JUST IN: Boeing CEO Faces Intense Grilling Before Senate Homeland Security Committee

6 months ago

On Tuesday, the Senate Homeland Security Committee held a hearing to investigate “Boeing’s broken safety culture.”

Fuel your success with Forbes. Gain unlimited access to premium journalism, including breaking news, groundbreaking in-depth reported stories, daily digests and more. Plus, members get a front-row seat at members-only events with leading thinkers and doers, access to premium video that can help you get ahead, an ad-light experience, early access to select products including NFT drops and more:

https://account.forbes.com/membership/?utm_source=youtube&utm_medium=display&utm_campaign=growth_non-sub_paid_subscribe_ytdescript

Stay Connected
Forbes on Facebook: http://fb.com/forbes
Forbes Video on Twitter: http://www.twitter.com/forbes
Forbes Video on Instagram: http://instagram.com/forbes
More From Forbes: http://forbes.com

Transcript

00:00:00This hearing of the Permanent Subcommittee

00:00:05on Investigation will come to order.

00:00:09We welcome our witnesses and my colleagues.

00:00:14And I would like to welcome in particular some of the members

00:00:20of the audience who are here today, Michael Stummo,

00:00:24Nadia Milleran, Adnan Stummo.

00:00:27They are the parents and brother of Samia Rose Stummo.

00:00:32If you want to stand, you're welcome to

00:00:34with your photographs.

00:00:38Also here are Chris Moore, Clarice Moore, and David Moore,

00:00:43the parents and brother of Danielle Moore.

00:00:49Zipporah Curia is here today.

00:00:51She's the daughter of Joseph Curia, Catherine Bertay.

00:00:57She is the mother of Camille Bertay, Abadou Amiha is also

00:01:03here, his wife, Sarah Gabray.

00:01:08Michael was the cabin supervisor on Ethiopia Flight 302.

00:01:14We remember them and the other 341 victims

00:01:19of the unspeakable tragedies that

00:01:22occurred when two airlines crashed in 2018-2019.

00:01:29I also want to recognize the family of John Barnett,

00:01:34his mother, Vicki Stokes, and brother, Rodney Barnett,

00:01:40a Boeing whistleblower who committed suicide

00:01:43under the immense pressure that the company put on him

00:01:48for raising safety claims.

00:01:50They are with us today.

00:01:54To all of you, thank you for having the strength and courage

00:01:59to be with us, and we are deeply sorry for your losses.

00:02:06I wanted to begin by introducing you because the issues before

00:02:15us today have real human consequences,

00:02:18life and death results, not just abstract numbers

00:02:26and hypotheticals, abstract issues,

00:02:28they are a matter of life and death for people who travel

00:02:35by air or work for Boeing.

00:02:40And this hearing is a moment of reckoning.

00:02:47It is about a company, once an iconic company

00:02:52known for engineering excellence and product prowess,

00:02:57that somehow lost its way.

00:03:03Five years ago, 346 innocent people

00:03:07lost their lives in not one but two preventable tragedies.

00:03:11We learned those tragedies were caused by intentional decisions

00:03:17to put production speed over safety and profits,

00:03:23stock price over people.

00:03:27In the wake of those tragedies, Boeing

00:03:28promised to turn itself around.

00:03:33Planes were grounded, executives were dismissed,

00:03:37promises were made.

00:03:39What we've seen since from whistleblowers

00:03:43is that, in fact, the manufacturing issues,

00:03:50the retaliation against whistleblowers,

00:03:53nonconforming parts, quality inspections skipped,

00:03:58and issues concealed from the FAA, evidence hidden,

00:04:04all have continued.

00:04:07And there is mounting evidence that the deferred prosecution

00:04:12agreement concluded in 2021 with the United States Department

00:04:16of Justice has been violated.

00:04:18In fact, there is near overwhelming evidence,

00:04:21in my view as a former prosecutor,

00:04:24that prosecution should be pursued.

00:04:30When you were named as Boeing's chief executive, Mr. Calhoun,

00:04:38we were told that you were the right person

00:04:41for the correct course.

00:04:42And you committed to, quote, strengthen Boeing's safety

00:04:46culture and rebuild trust with our customers, regulators,

00:04:50suppliers, and the flying public.

00:04:53And for a while, some sort of believed

00:04:58that Boeing might have changed.

00:05:00But then this past January, the facade

00:05:03literally blew off the hollow shell that had been Boeing's

00:05:09promises to the world.

00:05:10And once that chasm was exposed,

00:05:13we learned that there was virtually no bottom

00:05:16to the void that lay below.

00:05:18PSI started this investigation after current Boeing quality

00:05:22engineer Sam Salipur came forward

00:05:25to disclose alleged shortcuts in the production of 787 and 777

00:05:31aircraft that could pose catastrophic safety

00:05:34risks over time, fastening of the fuselage to other parts.

00:05:40Mr. Salipur courageously recounted

00:05:44how he was isolated and transferred

00:05:47for refusing to stay silent about his concerns.

00:05:52Our investigation has proceeded since we first heard from him.

00:05:55And we have heard from many others.

00:05:57We have more than a dozen whistleblowers by this point.

00:06:02And we encourage more to come forward.

00:06:07We've collected that evidence.

00:06:08We've learned that Boeing's problems go deeper

00:06:10than one whistleblower or one incident

00:06:13or one line of aircraft.

00:06:16A mechanic in South Carolina told us

00:06:18about how when he and his colleagues

00:06:20raised concerns about directives to not follow policies

00:06:24and procedures, quote, we were ordered to just do it

00:06:29and told there were hundreds of others waiting

00:06:32in line outside the gate wanting our jobs.

00:06:36Another whistleblower from Washington State

00:06:39has brought us new evidence.

00:06:42Very recently, a Boeing employee, Sam Mohawk,

00:06:48quality assurance inspector in Renton, Washington,

00:06:52informed us that Boeing is improperly documenting,

00:06:56I'm quoting, non-conforming parts, possibly using them

00:07:02and installing them in airplanes.

00:07:04They are parts that are damaged or defective out

00:07:09of specification.

00:07:11He said that he's been told by his superiors

00:07:13to conceal this evidence from the FAA

00:07:17and that he is being retaliated against the fact

00:07:19he's been threatened with termination.

00:07:24These are chilling allegations.

00:07:27They echo concerns raised by others

00:07:29like John Barnett, who made similar claims about practices

00:07:33at Boeing 787 manufacturing plant in South Carolina,

00:07:39and by Merle Myers, who came forward last month

00:07:43with additional related claims about a different plant

00:07:49in Washington.

00:07:52This new evidence is detailed in a memorandum

00:07:55that I shared with my colleagues, PSI members,

00:08:00earlier today.

00:08:02Without objection, I'd like to ask that this memorandum

00:08:06be entered into the record.

00:08:09Mr. Calhoun, you were brought in to the company as CEO.

00:08:15You had been on the board to turn this company around.

00:08:20You and your board of directors have

00:08:21a duty to your shareholders, but they

00:08:25will be deeply ill-served if you fail to correct course

00:08:30to confront the root cause of this broken safety culture.

00:08:37You have a duty to demand the highest safety standards

00:08:43and insist that every installation is properly

00:08:47documented and ensure that speak up means, in fact, speak up,

00:08:52not shut up, as it is meant all too often.

00:08:57Boeing needs to stop thinking about the next earning call

00:09:02and start thinking about the next generation.

00:09:09We're here because we want Boeing to succeed.

00:09:12Boeing needs to succeed for the sake of the jobs it provides,

00:09:17for the sake of local economies it supports,

00:09:20for the sake of the American traveling public,

00:09:23for the sake of our military.

00:09:28It's not enough for Boeing to shrug its shoulders

00:09:34and say, well, mistakes happen.

00:09:36This is not an industry where it's OK to cut corners,

00:09:41to reduce inspections, to take shortcuts,

00:09:44and rely on broken parts that happen to be sitting around.

00:09:48It's not an industry where it's OK to rush planes out the door

00:09:52because you need to meet a quarterly sales target.

00:09:56I feel you know all of what I am saying.

00:10:00But it's not enough to say it.

00:10:04Boeing has to do it.

00:10:05Boeing has to live it.

00:10:10In a country where air travel literally

00:10:13was invented with the ingenuity and exceptional American

00:10:17engineers of Boeing, where still the best

00:10:23workforce in the world in the aviation industry

00:10:27continues to come to work every day and do its best,

00:10:32there's absolutely no reason where

00:10:35we should not be the home of the preeminent airplane

00:10:39manufacturer in the world.

00:10:43Boeing is making some leadership changes,

00:10:45but they look more like management musical chairs,

00:10:49moving the same people to different roles

00:10:51within the company, people who may have been responsible

00:10:55and should be held accountable.

00:10:58The Department of Justice will conclude its investigation

00:11:01and make its independent decision

00:11:03about whether to prosecute.

00:11:07But for Boeing, regardless of that decision,

00:11:13it is a moment of reckoning and an opportunity

00:11:17to change a broken safety culture.

00:11:23With that, I turn to the ranking member.

00:11:25Hey, Mr. Chairman.

00:11:26To avoid repeating much of what you said,

00:11:28I'll just ask my written opening statement

00:11:30to be entered in the record.

00:11:32Well, I start out by offering my condolences to the family

00:11:35members and loved ones of those who

00:11:37were lost in the 737 crashes, the people in the audience

00:11:39here.

00:11:42I think those condolences are universal and shared

00:11:44by everybody here.

00:11:46I'd like to underscore what the chairman said,

00:11:48is that this committee, everybody in this room,

00:11:53I would say everybody in America wants

00:11:55Boeing and the airline industry to succeed.

00:11:59It's just crucial that they do so.

00:12:01I come from a manufacturing background myself,

00:12:03supplying plastic packaging materials

00:12:06to the medical device industry.

00:12:07I understand quality systems.

00:12:10I also understand the difficult nature sometimes

00:12:13in meeting specifications.

00:12:15I understand the difficult nature

00:12:17in today's world of hiring people

00:12:19in a manufacturing setting.

00:12:21And I read a recent article that it's

00:12:23becoming more and more challenging for the airline

00:12:25industry as well.

00:12:26So there are many contributing factors to what has happened.

00:12:31And from my standpoint, the subcommittee's role

00:12:34is to highlight as many of those factors as possible,

00:12:38get everybody focusing on them, keeping pressure

00:12:42on the entire system.

00:12:43I think that's the other point I want to make,

00:12:45is there are many people.

00:12:47It's not just Boeing CEOs.

00:12:49It's not just Boeing's management team.

00:12:52The quality system that needs to provide assurance

00:12:57to the traveling public that it's safe to fly.

00:13:02And in the end, that's what we want.

00:13:04I travel multiple times a week, almost exclusively on 737s.

00:13:09I have to admit, I get on those planes feeling pretty confident

00:13:13because I know of all the people involved, the suppliers,

00:13:17the manufacturing workforce, the multiple layers of management

00:13:20within Boeing.

00:13:23Certainly, FAA plays a major role.

00:13:27I'm not a fan of big government, but we need government

00:13:29to do certain things.

00:13:30And one of them is the FAA doing its job of regulating

00:13:35the airline industry and the airline manufacturers

00:13:38to make sure that they have a perfect record.

00:13:42We're talking about you need perfection.

00:13:46And that's hard to achieve.

00:13:49Airlines themselves are huge participants in this,

00:13:53and I am highly disappointed.

00:13:55I've spoken to airline CEOs, your customers,

00:13:58and I'm disappointed that they haven't been willing to come

00:14:01before Congress, primarily to offer assurance

00:14:04to the traveling public that they have their maintenance

00:14:08systems in place.

00:14:09They have quality systems.

00:14:10They're checking and double-checking the aircraft

00:14:14multiple times a day.

00:14:15And of course, the final quality control step is,

00:14:19and quality control personnel are the flight crew,

00:14:23the pilots.

00:14:24And personally, I would never travel on an autonomous plane.

00:14:29I don't care how good you have your quality systems.

00:14:31I want to make sure that I've got

00:14:33a pilot and a flight crew on that plane with me,

00:14:37making sure that it's safe as best as we possibly can.

00:14:41So again, I think it's necessary that we hold these hearings.

00:14:46I wish the airlines would come in and explain their quality

00:14:50systems, their maintenance systems,

00:14:51again, with the whole goal of assuring the public that

00:14:57it's safe to fly today and in the future,

00:15:00and that they've got what problems exist.

