served as a london correspondent, seattle bureau chief and feature writer for bloomberg businessweek and a recipient of the malcolm forbes award and from the society of advanced business writing and editing. a native of st. paul minnesota with an honors degree from stanford he lives in seattle with his wife and two children. previously contributed to the industry standard and pulitzer tprize morning he covers the aerospace industry for the seattle time. here tonight to discuss peter's book flying blind the 737 tragedy. please join me in welcoming peter robison. [applause]

thank you all for coming. before i start throwing questions out let me say a few things first about the book. i'd like to begin by since the subtitle of the book says the fall of boeing, i'd like to begin by recalling the legacy and what it means to this region and to the world. boeing gives the region a great part of its social fabric and all those blue-collar jobs, highly paid and was all here in.

and it gave the world like the 740 sevens that have this incredibly in my lifetime so this is aer company that has gin the world a great deal. the fall began with the two crashes in 2018 and 2019. since then it seems like nothing is going right. everything that could go wrong has gone wrong. the pandemic has hit their airle industryve.

they are supposed to be delivering 14 a month so it's definitely one of the low points. the question this book sets out to answer as peter wrote a company that prided itself on its engineeringio proneness but promise but hadperfectionism ino wildly off course. that is the question he sought to answer, and i have to say i think that this is a great book and i think it will become the go to book for boeing. i would like to mention three things i find very impressive about it is first of all, he nailed the cultural shift that has happened over the last two

decades. if you've ever talked to boeing people, you often have heard the merger ruined everything, ruined the culture. that's perhaps too easy of a conclusion butin with deep research and lots of exclusive interviews actually mapped out this cultural shift incredibly well and it's worth reading from that to get a perspective on how we got here. the other thing is he's a wonderful writer. there are so many sentences in the book i'm just going to read one that refers to the directives issued one week after the crash and i remember reading that so well because you know when a plane crash is very far away, and unfortunately it doesn't get a lot of attention here in the united states. bad weather, old airplane, something like that is the usual

picture. they issued a bulletin followed with a directive. for me and i'm sure every airline supporter in the world boeing was telling us there's somethingg wrong. on its face it is like an iphone bug alert but so paradoxically earth shattering, and i feel it

was. i knew this was going to be a big investigation. i will say what i really admire about the book is it's unflinching in its conclusions. very succinctly he says what he means. he really solidified this culture focused on the financials and the t familiarity beaver he was at 3 a.m. for -- 3m for years that makes office products but was famous for lots of inventions so in just over four years he doubled the

company's annual profits. he did it by going through straight at the future because the last jobs he slashed spending and that is how he got thesee profits but he destroyed the future of the company. so terrific storyat and writing and conclusions. now i will give peter a chance to talk about it with a few questions and later on we will come tote your questions. it seemsms to me a company can move past the greatest tragedy without first admitting what it did wrong with coverage over the

last two decades but i will try to say what, i mean, is cited in the book today. i think it depends on the audience just this month as you reported they admitted fault in aa court filing. it wasta maintenance mistakes ad use all later in the second crash there was enough technical slip that eventually there was a we own it and then i'm sorry in public but even as recently as

last year, the current ceo is something pilots couldt' have handled so i think it's an open question as to whether they would have truly accepted fault. >> they said the design they failed to take into account which to me is also pointing to one thing i often about and you talk about previous generations where somebody stands up and made a suggestion he stands up and says do you want blood on the seats and nobody did that.

when it was being designed, they pulled the wool over their eyes but one of thees doctoral desig, how did that get past this tremendousri engineering company where you get all the engineers in the room and at some point somebody didn't sayy a single thread or sensor. there is an example setting in the book for the next generations where someone realizes a f single point and he stood up in the meeting and said how much blood do you want on the seat covers andnd that got

people's attention over time berkeley because of this cost-cutting a lot of the experienced engineers were being laid off and you had people that have the clout to stand up. people i talkedd to said they felt the checks and balances were broken down when they tried to raise concerns or say or sophisticated flight controls should be introduced they were shot down. >> i mentioned this pilot who is the only one that hasn't been criminally indicted who he was the chief technical pilot and was indicted his actions are clearly inexcusable. he convinced them not to put the systemem in the manuals and

