It has been getting harder for staff to find parking spaces at Boeing’s Renton plant outside Seattle. For much of this year, the world’s largest aircraft manufacturer has been using the employee car park to store planes which it cannot deliver.
Renton is home to the 737 Max, the latest model of the best selling commercial jet in history. Since two fatal crashes prompted global regulators to ground the entire Max fleet in March, the plant’s 12,000 people have been confronted each day they arrive for work with hulking reminders of the biggest crisis in Boeing’s 103-year history.
The company has been producing 42 Max jets a month, even while it could not send them on to customers, leaving it with 400 “white tails” — finished planes awaiting airline liveries — in need of novel storage solutions.
They will soon have more room, after Boeing announced this week that it is halting production at Renton for an indefinite period. Employees will be parking at other nearby Boeing facilities where the $188bn company has promised to find them work.
Dennis Muilenburg, Boeing’s engineer-chief executive, had hoped the Max would be flying again by this summer, yet analysts now think it will not return until March 2020 at the earliest — almost 18 months after the first of two crashes, in Indonesia and Ethiopia, that killed 346 people. But even that might be optimistic — United Airlines said on Friday that the Max would not return to its fleet until June.
The crisis has not only cost America’s largest exporter billions of dollars: it has challenged many of the global aviation industry’s core assumptions about the political, regulatory and competitive context in which it operates.
Boeing’s announcement left employees who had feared lay-offs relieved, but it rattled suppliers who will find it harder to replace work lost during any prolonged interruption to orders.
With its shares down almost a quarter since March, and economists estimating that the disruption could shave half a percentage point off US gross domestic product in the first quarter of 2020, its troubles have also caught the attention of the passenger of its best known plane, Air Force One. Donald Trump reportedly called Mr Muilenburg on Sunday to ask about the company’s health highlighting that in election year the president will be weighing Boeing’s economic impact against his voters’ safety fears.
Boeing’s failure to put the Max crisis behind it has baffled even experts who have studied corporate crises, from Johnson & Johnson’s 1982 Tylenol pain relief recall, to BP’s Deepwater Horizon environmental disaster in 2010.
The drawn-out saga has few parallels, says Eric McNulty, associate director of the National Preparedness Leadership Initiative, but he believes it stems from “tone-deaf” management and an inability to understand that Boeing’s world was changing even before the pride of its fleet proved fatally flawed.
When questions first arose about the role its MCAS anti-stall system played in the Max crashes, Mr McNulty argues, the company’s first reaction was to think “we’re Boeing; this can’t be happening to us”; it failed to question potential failings in its culture, its close relationship with its domestic regulator or its fast-changing market.
“When you have a worldview that makes sense it’s almost impossible to break out of it,” he adds: “The system made perfect sense until it didn’t.”
Boeing is accused of producing a flawed design for the MCAS system, which pushed the nose of the plane down when sensors detected it was about to stall. But Boeing opted to use one instead of two sensors to deliver that crucial data to the flight control system, leaving it exposed if the remaining sensor was defective. Compounding the problem, Boeing lobbied to keep information on the system out of the manual to avoid costly pilot training, arguing that crew should be able to handle the system from existing checklists.
One analyst, a former aerospace engineer, says: “I don’t think they think they did anything wrong. They think they designed an aeroplane that was fine and this never would have happened if they had pilots who knew what they were doing . . . Deep down inside they think they are being picked on.”
If Boeing has been blindsided by the hostile response to its predicament, that is partly because its status as one of America’s most politically significant companies has offered it surprisingly little protection. With plants dotted around the country, the company donated $4.2m to politicians of all stripes from 2016 to 2018. It also gave $1m toward Mr Trump’s inauguration.
But if it hoped such patronage would shelter it, it was mistaken. Boeing does not face insurmountable technical problems, says Richard Aboulafia, vice-president of aviation consultancy Teal Group. Instead, “it’s a hideous mix of political pressure, messaging incompetence and regulatory misalignment” that is confronting the company.
In the view of one former supplier who asked not to be named, its problems with the Max began when the Federal Aviation Administration let it “ram through” alterations to a 737 design which was first certified in 1967, rather than face the more arduous approval process for an entirely new aircraft.
As House of Representatives and Senate committee members have learnt how keen Boeing was to avoid having the Max classified as a new jet, rather than an update of an old one, they have taken a tougher tone in questioning Mr Muilenburg and other executives.