00:15:02And they're obviously problems.

00:15:04They've got them in hand, and they're

00:15:06doing everything they can to fix those problems.

00:15:09So again, appreciate the hearing.

00:15:11Mr. Calhoun, thanks for coming here.

00:15:14You'd be asked some tough questions here.

00:15:16I appreciate the phone conversation we had,

00:15:18and you know what you're in here for.

00:15:20So I appreciate you coming here.

00:15:22With that, I'll turn it back over to you, Mr. Chairman.

00:15:25Thank you, Senator Johnson.

00:15:27Just to assure you, we are hopeful

00:15:30that the airlines will be coming to appear

00:15:33before this subcommittee.

00:15:35We welcome two witnesses today.

00:15:37David Calhoun has served as President and Chief Executive

00:15:41Officer of Boeing since January 2020.

00:15:45Prior to taking this role, he served

00:15:48as a member of Boeing's Board of Directors since 2009.

00:15:53He served as its chairman from October to December 2019.

00:15:57He began his career at General Electric Company, GE,

00:16:01where he spent 26 years, including

00:16:05as Vice Chairman of the company and President and CEO of GE

00:16:10Infrastructure.

00:16:11He's accompanied today by Howard McKenzie, Chief Engineer

00:16:16of the Boeing Company.

00:16:17Howard McKenzie has been Chief Engineer,

00:16:22and he leads the Boeing engineering function.

00:16:25He is responsible for oversight of all aspects

00:16:30of safety and technical integrity of Boeing products

00:16:35and services.

00:16:36Mr. McKenzie has been with Boeing

00:16:38for more than three decades.

00:16:40Thank you both for being here.

00:16:42Our practice is to swear in all of our witnesses.

00:16:47So if you would please stand and raise your right hand.

00:16:52You promise that the testimony you are about to give

00:16:55is the truth, the whole truth, nothing but the truth,

00:16:58so help you God.

00:17:00Thank you.

00:17:04Mr. Calhoun, you may proceed.

00:17:08Chairman Blumenthal, Ranking Member Johnson,

00:17:12members of the subcommittee, thank you

00:17:14for inviting me to appear before you today,

00:17:16along with Boeing's Chief Engineer, Howard McKenzie,

00:17:20seated to my right.

00:17:22Before I begin my opening remarks,

00:17:24I would like to speak directly to those who lost loved ones

00:17:28on Lion Air Flight 610 and the Ethiopian Airlines Flight 302.

00:17:40I would like to apologize on behalf of all of our Boeing

00:17:44associates spread throughout the world, past and present,

00:17:50for your losses.

00:17:53They're gut-wrenching.

00:17:54And I apologize for the grief that we have caused.

00:17:58And I want you to know we are totally committed,

00:18:00in their memory, to work and focus on safety for as long

00:18:06as we're employed by Boeing.

00:18:08So again, I'm sorry.

00:18:14Thank you.

00:18:22Nearly every second, a Boeing commercial or defense product

00:18:26takes off and lands somewhere around the world,

00:18:29making us responsible for the safety of millions

00:18:32of passengers and flight crews every day,

00:18:35including our men and women in uniform.

00:18:39Aerospace safety is built on a robust, industry-wide system

00:18:42that relies on self-disclosure, accountability,

00:18:46and continuous learning.

00:18:48This scrutiny, to be held to the very highest standard,

00:18:52is fundamental to why commercial aviation is, by far,

00:18:55the safest mode of transportation today.

00:18:59I come from this industry.

00:19:00And I know full well that this is an industry where

00:19:03we simply must get it right every single time.

00:19:08I've served as president and CEO of Boeing

00:19:10since January of 2020, following

00:19:13these tragic accidents.

00:19:16I joined the aviation industry as president and CEO

00:19:18of GE Aircraft Engines.

00:19:21My introduction to aerospace safety

00:19:22was after the tragic accident in 1989 of United Airlines Flight

00:19:27232 in Sioux City, Iowa, due to an uncontained engine failure.

00:19:33It led to sweeping changes in our industry's safety

00:19:36management processes and contributed significantly

00:19:38to flight safety going forward.

00:19:41And from this experience, I understand

00:19:43the gravity of Boeing's role in upholding

00:19:46the integrity of aerospace safety in our industry.

00:19:50We deeply regret the impact that the Alaska Airlines Flight

00:19:541282 accident had on Alaska Airlines

00:19:57team and its passengers.

00:19:59And we are grateful to the pilots and crew

00:20:03for safely landing the plane.

00:20:05We are thankful that there were no fatalities.

00:20:10From the beginning, we took responsibility

00:20:13and cooperated transparently with the NTSB

00:20:15and the FAA in their respective investigations.

00:20:19In our factories and in our supply chain,

00:20:21we took immediate action to ensure

00:20:23the specific circumstances that led to this accident

00:20:27could never happen again.

00:20:29Importantly, we went beyond to look comprehensively

00:20:33at our quality and manufacturing systems.

00:20:36And we slowed things down dramatically.

00:20:41To launch this more comprehensive look,

00:20:43we've held stand downs in our plants.

00:20:46And we've listened to our employees

00:20:47and acted on their ideas.

00:20:50We've brought in an independent quality expert

00:20:52to assess our processes.

00:20:54And we have announced our intention

00:20:56to reacquire Spirit AeroSystems, the manufacturer

00:20:59of our fuselage.

00:21:01In consideration of these inputs,

00:21:03Boeing developed a comprehensive safety and quality action

00:21:06plan with very specific metrics, which

00:21:09we will use to hold ourselves accountable

00:21:12and the FAA will use to provide the oversight required.

00:21:17Most importantly, it is our people,

00:21:20over 170,000 around the world, who are our greatest strength.

00:21:26We've asked every one of our employees

00:21:27to consider themselves an aviation safety advocate.

00:21:31We're committed to making sure every employee feels empowered

00:21:34to speak up if they see a problem.

00:21:37We also have strict policies that

00:21:39prohibit retaliation against employees who come forward.

00:21:43It is our job to listen, regardless

00:21:46of how we obtain feedback, and handle it

00:21:49with the seriousness it deserves.

00:21:52Much has been said about Boeing's culture.

00:21:55We've heard those concerns loud and clear.

00:21:58Our culture is far from perfect.

00:22:00But we are taking action, and we are making progress.

00:22:05We understand the gravity, and we're

00:22:07committed to moving forward with transparency

00:22:10and accountability, while elevating employee engagement

00:22:13every step of the way.

00:22:16Our airplanes have carried the equivalent of more than double

00:22:18the population of the planet.

00:22:21Getting this right is critical for our company.

00:22:23It's critical for our customers who fly our planes every day,

00:22:26and it's critical for our country.

00:22:29We're part of a global ecosystem composed

00:22:32of manufacturers, suppliers, airlines, airports, air traffic

00:22:35controllers, and regulators.

00:22:38And they're all committed to learning from every incident.

00:22:41It is this relentless focus on improvement

00:22:44that has led to our industry's unparalleled safety record.

00:22:48And it is with this mindset we're

00:22:51taking comprehensive action to strengthen safety and quality.

00:22:55And we know, as America's premier aerospace

00:22:59manufacturer, this is what you and the flying public

00:23:03have every right to expect from us.

00:23:06And thank you, Mr. Chairman.

00:23:08And Howard and I will be happy to take your questions.

00:23:11Thank you, Mr. Calhoun.

00:23:13We will have seven-minute rounds.

00:23:16I'll begin.

00:23:17Mr. Calhoun, more than five years after the MAX crashes,

00:23:27you're once again making promises

00:23:32and seeming commitments.

00:23:33They seem highly aspirational.

00:23:37They are very general.

00:23:38To correct course, do you think Boeing

00:23:41has done enough to date to make those kinds of corrections?

00:23:51And what would you say to the whistleblowers who have come

00:23:56forward and faced retaliation?

00:24:00Senator, thank you for the question.

00:24:03I ask myself that question every day.

00:24:05Have we done enough?

00:24:07I remind everyone the findings and the accidents.

00:24:13And we all participated in the investigative work.

00:24:16We saw the conclusions by virtue of the NTSB reports

00:24:20and the local regulators' reports.

00:24:24These issues were attributed to the development

00:24:27of the airplane and a software package referred to as MCAS.

00:24:31And we took responsibility for that error.

00:24:36You accept that Boeing was responsible for those crashes

00:24:39and 346 MCAS?

00:24:40I accept that MCAS and Boeing are

00:24:42responsible for those crashes.

00:24:44But has enough been done to date already?

00:24:48So this is the answer to that question.

00:24:50The development process for an airplane

00:24:52starts with an engineering effort.

00:24:55So we have revamped our engineering effort at large.

00:24:58We have created a series of design practices,

00:25:01including a new one referred to as human factors.

00:25:04It speaks directly to the work that

00:25:07needed to be done to prevent MCAS

00:25:09from creating the environment that those pilots faced

00:25:12at that moment.

00:25:14So we did that.

00:25:15We established a safety management system.

00:25:17We learned from the FAA and from our airline customers

00:25:20what it was and how to implement it.

00:25:22We've been listening to it.

00:25:24We tuned that safety management system

00:25:26into every airplane that flies every second of every day

00:25:31so that we could learn from those airplanes.

00:25:33Let me be more specific, and I apologize for interrupting,

00:25:35but we're limited in terms of time.

00:25:38Boeing has a code of conduct that states, and I quote,

00:25:42I will never retaliate against or punish

00:25:45anyone who speaks up to report a concern, end quote.

00:25:51And yet, the whistleblowers that we have heard,

00:25:56including testifying before this committee,

00:25:59have reported a host of retaliatory behaviors

00:26:02from reassignment to exclusion from key meeting

00:26:06to being sidelined and sidetracked in their careers,

00:26:09verbal harassment and threats, and even physical violence.

00:26:17After whistleblower John Barnett raised his concerns

00:26:20about missing parts, he reported that his supervisor called him

00:26:2519 times in one day and 21 times another day.

00:26:31And when Barnett asked his supervisor about those calls,

00:26:36he was told, quote, I'm going to push you until you break.

00:26:42He broke.

00:26:45When whistleblower Sam Mohawk raised concerns

00:26:48about Boeing's concealment of non-conforming parts,

00:26:53he was put in charge of completing corrective action

00:26:58investigation with an impossible deadline

00:27:02and then threatened with formal discipline, including firing.

00:27:07He couldn't meet that deadline.

00:27:08When I hear about these experiences,

00:27:11I wonder whether Boeing really wants change.

00:27:17How can you reassure us that Boeing is going to, in fact,

00:27:23end this broken safety culture?

00:27:28Senator, I'm going to start by assuring you

00:27:35that I listened to the whistleblowers that

00:27:37appeared at your hearing.

00:27:40Something went wrong.

00:27:42And I know the sincerity of their remarks.

00:27:44Well, let me ask you a more specific.

00:27:46And then with respect to our company, we do have a policy.

00:27:51I often, often cite and reward the people

00:27:54who bring issues forward, even if they

00:27:56have huge consequence on our company and our production

00:28:00levels, et cetera.

00:28:01My leadership team does that.

00:28:03We survey our people with respect to,

00:28:05do they feel empowered to speak up?

00:28:09That survey performance gets better and better.

00:28:11It's never perfect.

00:28:14We work hard to reach out to our people.

00:28:17Immediately following Alaska, we had a stand down.

00:28:20The stand downs continue.

00:28:22And they rotate.

00:28:23And we listen to everybody.

00:28:25I'm trying to deal with 30,000 ideas

00:28:31on how we can move forward.

00:28:34How do we make their jobs easier?

00:28:35How do we train them more effectively?

00:28:37How do we do that?

00:28:38Our team is, we are working hard to listen.

00:28:40Mr. Calhoun, let me ask you.

00:28:42How many of your employees have been

00:28:45fired for retaliating against whistleblowers?

00:28:50Senator, I don't have that number on the tip of my tongue.

00:28:52But I know it happens.

00:28:55I know it happens.

00:28:56I am happy to follow up and get you that number.

00:28:58I would appreciate your following up.

00:29:00Let me ask you, have any of your supervisors, your managers,

00:29:06anybody been fired for retaliating

00:29:10against people who speak truth to power about defects

00:29:14or problems in production?

00:29:18Senator, we have fired people and disciplined people.

00:29:21And I am happy to follow up with what you need.

00:29:23Who have you fired and how have they been disciplined?

00:29:26Without, I can't, I have concern on privacy.

