 MAX planes to go through and inspect them all. And while most didn't find anything major, several airlines did find some flaws, raising questions about Boeing's manufacturing process. Sharon spoke to Boeing employees who'd worked on the Alaska Airlines plane. For them, the faulty rivets, all the flagging of problems, that stuff didn't stand out. The workers that we spoke to largely didn't remember. They felt badly and were somewhat incredulous.

You know, by the time this came off, it was months later. So nobody remembered the plane with the faulty rivets. Like, it wasn't a remarkable case. And one of the workers I spoke to said he had actually read in the media when Boeing said there wasn't documentation and he had said he was just stunned. He used the word, what the hell? You know, like he was shocked to hear there wasn't documentation because there's so many layers of documentation required in doing this kind of work. layers of documentation required in doing this kind of work. Amid the fallout, Boeing has made some changes. The bonus structure for some of its employees is now more heavily weighted to quality and safety and less weighted to meeting financial goals.

It's also made changes to the workflow in its factories, specifically untraveled work. Remember, that's when problems aren't resolved, but the plane keeps moving through the production process. So they're saying you can't just keep moving the plane down, even if it means that our projection is painfully slow. We need to make sure that everything is done before the plane moves forward. They're trying to send messaging down to employees that they need to really flag safety and quality issues and that they won't be punished for doing so. And is there a sense that there's been reprisals for that? Yes. There's been whistleblowers who have come out and said,

we were punished. You know, I flagged all this stuff and I was punished. Boeing has denied that workers face retaliation for raising safety and quality issues. Meanwhile, in Boeing's executive offices, there have been some big announcements. A major shakeup tonight at Boeing. Boeing CEO Dave Calhoun will step down. CEO Dave Calhoun will step down. CEO Dave Calhoun will now depart by year's end. Calhoun, who had promised investors back in November 2022 that Boeing was back on track, is now making an early exit. What has the financial fallout been for Boeing? It's still

coming. So Boeing, when they announced their fourth quarter earnings, said they wouldn't be able to put forth financial targets for the year. Each of these planes, they're roughly $100 million. And so they delivered close to 40 planes in December. In January and February, they're at more like 15. So it's a massive cash flow issue. Today, Alaska Air said it received a $160 million payment from Boeing for lost profits as a result of the door plug failure. It said it expects further compensation from Boeing, but didn't provide details. Boeing is also waiting for the results of multiple federal investigations, including a criminal probe by the Justice Department.

If these investigations find Boeing to be at fault, what would that mean for the company? Well, I mean, it could mean any number of things. I mean, it could mean fines. It could mean restrictions. Already things. I mean, it could mean fines. It could mean restrictions. Already, the FAA is telling Boeing, you know, we're going to limit how many planes you make. We're going to force you to go slow. Boeing wants to add a fourth assembly line. They have three assembly lines making the 737, and the FAA is saying you have to hold out on doing

that. So it could kind of codify restrictions. There could be big fines. So is Boeing now sort of permanently tarnished? You know, I mean, permanent's a long time. I mean, for people inside, it's a blow to morale. They're in a state of uncertainty. You know, they don't know when they're going to be able to pick production back up. They don't know when their new planes are going to be built. How do you see this all resolving? You can know that a manufacturing process is complex. And then I think it really internalized for me just how complex this process is, especially reading these logs. Because these logs, it's pages of

communication, not about the plane. Like this is pages of communication about a door plug, like one relatively small piece of a plane. So I think there is, you know, it's more than 100,000 people. The planes are complex. The company's complex. A lot of these issues seem very ingrained. So it feels like, you know, something that we'll be talking about for years as the company works to unwind and fix some of these practices and issues. That's all for today, Thursday, April 4th. The Journal is a co-production of Spotify and The Wall Street Journal. Additional reporting in this episode by Andrew Tangle. Thanks for listening. See you tomorrow.