airlines not to have simulator training when they asked for it but my question for you is he is one guy.ho is he a scapegoat through, where else does the responsibility lie do you think? >> withhe management and evidene shows he can be the scapegoat as despicable as some of the comments might be, there's a story i tell in the book in a series of events in october 2019 after the second crash, dennis was going to be brought in in front of congress he would be the public face of this blunder anda it was just before that in that month a staffer on the house transportation infrastructure committee had been getting regularum releases and documents got a release and the call was take a look at the

top and the one on the top was the w messages where they appear to to already know about the problem with the software before the plane was delivered. during those hearings, dennis sullenberger showed the distance. you rememberro the scene where e is confronting him over these messages and my reporting showed he had every reason to know what he meant because he was paid throughnd boeings director and officer liability insurance with a double gain where he was

holding him out as a scapegoat as you are saying. >> and his deputy was still out of boeing at the time. >> and he had to say no. >> you wrote documents parallel to t the faa in terms of the oversight that they were, that was their job. what went wrong in the faa do you think? >> i saw the story through the perspective of the faa specialist on the ground. there were people who talked about the managers as being people who were just effectively skilled is then going back to the 80ss and early 90s and people had a great feelings about working on the triple

seven which many people considered the last great airplane outpl of boeing. then things started to shift and this goes back to the reagan revolution and the other government is the problem and not the solution. it was embraced as an extreme delegation of authority so lots of engineers who felt the managers were no longero to holding them accountable to produce the safest designs. they were seeing the customer ultimately as being the manufacturer and the goal was to help the manufacturers lead them to the market. you quote richard reid at the time do you remember what he said? >> he had kind of a remarkable analogy he said at the time he was seeing what was happening

and he was seeing that his authority was diminishing he saw it as congress that had a potentially dumbed down the agency and he thought of himself as like forest gump and imagined what he would say if anyone called in front of congress to say why don't you certify this so quickly and he thought when he put his rifle together so fast he said because he told me to, congressman. >> congress of course did it by turn afterwards and demanded the hearings that are actually really good but you are right before the crashes there's all the directionon of congress waso put the faa in as treating the customer. >> those were the words instead of applicants for several years, customer m was the preferred language for the manufacturer he

was appointed after the second crash but has been nevertheless pilloried by the politicians. what do you think of dixon and his handling of things since the clash? >> he's a former airline executive as you said he's trying to balance these competing demands right now, trying to show that he has heeded the message of the agency is reforming itself. one of the fathers got a note that said more recently managers have been saying they expect not

much to change as a result of the rules and one of the managers scolded posing for the cameras. >> i've heard some of that and i've also been impressed somewhat with some of theng changes we've seen publicly. just beforeoc the first crash, r local senator maria cantwell helped write some clauses in the reauthorization bill a month before the crash increasing the amount of delegation that would be done but then cantwell reversed after the crash is so last december she helped passn this reform act and then a since then the faa does seem to be getting tougher. they've delayed certification of the triple 7x, quite a lot. it's going to take four years -- it took one year from first

flight to certification of the triple seven, in fact, ten months. and now 44 months until the you version of the triple 7x so they have gotten tougher and i've written several stories about how they are tightening up a little bit, but i wonder do you think it's gone far enough? is it really going to change? >> i think time will tell. it will depend on whether the cultural shift takes hold. i think you reported recently that the faa was concerned about the experience level of the people boeing wass appointing as deputies who were meant to represent the faa and there is also a brain drain that's taken place over the generation that has toto be addressed on both sides. >> let's step back for a moment to go back to that cultural

shift that i talked about at the beginning. most people as i said blamed the mcdonnell douglas merger that was 97 for this change in the culture of boeing but that began with the ceo at the time. and this is the guy that moved the headquarters to chicago from here. you write in the book that he was drawn to the bold vision of capitalism presented by the corporate that he admired. inactually he wasn't a standing engineer the boeing before he became ceo he was an engineer on the triple seven which was the last created airplane that boeing built. what happened after becoming ceo? >> he was a great engineer according to the people i talk to. he would have been a great college professor. he was -- the constituency of