00:29:29And as you know, every one of those cases.

00:29:31Will you come back to this committee and tell us?

00:29:33I will most certainly get back to you, sir.

00:29:38Let me ask you, have you been aware

00:29:43of how Boeing has complied with requests for information

00:29:48from this committee?

00:29:51Probably not by line item.

00:29:53No, sir.

00:29:54Well, let me show you a sample of the data produced

00:30:00by Boeing in response to requests by this committee.

00:30:06I'll show you a bigger display.

00:30:12And the details have been provided to you.

00:30:17Are you able to make sense of this?

00:30:19No, sir.

00:30:20Complete gobbledygook.

00:30:22Yes, sir.

00:30:23This is what Boeing has provided to this committee in response

00:30:28to our request for information.

00:30:31Can you justify these productions?

00:30:34I will.

00:30:36I would describe it precisely as you did.

00:30:39And I can't justify.

00:30:40And I will most definitely follow up.

00:30:44My time has expired on this first round.

00:30:48And we're going to try to stick to the time limits

00:30:52because we have a number of colleagues here.

00:30:55And I want everybody to have a first round.

00:30:56We will have a second round for colleagues who want to do it.

00:31:00I turn now to the ranking member.

00:31:02Thank you, Mr. Chairman.

00:31:03To pick up where the chairman just left off,

00:31:05you said you'll check into that.

00:31:07Did you talk to the individual responsible for complying

00:31:12with our information requests?

00:31:14Have you had a meeting with that individual

00:31:15or that group of individuals?

00:31:17Senator Johnson, my team knows and I have talked to them

00:31:21about the need for transparency at every level and every stage.

00:31:24So beyond that as a backdrop, no, I

00:31:28did not review each line item.

00:31:30So who would be your direct report

00:31:32responsible for providing this committee the information,

00:31:36the subcommittee the information you requested?

00:31:38Yeah, it would be an accommodation of my counsel

00:31:40and my government affairs office.

00:31:43OK, so you'll talk to them today about this.

00:31:45Yes, well, they're right behind me and so I'm sure, yes,

00:31:47it's registered.

00:31:50You said you've listened to the whistleblowers.

00:31:52Have you directly spoken to any of the whistleblowers?

00:31:55I have not directly spoken to any of the whistleblowers.

00:31:58You think that'd be a good idea to do that?

00:32:00Yeah, I think it would.

00:32:02I'd recommend it.

00:32:03Yeah.

00:32:10Exactly what are you doing then to investigate

00:32:13the whistleblower complaints?

00:32:15If you haven't spoken to them directly,

00:32:17have you just turned it over to your counsel or?

00:32:20No, we have a team.

00:32:22We have an ethics hotline and a team of investigators.

00:32:26The most important thing in every whistleblower out

00:32:29of the chute is to make sure we understand

00:32:32the substantive issue that is being discussed

00:32:34and do safety analysis immediately

00:32:37and go out and interview everybody that's involved

00:32:40and or has touched any of that work

00:32:42and assure ourself that we have safe airplanes.

00:32:46And if there are corrective actions

00:32:47to take with respect to the points

00:32:50that they make with us, that's what we do.

00:32:52And we try to get on that immediately.

00:32:53But there is always an objective view

00:32:57and a number of perspectives, particularly

00:32:59with respect to engineering disciplines

00:33:01that have to come to bear on it.

00:33:02So how many employees does Boeing have?

00:33:04170,000.

00:33:06So having run a much smaller operation.

00:33:08I mean, first thing I can say is I realize that I don't control

00:33:12what everybody does.

00:33:12You try and set policies, you can communicate

00:33:15as clearly as possible, people are people.

00:33:18The question I have for you,

00:33:19because it's actually quite shocking

00:33:21to have a supervisor calling somebody up 19 times in one day

00:33:26and making the statement that I'm gonna break you.

00:33:29My guess is you don't condone that kind of behavior.

00:33:34Have you looked at your incentive system within Boeing?

00:33:37And let's face it, there's obviously pressure

00:33:40from your sales force to your manufacturing operation

00:33:43to deliver the planes that they've sold to airlines.

00:33:45Again, there's pressure throughout companies.

00:33:49And I can just imagine that the pressure is being applied

00:33:53to Boeing associates throughout the company.

00:33:57I get that, I've been in manufacturing.

00:34:01But have you reviewed, for example, your incentive systems

00:34:03that maybe would drive that kind of behavior?

00:34:07Having to meet quotas or, I mean, have you reviewed that?

00:34:11Yeah, this year we made a number of significant changes

00:34:16to our incentive structure that really emphasizes

00:34:21all things safety, including the running a just culture

00:34:25with that respect.

00:34:26And a just culture, I think, is the environment

00:34:29that you would like us to run.

00:34:32And so yes, that incentive alignment is now in place.

00:34:37So prior to our last hearing, one of the articles I read,

00:34:40whether fair or unfair, talked about your disclosures,

00:34:45which is probably the SEC, where you were scoring high

00:34:51on ESG and DEI, and your score was zero on your quality.

00:34:56These are internal quality performance measures.

00:34:59Can you speak to that report?

00:35:03That's a fact.

00:35:04Because the point being is, is Boeing's management,

00:35:07are they concentrating on DEI and ESG,

00:35:10and at the expense of really meeting

00:35:14your quality performance measures?

00:35:17Senator, I've never seen those two things

00:35:21ever come into conflict.

00:35:23I don't believe my team has ever allowed for them

00:35:26to come into conflict in any way.

00:35:28It's not necessarily conflict, it's what you're emphasizing.

00:35:32Where are you putting your management emphasis?

00:35:35Yes, well, again, Senator, there's a comp system,

00:35:39there's also what we work on every day, all day,

00:35:42knowing how important and critical it is

00:35:44for the future of our company.

00:35:46Safety and quality is it.

00:35:48It's been that way since January of 2020,

00:35:53because of what we have been responding to.

00:35:56Safety and quality, that is what we talk about.

00:35:59I'll mention another article,

00:36:02the reason I'm doing this is,

00:36:03one of the reasons we need a free press,

00:36:06it'd be nice to have a completely unbiased free press,

00:36:09but we need investigative reporting.

00:36:12We only have so much staff here at a subcommittee level,

00:36:14or even a committee level, so we really do need

00:36:16journalists going out there and digging up stories.

00:36:18One of the ones I thought interesting before this hearing,

00:36:21spoke to the very real problem,

00:36:23the difficulty you are having in finding,

00:36:26well, first of all, your workforce,

00:36:28manufacturing workforce is aging.

00:36:30Throwing COVID on there, early retirement,

00:36:32that type of thing, you lost a lot of experience.

00:36:35And in the past, it sounds like Boeing was able to tap into

00:36:40a workforce that had experience in the aerospace industry.

00:36:45And you don't have that luxury anymore.

00:36:47I'm not exactly sure when that changed.

00:36:48I know coming from manufacturing myself,

00:36:50it's been difficult to hire people

00:36:51in a manufacturing operation,

00:36:53because let's face it, we tell our kids,

00:36:55gotta get a four-year degree,

00:36:56and you wanna be in management.

00:36:58So we don't encourage people to go into manufacturing,

00:37:01but can you speak to that issue?

00:37:01Maybe Mr. McKenzie can speak to that issue,

00:37:03in terms of just your challenges in hiring people

00:37:06in a manufacturing setting for a very high-quality,

00:37:12high-demand aerospace industry.

00:37:15Senator Johnson, and I appreciate the question

00:37:17more than you know, the post-COVID moment

00:37:22in the aerospace industry has been

00:37:27unbelievably difficult to navigate.

00:37:30We have 10,000 suppliers.

00:37:32We put almost 2 1⁄2 million parts into a 787.

00:37:39Boeing, because it's big and it has resources,

00:37:43even those were strained,

00:37:45we were able to keep more than most,

00:37:47but like you say, we turned over a lot of people,

00:37:49and yes, a lot of experienced people.

00:37:51Our supply chain experienced enormous turnover.

00:37:55So as we try to respond to unbelievable demand

00:38:01for airplanes out there,

00:38:03we have a supply constraint that is very real,

00:38:06and it is not resolved today.

00:38:08And I think one of the most important things we can do,

00:38:12we've done it in a few large instances,

00:38:16but now we have to train ourselves to do it

00:38:18at small instances, meaning every employee.

00:38:20If a part's not there on time,

00:38:22if a part's nonconforming,

00:38:24we will stop the line.

00:38:27This, so much of this relates to an untrained workforce.

00:38:30I can tell you, it's all about that, honestly.

00:38:34Okay, thank you, Mr. Cowan.

00:38:35Senator Hassen.

00:38:37Thank you, Mr. Chair and Ranking Member Johnson

00:38:40for holding this hearing.

00:38:42To the families and loved ones of the people

00:38:44we have lost to Boeing safety failures,

00:38:48our condolences, and thank you for continuing

00:38:50to advocate for your loved ones

00:38:52and for airline safety generally

00:38:56and for the safety of the public.

00:38:58Mr. Calhoun, it seems like every other day

00:39:01news breaks of a new problem or safety concern

00:39:04with Boeing aircraft.

00:39:05In just the last week, there has been one news story

00:39:08about questionable titanium in your supply chain

00:39:10and another story about incorrectly installed fasteners

00:39:13with your new 787 Dreamliners.

00:39:16There have been major problems with Boeing's manufacturing,

00:39:19assembly, and quality assurance.

00:39:21As Senator Blumenthal noted,

00:39:23Americans built the first ever airplanes

00:39:25more than a century ago,

00:39:27but now for the first time in decades,

00:39:30Americans are more and more nervous

00:39:31about flying your American-made planes.

00:39:35That breakdown in trust is a remarkable failure

00:39:38for your company, and I'm concerned that it stems

00:39:41from a decision to put profits ahead of safety.

00:39:44So what are the root causes of this systemic failure?

00:39:48How are you gonna fix it?

00:39:49And who should we hold accountable?

00:39:51Does the buck stop with you or with somebody else?

00:39:54Senator Hassan, I appreciate the question,

00:39:56and like you, I get the media input every day,

00:40:00and I see a Boeing description of the airplane.

00:40:04Two out of every three airplanes that fly in this country

00:40:06are Boeing airplanes.

00:40:10The contributing causes to most everything

00:40:14outside of the Alaska accident relate to

00:40:19a variety of inputs that are downstream

00:40:21with respect to operating and maintenance,

00:40:23and et cetera, with an airplane.

00:40:27Alaska was a manufacturing defect.

00:40:29I'm not aware of any others that were.

00:40:34And we cannot allow one, right,

00:40:37unsafe airplane to leave our factory.

00:40:39And so we are totally focused on everything

00:40:41that may have contributed to that.

00:40:44I will say this.

00:40:46Every issue that occurs out in the field with an airplane,

00:40:51our industry doesn't actually point fingers at each other.

00:40:54We all rally around whatever happened.

00:40:56And if the manufacturer can contribute to that,

00:40:59to fixing that once and for all, we will.

00:41:01So let me just follow up here,

00:41:03because you have talked about a culture

00:41:06of safety and quality.

00:41:07You say that's what we talk about,

00:41:09and I hear you talking about it.

00:41:11But what we've been trying to get to

00:41:13is how is it that you had a 2020 failure,

00:41:16a 2024 failure, the failures I've just read about,

00:41:20so there were 737 failures, now these 787 ones.

00:41:23You talk about safety and culture,

00:41:25but you aren't answering the question

00:41:27about what the root causes are here.

00:41:29How do you make sure that safety and culture,

00:41:31safety and quality is your product,

00:41:35as opposed to your words?

00:41:36Well, we do, and I will always refer to the record

00:41:40with respect to airplane safety.

00:41:452023, IATA is the international organization

00:41:49that compiles all the information

00:41:50with respect to safety,

00:41:51and this was the safest year on record.

00:41:54Boeing's a large part of that.

00:41:56I understand that, and what I'm gonna ask you to do

00:42:00is produce to us the documents that you have,

00:42:04or the understanding you have,

00:42:05of what are the root causes

00:42:07of the safety problems your company has had.

00:42:11I appreciate the context, and I appreciate the answer,

00:42:13but as the chair and the ranking member have noted,

00:42:15we have limited time here.

00:42:17So I'm gonna move on to my next question,

00:42:19but what I would assume, now four years after

00:42:23the 737 MCAS issue, what I would assume is,

00:42:28by now, you would have identified root causes

00:42:31for some of these safety problems,

00:42:33and what I'm not hearing is an answer back.

