Boeing and the perils of outsourcing mission-critical work

​Around and around Starliner goes, and when it comes down, nobody knows. What we do know is that thanks to poor development and engineering, Boeing’s stock will come down soon.

I remember a time when Boeing was one of the top American companies. Indeed, it was the very model of a modern technology enterprise. Then things changed. In 1997, after its merger with McDonnell Douglas, the company prioritized financial engineering over actual engineering and MBAs over aeronautic engineers.

Thereafter, one questionable decision after another was made, and corners were cut. The result? A once-proud American manufacturer is now better known for fatal crashes of its 737 Max 8 planes in 2017 and 2018 and this year’s explosive midflight loss of a 737 Max 9 door plug. These are the results of bad engineering and lousy quality assurance.

Editor’s note, July 8, 2024: Two days after this article was published, Boeing pleaded guilty to conspiring to defraud the federal government, a felony charge, and pay a $487.2 million fine in relation to the fatal 737 Max crashes.

Now, as I write this, I see that Boeing’s Starliner spaceship remains parked at the International Space Station. When will it come down bearing its astronauts, Butch Wilmore and Suni Williams? I don’t know. They certainly don’t know. None of us know.

Just don’t say they’re stranded. Boeing’s vice president for its Commercial Crew Program, Mark Nappi, insists, “We’re not stuck on the ISS.” Uh, folks, they’re stranded, and the astronauts are stuck.

I doubt very much that they’ll be coming down on Starliner. Just getting to ISS, five of Starliner’s 28 thrusters stopped working due to helium leaks. NASA engineers got four thrusters to work again … and discovered four more leaks. That’s five known leaks to date.

While the astronauts get more time in space than they ever planned, down here on Earth at NASA’s White Sands Test Facility in New Mexico, they’re testing an identical thruster to work out what’s going on and how to fix it.

I wish them luck. Personally, you couldn’t get me back on Starliner for love or money. I worked at NASA’s Goddard Space Flight Center (GSFC) mission control during the Challenger disaster. That was more than bad enough.

Instead, I suggest the astronauts hitch a ride with the SpaceX Dragon Crew-9, which is still docked at ISS.  

This episode may be the straw that will break Boeing’s back.

Lessons for tech leaders

What does all this have to do with your business and technology? A lot.

What your company does may not be a matter of life and death, but your customers still expect you to do your best for them, not your stockholders. For too long, businesses have labored under the delusion that shareholder wealth is more important than the creation of stakeholder value.

The result is that companies prioritize their next quarter’s results over the overall health of their business. Specifically, Boeing didn’t just cut the fat from its teams; it also cut and outsourced its muscle. Financial engineering should never trump actual engineering. 

For example, quality assurance went out the window. Instead of testing, testing, and then testing again, Boeing neglected this fundamental principle of both software and hardware engineering. Make sure you don’t.

In particular, if something is mission-critical, treat it that way!

Take, for example, the very fuselages of the 737s. In 2005, Boeing cut costs by selling its Witchica-based manufacturing site to Onex, a private equity firm that buys struggling businesses, slashes costs, and resells them. There went years of experience and a quality-first culture.

That plant would re-emerge as Spirit AeroSystems, Boeing’s third-party manufacturing partner. Whether Boeing overseeing its quality assurance would have improved anything is an open question, but there can be no doubt that Spirit’s products were shoddy and second-rate under a cost-saving mandate.

Never, ever outsource mission-critical work. What Boeing used to do best was engineering and manufacturing. I don’t know what your company does best, but neglecting your expertise to cut costs is a fool’s move.

Now Boeing has repurchased Spirit for about $8.3 billion. The company finally has figured out it can’t fix its problems without fixing its fundamental manufacturing problems. Somehow, I think Boeing would have done better if it’d never spun out its major manufacturing side in the first place.

The moral of the story? Never let MBAs driven by the bottom line take over an engineering company building airplanes and spaceships. The same’s true for your company. Yes, make profits for your owners, but never forget that long-term success comes from putting quality work for your customers first.

More by Steven J. Vaughan-Nichols:

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