shareholders was very powerful and that became the group that he judged the nonperformance on. if you remember at the time that was the days of jack welch and general electrichi which was the ultimate model for anye manufacturer in the u.s. and a company like boeing that meant services and financial engineering, finance. so he pursued the merger with mcdonnell douglas who pursued the acquisitions the commercial airplane company was seen as a commodity business that could take care of itself and he would move to chicagocu and focus on e big strategic picture. >> i interviewed him before he worked for the "seattle times" lighted one interview and i interviewed him at the leadership center inin st. louis

and the beginning of 2001 just before they announced thehe headquarters move and in that interview talked about wanting to shift the idea of what boeing was that wee were not metal at the time but of course he was talking about the new connections, internet connections to airplanes, beaming movies to cinemas via ca satellite. he wanted it tola be high-tech. metal bending very strange but you mentioned general electric. the influence has been incredible. he came with mcdonnell douglas and he was then we had mcnerney who was almost jack welch's successor and h then calhoun who

was also a ge so the influence has been there for years. this description in the book ill was reading, ge was an american institution pioneered inventions that dramatically improved living standards. the x-ray machine, the electric locomotive, the refrigerator. the people who worked in the labs and industrial groups around the country thought of themselves as family. he was telling investors he wouldn't flinch from the hard decisions to jettison them whatever the cost and actually after he took over, within the next five years he laid off a quarter of ge staff but this was the era of ceos of corporate america beingf lionized on the cover of "fortune magazine" and jack welch was the absolute top

of the pile. so can you talk for a little bit about how ge had such influence over corporate america generally, and boeing specifically? >> at the time, he was considered -- he was the model of what a ceo should look like and what he should prioritize. phil knew him and had a personal relationship with him. he was a protégé of jack welch and so it meant things like fix it, close it or sell it. you've got to fire the bottom 10% every year. financial engineering. during those years ge better be meeting big expectations from 95 to 2004 which you can do if you have a finance unit where you

can get something down one quarter and buy you q down the next quarter and later the sec found that she had bent the rules beyond the breaking point with the wording so jack welch had this influence throughout and as you say it continues to this day dave calhoun, jack welch's former speechwriter said he is the guy most like jack in his book. >> going back to very specifically boeing in a moment, but one last thing you brought back the context of what has happened and you cite the influence of milton friedman in 1970 who wrote in 1979 company's 1979 companiessole responsibilio increase its profits and then

you had this sentence. two generations later in any prosperous american city the effects tesla, luxury high-rises, avocado toast and temps. it sounds like seattle now tell me if marxist academic writing that it would be less startling but it's coming from a business reporter so it's kind of a stunning w judgment on the business world. do you think corporate america has lost its way? >> i am a big business reporter and the question if i'm a business reporter who has seen a story over time and how it ends, i moved to seattlese in 1998 and was eager to meet these great engineers boeing lionized like built to last but that was also

this period of shareholder primacy, the business roundtable at the time said declared as part off its corporate governane the first duty of any company is the shareholders and as long as you take care of profits, employees,ro communities, the customers, they can take care of themselves. so more recently you're seeing ithat shift, the business roundtable is recognizing they have duties to all stakeholders. >> i think one of the saddest things is the stakeholder group that lost sight is the employees. mcnerney and the other ceos were so antiunion and just had this mentality they could get a somewhere else so all the talent here, all this

generation upscale in some ways was thrown away and making people here feel like that meant that they lost. i've heard people say boeing should be runur by an engineer. the current ceo is not an engineer. dennis was an engineer as well as phil as we said earlier. dennis was an engineer. when he came in following mcnerney i remember being full of hope it's an engineer taking over. one of the first things he did was he had signed a new contract with thehe engineering union thy did a quiet negotiation and came up with a new deal and thought that's great but in fact otherwise he just kept very strictly to the mcnerney way

they'd taken him for 18 months to be under his wing. he's come off very badly. why do you think he fails. you would think being an engineer he is a great program manager and a detail oriented and is driven and rides his bicycle 140 miles a week. you need someone with broad

judgment about what to do after something like that. in a lot of ways people describe bill allen as the best ceo and he was someone that wrote notes to himself like don't talk too much. be considerate to make an understanding about the laborers viewpoint. there's a story i tell in the bookoo about a crash that took place in the 747 in 1985 in japan. within a month, boeing came out and said it was our fault that there had been a bad repair job at the boeing facility and it took the japanese authorities by complete surprise. i've talked to people that after

the lion air crash thought it made a similar vehicle but it's more difficult and hard to admit fault. it could have diffused everything that happened afterwards. it's the way that peter paints pictures of these personalities andd gives you a lot of depth about the religion, bike riding and his whole intent focus. the same for many of the other leaders. let me talk or ask you about another one. many engineers said if only alae had stayed and the company would have been saved. but of course he's in charge of thet 787 debacle and left befoe it all fell apart.