00:42:35Let me move on to another issue,

00:42:38which is that one of whistleblower protection.

00:42:41In April, a Boeing engineer told this committee

00:42:43that he raised safety concerns with leadership at Boeing

00:42:46about some of the company's manufacturing processes.

00:42:49He told us that Boeing management then retaliated

00:42:52against him for raising those safety concerns.

00:42:54He went so far as to tell us that he felt

00:42:56that his physical safety had been threatened.

00:42:59Not only has your company failed

00:43:00to uphold the highest safety standards,

00:43:03it appears that Boeing has fostered a culture

00:43:05that censors people who try to speak up and help.

00:43:09So what actions have you personally taken as CEO,

00:43:12I heard your testimony about listening,

00:43:16but what actions have you personally taken as CEO

00:43:20to investigate instances of retaliation

00:43:22and intimidation at Boeing, and to hold managers

00:43:25and leadership accountable for punishing whistleblowers?

00:43:30Senator, I'll start again with respect to leadership

00:43:35and culture communication.

00:43:38We are always out there with respect

00:43:41to our policy on retaliation.

00:43:46Not accepted, we will take the disciplinary actions

00:43:50that are necessary, and we do have a process.

00:43:52If I get a retaliation claim, I have a team,

00:43:56again, they're independent, they are meant

00:43:59to investigate that, and they're meant to assume

00:44:03that that allegation is correct.

00:44:06Let's go find out.

00:44:07They are not always determined to be correct.

00:44:11They are not always.

00:44:13I would suggest, because you couldn't answer

00:44:15how many folks have been disciplined

00:44:18or fired for retaliation, I would suggest

00:44:21that a personally involved CEO might be able

00:44:24to get us that information, and that if you talked

00:44:27about the discipline that you took towards people

00:44:30who retaliated against whistleblowers,

00:44:32there might be less retaliation.

00:44:35Let me move on to one final issue here.

00:44:38News broke last week that the Federal Aviation

00:44:41Administration is investigating how counterfeit titanium,

00:44:44originally from a Chinese supplier,

00:44:46made its way into Boeing planes.

00:44:48What systemic failures allowed Boeing

00:44:51to not only purchase questionable titanium,

00:44:54but to fail to recognize that it was substandard

00:44:56once you had it in your possession,

00:44:58and to install it in an aircraft?

00:45:00How'd that happen?

00:45:01Senator, I appreciate the question.

00:45:03We did not purchase the titanium.

00:45:06A sub-tier would have purchased that titanium,

00:45:09and we would not be aware until they raised their hand

00:45:11and let us know, in which case we would help them

00:45:14immediately solve that problem.

00:45:16Back when Russia invaded Crimea, we made a determination,

00:45:20immediately following that invasion,

00:45:22that we would end our dependency on Russia

00:45:25for titanium, and we've done quite a good job.

00:45:28And the only other point, the material that we have seen,

00:45:32and the parts that our vendors have notified us of,

00:45:35has not been substandard.

00:45:37It has met the spec.

00:45:38So, and my time has expired, but I would ask you

00:45:41to follow up on what product quality testing Boeing does,

00:45:47and conducts of the materials and parts it purchases

00:45:50in order to verify the authenticity and safety

00:45:52of materials that come through the supply chain.

00:45:55Thank you, Mr. Chair.

00:45:56Thanks, Senator Hassan.

00:45:57Senator Hawley.

00:45:59Thank you, Mr. Chairman.

00:46:01Mr. Calhoun, what is it that you get paid currently?

00:46:07Senator, that's well disclosed in our proxy documents

00:46:11in each of the years that I've been employed.

00:46:13Yeah, but what is it?

00:46:15It's a big number, sir.

00:46:16Well, let me help you out.

00:46:17It's 32.8 million this year.

00:46:19Does that sound right?

00:46:20Yes, it does.

00:46:21That's a 45% increase over last year.

00:46:24Does that sound right?

00:46:25Yes, it does.

00:46:27What is it you get paid to do, exactly?

00:46:29I get paid to run the Boeing company.

00:46:31Yeah.

00:46:32So, just help me understand that.

00:46:34I mean, do you get paid for transparency?

00:46:36Is that part of, is that one of the metrics for your income?

00:46:40I think the board counts on me for transparency.

00:46:43Really, because you're under investigation

00:46:45for falsifying 787 inspection records.

00:46:48The Boeing's under criminal investigation

00:46:50for the Alaska Airlines flight.

00:46:52You were investigated by DOJ for criminal conspiracy

00:46:56to defraud the FAA.

00:46:58This is all in your tenure.

00:46:59This doesn't sound like a lot of transparency to me.

00:47:04What about safety?

00:47:07Is that a component of your salary?

00:47:09It sure is, Senator.

00:47:11You know, have you seen the reports

00:47:13that the subcontractor that you use

00:47:17to make that door piece that fell out of the sky,

00:47:20that when the FAA went and toured the facility,

00:47:24they found one door seal being lubricated

00:47:27with Dawn liquid dish soap

00:47:29and cleaned with a wet cheesecloth,

00:47:32and another was being checked with a hotel room key card?

00:47:36Does that sound like safety to you?

00:47:39Senator, I think our relationship

00:47:42with that particular supplier has been well-documented,

00:47:46reviewed by the FAA, and most certainly us,

00:47:49and I'm very intent on acquiring that company

00:47:52so that none of that ever happens.

00:47:54You know, the FAA also says

00:47:55that Boeing still has not implemented

00:47:58the recommended steps back from 2019 and 2020

00:48:02after the MAX crashes.

00:48:03You still have not taken the appropriate safety procedures

00:48:08or implemented what they recommended.

00:48:10I mean, how, if safety is a component

00:48:13of your $33 million compensation package,

00:48:16I mean, how can you possibly qualify for any of this?

00:48:18What about quality?

00:48:20Is quality part of your compensation package?

00:48:24Senator, I meet with the FAA pretty regularly.

00:48:30They don't hold anything back,

00:48:31and I'm not aware of anything that has been cited

00:48:35with respect to those accidents

00:48:37that we haven't taken action on.

00:48:38Really?

00:48:39Because we've had whistleblowers,

00:48:40you said you'd listen to whistleblower testimony.

00:48:42We've had multiple whistleblowers come before this committee

00:48:45and allege that Boeing is cutting every possible corner

00:48:48on quality and safety, not just in the past, but now.

00:48:53They've alleged that you've eliminated safety inspections,

00:48:55that there are fewer in quality,

00:48:57and there are fewer inspectors

00:48:58doing quality inspections out there.

00:49:00They've alleged that when they raised quality issues

00:49:03and concerns, they were reassigned,

00:49:05they were retaliated against,

00:49:07they were physically threatened.

00:49:09That doesn't sound like attention to quality to me,

00:49:12and yet you're getting paid $33 million a year.

00:49:17It's extraordinary.

00:49:18Senator, we have increased

00:49:22our quality inspectors significantly.

00:49:24How much has your stock price increased

00:49:26while you've been at Boeing?

00:49:28It hasn't, and I don't watch it much.

00:49:32Have you done any stock buybacks

00:49:33while you've been at Boeing?

00:49:35Not in my job, no.

00:49:36How about your profits?

00:49:37Have your profits increased at all?

00:49:39I haven't had any profits, sir.

00:49:41I'm sorry?

00:49:42I have not had any profits.

00:49:43Yeah.

00:49:44You know, I think the truth is, Mr. Calhoun,

00:49:47you're not focused on safety,

00:49:48you're not focused on quality,

00:49:50you're not focused on transparency.

00:49:51All of this is in the record,

00:49:52but I think actually you're focused on

00:49:54exactly what you were hired to do,

00:49:56which is that you're cutting corners,

00:49:58you are eliminating safety procedures,

00:50:01you are sticking it to your employees,

00:50:05you are cutting back jobs

00:50:07because you're trying to squeeze

00:50:08every piece of profit you can out of this country,

00:50:11this company, you're strip mining it.

00:50:12You're strip mining Boeing.

00:50:14It was one of the greatest American companies ever.

00:50:16It has employed thousands of people in my state,

00:50:19and you are strip mining it for profit, shareholder value,

00:50:23and you're being rewarded for it.

00:50:24You got a huge raise, a huge increase.

00:50:27So it's working out great for you.

00:50:30For the American people, they're in danger.

00:50:33For your workers, they're in peril.

00:50:35For your whistleblowers,

00:50:36they literally fear for their lives,

00:50:38but you're getting compensated like never before.

00:50:40Don't you think maybe your priorities are misplaced here?

00:50:43I mean, don't you think maybe it's time

00:50:44to get back to focusing on making quality planes

00:50:47and paying your workers well

00:50:49and taking care of the little guys

00:50:51who got you to where you are?

00:50:53That's not a rhetorical question.

00:50:55Senator, I don't recognize any of the Boeing you described.

00:51:01Really?

00:51:02And I want to assure-

00:51:03You don't recognize the Boeing

00:51:04that has airplanes falling out of the sky,

00:51:07that has had two Maxis crash,

00:51:09that has had pieces of doors fall out of the sky,

00:51:12that have had whistleblowers come

00:51:13before they've sat right where you have sat and told us.

00:51:16These are your employees who have told us that when they,

00:51:19these are the engineers, by the way.

00:51:21Are you an engineer?

00:51:22I'm not.

00:51:23Yeah, they are.

00:51:23And they have said that they're not listened to,

00:51:26that they're retaliated against, that they're threatened.

00:51:29That's the reality of Boeing today.

00:51:33That's your company that you have created.

00:51:34Now, I don't recognize it either

00:51:36from the company it used to be decades ago,

00:51:37but under your leadership, that's what Boeing is,

00:51:40and you're being rewarded for it handsomely, handsomely.

00:51:43Don't you think there's something wrong with that?

00:51:46Why haven't you resigned?

00:51:48Yeah, Senator, I stand by what I said,

00:51:52and I want to assure the great employees in your state

00:51:54that that is not the way we operate the company,

00:51:58and it never will be.

00:51:59And if you would like my chief engineer

00:52:00to talk about what he sees in your-

00:52:02No, I want to hear from you,

00:52:03because what I hear from you

00:52:04is a lot of this team does that, and that team does that,

00:52:06and I listen to the whistleblowers,

00:52:07but I don't meet with them.

00:52:09And I've heard about all this stuff

00:52:10that you, Congress, have meddlesomely asked for

00:52:14because the public wants to see it.

00:52:15Gosh darn it, but you actually haven't supervised any of it.

00:52:18I've heard that.

00:52:19It's a lot of it's this, it's that, it's this, it's that.

00:52:21But meanwhile, you're getting paid a heck of a lot of money.

00:52:23It's unbelievable.

00:52:24If anybody's coming out of this deal, good, it's you.

00:52:27Why haven't you resigned?

00:52:29Senator, I'm sticking this through.

00:52:31I'm proud of having taken the job.

00:52:33I'm proud of our-

00:52:34Proud of this record?

00:52:35Safety record, and I am very proud-

00:52:36You're proud of the safety record?

00:52:37Of our Boeing people.

00:52:38You're proud of this safety record?

00:52:40I am proud of every action we have taken.

00:52:42Every action you've taken?

00:52:43Yes, sir.

00:52:44Wow, wow.

00:52:47There's some news for you.

00:52:48Well, behind you, you can't see it.

00:52:50Behind you, the folks are showing pictures

00:52:53of the people who are the victims of your safety record.

00:52:56I think we can all see them.

00:52:59And I think the American public,

00:53:00when they fear to get on their airplanes,

00:53:02they understand your safety record.

00:53:04And frankly, sir, I think it's a travesty

00:53:06that you're still in your job.

00:53:11Senator Butler.

00:53:13Thank you, Chairman.

00:53:14Thank you to you and a ranking member

00:53:16for today's hearing.

00:53:17To the families who are here today,

00:53:22thank you for continuing to keep the legacy

00:53:27of your family strong and present,

00:53:30raising their voices at a time

00:53:35when there's so much attention being paid.

00:53:38You have not been, you've not relented one bit,

00:53:43even when you thought no one was listening.

00:53:47Thank you for staying on the case and for being here.

00:53:50Mr. Calhoun and Mr. McKenzie, thank you for your presence.

00:53:55I want to turn to your, the report to the FAA,

00:54:01Mr. Calhoun, the plan of action moving forward.

