• Home
  • Latest
  • Fortune 500
  • Finance
  • Tech
  • Leadership
  • Lifestyle
  • Rankings
  • Multimedia

Trendingnow

1

The millennial generation has split, new Fed research shows: Those over 35 are edging toward boomer-style wealth, while everyone else falls behind

2

Mark Cuban says he has the solution to growing income inequality, and it's to reward every employee—from CEO to janitor—with company stock

3

Mathematicians grapple with a ‘very rapid and very unsettling change’ as AI cracks yet another century-old problem

1

The millennial generation has split, new Fed research shows: Those over 35 are edging toward boomer-style wealth, while everyone else falls behind

2

Mark Cuban says he has the solution to growing income inequality, and it's to reward every employee—from CEO to janitor—with company stock

3

Mathematicians grapple with a ‘very rapid and very unsettling change’ as AI cracks yet another century-old problem
CommentaryBoeing

Boeing CEO Dave Calhoun has charted a path back to profitability–but ongoing supply chain issues seem plane crazy

By
Jeffrey Sonnenfeld
Jeffrey Sonnenfeld
and
Steven Tian
Steven Tian
Down Arrow Button Icon
By
Jeffrey Sonnenfeld
Jeffrey Sonnenfeld
and
Steven Tian
Steven Tian
Down Arrow Button Icon
April 17, 2023, 11:28 AM ET
David Calhoun is the president and chief executive officer of the Boeing Co.
David Calhoun is the president and chief executive officer of the Boeing Co.Valerie Plesch—Bloomberg/Getty Images
Add Fortune on Google for similar content.

With more supply chain woes at Boeing–this time, “fuselage” deficiencies from contractor Spirit AeroSystems–making the headlines days before Boeing’s annual meeting this week,  perhaps it is sane to wonder if it is just “plane crazy” that Boeing’s supply chain issues still flare up with alarming regularity four years after the highly publicized 737 MAX crashes that killed 346 passengers.

At the very least, this latest mess turns up the heat for CEO Dave Calhoun, who has absorbed relentless slings and arrows from all corners for problems that largely predate him or are outside his control, including misfires with regulators, COVID shutdowns, order cancellations, and high indebtedness. He deserves tremendous credit for charting a path back to profitability–without needing a single airplane purchase from China. In fact, just last year, we named Calhoun one of our five CEOs of the year, crediting him with finally guiding Boeing to take off after a long tarmac delay.

However, the seemingly unending procession of quality control issues speaks to three specific challenges that are still plaguing Boeing’s supply chain and which threaten to derail Calhoun’s plans mid-flight.

First, as supplier Spirit Aerosystems’ fuselage issue reminds us, Boeing’s supply chain diversification–or lack thereof–makes it unusually vulnerable to singular choke points. Boeing is basically solely dependent on Spirit Aerosystems as its outsourced aerostructure manufacturer. In fact, with Boeing represents a whopping 60% of Spirit’s revenues. This is over three times the dependence of Boeing’s competitors such as Airbus, which makes its own fuselages.

Thus it is hardly surprising that minor problems at Spirit have boomeranged into at least three major Boeing production disruptions, with 787 halts in 2020 and 2021, and now the 737 disruptions this week. With Spirit’s outside analysts such as Bank of America ominously warning that “a significant ramp with a greener work force does not give the greatest comfort on execution,” the fact that Boeing has tried and failed for years to take control over this part of the supply chain casts its own strategic missteps in starker relief.

Spirit had been a part of Boeing since two years after its founding in 1927. Its core role for Boeing has been primary manufacturing of the entire fuselage of the Boeing 737, as well as its nose and forward-cabin sections of most Boeing plans and other parts. It was spun off by Boeing in 2005 to the Canadian private equity firm Onex, which took the company public just a year later, retaining 58% of ownership and 92% of the voting control!

Some voices inside Boeing advocated for Boeing to purchase Spirit to provide direct oversight and capitalization–but senior executives have long reflexively shunned the acquisition, embarrassed by the idea of having to buy back a business, even though the cost would be relatively trivial with Spirit being only 2% of Boeing’s size.

The asset-lightening move may have been intended as financial engineering to appease activist investors or to address the federal government’s concern over the concentration of defense-related businesses.  Whatever the reason, the outcome now appears to be regrettable. Increased oversight and integration, which would have followed such a purchase, would have provided Boeing with a similar advantage to that of Airbus. Additionally, once-promising partnerships with Spirit’s many competitors, such as Embraer, failed to take off due to self-inflicted wounds.