The House transportation committee wants to find out who was pushing regulators to minimise how much training pilots would need on the Max. With 500,000 documents to review, its investigation has months to run.
“There is clearly a cultural issue at Boeing,” says one congressional official. “It is going to take a lot of things to turn this company around — a new leadership, and possibly a fresh perspective.”
Much of the scrutiny Boeing has faced on Capitol Hill has focused on a relationship with its domestic regulator that many now paint as excessively cosy. An official report from representatives of the FAA, Nasa and seven regulators, concluded that the FAA’s practice of delegating many of the steps required to certify an aircraft to Boeing’s own staff had created “conflicting priorities”.
Under fire, the FAA has appeared determined to demonstrate its distance.
Where once the regulator might have accepted Boeing’s reassurance that its aircraft were airworthy, now it is “reasserting itself”, Mr Aboulafia says.
The manufacturer’s timetable for getting approval for the Max to fly again was “not realistic”, the FAA said last week, reprimanding Boeing for appearing to try to “force” it into moving faster.
The FAA is not Boeing’s only concern. Despite a tradition of domestic regulators taking the lead in such decisions, China was the first country to ground the Max and the FAA’s international peers have all demanded a say in the process for getting it airborne again.
Authorities ranging from the European Aviation Safety Agency to Canada’s civil aviation body have peppered Boeing with questions. The FAA’s hopes of avoiding a piecemeal return to service have required unprecedented co-ordination with peers, which some in the US industry see as eager to challenge its standing as the leading regulator.
Their suspicions have been fed by other tensions between Washington and its trading partners. Mr Trump’s tariffs have sharpened competition with China, while the US recently won World Trade Organization backing for its case that the EU has provided unfair subsidies to Airbus, Boeing’s European rival.
Despite this win, one senior industry executive warns that “time is against Boeing” because the Max crisis may have set back the planned launch of its “new midsized aeroplane”, by three years. The popularity of Airbus’s recently launched A321XLR and re-engineered A330neo could leave little of the mid-market for it to go after, he says.
For now airlines faced with an effective duopoly between Boeing and Airbus cannot afford for either to fail. “The market needs [Boeing] to recover,” the executive says.
Despite the discomfort Mr Muilenburg showed while being grilled in October’s congressional hearings, many still expect Washington to temper its urge to punish the national champion.
“Boeing will receive all the support it needs to recover from airlines, the government, the agencies,” the executive says. “Boeing was too optimistic and arrogant in the way it predicted the aircraft would fly again but the FAA and EASA will authorise the 737 to fly again.”
If Boeing has had to rethink its assumptions about Washington and the wider regulatory environment, it has had to do the same with its planes.
The company faced angry reactions when it suggested earlier in the year that its errors with MCAS had been just one link in a “chain of events” but the pilot error at which it hinted remains a concern for manufacturers and regulators.
As the industry’s growth forecasts depend on emerging markets, Boeing faces the need to reassess its different pilot training programmes. That will mean building more technological safety nets into cockpits, and a level of automation which it had resisted.
The Boeing board, for now, is trusting Mr Muilenburg to execute these longer-term shifts, even while leading the urgent work to return the Max to the skies and responding to challenges like the malfunction which prevented its Starliner astronaut capsule from reaching the International Space Station on Friday.
But the chief executive will have one eye on the planes sitting in the Renton car park. A 737 does not take well to being grounded: its tyres go flat, its electronics need retesting, and its engine must be turned over. Much like one of the cars at Renton, one employee says, “you’ve got to take it out for a spin”.
Apple worker says she was fired after leading movement against harassment
An Apple employee who led fellow workers in publicly sharing instances of what they called harassment and discrimination at the company said on Thursday that she had been fired.
Janneke Parrish, an Apple program manager, said the iPhone maker informed her on Thursday that she had been terminated for deleting material on company equipment while she was under investigation over the leaking of a company town hall to media. She told Reuters she denies leaking.
Parrish said she deleted apps that contained details of her finances and other personal information before handing her devices in to Apple as part of the probe.
Parrish said she believes she was fired for her activism in the workplace.
“To me, this seems clearly retaliatory for the fact that I was speaking out about abuses that have happened at my employer, pay equity and, generally, about our workplace conditions,” she said.
Apple said Friday it does not discuss specific employee matters.
