Boeing and Washington State: Codependency and Moral Hazard
Total Page:16
File Type:pdf, Size:1020Kb
WILLIAMS 12/3/2020 1:29 PM BOEING AND WASHINGTON STATE: CODEPENDENCY AND MORAL HAZARD Brendan Williams* TABLE OF CONTENTS INTRODUCTION .................................................................................................. 66 I. CHARTING A DANGEROUS FLIGHT: WASHINGTON’S 1987 “POISON PILL” BILL ............................................................................................. 69 II. THREATENING TAKEOFF: WASHINGTON’S 2003 BOEING CONCESSIONS ........................................................................................ 71 III. EXPERIENCING TURBULENCE: WASHINGTON’S 2009 WORKER’S RIGHTS BILL .......................................................................................... 75 IV. ONGOING TURBULENCE: WASHINGTON’S 2013 BOEING CONCESSIONS ........................................................................................ 77 V. STUCK IN A HOLDING PATTERN: BOEING AS A BAD CORPORATE CITIZEN .................................................................................................. 84 VI. CORRECTING COURSE: A BETTER MODEL OF CORPORATE INDUCEMENT ......................................................................................... 90 * Attorney Brendan Williams is a nationally-published writer on health care and civil rights issues. Thanks to the great editors of the Gonzaga Law Review for their advice and assistance. This article is dedicated to the members of the IAM and SPEEA. 65 WILLIAMS 12/3/2020 1:29 PM 66 GONZAGA LAW REVIEW Vol. 56:1 INTRODUCTION Aerospace giant Boeing has been a linchpin of Washington’s economy since 1916.1 By 1971, Seattle was such a “Boeing town” that amidst thousands of Boeing layoffs, a billboard was famously displayed that read “Will the last person leaving Seattle — turn out the lights.”2 Beginning in 2018, Boeing, the nation’s largest manufacturing exporter,3 was beset by bad news. Two crashes involving its 737 MAX aircraft killed 346 people, forcing the aircraft to be grounded by the Federal Aviation Administration (FAA) amidst allegations of a faulty flight-control system.4 In December 2019, the head of the FAA admitted his agency made mistakes in responding to the crashes.5 Congressional hearings revealed “instances when F.A.A. managers sided with Boeing instead of their own safety experts.”6 Documents released to Congress showed that “during certification of the 737 MAX, company employees spoke of deceiving international air safety regulators and Boeing’s airline customers, and successfully fought off moves over several years to require anything but minimal pilot training for the new airplane.”7 These revelations drew bipartisan condemnation: “Sen. Ted Cruz (R-Texas), who 1. See, e.g., Greg Schneider & Don Phillips, Boeing HQ to Leave Seattle, WASH. POST (Mar. 22, 2001), https://www.washingtonpost.com/archive/business/2001/03/22/boeing -hq-to-leave-seattle/36353247-c341-43f4-964e-65c559e6700d/ (“The company has been in the Seattle area since William Boeing founded it there in 1916 as the Pacific Aero Products Co., renaming it the next year.”). 2. Erik Lacitis, ‘Turn Out the Lights’: Message from 1971 Seattle Billboard Echoed in Head-Tax Debate, SEATTLE TIMES (May 21, 2018, 3:37 PM), https://www.seattletimes .com/seattle-news/turn-out-the-lights-message-from-1971-seattle-billboard-echoed-in-head -tax-debate/. 3. David Gelles, ‘I Honestly Don’t Trust Many People at Boeing’: A Broken Culture Exposed, N.Y. TIMES (Jan. 10, 2020), https://www.nytimes.com/2020/01/10 /business/boeing-737-employees-messages.html (“Boeing is the largest manufacturing exporter in the United States, and its fate can sway the national economy. It employs more than 130,000 people, in all 50 states, and supports a network of thousands of suppliers.”). 4. See Timeline: Boeing 737 Max Jetliner Crashes and Aftermath, CHI. TRIB. (Oct. 14, 2019, 7:52 AM), https://www.chicagotribune.com/business/ct-biz-viz-boeing-737-max -crash-timeline-04022019-story.html. 5. David Gelles & Natalie Kitroeff, Boeing Hearing Puts Heat on F.A.A. Chief Over Max Crisis, N.Y. TIMES (Dec. 11, 2019), https://www.nytimes.com/2019/12/11/business /boeing-faa-737-max.html. 6. Id. 7. Dominic Gates & Lewis Kamb, Boeing Apologizes as Internal Memos Reveal How Workers Spoke of Deceiving Regulators, Airlines, SEATTLE TIMES (Jan. 9, 2010, 9:11 PM), https://www.seattletimes.com/business/boeing-aerospace/boeing-internal-documents -reveal-culture-of-deceit-to-keep-down-costs-of-737-max/. WILLIAMS 12/3/2020 1:29 PM 2020/21 BOEING AND WASHINGTON STATE 67 chairs the aviation subcommittee of the Senate Commerce Committee, called the documents ‘deeply disturbing.’”8 In 2019, Boeing’s archrival Airbus delivered over twice as many jet aircraft as did Boeing,9 while