Beyond the lack of supply chain diversification, persistent quality control problems continue to plague Boeing across its entire supply chain. Even though much criticism was levied at former leadership for “turbocharging Boeing’s production rates before the supply chain was ready, compromising quality,” Boeing continues to take billions in write-downs due to egregious cost overruns, while constantly postponing or canceling new product launches, ranging from the much-hyped jumbo 777X to new Air Force One jets, as the aerospace giant struggles to ramp up production and build capacity. Boeing’s customers have resorted to uncharacteristic public protests: One airline CEO compared Boeing execs to “headless chickens,” unable to deliver planes on time, while another lamented that Boeing “lost its way.”

Calhoun has vowed to overcome supply chain challenges “eventually”–but also acknowledged frustration that it feels like a “steady whack-a-mole kind of situation.”

As the largest manufacturing exporter in the U.S. with a workforce of 130,000 employees, Boeing’s persistent quality and culture challenges, unfortunately, trickle down across its entire extended ecosystem of thousands of suppliers. And unlike four years ago, these quality control issues cannot be blamed on excessive profit growth (of which there has been none) or an unseemly focus on boosting the stock price (which has gone nowhere) amidst an aerospace down cycle. 

One cannot help but wonder about accountability across the Boeing supply chain, and why Boeing seemingly covered for its subcontractors instead of sharing the cost of the damage. For example, even though Collins Aerospace manufactured the faulty flight deck software which resulted in the 2018/2019 crashes, Boeing accepted full liability and sole responsibility for the 737 MAX crashes and paid a whopping $2.5 billion to settle criminal probes from the Department of Justice. Has Boeing become too deferential to its supplier base in their earnest efforts to fix relationships after years of relentless cost-cutting and pushing?

The company must not be seen as having its head in the clouds and its planes on the ground. Ultimately, Calhoun has gotten the company back on track by getting its planes back up in the air–but the specter of persistent supply chain woes means more turbulence could be on the horizon. 

Jeffrey Sonnenfeld is the Lester Crown Professor in Management Practice and Senior Associate Dean at Yale School of Management. 

Steven Tian is the director of research at the Yale Chief Executive Leadership Institute and former investment analyst at Rockefeller Capital.  

The opinions expressed in Fortune.com commentary pieces are solely the views of their authors and do not necessarily reflect the opinions and beliefs of Fortune.

More must-read commentary published by Fortune:

  • A recession in 2023 is now inevitable. Layoffs in tech and finance will spread to other sectors
  • Energy analysts have been making gaseous calls since Russia invaded Ukraine. It’s time to clear away the smoke of economic groupthink
  • I am a Starbucks barista who doesn’t qualify for all the wonderful benefits you keep hearing about. We want the ‘different kind of company’ that Howard Schultz promised but failed to deliver
  • The average NFL owner is 75–and not rich enough to hang onto their team
About the Authors
By Jeffrey Sonnenfeld

Jeffrey Sonnenfeld is the Lester Crown Professor in Management Practice and Senior Associate Dean at Yale School of Management.

See full bioRight Arrow Button Icon
By Steven Tian

Steven Tian is the director of research at the Yale Chief Executive Leadership Institute.

See full bioRight Arrow Button Icon
Add Fortune on Google for similar content.

Latest in Commentary

Finance
Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam
By Fortune Editors
October 20, 2025
Finance
Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam
By Fortune Editors
October 20, 2025
Finance
Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam
By Fortune Editors
October 20, 2025
Finance
Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam
By Fortune Editors
October 20, 2025
Finance
Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam
By Fortune Editors
October 20, 2025
Finance
Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam
By Fortune Editors
October 20, 2025