00:54:05There's not been a great deal of detail

00:54:08of that plan shared, but in your comments

00:54:12and testimony to the committee today,

00:54:15you highlight the, you say, and I quote,

00:54:19it's our people who are our greatest strengths.

00:54:24I think any executive, CEO, person who's run a business,

00:54:29a small organization knows that it fundamentally

00:54:33is the people who make the company strong.

00:54:36My colleague, Senator Hawley, was talking about

00:54:41how well you compensate.

00:54:43The chairman raised issues, concerns about

00:54:47are the people of your company seeing any accountability

00:54:53for behaviors that have led to us being in this place.

00:54:57You said yourself that the people who you tasked

00:55:01with responding to the information requests

00:55:05from this committee are sitting in this room,

00:55:07but I think you would agree that they have failed

00:55:11in representing the greatness of this American company.

00:55:17So let's, I want to understand, what is the plan?

00:55:22Relative to the people moving forward.

00:55:26There's a lot of words about training.

00:55:28There's a lot of words about, I tried to capture it

00:55:33as precisely as I could, better work instruction adherence.

00:55:39It implies that the workers are not adhering

00:55:43to the instruction and or training

00:55:45that you are currently providing.

00:55:48So I want to dig a little bit into understanding

00:55:51the specifics of the plan that you've offered to the FAA,

00:55:55to the American people, and to these families

00:55:58who are here about how it is that you are going

00:56:01to advance this plan relative to the important people

00:56:07that keep this company strong.

00:56:09Let me ask just a very specific question.

00:56:12What are the costs associated

00:56:15with the people part of your plan?

00:56:19It depends on what aspect of it,

00:56:23but if it's in the training arena,

00:56:24it's well over a billion dollars.

00:56:28And Senator, a large part of the training needs

00:56:32relate to Senator Johnson's question

00:56:35with respect to turnover and the number

00:56:36of newer people that we have.

00:56:40In our stand downs with all of our people,

00:56:43and I always believe and I'm sure and certain

00:56:46that the best ideas will come from them,

00:56:49they gave us lots of great ideas

00:56:51on how they would train all the new people,

00:56:54how they would do most of that training on the job

00:56:57as opposed to the classroom.

00:56:59We dedicated many, many, many more hours to that training.

00:57:05We created-

00:57:06I read it, it's about 300 additional hours

00:57:08that were dedicated to the-

00:57:11We created a proficiency metric,

00:57:13not as a pay item, but simply recognition

00:57:18that from the senior folks, the junior folks

00:57:21are now proficient at the task and the job that they have.

00:57:26They know where the drawings are,

00:57:27they know the steps required to follow

00:57:28each of those drawings, and they don't need

00:57:30to have somebody next to them while they do it.

00:57:33So of all the issues that we heard for all of those people

00:57:38and 30,000 ideas, most, most focused on training.

00:57:42So it's a billion, about?

00:57:44Yes, something north of a billion.

00:57:46North of a billion dollars dedicated to the implementation

00:57:51of the plan moving forward relative to people.

00:57:54Are those costs, are those dollars actually

00:57:58gonna be dollars going into the pockets

00:58:02of Boeing workers around the world?

00:58:05It will pay for all of the time and training that they get.

00:58:10It's not a compensation.

00:58:13This is an investment the company will make

00:58:15to take people off of their airplane job

00:58:18and make sure that we train them to be ready

00:58:20to do the airplane job.

00:58:21So they're not gonna be compensated

00:58:23for the additional training that they get?

00:58:25Well, they get paid for every hour they're there, yes.

00:58:28But now you have a more highly skilled worker,

00:58:33Yes. theoretically.

00:58:34Yeah.

00:58:35And there is not additional,

00:58:36in this plan, there's not a-

00:58:37They can proceed within the,

00:58:39like in the Puget Sound, along the uni.

00:58:41The more skills they accumulate,

00:58:43the better they'll get paid.

00:58:44So- Answer to that is yes.

00:58:46And that's within the billion dollars?

00:58:49No, that's a, no, no.

00:58:51So that's what I'm trying to understand.

00:58:51That would be straight compensation.

00:58:53Right, so I wanna, I really wanna understand-

00:58:55I don't have the aggregate number for that.

00:58:57Yeah.

00:58:57I'm happy to provide that,

00:58:59at least with respect to the plan.

00:59:00I would really like to understand,

00:59:02because I think the, if we're,

00:59:03if what you have said is, and what the,

00:59:06and the plan that you have moving forward,

00:59:09is that there's, that we need

00:59:10a more highly skilled workforce.

00:59:14I would assume that that would mean

00:59:16a better compensated workforce

00:59:19that is now more highly skilled.

00:59:22And so I wanna make sure that I understand

00:59:25that in particular, we're running out of time quickly.

00:59:29I wanna pick up on a conversation

00:59:30that a couple of my colleagues have started out.

00:59:34And this notion of culture.

00:59:37And culture is incredibly important for it to last.

00:59:41It's really gotta be something that is sticky.

00:59:45The chair asked about the number of workers

00:59:48that have been, or employees, managers, leaders,

00:59:51that have been, faced discipline for retaliation.

00:59:57What I would like to understand,

00:59:59and would love to get just a quick response from you about,

01:00:02is how do you plan to increase confidence

01:00:06in these new policies and the culture

01:00:08that you want your people, your greatest asset,

01:00:12to believe in, if there's no visible consequences

01:00:18for the behavior that is allegedly disallowed?

01:00:24Again, with respect to how to motivate our teams,

01:00:30the most important thing.

01:00:31I'm sure you believe that they're motivated

01:00:33because they're producing products.

01:00:35So I'm not suggesting that they're not motivated.

01:00:38What I want, and I think what you want,

01:00:40is to have them to believe, and to trust,

01:00:44that your leadership is gonna keep the traveling public safe

01:00:49and is gonna help them build a solid future

01:00:51for their family.

01:00:53Why should they trust you?

01:00:55Well, first, we do celebrate people

01:00:59who give us information that helps our operation.

01:01:02And even if it doesn't,

01:01:04we celebrate their willingness to speak up.

01:01:06And we do it publicly.

01:01:09And we survey the results.

01:01:10Do you trust the system?

01:01:11And we get better and better and better feedback on that.

01:01:16And we have ways to go,

01:01:17and we have to keep working on that one.

01:01:19And yes, maybe there's a better way

01:01:21to communicate the disciplinary actions that we take.

01:01:25I am sensitive to the people

01:01:27who we take those disciplinary actions against.

01:01:30I think it's highly likely that in the immediate workspace,

01:01:35around wherever or whatever happened in those instances,

01:01:39there's a high level of awareness.

01:01:42Yeah, thank you.

01:01:43Thank you, Senator Butler.

01:01:44Senator Marshall.

01:01:46Thank you, Mr. Chairman.

01:01:49Growing up, a lot of my friends,

01:01:52uncles, relatives worked for Boeing.

01:01:54And I remember a button.

01:01:55It said, if it's not Boeing, I'm not going.

01:01:59If it's not Boeing, I'm not going.

01:02:02Good jobs, great jobs working there.

01:02:06Mr. McKenzie, you worked for Boeing

01:02:07for several decades, I understand.

01:02:10What happened to the safety culture there?

01:02:14Thank you for the question, Senator.

01:02:16Well, I'll tell you, I've been in this role at Boeing

01:02:19just over a year.

01:02:21As you noted, I've been at Boeing

01:02:24for well over three decades.

01:02:26I'm in my 37th year, starting out as an intern,

01:02:31going all the way through today.

01:02:33I can tell you that in the last several years,

01:02:35and I speak for the engineering team at Boeing,

01:02:38they are extraordinarily focused on safety.

01:02:41We've done several structural changes

01:02:43to the engineering function.

01:02:45We have aligned the engineering function

01:02:47into one organization.

01:02:49We now have the most engineers

01:02:51that ever populated the Boeing company inside Boeing,

01:02:55over 64,000 engineers.

01:02:58We have defined functional chief engineers

01:03:01for every one of our functional disciplines,

01:03:03including human factors.

01:03:05We have built out and developed a robust system

01:03:08of what's called design practices,

01:03:10where we are codifying every technical learning

01:03:14and lesson on how we do things at Boeing.

01:03:16But sir, you're an engineer.

01:03:19Yes, sir.

01:03:19To solve the problem,

01:03:20you have to first identify the problem.

01:03:22There was a problem.

01:03:24What happened to the safety culture of Boeing?

01:03:28What did you identify as the problem?

01:03:31Well, Senator, the presumption is that

01:03:35the, if you're talking specifically,

01:03:38which, if you're talking specifically about the MAX,

01:03:40there was specific technical requirements

01:03:43that were an error.

01:03:47And to resolve those errors,

01:03:50we embarked on the design practice discipline structure.

01:03:54Do you think that there was a culture, though,

01:03:56that safety was not first, from then until today?

01:04:01I think, in that particular instance,

01:04:04I think that the analysis

01:04:07that supported the decisions

01:04:11that were made at the time were an error.

01:04:14And I can't state exactly the threads

01:04:19that were drawn that created that error,

01:04:22but we have built a system

01:04:24to make that much more robust today,

01:04:28so that will never happen again.

01:04:29Do you think that there's a culture of safety first today?

01:04:32There is absolutely.

01:04:33Within our engineering team,

01:04:35there's absolutely a culture of safety first.

01:04:37Whenever there's an issue or a problem,

01:04:40invariably, the very first question we ask is,

01:04:42what is the safety determination?

01:04:44We have a system called

01:04:45the Continued Operational Safety Program

01:04:48that addresses every single item

01:04:50coming out of our fleet every day.

01:04:52Every engineering leader in the company

01:04:54gets an email every day that identifies

01:04:57all problems that occurred in the fleet.

01:04:58They're called cost-reportable problems.

01:05:01We take those to our safety review boards,

01:05:04and we go through a very structured and rigid process

01:05:07that's overseen by the FAA

01:05:09to make safety determinations on all of those issues.

01:05:12Anything that's determined to be a safety issue,

01:05:14we go through, again, a very methodical process,

01:05:18and we've been doing this for many years,

01:05:20that defines what the safety implications are,

01:05:24what the safety remedies are.

01:05:26So what happened?

01:05:27What went wrong?

01:05:29How did we miss the mark?

01:05:32Again, Senator, you asking about a specific issue,

01:05:37I'm talking about the broad process.

01:05:40Will, I'm talking about doors flying off of planes.

01:05:42I'm talking about using parts that are misfits.

01:05:45I'm talking about planes crashing.

01:05:47Well, Senator, the door issue

01:05:52was an issue in manufacturing,

01:05:54and I'm representing engineering.

01:05:56The engineering design of the door is not implicated.

01:05:59However, the engineering actions

01:06:04through all of that remain, as I explained,

01:06:08focused on every learning that comes out from the fleet,

01:06:13uses the robust processes that we have

01:06:16in conjunction with the FAA.

01:06:17They're all overseen by the FAA,

01:06:19and implements all safety precautions in the fleet

01:06:24from an engineering perspective here.

01:06:27So certainly as I talk to aerospace engineers,

01:06:32they're absolutely convinced Boeing is engineered properly.

01:06:36They're absolutely solid airplanes.

01:06:38There's so many good things we could,

01:06:39and I talk to the pilots.

01:06:41The pilots love their Boeing airplanes.

01:06:43They, so many good things.

01:06:45They give us enough good things

01:06:47to say about Boeing airplanes.

01:06:50So to me, it comes down to the fact

01:06:52that we're not executing the plan.

01:06:54We have good design.

01:06:57The planes are good,

01:06:58but we're not executing a plan perfectly,

01:07:01and that's what it takes,

01:07:02is there's no room for error in your industry,

01:07:05and if you cut corners, Mr. Calhoun,

01:07:11what went wrong?

01:07:13What happened?

01:07:13Again, is the design right?

01:07:14The pilots love them,

01:07:16but yet we've had some pretty bad outcomes.

01:07:18What went wrong?

01:07:19Yes, sir.

01:07:22The MAX accidents, again, tragic.

01:07:27The design was wrong.

01:07:30The NTSB reports, all of the investigative reports,

01:07:35specifically identified an error with MCAS,

01:07:41and MCAS created an environment in the cockpit

01:07:44at a crucial moment.

01:07:46Then fast forward.

01:07:47Now we're losing this bit.

01:07:50So Mr., again, Mr. McKenzie,

01:07:53what he refers to is about probably half our people,

01:07:56engineering in particular,

01:07:57work on the development of airplanes,

01:08:00and half work in support of production operations.

