Boeing and the Pursuit of Increasing Profits

It is not hard to jump on the bandwagon, bashing Boeing, but the truth is Boeing is a great American company.  It has been one of the world’s most innovative companies for over 100 years. In 2017, the company generated almost $100 billion in revenue and employed over 140,000 people.  If you set back from the numbers, the success is generated, because they invent amazing flying machines that satisfy people’s desire to explore and engage all around the world. And, they are doing it faster, better AND safer than ever before.

Despite the myriad of ways we can evaluate Boeing’s contribution to society, the executives at Boeing are only reward one way -- if they drive the stock price up. Part of that is developing better planes, but most of it is delivering increasing profits for the firm. 

As this article from Bloomberg Businessweek details, the executives were focused on relentless cost cutting, which may have been a contributing factor in the crashes.  Another factor is highlighted in this article which details that safety features were an “upgrade” that were not available on all planes.

This issue is not unique to the airline industry. Automobile manufacturers fought against seat belt laws as it increased their cost and responsibility. The increased costs meant higher prices and lower sales and/or less profit.

Until executives are rewarded for responsible behavior, we can expect they will continue to focus their attention on the only important metric to their success – profit growth.