you write about how he had become disengaged in the months or half year before he left. by the way there's also news in the book that you will not have read anywhere else. you also reveal the reason why he wasn't elevated to ceo. >> he is a a revered figure. he popularized the phrase working together at boeing and to over communicate, the problem is the illusion so he brought people together and was considered technically

brilliant. he had an upbeat personality but that w demeanor was also held against him in some ways because it became his turn to be considered for the ceo role who had been a board member. mcnerney was seen as more the ceo type. there are just some people who look like an nfl quarterback in the same way he looks like a ceo to them would pursue a predictable strategy. there was another risk factor that came up about his personal life and at that time there had been two consecutive ceos.

some of the sources, many of my stories have to be anonymous because the employees cannot talk to me or you without a pr person beside them. can you talk about your sources and why some of them are anonymous and how you came to trust them? >> there's direct knowledge of the event of the newspaper or any other article but they have important information.

>> i relied on the reporting i've done on the 25 years since. with customers over that time i did zoom interviews with the people overseas. >> the various points that he makes we are running out of time so let me ask a couple of quick questions. as i mentioned.

to recover the ceo and in chicago and the commercial airplane chiefs feels are these the right leaders i spent a lot of time readingve about boeing they said let's no improvement in flying pass us by. they were not seen as sure bets at the time. i don't know if that's something dave calhoun is attuned to and his history has a history of private equity and parachuting

in different divisions at ge. >> it's a difficult position for anybody that might be leading boeing but they are overwhelmed with debt and should probably launch a new airplane, but it's about time to do so and they don't have the money. i will ask two questions into phone andud go to questions from the audience. is it fixed? would you put your kids on board? >> the particular software there were other things they wanted shielding around them. they wanted a system with electronic lists. those hadn't been put oni the plane. the statistic i saw last year was one in every 3.7 million

flights and the max had 200,000 or more than 200,000 at this point. i'm going to wait for more evidence. >> you're not going to fly on it? >> i don't have to fly anywhere now. >> you talked about ge and you probably heard the news recently that the whole edifice is breaking up, so they are along the same lines, toshiba in japan is doing the same thing. do you think it's possible or would it be a good idea to undo the merger and headquarters to seattle? >> it seems really appealing

because it would turn backck the clock. boeing was at a high point in two thirds of the market being a combined company you get so much synergy. the breakup could also potentially have other effects you might be tested to take the stable military and government contracts and put them in the pensionat obligations so ideally it would come out of this and be a combined stable company. >> it's certainly an idea that i've heard from some senior executives in the past. >> it's time for audience questions and i have an ipad to go through so let me see what we can do.

>> which of boeing's ceos should take credit for the crashes? [laughter] dennis is the one that was at the helm at the very end of development and he had the opportunity to dig into the truth of what happened after the crash. >> does boeing have something to learn at this point given the problems every chief pilot has

had a lot of clout within the organization. i think boeing does have some things to learn. one thing i learned in reporting the book is there is a stereotype within strict labor regulations. is that a disadvantage that became an advantage in some ways because it had to train its workforce and rely on the highly skilled workforce that is the difference. this is also an airbus related question. what role did the landscape play in the failures that led to the engineering problems? the specter of airbus there were

many opportunities during the past 20 or 30 years. there was a plan about 20 years newer that had electronic technology boeing didn't. there was aa meeting i wrote about in 1992 that later became senioron continental and said should we develop a brand-new 737 and he got a kick under the table from someone who wanted to vote the other way.

historically boeing with the 747 and the triple seven as well when it came time the culture of cost cutting was already there in chicago so they came up with outsourcing so boeing wouldn't have to pay for it which was a financial disaster. what are the main lessons of the tragedy? >> listen to what your employees are telling you. managers have a prime directive to minimize training on the max.

there were points in history when there was a wish to minimize training but there was an understanding that if that was permissible by the design if we could design a way to make that possible i think it overrode what people on the ground were saying. >> the next question is about the faa. the leader here for a long time left to work in the industry for the industry association then became aviation safety director so he was the top executive. how would you describe ali?