Most Popular

Finance
Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam
By Fortune Editors
October 20, 2025
Finance
Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam
By Fortune Editors
October 20, 2025
Finance
Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam
By Fortune Editors
October 20, 2025
Finance
Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam
By Fortune Editors
October 20, 2025
Finance
Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam
By Fortune Editors
October 20, 2025
Finance
Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam
By Fortune Editors
October 20, 2025
Fortune Secondary Logo
Rankings
  • 100 Best Companies
  • Fortune 500
  • Global 500
  • Fortune 500 Europe
  • Most Powerful Women
  • World's Most Admired Companies
  • See All Rankings
  • Lists Calendar
Sections
  • Finance
  • Fortune Crypto
  • Features
  • Leadership
  • Health
  • Commentary
  • Success
  • Retail
  • Mpw
  • Tech
  • Lifestyle
  • CEO Initiative
  • Asia
  • Politics
  • Conferences
  • Europe
  • Newsletters
  • Personal Finance
  • Environment
  • Magazine
  • Education
Customer Support
  • Frequently Asked Questions
  • Customer Service Portal
  • Privacy Policy
  • Terms Of Use
  • Single Issues For Purchase
  • International Print
Commercial Services
  • Advertising
  • Fortune Brand Studio
  • Fortune Analytics
  • Fortune Conferences
  • Business Development
  • Group Subscriptions
About Us
  • About Us
  • Press Center
  • Work At Fortune
  • Terms And Conditions
  • Site Map
  • About Us
  • Press Center
  • Work At Fortune
  • Terms And Conditions
  • Site Map
  • Facebook icon
  • Twitter icon
  • LinkedIn icon
  • Instagram icon
  • TikTok icon
  • YouTube icon

Latest in Commentary

Thijn Lamers is Co-Founder and President, Noah.
Commentarystart-ups
Adyen co-founder: Europe does not need more ambition. It needs to stop hiding it
By Thijn LamersJuly 23, 2026
2 hours ago
t
CommentaryTariffs
Trump’s third tariff tantrum piles more dizzying distractions on top of ever-spiraling failures
By Jeffrey Sonnenfeld and Steven TianJuly 22, 2026
20 hours ago
orson
CommentaryOpenAI
We got California to intervene about OpenAI’s corporate switch from nonprofit status. It’s time for the SEC to come to the table
By Orson Aguilar and Catherine BracyJuly 22, 2026
20 hours ago
ls
Commentarybooks
Confessions of an award-winning AI memoirist — the ‘slop’ debate isn’t really about good writing, and you know it
By Luke StoffelJuly 22, 2026
21 hours ago
b
Commentarythe future of work
Manpower President: The future of work question that even CEOs can’t answer
By Becky FrankiewiczJuly 22, 2026
21 hours ago
k
Commentarypower
What I keep hearing from Fortune 500 CEOs: ‘We have no idea what we’re actually paying for power’
By Kiran BhatrajuJuly 21, 2026
2 days ago

Most Popular

The millennial generation has split, new Fed research shows: Those over 35 are edging toward boomer-style wealth, while everyone else falls behind
Real Estate
The millennial generation has split, new Fed research shows: Those over 35 are edging toward boomer-style wealth, while everyone else falls behind
By Nick LichtenbergJuly 22, 2026
16 hours ago
Mark Cuban says he has the solution to growing income inequality, and it's to reward every employee—from CEO to janitor—with company stock
Success
Mark Cuban says he has the solution to growing income inequality, and it's to reward every employee—from CEO to janitor—with company stock
By Sasha RogelbergJuly 20, 2026
3 days ago
Mathematicians grapple with a ‘very rapid and very unsettling change’ as AI cracks yet another century-old problem
AI
Mathematicians grapple with a ‘very rapid and very unsettling change’ as AI cracks yet another century-old problem
By Eva RoytburgJuly 21, 2026
2 days ago
OpenAI says its AI models secretly broke out of a secure test environment and hacked into AI company Hugging Face in order to cheat on an evaluation
Cybersecurity
OpenAI says its AI models secretly broke out of a secure test environment and hacked into AI company Hugging Face in order to cheat on an evaluation
By Jeremy Kahn and Emily ForliniJuly 21, 2026
2 days ago
Despite a $156 million contract, Knicks star Jalen Brunson still calls his parents for financial advice any time he makes a big purchase
Success
Despite a $156 million contract, Knicks star Jalen Brunson still calls his parents for financial advice any time he makes a big purchase
By Emma BurleighJuly 21, 2026
2 days ago
Scott Bessent casually says the U.S. has more than $1 trillion in gold—and that it doesn’t matter for the dollar
Economy
Scott Bessent casually says the U.S. has more than $1 trillion in gold—and that it doesn’t matter for the dollar
By Sasha RogelbergJuly 22, 2026
13 hours ago

© 2026 Fortune Media IP Limited. All Rights Reserved. Use of this site constitutes acceptance of our Terms of Use and Privacy Policy | CA Notice at Collection and Privacy Notice | Do Not Sell/Share My Personal Information
FORTUNE is a trademark of Fortune Media IP Limited, registered in the U.S. and other countries. FORTUNE may receive compensation for some links to products and services on this website. Offers may be subject to change without notice.