Good morning.
A few CEO Daily readers may be old enough to remember September 1982, when cyanide-laced Tylenol took the lives of seven people in the Chicago area. Johnson & Johnson had every reason to believe its drug was safe, and that the problem was caused by a local miscreant, but the company nevertheless took the unprecedented step of recalling the popular product from all drugstore shelves, at a cost of millions of dollars. The case since has become a business school case study in effective corporate crisis management.
So did no one at Boeing take the course? While most regulators around the world have grounded the Boeing 737 Max 8 after the Ethiopian Airlines crash—the second of a 737 Max 8 in a few months under similar circumstances—the U.S. FAA is keeping the planes in the air, with Boeing’s backing. “Safety is Boeing’s number one priority,” the company tweeted yesterday, “and we have full confidence in the safety of the 737 MAX.”
Really? Worth pointing out that Boeing is already working on a software fix after the earlier crash, which is due out in April. If there is no problem, why do they need a fix?
Don’t count me among the luddites who believe automation has made flying more dangerous. The evidence suggests otherwise. Moreover, I get that Boeing’s quandary is tougher than J&J’s—analysts estimate suspending the plane could cost the company over $1 billion in revenue.
But I can’t help but feel as though Boeing CEO Dennis Muilenburg is casting himself as Amity Mayor Larry Vaughn in Steven Spielberg’s Jaws, who told tourists that the water was safe. If Muilenburg really believes what he is saying, at a minimum he should make his case personally and publicly…not just on the phone to President Trump. The traveling public deserves to hear from him directly.
More news below.
| Alan Murray | |
| @alansmurray | |
| alan.murray@fortune.com |
Top News
VW Cuts
Volkswagen is cutting 5,000 to 7,000 jobs as a cost-cutting measure, in order to invest more in its electrification drive. The workers will mostly get retirement offers—11,000 or so workers are due to hang up their hats this year anyway. VW is also adding 2,000 jobs in R&D. Deutsche Welle
U.K. Tariffs
Following last night's second rejection of the negotiated Brexit deal, the British government has announced that it will cut tariffs to zero on 87% of imports, in the event of a no-deal Brexit. The move would supposedly minimize disruption to businesses and consumer prices, though as the government wants lawmakers to reject a no-deal scenario in another vote today, there's also a threat involved here. Guardian
China Talks
U.S. Trade Representative Robert Lighthizer is not sounding overly confident about a trade deal with China. He told the Senate Finance Committee that the Trump administration hopes "we are in the final weeks of having an agreement—but I’m not predicting one." He went on: "There still are major, major issues that have to be resolved… and if those issues are not resolved in a way that’s beneficial to the United States, we will not have an agreement." South China Morning Post
Belt and Road
Like Italy, Malta is also considering signing up to China's Belt and Road investment initiative. "One has to be wary of any country, especially with political ambitions or any sort of ambitions, but that's life," said Maltese Finance Minister Edward Scicluna. The U.S., which is not a fan of Beijing's influence exercise, will not be pleased. CNBC
Around the Water Cooler
Bayer Taint
French President Emmanuel Macron is to all intents and purposes a liberal—in the European sense, i.e. pro-business and politically centrist—but he has not allied his relatively recently-formed Republic on the Move party with the liberal ALDE coalition in the European Parliament. And it's going to stay that way, it seems, because ALDE received donations from Bayer's Monsanto, a company with a toxic image in France due to its association with glyphosates and genetically modified crops. Reuters
Shell Power
Shell is looking into creating a power business, which it would try to make the world's largest by the 2030s. Clean power, of course—by that point, Shell would prefer not to be associated with mucky oil anymore. Financial Times
College Admissions
Actors and CEOs are among those who have been arrested as part of a crackdown on college admissions bribery in the U.S. The rich and famous people—including Desperate Housewives' Felicity Huffman and TPG Growth founder William E. McGlashan Jr.—were indicated for paying bribes as high as $6 million to get their kids into the likes of Yale and Harvard. Fortune
Rothschild Shift
The de Rothschild family is to take the Edmond de Rothschild bank private, with each share netting its owner around $17,800 in cash. The Swiss group's banking unit had client assets of 128 billion francs ($127.3 billion) last year. The Edmond de Rothschild Group will become the bank's operative holding company. Reuters
This edition of CEO Daily was edited by David Meyer. Find previous editions here, and sign up for other Fortune newsletters here.