Apple has recently experienced other examples of employee unrest. Last month, two Apple employees told Reuters they had filed charges https://www.reuters.com/technology/us-national-labor-relations-board-investigating-two-complaints-apple-workers-2021-09-02 against the company with the National Labor Relations Board. The workers accused Apple of retaliation and halting discussion of pay among employees, among other allegations.
Apple has said that it is “deeply committed to creating and maintaining a positive and inclusive workplace” and that it takes “all concerns” from employees seriously.
U.S. law protects the right of employees to openly discuss certain topics, including working conditions, discrimination and equal pay.
Over the summer, current and former Apple employees began detailing on social media what they said were experiences of harassment and discrimination. Parrish and some colleagues began publishing the stories on social media and a publishing platform in a weekly digest titled ‘#AppleToo.’
Parrish said she was careful to respect company rules and never shared information that she believed to be confidential. She said she continued to publish the ‘#AppleToo’ digest after coming under investigation at the end of September.
“If anything, it’s made the importance of that work clearer than ever, when Apple’s response to criticism is to start internal investigations into those that it wants to see gone,” she said. “It’s easier for them to terminate people than it is for them to actually listen.”
(Reporting by Julia Love; editing by Peter Henderson and Rosalba O’Brien)
With average prices up another 14%, Swiss bank UBS warns of housing bubbles in Canada – CBC.ca
Average house prices rose 14 per cent in the past year, the Canadian Real Estate Association said Friday, adding to concerns that Canada’s most expensive real estate markets are dangerously overvalued.
The group that represents realtors across the country says the average price of a Canadian home sold on its MLS system was $686,650, almost 14 per cent higher than it was in the same month a year ago.
Canada’s inflation rate hit four per cent in August, the fastest increase in the cost of living in almost 20 years. The new data on house prices Friday means that house prices are going up at more than three times that record pace.
CREA says the average price can be misleading, since it is heavily skewed by sales in the most expensive markets of Toronto and Vancouver. It trumpets another number, known as the MLS House Price Index (HPI), as a more accurate gauge of the overall market, because it strips out some of the volatility.
But the HPI is rising by even more than the average is right now — up 21.5 per cent in the past 12 months. In the Greater Toronto area, the average price of a home that sold was $1,136,280 in September, up 18 per cent in a year, according to the local real estate board. In Vancouver, the average is 1,186,100 — up by more than 13 per cent in the past year.
“There is still a lot of demand chasing an increasingly scarce number of listings, so this market remains very challenging,” CREA chair Cliff Stevenson said.
The pandemic has had an unexpected impact on house prices in that instead of causing people to be more conservative because of the economic uncertainty, buyers have been eager to shell out for more space.
Canada’s central bank slashed its benchmark rate to help stimulate the economy through the pandemic, and when lenders passed those rates on to consumers in the form of record low mortgage rates that had the effect of pouring gasoline on the fire of housing demand, making it more affordable to borrow more and more money to buy a home.
UBS warns of bubble
The fresh numbers on prices come as a major Swiss bank was already warning that Toronto and Vancouver are home to two of the worst housing bubbles in the entire world.
In an annual ranking, UBS examines the housing markets in 24 major world cities in Europe, North America and Asia to assess them based on how expensive housing is compared to local income levels and other factors.
It then puts all the cities into one of five categories:
- Depressed housing market (a score of -1.5 or lower).
- Undervalued (-0.5 to -1.5).
- Fairly valued (-0.5 to +0.5).
- Overvalued (+0.5 to +1.5).
- Bubble (1.5 and up).
Six cities were deemed to have housing bubbles. Two of them are in Canada.
Toronto got a score of 2.02. That was higher than every other city except Frankfurt, Germany, which scored a 2.16.
Vancouver scored a 1.66, just behind Hong Kong (1.90), Munich (1.84) and Zurich (1.83).
The bank says house prices in Toronto have effectively doubled in the past decade. Government interventions through things like foreign buyers taxes and rent controls caused the market to take a breather in 2018 and 2019, but things have only accelerated since, the bank said.
“Real prices increased by almost eight per cent from mid-2020 to mid-2021,” the bank said.
The bank says price gains are being fuelled by record-low mortgage rates, which are not expected to last much longer once the Bank of Canada inevitably has to raise its rate.
That “could lead to an abrupt end to the current housing frenzy,” the bank said.
Isabel Serrano, a prospective homebuyer in Toronto, is well aware of how frothy things have gotten in the city. She and her husband have been renting for the past 15 years, and are finally ready to buy. But despite having more than $200,000 a year in combined income, the pair can’t find anything in their price range — and they keep getting outbid when they try.