Boeing suffered its first annual loss in net revenue since 1997.10 Adding insult to injury, Boeing’s Starliner spacecraft failed to dock with the International Space Station during a December 2019 mission because “its onboard clock was 11 hours off.”11 8. Brianna Gurciullo & Tanya Snyder, Congress Seethes Over Boeing Emails, POLITICO (Jan. 10, 2020, 5:41 PM), https://www.politico.com/news/2020/01/10/congress -seethes-over-boeing-emails-097374. Yet the 737 MAX crashes, and Boeing’s responses, were not without precedent—a New York Times investigation of the 2009 crash near Amsterdam of a 737 found “striking parallels with the recent crashes—and resistance by the team of Americans to a full airing of findings that later proved relevant to the Max.” Chris Hamby, How Boeing’s Responsibility in a Deadly Crash ‘Got Buried’, N.Y. TIMES (Jan. 20, 2020), https://nyti.ms/3792Gms. Following the New York Times story, Boeing and the National Transportation Safety Board refused to cooperate with an inquiry into the 2009 crash by Dutch lawmakers. See Chris Hamby & Claire Moses, Boeing Refuses to Cooperate with New Inquiry into Deadly Crash, N.Y. TIMES (Feb. 6, 2020), https://nyti.ms/2uh4ATU. 9. See Dominic Gates, Boeing’s Horrible Year: It Lost Orders, While Airbus Delivered Twice as Many Jets, SEATTLE TIMES (Jan. 14, 2020, 8:44 AM), https://www.seattletimes.com/business/boeing-aerospace/after-boeings-horrible-year-annual -race-against-airbus-is-no-contest/ (“Airbus’ total jet deliveries were worth about $60 billion compared to Boeing’s $42 billion, based on market pricing estimates from aircraft valuation firm Avitas.”). Seizing the moment, Airbus even built up its own presence in Washington when it “acquired Mukilteo-based MTM Robotics, a small aerospace supplier with 40 employees that has made portable robotic systems and tools for three different Boeing aircraft programs.” Andrew McIntosh, Airbus Buys Seattle-Area Robotics Supplier That Built Systems for Boeing Jets, PUGET SOUND BUS. J. (Dec. 12, 2019, 11:29 AM), https://www.seattletimes.com/business/boeing-aerospace/after-boeings-horrible-year -annual-race-against-airbus-is-no-contest/. 10. Aaron Gregg, Losses from Max Grounding Continue as Boeing Reports Another Dismal Quarter, WASH. POST (Jan. 29, 2020, 11:57 AM), https://www.washingtonpost .com/business/2020/01/29/losses-max-grounding-continue-boeing-reports-another -dismal-quarter (“The company’s 2019 net losses of $636 million mark its first annual loss since 1997.”). Boeing bottomed out in January 2020, when it went the month without selling a single plane. See Dominic Gates, In an All-Time Low, Boeing Wins Zero Orders and Delivers Just 13 Jets in January, SEATTLE TIMES (Feb. 11, 2020, 5:13 PM), https://www.seattletimes.com/business/boeing-aerospace/in-an-all-time-low-boeing-wins- zero-orders-and-delivers-just-13-jets-in-january. 11. See Christian Davenport, After Mishap with Boeing Spacecraft, NASA Faces a Dilemma, WASH. POST (Jan. 9, 2020, 12:25 PM), https://www.washingtonpost.com /technology/2020/01/09/after-mishap-with-boeing-spacecraft-nasa-faces-dilemma/. Even this incident appeared not enough to prompt NASA to look closely at “one of its longest and most trusted contractors” until it was discovered that a second software problem occurred during the December test fight, “forc[ing] NASA to rethink its decision to give it a pass on the full safety review.” Christian Davenport, Boeing’s Starliner Space Capsule Suffered a Second WILLIAMS 12/3/2020 1:29 PM 68 GONZAGA LAW REVIEW Vol. 56:1 Also in December 2019, Boeing fired its chief executive, Dennis Muilenburg.12 However, he was still to receive over $62.2 million in compensation after his firing,13 news that reportedly “sickened” family members of those killed in the 737 MAX crashes.14 Even after the first plane crashed, “Muilenburg pressured the government to allow them to fly, going so far as to personally call President Trump about the issue.”15 This raises the question of “moral hazard.” The concept was born in insurance: “For nineteenth-century insurers, moral hazard was a label applied both to people and situations. The people were those whose character suggested that they were unusually susceptible to the temptation that insurance can create, and the situations were those that heightened that temptation.”16 Or, as economist Paul Krugman put it, “one person makes the decision about how much risk to take, while someone else bears the costs if things go badly.”17 What if Boeing’s excessive risk-taking was the result not of private insurance, but of government enabling? This article examines the control Boeing has exercised over Washington state politics, dating back to 1987 when the state protected the corporation against a hostile takeover,18 then jumping ahead to Software Glitch During December Test Flight,