01:08:03So with respect to the accidents,

01:08:05where we were focused, focused, focused,

01:08:08and the description of the changes,

01:08:10and they're big and they're significant

01:08:11across the engineering department,

01:08:13we're focused on preventing the design problem

01:08:16from ever happening again.

01:08:18Human factors, a whole new team,

01:08:20a whole new approach,

01:08:21a set of disciplines around it, et cetera.

01:08:25Alaska, very different.

01:08:26That was a manufacturing miss.

01:08:30That is what our quality action plan is all about.

01:08:34I believe, while there was a very discreet miss

01:08:39with respect to the documentation

01:08:40of removal of that door plug,

01:08:43which caused this to escape our factory,

01:08:47while that happened,

01:08:48and it was a discreet instance on one airplane,

01:08:50we have tried to look at literally everything we do

01:08:54to make certain that that can never happen again,

01:08:56and that is what our quality plan is about,

01:08:59and that is what we're up to.

01:09:00But that's a very different process,

01:09:02the production process,

01:09:03than the development process.

01:09:04Thank you.

01:09:05Neil Beck.

01:09:07Mr. Calhoun, let's put it very bluntly.

01:09:10346 people died because of a faulty control system,

01:09:16the MCAS system,

01:09:19that Boeing knew was going to cause a crash at some point.

01:09:24Correct?

01:09:26I would not say the latter part of that sentence.

01:09:29People at Boeing knew.

01:09:31There was a judgment that was made by ourselves,

01:09:34our design engineers,

01:09:35and the certification process,

01:09:37that that could never happen, but it did.

01:09:40Well, now you're gonna make me really angry,

01:09:43because the evidence shows, in fact,

01:09:48that the engineers working on this plan

01:09:55knew that that faulty control system

01:09:57drove the nose down under certain circumstances,

01:10:02and pilots, in fact,

01:10:05Lion's Air and Ethiopian Air,

01:10:08struggled to lift that nose

01:10:13as the plane plummeted toward the sea,

01:10:17and they couldn't do it,

01:10:18because they didn't know what was happening,

01:10:22and the reason they didn't know what was happening

01:10:23is Boeing concealed it.

01:10:26They concealed it from the FAA,

01:10:29and therefore, Boeing was charged with defrauding

01:10:36the United States of America,

01:10:40and the prosecution was deferred,

01:10:43because Boeing paid a fine,

01:10:45but no individual was held accountable.

01:10:49In my view, and I said it at the time,

01:10:52individuals should be held accountable

01:10:55for those deaths, don't you agree?

01:10:58Senator, what's wrong for me

01:11:01to reinvestigate an investigation

01:11:03that was thorough, thorough, thorough?

01:11:04I'm not talking about reinvestigating.

01:11:06I'm talking about a judgment.

01:11:10We're here about accountability.

01:11:12It is a moment of reckoning for Boeing

01:11:15that will help Boeing in the long run,

01:11:17because the only way to course correct

01:11:20is to face the truth and confront the need for action,

01:11:26and I'm asking you,

01:11:28shouldn't individuals be held accountable,

01:11:31individuals who are still at Boeing,

01:11:33and who may be in positions of responsibility now?

01:11:37Senator Blumenthal, we are responsible.

01:11:39We are responsible.

01:11:43The Department of Justice and the Boeing team,

01:11:46and all the investigations,

01:11:47and all the judgments that were ultimately taken,

01:11:50I'm not here to second-guess them.

01:11:52Only one individual was ever criminally prosecuted,

01:11:57a pilot, he was acquitted,

01:12:01and I'm saying to you,

01:12:03and I'm saying to the Department of Justice,

01:12:06individuals should be held accountable,

01:12:08because that's the only way that deterrence works.

01:12:13Wouldn't you agree?

01:12:14Yes, sir.

01:12:15I believe strongly in accountability.

01:12:17Now, Boeing paid a criminal fine of $243 million, correct?

01:12:25I don't know the precise number,

01:12:27but I assume that's correct.

01:12:27You must know the precise number.

01:12:29You're the CEO of the company.

01:12:31It only happened five years ago.

01:12:34Five years ago, and I-

01:12:36Four years ago.

01:12:37Yep.

01:12:39Boeing paid $243 million in a criminal penalty.

01:12:44It paid $500 million to the families

01:12:49who lost loved ones in the MAX crashes,

01:12:54and it paid $1.77 billion

01:12:59in compensation to airline customers.

01:13:02Those numbers correct?

01:13:03Yes.

01:13:06As to any of those amounts that were paid,

01:13:12was Boeing insured?

01:13:14I don't have a precise number for you.

01:13:20You don't have a precise number,

01:13:21but Boeing was insured,

01:13:23therefore Boeing didn't have to pay large amounts.

01:13:27Do you know how much?

01:13:28I don't know the net amounts, sir.

01:13:30Let me ask you this.

01:13:31Did Boeing take tax deductions on any of those amounts

01:13:35to reduce the impact?

01:13:37And I don't have the answer to that either, sir.

01:13:39You don't have the answer as the CEO of the company?

01:13:43I find that hard to believe.

01:13:46I don't, sir.

01:13:51Well, I would suggest that the prosecution

01:13:57that is, in my view, almost certainly to result

01:14:02from the investigation underway,

01:14:05and I say again, as former federal prosecutor

01:14:11and state attorney general,

01:14:14I think that the evidence is near overwhelming

01:14:19to justify that prosecution,

01:14:21that there ought to be individual accountability

01:14:26and amounts that really reflect the harm done

01:14:29that are not deductible as those amounts were.

01:14:35And I would like you to report back to this committee

01:14:39as to what amounts were deducted

01:14:42and how much of those penalties

01:14:46and payments were covered by insurance.

01:14:49Will you commit to do that?

01:14:50I will do that.

01:14:52John Barnett went through two days of deposition.

01:14:57Have you read his deposition?

01:14:59Yes, I, yes.

01:15:04What was your reaction?

01:15:06Heartbroken.

01:15:08Well, it was heartbreaking, that's for sure,

01:15:10but did it cause you to want to take some action

01:15:13against those employees who put pressure on him

01:15:17and threatened him?

01:15:21Senator, now this was considerably before my time.

01:15:29I do know that that process was taken up

01:15:33by the governor authorities and was looked into

01:15:38and they came out with a determination

01:15:41that I know nobody's satisfied with in the Barnett family

01:15:45and I understand that and I understand why.

01:15:49But it did go through a process

01:15:51and I know the family will take exception to that process

01:15:57and I understand it.

01:16:03I'll turn to a ranking member for second round on his part.

01:16:08I see I have some colleagues here.

01:16:09Do I, should I defer to either Senator Hawley

01:16:11or Senator Marshall?

01:16:14Well, I guess what I'd like to do

01:16:15and maybe Mr. McKenzie would be the person

01:16:18to speak to this or Mr. Calhoun.

01:16:23Again, the goal here is to reassure the public

01:16:29that they feel safe to fly.

01:16:33We want Boeing, we want the airline industry to succeed.

01:16:36So can one of you go through the entire quality

01:16:42and safety process that provides that assurance?

01:16:45I talked about all the players in that process,

01:16:49the suppliers, your manufacturing associates,

01:16:52your management, the FAA, which by the way,

01:16:55the FAA has only turned 172 documents

01:16:58over this committee as well.

01:16:59They're not exactly as is true

01:17:02in just about every government agency

01:17:03that I've tried to do oversight on.

01:17:06They're not very transparent.

01:17:08But the FAA and then finally the airlines

01:17:11and their maintenance crews and the pilots.

01:17:14Can you just kind of talk the way through

01:17:16that even if Boeing doesn't reach perfection,

01:17:22there are other steps beyond that to try and catch air.

01:17:26So go through that process, please.

01:17:32I'll start and I'll turn it over to Howard.

01:17:37Alaska was a manufacturing defect.

01:17:41It created an unsafe airplane.

01:17:43Perfection is what our job is and it has to be absolute.

01:17:49We inspected every airplane that has that plug quickly.

01:17:53We know it was a single airplane.

01:17:55And as I said, for all of the media coverage

01:17:58of Boeing airplanes over the course of this year,

01:18:01I believe that was the only manufacturing defect

01:18:06that's related.

01:18:07Now, so what we do first is we close that down, period.

01:18:12We look at the value chain from the delivery

01:18:17of the airplane all the way back through our supplier.

01:18:20And we take dramatic steps to make sure

01:18:22that at every step of that value chain,

01:18:24that door could never, never leave the airplane in flight.

01:18:29This was related to our spirit supplier.

01:18:33And I'll do this just for effect

01:18:35and I'll let Howard cover a little more.

01:18:39We used to inspect those fuselages

01:18:40when they arrived at our factories.

01:18:42And we had a lot of inspection sites.

01:18:45And then we would fix all the nonconformances

01:18:49that we would find in those inspections in our factories.

01:18:52And it created more movement than we should have.

01:18:57So immediately following this accident,

01:18:59we moved 13 inspection stations down to Wichita.

01:19:05And we asked, we demanded that Spirit treat us

01:19:09as an inspection authority on their premise

01:19:12and treat it like an FAA ticket

01:19:15so that not a single fuselage would leave that facility

01:19:17that wasn't in perfect condition to come to ours.

01:19:21That was a movement of roughly 200

01:19:23inspection engineers to do that.

01:19:25And then it required probably at least that

01:19:28or double that from Spirit to help us man those stations

01:19:32so they could learn what this process is.

01:19:35So I say that just because that's how big

01:19:38this effort has been for us and that is how we've done it.

01:19:40And we have then sent that message to every supplier

01:19:43with respect to perfection of the products

01:19:47that they deliver to us so that they can move

01:19:49through our line in regular order.

01:19:52Otherwise, we have launched a program

01:19:55on factory floor compliance, hygiene in the factory,

01:19:59pretty much everything, sir.

01:20:00And I know the FAA has paid an awful lot of attention to it.

01:20:05Howard, I don't know if you want to add to that.

01:20:07Yeah.

01:20:08I want to go downstream as well.

01:20:09You know, once it leaves your factory,

01:20:10these playrooms are running for,

01:20:12I mean, how many thousands of hours, you know?

01:20:15Yeah, I want you to take them through

01:20:16the D checks on the eighth set.

01:20:19Yes, Senator, thanks for the question.

01:20:20So from an engineering perspective,

01:20:23I'll just talk very broadly about the whole system.

01:20:27Dave talked about the build aspect.

01:20:30From a design perspective, all of our designs

01:20:35are found to be compliant by FAA standards.

01:20:39We go through a rigorous design process.

01:20:42We do design assurance analyses.

01:20:44We do risk analyses.

01:20:46We do probabilistic analyses.

01:20:48And that assures us that we have compliant design.

01:20:52Dave talked about the build piece of it.

01:20:55But on the back end, we support all of our customers

01:20:59with a continued operational safety process

01:21:02where we monitor the fleet every day, every hour of the day.

01:21:05Everything that should come out of our fleet

01:21:08is determined to be cost-reportable or not.

01:21:10Whether it's, if it's a cost-reportable item,

01:21:12it goes into our safety review boards.

01:21:15We take action based on the individual aspect

01:21:19of whatever was discovered, a learning.

01:21:22We make a safety determination.

01:21:24That is all shared transparently with the FAA.

01:21:27And the FAA takes their own independent risk analysis

01:21:30based on what we've provided.

01:21:32And these are airplanes that have been sold

01:21:34or being operated by the airlines?

01:21:35Airplanes have been sold and been operated.

01:21:37We provide our operators with a robust set

01:21:40of operational guidance to keep the airplanes maintained,

01:21:45keep the airplanes repaired,

01:21:47and keep the airplanes supported.

01:21:49We also provide individual support

01:21:51for items that our customer and airline

01:21:54can't support on their own.

01:21:56And then the airplanes go through a rigid structure

01:22:00of repeated inspections over their lifetimes

01:22:04that are all Boeing.

01:22:05They perform these inspections per Boeing data on their,

01:22:10given their own FAA-approved maintenance practices.

01:22:14And so, it's a constant conversation back and forth.

01:22:19For example, our 70s.

01:22:20Let me just ask, how complex is the maintenance schedule?

01:22:22I mean, how many timed maintenance activities

01:22:26or measures are taken on a weekly basis,

01:22:30monthly, annual basis by the airlines?

01:22:33It's multifaceted, Senator.