>> he represented the revolving door and he saw boeing as his customer and would tell specialists in the audience leave it to boeing. they know what to do. he went to the industry lobbying group and then came back to the faa and allowed them to keep flying after the crash. >> it seems like these ideas take hold in an organization at the public agency. but then the groups in corporate america tell them to cut costs

and get rid of unions and suddenly that is what you have to do then this whole management level seemed to think they compete against airbus to champion the american industry. in other words by certifying more quickly giving the ability to do itou itself so you have a lot of groupthink. what does boeing need to do to do and so the customers wants rather than have them by airbus? >> what they did at the time was come up with a gang of eight who told it what they want.

do they write down on a napkin or something we are going to have a plan from the beginning and everything works and it was in very plain language on a napkin. when i'm in front of congress and asked why we did it this way i say because you told us to, mr. congressman. i guess you already addressed thatat. any further comment? in the excerpt ofhe the book the piece that's published in

bloomberg businessweek this week you released a huge segment. why do you think the previous investigations failed to bring this culture tos light? i'm not sure what that's referring to with the view in indonesia and so on is that what that's getting at? >> i think it's getting at the idea of the cultural bias pilots were not as skilled as pilots in the u.s. that's part of the book that looks at the response after the first crash. he said he felt if the first

crash had taken place in the westad or the uk or canada where lives matter more than other places, his family would not have died. the american pilots said this could have happened to us on a flight out of miami and we would have dropped a plane and had a storm. >> is there a chance the u.s. eventually gets left behind? >> there is although it's been such a strong duopoly for years

there are many analysts that are skeptical of another airplane builderna including china enterg the market. china does have the market of entering a huge market where they are not flying in china yet and it also had the advantage of having a lot of money until countries that can by airplanes soex over time that may change over the next ten to 20 years. >> here's a question about the move item seattle. not just the headquarters to chicago but also moving work out of seattle the cfo at one point said it was to work off the most effective areas it did feel like

a move that happened right in r the middle of contract talks. >> in 2009 it was by the machinist strike in the end he wasn't going to put it in washington stateaf after that. it's pretty extraordinary that after we give the tax breaks. do you see any correlation with military aircraft based on the

737 or the 746? >> any problems in the correlations on those planes. >> it is a widespread cultural problem and diminishing the focusing on engineering has happened across the company. >> i don't know if i got a clear answer to this so i will ask it again can it recover? there was ay remarkable performance full of confidence

with one order and then came home and the executives said very little. it's at a very low point in the market where basically reversal of 20 years ago in some parts of the market it's got a 5-1 cap. it would take a very focused effort. >> people in this region can only hope that would happen.

>> it would be pretty pointless but some are leaving if you climb on board some of them. let me see one more. wallenberg met with the families after the annual general meeting in 2019. they had no mediator or conflict specialist. howoe do you think boeing handld

trading the families of the victims of those crashes? and other family members probably should have met withth them earlier. what i've been told at that meeting one point of concern afterwards they felt they exaggerated the amount of time spent with the family members, so it's an incredibly different situation compounded by the exaggeration of the amount of sensitivity. there was a memorial held afterwards boeing arranged that was held in ethiopia.

the bp oil spills at 1.1 of the top concerns the executives answered if we are paying for it, we will be there. those are some of the things i cover in the book. >> this is communicated with those families. >> they don't talk to me, they don't talk to the press they

don't even let me ask questions. theeg excuse is we are waiting until the regulators. but everybody but the chinese basically. it's okay for the company to not give regular press interviews. i think the reason is he doesn't want to put a foot in his mouth on the suit that said that dave

calhoun had met immediately after the air crash. for the backlash. i'm going to leave it there. it's available at the end, november 30th. the "seattle times" will run an excerpt in the magazine decembe. but i highly recommended, anybody interested should read it. thank you very much for coming. [applause]