From a freak accident that blew a door-size hole into the fuselage of an airborne 737 Max to revelations of sloppy workmanship and now a crippling strike entering its second month — the icon of US manufacturing hasn’t been able to catch a break since the first days of January. Cash is dwindling, plane production is anemic and the stock is heading for its worst annual performance since the financial crisis in 2008.
Combined, the episodes have exposed quality lapses at Boeing and its supply chain, alongside a corrosive culture a quarter-century in the making, where pressure over costs and schedule permeated decision-making. Earlier this year, customers finally revolted and the board shook up leadership, hiring Kelly Ortberg in August out of retirement to fix the beleaguered manufacturer.
In his two months on the job, Ortberg has made a series of blunt moves. He removed the head of the defense and space division and tried to short-circuit a strike by taking a higher offer directly to workers — a move that backfired and only hardened the union’s resolve.
Core Areas
His latest maneuver came late on Friday, when Ortberg said Boeing would cut 10% of its workforce, equivalent to about 17,000 people. And he tucked in a hint that more dramatic steps might be needed to get the company back on course.
“We need to be clear-eyed about the work we face and realistic about the time it will take to achieve key milestones on the path to recovery,” the Boeing chief wrote in the Oct. 11 memo to workers. “We also need to focus our resources on performing and innovating in the areas that are core to who we are.”
The comments suggest that Boeing under Ortberg may double down on the field for which it is best known: Commercial aviation. The unceremonious departure of Ted Colbert as head of the defense and space business put those subsidiary’s shortcomings into sharp relief — made more glaring still on Friday when Boeing said the unit would have about $2 billion in charges in the third quarter.
It all adds up to the perception of a company that will need more time to regain its footing — the Federal Aviation Administration’s top official has said it’s a matter of years, not months, before Boeing is stabilized. When Ortberg, 64, hosts his first earnings call as CEO on Oct. 23, investors will want more detail on how he intends to comprehensively lead one of the toughest revivals in corporate America, rather than just putting out fires.