In an interview with CBC News, she said she has looked at between 40 or 50 houses in the past few months, and placed offers on four. In some cases, the house sold for six figures more than the asking price.
“I never thought it was going to be this hard. I really didn’t,” she said. “It blows my mind that there are no homes to buy. It blows my mind that we cannot find a house to buy for $800,000.”
WATCH | Isabel Serrano says house prices are out of reach for people like her
‘A fast rebound’
Things don’t look much better in Vancouver. Taxes on vacant homes and foreign buyers in 2016 cooled what was then a red-hot market, as prices rose by more than 20 per cent that year. Those moves seemed to relieve some of the pressure, as prices declined by 10 per cent between 2018 and 2019.
“Since then, however, lower prices, falling mortgage rates and looser stress test rules have enticed households to buy properties again, leading to a fast rebound,” UBS said. “From mid-2020 to mid-2021, property prices increased by 11 per cent, offsetting past losses.”
High prices aren’t just bad for would-be buyers like Serrano, who plan to live in them — they don’t augur well for investors hoping to pay them off by renting them out either.
According to UBS, anyone buying an investment property with the intent to rent it out would need to rent it for 31 years in Vancouver to cover the price of buying it. In Toronto, it would take 28 years. In cities like Miami and Dubai, it’s half that.
It’s a big reason why the bank suspects both Toronto and Vancouver are in bubble territory, which UBS defines as “a substantial and sustained mispricing of an asset, the existence of which cannot be proved unless it bursts.”
UBS has no qualms calling what’s happening in Canada’s two biggest housing markets a bubble, and they aren’t the only ones.
Prof. George Fallis, who teaches economics at York University in Toronto, says the city’s housing market shows all the signs of being detached from fundamentals.
Supply and demand
“A bubble exists if you can’t explain price increases by using the normal variables we look at,” he said in an interview. “Whenever you see that kind of thing, that should be a warning light.”
Fallis says he worries some people buying today are doing so based solely on the expectation that gains in the future will be the same as those of the past, and it’s always dangerous when that happens.
“Economists are not psychologists and the psychology of frothy expectations is poorly understood. But it’s clear that it’s [caused by] something arising which sort of shocks you,” he said. The most likely trigger could be a rapid rise in interest rates, something that experts have already warned is inevitable.
“You only know a bubble exists when it bursts,” Fallis said. “It just keeps going and going and going until it doesn’t.”
Two B.C. women file constitutional challenge of vaccine card – CHEK
VANCOUVER — Two British Columbia women who say doctors advised them against getting COVID-19 vaccines have filed a constitutional challenge of the province’s vaccine passport.
A petition filed in B.C. Supreme Court says 39-year-old Sarah Webb, who lives in Alberta and B.C., developed an adverse reaction from her first dose of a vaccine in May and ended up in the emergency department of a Calgary hospital six days later.
The court document says Webb’s symptoms included fatigue, heart arrhythmias, severe pain and a rash on her arm.
It says she received antibiotics but developed further complications the next day and went to another hospital, where a doctor told her she should not get a second vaccine shot.
The petition filed against the attorney general and the Ministry of Health says Leigh Anne Eliason of Maple Ridge, B.C., was told by her doctor that she should not get a COVID-19 vaccine because of the risk of side effects due to her medical history.
Neither the Attorney General’s Ministry nor the Health Ministry could immediately provide a response to the court challenge.
The petition says both women’s physicians have written exemption letters citing their physical disabilities.
However, the petition says each of the doctors raised concerns that neither the government nor any provincial medical associations had provided guidelines on how to write such a letter or what information should be included.
“There is no evidence to suggest that the attorney general of British Columbia or the (Health Ministry) have considered individuals like the petitioners in making the vaccine card announcement or in crafting the vaccine card orders,” says the petition, which was filed on Sept. 23.
B.C. residents without proof of vaccination are prohibited from certain activities like dining in restaurants, entering movie theatres and gyms. That deprives the petitioners of their charter rights, the petition says.
Provincial health officer Dr. Bonnie Henry has said anyone who chooses not to be vaccinated has options including ordering takeout from restaurants and watching movies and sports at home because her order is aimed at reducing transmission of the virus from anyone who may be infected.
This report by The Canadian Press was first published Oct. 15, 2021.
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