Business

Boeing may be ‘too big' to fail

It employs over 150,000 globally and its CEO makes politically savvy choices

NEW YORK The grounding of the 737 Max for more than four months after two deadly accidents has tarnished Boeing's reputation, but it still has the confidence of US policymakers.

This is despite the fact that one of the Max flight systems, the MCAS, has been cited in both accidents.

Is this an indication that the American aerospace giant is too big to fail?

US President Donald Trump, whose mantra is "America First", certainly criticised Boeing early in his administration over the presidential plane, Air Force One, but he has been largely silent about the recent woes.

The wave of negative press about the flaws that caused the deaths of 346 people did not prompt legislators to summon Boeing chief executive Dennis Muilenburg before Congress to inflict on him the kind of humiliation Wall Street bankers were subject to following the global financial crisis.

"Boeing is one of the engines of the US economy, it is way too big and too important for the US," said Mr Michel Merluzeau, an expert at Air Insight Research.

If American politicians were to attack the manufacturer, they would be shooting themselves in the foot, Mr Merluzeau said, because "there are many jobs involved, a very, very numerous supply chain, and it cannot be replaced with Facebook or Google that doesn't produce anything tangible".

Founded 103 years ago, Boeing employs more than 150,000 people around the world, the vast majority in the US.

Its subcontractors - such as General Electric, United Technologies and Spirit Aerosystems - are large US industrial employers.

POLITICAL

The location map of Boeing plants resembles a political campaign map, with facilities in Republican strongholds such as Alabama, South Carolina and Texas, and Democratic areas such as California and Washington, as well as states that helped Mr Trump win the election: Pennsylvania and Arizona.

And Boeing chief Muilenburg has shown political savvy in his picks for the company's board of directors, naming Ms Nikki Haley, Mr Trump's former ambassador to the United Nations, and Ms Caroline Kennedy, daughter of former president John F. Kennedy.

Boeing is also a dominant player in the defence and space industries and is a major supplier to the Pentagon.

But Boeing also "can be used as a strategic tool", said Mr Arthur Wheaton, a professor at Cornell University in New York.

Chinese purchases of Boeing aircraft are part of trade negotiations with Beijing, according to a source, since that can be a fast way to reduce the US trade deficit.

US civilian aircraft exports fell 12 per cent to US$20.4 billion (S$28 billion) in May, due to the Max crisis, which affected the gross domestic product, according to government data.

- AFP

WORLD