01:22:35Depending on the airplane system or structure,

01:22:38there are determined maintenance intervals and cycles

01:22:41for different aspects of the airplanes

01:22:44to be inspected at different times.

01:22:46Depending on the airplane,

01:22:47it's what we call limited validation,

01:22:50or that's life cycle.

01:22:51There are prescribed structural inspections

01:22:54that occur for the 87, for example,

01:22:57six years, 12 years, and onward.

01:23:01Those are major structural inspections,

01:23:03but there are interval structural inspections

01:23:06for particular parts of the airplane

01:23:08at regular intervals.

01:23:09For different systems, there are regular intervals

01:23:12to check for individual aspects of each individual system.

01:23:16So, it's not a single response.

01:23:18It's multiple.

01:23:19And if maintenance is required prior to those safety checks

01:23:22or scheduled maintenance, that gets written up,

01:23:23and Boeing is aware of that,

01:23:25and you bring that into your safety systems

01:23:27or report that to the FAA?

01:23:28Yeah, our airlines conduct and operate very robust,

01:23:33and again, FAA-approved maintenance practices.

01:23:36If they should have a finding

01:23:37in one of their maintenance practices,

01:23:39they will absolutely report it to us.

01:23:41It'll enter our cost system,

01:23:43and we'll make determinations

01:23:44based on the results of those analyses

01:23:46on whether those maintenance practices

01:23:48need to be adjusted to maintain compliance and safety.

01:23:51Briefly, what does the pilot do,

01:23:53or what does the flight crew do before every day

01:23:57or every flight?

01:23:58Well, they do their regimen of pre-flight checks.

01:24:02They do their,

01:24:04and every airline has their own prescribed pre-flight checks.

01:24:09They're based on Boeing flight crew operating procedures,

01:24:13but the airlines have the option to define their own

01:24:16for their particular operation.

01:24:18But the pilots go through their pre-flight checks

01:24:20on the airplane.

01:24:22They check the various systems,

01:24:25understand status lights, hazard lights,

01:24:28everything else that might appear in the flight deck.

01:24:30All systems have to be go,

01:24:32or we're sitting there at the ground stop

01:24:34and waiting for the maintenance.

01:24:35Correct.

01:24:36We also have what's called a minimum equipment list

01:24:39that allows airplanes to be dispatched

01:24:41if not every single system is working,

01:24:43but enough are working to provide absolute safe operation.

01:24:48And the airlines operate with that

01:24:50as well as part of the cadre of data

01:24:53that they use to support daily operation.

01:24:55And of course, we are listening

01:24:57to all of the airlines in the world

01:25:00that operate our airplanes on 24, seven o'clock.

01:25:04And that's why I'd like to get the airline,

01:25:07the CEOs or some representatives coming here

01:25:09to describe that for us.

01:25:10Again, try and set people's minds at ease, but.

01:25:13Along those lines, if I might mention.

01:25:16Your microphone.

01:25:17Along those lines, if I might mention,

01:25:19relative to the 87,

01:25:21the structural reviews that Howard referred to,

01:25:25six years, 12 years, many, many, many,

01:25:27many of those airplanes have been through those reviews.

01:25:30And we have not had an airplane

01:25:32that has had a better structural integrity

01:25:35than those airplanes as they move through there.

01:25:37Perfect record.

01:25:38Pretty much a perfect record.

01:25:39The 787, you're saying?

01:25:41787, yeah.

01:25:42Thank you, Mr. Chairman.

01:25:45Senator Hawley.

01:25:46Thank you, Mr. Chairman.

01:25:47Mr. Calhoun, just to come back to you.

01:25:49Isn't a big part of this story

01:25:52not just what's happened at Boeing in the last year or two,

01:25:55but what's happened over the last 20,

01:25:57what the C-suite has done to this company?

01:26:00Well, let me give you an example.

01:26:02This is from the Atlantic Magazine last month.

01:26:06For nearly 40 years, the company, Boeing,

01:26:09built the 737 fuselage itself

01:26:12in the same plant that turned out its B-29 and B-52 bombers.

01:26:16In 2005, it sold this facility

01:26:18to a private investment firm.

01:26:20Offloading, Boeing called it.

01:26:22The tail, the landing gear, the flight controls,

01:26:25and other essentials were outsourced to factories

01:26:27around the world, owned by others,

01:26:29and then just shipped to Boeing for final assembly.

01:26:33Mr. Chairman, I'd like to, with consent,

01:26:36have this article,

01:26:37Boeing of the Dark Age of American Manufacturing.

01:26:39Without objection.

01:26:41You now have 600, at least 600 direct suppliers worldwide.

01:26:46Who knows how many subcontractors.

01:26:48You've got 35 direct suppliers in China alone.

01:26:52I mean, hasn't this really been the hollowing out of Boeing?

01:26:57Senator Hawley, I think the decision that we have made

01:27:03with respect to Spirit Arrow and our determination

01:27:08to bring it back into the Boeing fold

01:27:11is definitely a vote in favor of vertical integration.

01:27:17That's one.

01:27:17I can't comment on all the ones of the past.

01:27:22We have not had the number of issues

01:27:26and those that we are currently dealing with

01:27:29with respect to our fuselage.

01:27:32So I can't rewrite history, but I can take action forward.

01:27:36You're in charge of the company.

01:27:37I'm just asking you.

01:27:39You're in charge of a company.

01:27:40You're getting paid $33 million a year.

01:27:43You're in charge of a company

01:27:44that has systematically over decades now

01:27:48shipped out its job, shipped out its production.

01:27:51Over the last decade,

01:27:52while you've either been in charge of CEO or on the board,

01:27:56stock prices have rose 600% at Boeing.

01:28:00You've in fact done $59 billion

01:28:03in returning cash to shareholders,

01:28:0420 billion of that in dividends,

01:28:0639 billion of that in stock buyback.

01:28:08Some people are doing great here.

01:28:10I'm just wondering, given the fact that your airplanes

01:28:13are falling out of the sky,

01:28:15do you think that any of that has to do with the fact

01:28:17that you really don't make that much anymore

01:28:19in this country or in-house?

01:28:20I mean, hasn't it been a mistake

01:28:23to hollow out the company and ship your production

01:28:27and your manufacturing and your know-how

01:28:29to other places around the world

01:28:30instead of doing it yourself,

01:28:33the American engineers, American workers?

01:28:35Senator Hawley, I think I read an annual report

01:28:39going all the way back to the introduction of the 747,

01:28:43which highlighted the fact that 65% of that airplane

01:28:47would be sourced by U.S. manufacturers here and there.

01:28:51And the other thing I do know that since 2015,

01:28:54again, I don't have all that history before that,

01:28:58we have actually brought more work to the U.S.

01:29:03than we have taken out of the U.S.

01:29:06And at an absolute level,

01:29:08our work in the U.S. is in the high 80%.

01:29:11And that is unlike any other industry I have ever worked in.

01:29:14These are your suppliers, you're saying?

01:29:15These are your subcontractors, right?

01:29:17The ones who are using Dawn dish soap to test their doors

01:29:20and cheesecloth to test the plugs, right?

01:29:23Those, your CFO, Brian West, recently went on the record

01:29:26and said that Boeing probably got a little too far ahead

01:29:29of itself on the topic of outsourcing.

01:29:31You agree with that?

01:29:32He was speaking directly to our decision to go after Spirit.

01:29:38So he was right?

01:29:40He was speaking directly to our decision

01:29:42to vertically integrate Spirit.

01:29:44So he was right, you got too far ahead of yourself

01:29:47on outsourcing for all of these years.

01:29:50Is Boeing gonna change course on this?

01:29:52We are most certainly changing course on Spirit.

01:29:55You've got 32,000 machinists,

01:29:59these are American workers who work for you,

01:30:01these are Boeing employees in the Pacific Northwest,

01:30:05you're in contract negotiations with them right now,

01:30:0832,000, that's a lot of them.

01:30:10The last time that they got a contract was 16 years ago.

01:30:13Do you remember the terms of that contract?

01:30:15I don't, it was a very long contract.

01:30:17Yeah, well, they got 1% wage increases over eight years.

01:30:241% over eight years.

01:30:26You got a 45% increase just last year,

01:30:30and you're making $33 million.

01:30:31You think maybe these folks deserve a raise?

01:30:34Oh, they will definitely get a raise.

01:30:36Good, good.

01:30:38I hope it's a substantial one.

01:30:40And I hope that maybe this will be an opportunity

01:30:43for Boeing under new leadership to reverse course

01:30:48and actually start making things again,

01:30:51start making things in this country again,

01:30:52and start paying its people well.

01:30:54I've listened to your testimony,

01:30:55and it seems like the gist of it seems to be

01:30:58that if you could just get your employees to comply,

01:31:01follow the rules, follow your management techniques,

01:31:05et cetera, things would be better.

01:31:06I don't think the problem's with the employees.

01:31:08No, I think the problem's with you, you.

01:31:12It's the C-suite, it's the management,

01:31:14it's what you've done to this company.

01:31:15That's where the problem is.

01:31:17The problem's at the top.

01:31:19Your engineers, they're probably the best in the world.

01:31:21Your machinists, they're outstanding.

01:31:24You're the problem.

01:31:26And I just hope to God that you don't destroy this company

01:31:28before it can be saved.

01:31:29Thank you, Mr. Chairman.

01:31:34Thanks, Senator Hawley.

01:31:39I want to talk about specific problems

01:31:43that apparently continue to exist.

01:31:47Have you read or heard recently about roles

01:31:53that the MACS has suffered?

01:31:57I have, sir.

01:31:59What's the story?

01:32:01Well, Senator, NTSB is involved,

01:32:03and they will investigate the hypotheses

01:32:08that we're aware of will not involve

01:32:11the manufacturer of the airplane.

01:32:14Well, what is the cause of those roles?

01:32:16It's the same phenomenon that occurred

01:32:18before that Ethiopian airplane crashed.

01:32:21No, sir, and I have to let the NTSB do their work.

01:32:25They will conclude it.

01:32:28What about fasteners improperly used?

01:32:33You are.

01:32:35Yes, Senator, so clarification on the fasteners.

01:32:40These are fasteners that are common

01:32:42to the side of body for the 787.

01:32:45All the fasteners are installed.

01:32:48All the fasteners are torqued

01:32:49to the proper torque specifications.

01:32:51The subtlety here is they were torqued

01:32:53using the head side of the fastener

01:32:55as opposed to the nut side,

01:32:57and so we are redoing the analysis

01:33:00to understand if that has any safety implications.

01:33:03All three of the submodels of the 787s will be analyzed.

01:33:06The first submodel was analyzed.

01:33:08So there may be a problem there.

01:33:09It's completely acceptable.

01:33:11The first submodel analysis shows completely acceptable.

01:33:14The torque is the right torque.

01:33:16Completely acceptable or unacceptable?

01:33:18Acceptable.

01:33:20What does that mean?

01:33:21It's fine the way it is.

01:33:22The torque is applied properly.

01:33:24All the fasteners are installed.

01:33:27Well, that doesn't give me a lot of reassurance

01:33:32that they're not installed properly, but it's acceptable?

01:33:35The fasteners are all installed.

01:33:38All the fasteners are torqued

01:33:40to the appropriate torque specifications.

01:33:43The specification asked that the torque be applied

01:33:47on the head side of the fastener,

01:33:49on the nut side of the fastener,

01:33:51and they were applied to the head side of the fastener.

01:33:54It's just a matter of what's being held

01:33:55and what's being turned.

01:33:57So all the fasteners are there,

01:33:59and the torque is appropriate.

01:34:00Maybe you can tell us about the causes

01:34:04of that Southwest airline rolling

01:34:09because damage was done to the plane, correct?

01:34:12Senator, it is under NTSB investigation.

01:34:15As Dave mentioned, we are pulling together

01:34:18the data that we have, and it does not indicate

01:34:21that there is anything that is a fleet concern here.

01:34:24We think there's a unique circumstance

01:34:28around this particular airplane

01:34:30that has nothing to do with design or manufacturing.

01:34:34But we'll need the NTSB

01:34:35to complete their investigation and share.

01:34:37What are you gonna do about it?

01:34:40Well, we're supporting the NTSB,

01:34:42and we're supporting the customer with any-

01:34:44You're not looking into it yourselves?

01:34:46We are, Senator.

01:34:47We're supporting the NTSB investigation

01:34:49with our design resources.

01:34:53Aren't you alarmed that airplanes manufactured by Boeing

01:35:00are rolling in this very dramatic

01:35:03and potentially unsafe way,

01:35:06doing damage to the planes that you've manufactured?

01:35:08Senator, the Dutch roll is an oscillation

01:35:12due to the rudder actuator

01:35:17responding to a particular circumstance that it's in.

01:35:20We think it's an individual circumstance

01:35:23for this airplane that, thus far,

01:35:26given the data we have, indicates that this airplane

01:35:29underwent some unique circumstance

01:35:32that is particular to this airplane,

01:35:34and it doesn't give us any cause for concern for the fleet.

01:35:40I'm told that the MAX engine's anti-icing system

01:35:45can't be kept on for more than five minutes in dry air

01:35:49without risking a potentially catastrophic engine failure.

01:35:54Is that true?

01:35:56Senator, it's a particular situation

01:35:58where you're at altitude on a particularly hot day,

01:36:01which is a very, very remote circumstance,

01:36:04and you've kept the MAX anti-ice on,

01:36:08or the engine anti-ice on, for too long of a period.

01:36:12That gives rise to a probabilistic exposure

01:36:15of some deterioration of the inlet.

01:36:18It's a, when we look at it through our cost process,

01:36:24we conduct a functional hazard analysis and a fault tree.

01:36:29We've established the probability of that occurring.

01:36:32It's extremely remote.

01:36:34At the same time, we're taking all efforts to redesign that,

01:36:38but again, because of its extremely remote probability,

01:36:42we believe the fleet is safe.

01:36:45Where I'm going with these questions is

01:36:47that there seems to be a kind of laundry list of incidents

01:36:52caused by a series of manufacturing or design problems,

01:37:00and the company isn't grappling with them

01:37:03in the very proactive and vigorous way

01:37:08that the public would expect

01:37:10when you're putting airplanes at risk.

01:37:16Senator, every single item that comes out

01:37:21of our 24-7 fleet monitoring goes through

01:37:25our Continued Operational Safety Program

01:37:28and is individually assessed

01:37:31through a rigorous analytical set of processes

01:37:35that is overseen by the FAA.

01:37:37Safety determinations are made on a continual basis,

01:37:42and those safety determinations are, again,

01:37:44overseen by the FAA,

01:37:45using their independent analyses for corroboration.

01:37:51Well, again, we come back to what you're telling the FAA,

01:37:54which was fraudulent

01:37:56when that Deferred Prosecution Agreement was reached

01:38:01and may now again result in prosecution

01:38:06in unrelated instances of what you've told the FAA.

01:38:10Let me ask you, Mr. Calhoun,

01:38:12have you heard that non-conforming parts

01:38:14are installed in any Boeing airplanes?

01:38:18We have a process, Senator,

01:38:21to ensure that no non-conforming part is in an airplane.

01:38:24But two whistleblowers have told us

01:38:26that likely non-conforming,

01:38:30meaning damaged or defective parts, were installed,

01:38:34and at the very least, they were hidden from the FAA.

01:38:39Senator, I read that complaint this morning.

01:38:44I do know, and it followed up,

01:38:46that the speak-up had been received in our system

01:38:48and that the quality team has been and is looking.

01:38:52So more than happy to get back to you on that.

01:38:55I apologize, I'm personally not involved in it.

01:38:58I just saw it this morning.

01:38:59I would hope that you would.

01:39:01You don't know of a single instance

01:39:03of any discipline for retaliation, is that correct?

01:39:10That's what you said earlier.

01:39:11I said that we have taken action

01:39:13on people who we have determined to have retaliated,

01:39:16but I did not have the number.

01:39:19Can you tell me about one?

01:39:22I'm not gonna tell you about one, sir.

01:39:25We have a process, it works.

01:39:29I beg to differ, it's not working.

01:39:33It's not working.

01:39:34You know it's not working.

01:39:37Let me tell you, because you've read this deposition,

01:39:41about what John Barnett said about one employee.

01:39:45Question, Mr. Barnett, are you aware

01:39:49of ever hearing about any employees

01:39:52being physically assaulted for raising safety complaints?

01:39:58Answer, Barnett answering.

01:40:01Actually, I have heard, heard of one.

01:40:04The name is blank.

01:40:06Was telling me about a time that she was dealing with,

01:40:11the other person's name is also redacted,

01:40:14and he was pushing her to work outside the procedures.

01:40:19And she told me that he actually put his arm against her

01:40:23and pushed her against the wall

01:40:25and was pointing to her in her face

01:40:28and telling her to get on board.

01:40:30And this was a good old boys program

01:40:33or something like that, end of quote.

01:40:37You read that?

01:40:38Yes, sir.

01:40:39Did you look into it?

01:40:41Sir, this happened a very long time ago.

01:40:43Well, did you look into it?

01:40:46And it happened a long time ago.

01:40:49I started in 2020.

01:40:53It's horrible, it's a tragic end.

01:40:55I don't know what else to say.

01:40:58Well, I understand your feelings of regret about it,

01:41:03but what's needed here is action.

01:41:07There are a series of whistleblower complaints.

01:41:11There are a collection of retaliation actions

01:41:16and there's been no action on them.

01:41:20Now you submitted a plan

01:41:23that sounds very much like the 90-day plan

01:41:31or the plan that the company submitted previously.

01:41:35I'm gonna put up the 90-day plan that you submitted.

01:41:43This is what you agreed with the FAA to do in 2015.

01:41:48I'm just taking four examples.

01:41:51Your 90-day plan basically recycles those ideas.

01:41:56I asked you my very first question,

01:42:00has the company done enough?

01:42:02I submit the answer based on this chart

01:42:07and the comparison is the company's done virtually nothing.

01:42:12It's making more of the same promises.

01:42:14It's recycling the same old ideas

01:42:18without having taken action.

01:42:22Do you disagree?

01:42:24Yeah, Senator, again, I started in 2020.

01:42:33I don't think I've ever taken, or I's the wrong word,

01:42:37we as a leadership team could have taken

01:42:40any more dramatic steps than we've taken.

01:42:42Howard described what has happened

01:42:45within the engineering function.

01:42:48We stood it up on its own.

01:42:50We created important design practices

01:42:52that would address directly the development

01:42:55and design of every next airplane

01:42:57so that we would never design an MCAS again.

01:43:01And it would include a very comprehensive look

01:43:03at human factors, pilots, all those interactions.

01:43:08We hired 60 pilots, experienced pilots,

01:43:11to travel the world and meet with our experienced

01:43:14and least experienced airlines to talk to them

01:43:17about what they need to see in our airplanes.

01:43:21The list goes on.

01:43:23The safety management system basically started

01:43:27and designed and attached to the cost program

01:43:31that Howard discussed, which is to listen

01:43:33to every airplane every day, every second,

01:43:38as one takes off, so that we can hear

01:43:42and then evaluate and support our customers

01:43:45to improve safety every day.

01:43:47And safety does get better every day.

01:43:52We mentioned earlier that only one person

01:44:01has been prosecuted as a result of the criminality,

01:44:07in my view, criminality,

01:44:09and the Justice Department's view, criminality,

01:44:12that was involved in the two crashes, 2018 and 2019.

01:44:18The basic practice, the modus operandi,

01:44:23it seems to me, of the company is to shift blame downward,

01:44:28to, in effect, scapegoat workers,

01:44:33rather than the management team responsible,

01:44:37ultimately, for conducting the company.

01:44:43Recently, in fact, just weeks ago,

01:44:48when a Boeing employee spoke up

01:44:50about the falsification of records for tests performed

01:44:53during the assembly of a 787 in South Carolina,

01:44:59this was speaking up about falsification of records,

01:45:02the FAA, a violation of that deferred prosecution agreement.

01:45:08In effect, Boeing blamed the employee and said,

01:45:13and I'm quoting from the letter,

01:45:16that Boeing submitted to the FAA, quote,

01:45:19the employee misconduct was so obviously

01:45:22outside the bounds of clearly articulated

01:45:26and broadly understood company requirements

01:45:29that their intent should not be imputed to the company.

01:45:36The same letter says that the root cause

01:45:38of the falsification has not been determined.

01:45:42You familiar with that letter?

01:45:44Senator, this issue, I will start with

01:45:50the employee who observed a practice

01:45:55and raised his hand and brought it to our attention,

01:45:58a team of very qualified engineers,

01:46:01because this was not a simple determination to come to,

01:46:05within a day, got to the determination

01:46:08that this employee misrepresented his work directly.

01:46:13That is unacceptable, and disciplinary actions

01:46:16will be handed out, and it'll be quick.

01:46:20But what about the managers who may have known about it?

01:46:23Have you begun an investigation?

01:46:25There will be a line right up

01:46:27with respect to the managers,

01:46:29but this was a misrepresentation.

01:46:36I'm gonna ask the Ranking Member

01:46:37whether he has any other questions.

01:46:43You know, we are running out of time,

01:46:48and you have promised to get back to us

01:46:52with information that I think this committee

01:46:57needs and deserves, but will you also commit

01:47:01to respond fully and transparently

01:47:06to the request for documents that we've made

01:47:09instead of what you and I have agreed is gobbledygook?

01:47:12Yeah, Senator, I will look hard at that.

01:47:14The answer is yes.

01:47:19I'm gonna take you at your word.

01:47:24You know, I think what this hearing has shown

01:47:28is we all on this panel want Boeing to do well and succeed,

01:47:35but that requires a course correction.

01:47:38It requires a correction of that broken safety culture

01:47:43more than just about a single aircraft

01:47:47or single factory or individual.

01:47:55And I think that there has to be

01:48:01a change in more than a single manager.

01:48:04Wouldn't you agree that a team of managers

01:48:08has to be held responsible for this kind of losing record?

01:48:14Senator, we have made a very significant number of changes

01:48:20starting with the tragedies that occurred.

01:48:26We have a whole new board,

01:48:30engineering representatives on that board,

01:48:33airplane experience on that board, safety on that board,

01:48:38replaced every single leader

01:48:40across the executive leadership team

01:48:43between 2020 and where we are today.

01:48:47And then we took actions with respect to the Alaska accident

01:48:53specific to the MAX 737 production program.

01:48:59I do believe in accountability.

01:49:01I do believe in it.

01:49:03Even it's hard to administer, but I believe in it.

01:49:06And we have been working hard at that.

01:49:10Would you agree that there has to be more accountability?

01:49:15Senator, I am doing everything in my power.

01:49:17If I agreed, then I would have done something more.

01:49:19I have done everything I believe is required.

01:49:23I am leaving.

01:49:25Yes, sir.

01:49:26At the end of this year.

01:49:26Yes.

01:49:28But people in the current board or management structure

01:49:36in effect are filling positions that are open,

01:49:41same individuals.

01:49:42Wouldn't you agree there has to be more accountability

01:49:45and a different team?

01:49:48Not the same individuals.

01:49:53We try to select people who know a lot about airplanes.

01:49:58We are an industry where domain expertise matters a lot.

01:50:04And so we do prefer to choose from within,

01:50:09but we also do our best to match the skill sets

01:50:12with the opportunity at hand.

01:50:15Right now, the immediate opportunity,

01:50:16and I think your committee has helped us point this out

01:50:19along with everything we've learned

01:50:20in the stand downs and accident,

01:50:23engagement, engagement, engagement, engagement,

01:50:26trust with our workforce.

01:50:27That I understand.

01:50:28And the people that we have selected to fill these jobs

01:50:32were based on that spec and that spec alone.

01:50:35Well, I think that you've certainly demonstrated

01:50:43that you can talk about these changes,

01:50:47but making the changes may well require a different team

01:50:52and accountability is very important for the past,

01:50:58but also going forward for the future.

01:51:02So I look forward to hearing more from Boeing.

01:51:06I look forward to hearing from the airlines

01:51:08as the ranking member has suggested.

01:51:11And we are gonna pursue many of these issues

01:51:16because they are a matter of life and death

01:51:20and they have profound consequences to our economy

01:51:25and to the traveling public.

01:51:29And again, I wanna thank everyone in the audience,

01:51:31particularly those who have been personally affected.

01:51:36And I think we wanna continue to encourage whistleblowers

01:51:42to come forward and protecting them from retaliation.

01:51:47The committee record will remain open for 10 days

01:51:50and the hearing is adjourned.

01:51:52Thank you.

JUST IN: Boeing CEO Faces Intense Grilling Before Senate Homeland Security Committee

Category

Transcript

Recommended