Wolf Richter: When Flight Safety Gets Outsourced To China

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By Wolf Richter, a San Francisco based executive, entrepreneur, start up specialist, and author, with extensive international work experience. Cross posted from Testosterone Pit.

Aircraft maintenance was a highly paid blue-collar job that required education, training, manual skills, and brains. It was one of the perfect American middle-class jobs with generous healthcare, retirement, and vacation benefits; and free flights! They were working for icons like Delta, American Airlines, Continental, TWA, or Pan Am. Icons indeed!

After endless rounds of Wall Street engineering and tough competition, they all went bankrupt, some of them twice. High wages and generous fringe benefits of maintenance mechanics got whittled down. Then the actual jobs, these well-paid blue-collar specialty jobs that required a lot of training and brains, the bedrock of the American middle class, were outsourced to cheap countries, including China.

Specifically to one company. It started in 1997 when Boeing announced that it would acquire for $11 million a 9.1% stake in an outfit that had opened for business the year before: Taikoo Aircraft Engineering Co. (TAECO), based at Gaoqi International Airport in Xiamen, China. Its largest shareholder is Hong Kong Aircraft Engineering Co. (HAECO); among the other shareholders are Cathay Pacific and Japan Airlines. TAECO does “heavy maintenance” on aircraft, a labor-intensive job that takes around four weeks per plane – if you have enough mechanics. And cheap labor makes a huge difference for Boeing and its airline customers.

I should probably disclose that my parents died in a Boeing nearly 40 years ago. So, for me, there is an extraneous exclamation mark behind every flight-safety issue. Turns out, it is a flight safety issue.

On Thursday, Syndicat ALTER, one of the unions representing the pilots of Air France, complained about an incident involving aircraft maintenance. On April 7, an Air France Airbus 340, flying from Paris to Caracas, had to be diverted to the Azores “for technical reasons.” Various issues had marred the flight, from overflowing toilets to the failure of two high-frequency radios. According to ALTER, it was the aircraft’s first commercial flight after heavy maintenance had been performed by TAECO.

Air France denied that the “technical problems” were in any way, shape, or form linked to the maintenance work done in China. The spokesperson defended TAECO, a company that is “internationally recognized and works for all major global airlines.”

The union retorted that this incident was “but the latest in a too-long series” and pointed at three other problems that Air France had run into with TAECO, one of them affecting an Airbus, the others Boeing 747s. In one incident, a Boeing 747-400 was grounded in 2010 after someone discovered that three weeks earlier, TAECO had repainted portions of the plane using flammable paint that didn’t meet heat certification criteria. In another incident there was an issue with certain parts of the wing.

Then in November 2011, an Airbus 340 was grounded in Boston, after someone discovered that about 30 screws were missing from a “large protective panel” between the fuselage and wing that serves to reduce drag. The plane had flown for five days in that condition, after heavy maintenance had been done by TAECO. ALTER described the incident in an internal document that was then leaked. Air France tried to step out the brushfire. The missing screws were supposed to hold down a piece that “was part of the outer covering of the wing and at no point was flight safety compromised,” the company’s spokesman said at the time.

A union spokesman wasn’t so nonchalant. “Deplorable,” was how he described the oversight at the TAECO plant. “Pieces of an aircraft should never simply go missing during maintenance,” he explained. “It is not the first time this has happened either.”

A month later, Air France buckled and suspended TAECO from performing heavy maintenance on its aircraft. Then, quietly, it restarted using TAECO, “for purely financial reasons,” the union pointed out. The addiction to cheap labor, regardless of what the costs.

So on Thursday, given the “serious incidents involving maintenance carried out in the workshops of TAECO,” the union demanded that management “put a definitive end to the outsourcing of maintenance” of long-haul aircraft “before one incident too many occurs.”

These kinds of incidents are not made public, neither by the airlines nor by TAECO. They would rather keep them quiet. And who knows how many times they succeed. They bubble up only if an interested party – such as a union whose pilots are impacted – finds out about it and writes up an “internal” report that then gets leaked. The mainstream media don’t appear to be eager to dig them up either, though it would help keep airlines honest about outsourcing maintenance to countries where people have trouble with the basics, like reading voluminous English-only maintenance manuals and making sure all the screws are in place.

There could not possibly be any clouds on the horizon with the Dow and the S&P 500 setting all-time highs, while the German DAX is getting there, and with the Japanese Nikkei soaring. But just then, a deeply connected representative of the global real economy spoils the rosy scenario. Read….. “During The Last Crisis, We Had China,” Now We Have No One

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  1. scraping_by

    The thing about cheap labor is that it doesn’t really benefit the consumer.

    In this case, spread the cost of a heavy overhaul over several thousand air hours, doesn’t really make a significant difference. Double that cost, it’s still a few bucks, a small part of one passenger ticket.

    It makes the difference to guys sitting around a table in headquarters. Somebody being able to hoot and point to a lower number on a budget. Return on investment, total cost of ownership, the reason for the spend, not really part of the meeting. The number is lower, the guy wins.

    Outsourcing is office politics let loose on the real world.

  2. MaroonBulldog

    The Chinese actually know how to solve problems like this, and they showed how during the Y2K transition. They required officers of their airlines to board flights that were scheduled to take off late in the evening of 12/31/99 and land on 1/1/2000.

  3. Bpo

    This honestly made me cry. We’re going to have to fight to make this country a decent place again.

    1. sgt_doom

      Like we used to do once upon a time: 1911 bombing of the rightwing, anti-worker LA Times by the McNamara brothers, and other such bombings, led to the Commission on Industrial Relations (a k a the Walsh Commission).

      Bombing of JP Morgan on Wall Street (or was it Broad Street?) in 1920.

      Attempted murder of mass-murdering industrialist sleazoid, Frick, by Alexander Berkman.

      Etc., etc., etc.

      Today they only do such things in China and Europe.

      We’ve got to catch up . . . .

  4. Timothy Y. Fong

    An old friend of mine likes to say that aviation regulations are written in blood. I guess the blood is too old now, and people have forgotten. No matter. We’ll find out, when one of the big 787s breaks up in midflight.

    1. arndebian

      Your friend is right.

      However it will take some time to realize the problem due to the small amount of part recovered from the wreckage (when you have enought luck to find what left of the aircraft).
      Il will take even more time to find a solution due to compagnie’s greed, “greed is good” …
      As long as the return of investment is low and the adjusment variable is wages and blood of the customers we will heard a lot of these stories.

      In the meantime it will be an human error thanks to the dead pilot unability to speak out.

      Just wait and see

    2. sierra7

      As in all work safety rules over the years, they were always the results of (unnecessary) blood being spilled.
      Witness the toll of those poor, unfortunate (invisible) laborors in Bangladesh and the collapse of the factory where the toll now exceeds one thousand.
      We never learn.
      And, we forget how to fight!

    3. JustAnObserver

      A flying instructor I once had said to me after I’d been complaining & moaning about some of the rules & regs (with the stare that only a flight instructor can truely manage):

      “Remember – someone got hurt or died to bring us the information that lies behind each & every one of those rules or procedures.”

      Needless to say my whinging stopped abruptly.

  5. Middle Seaman

    Businesses found out that cutting cost indiscriminately incurs no penalty. It’s true for airlines as well as banks. We live in a backward society where vacations are way too short, health care way too expensive, pensions nonexistent and management short sighted and rich.

    Do we revolt? Do we demand a pair share of the pie? We just continue to vote and support the oppressors.

    1. Can't Help It

      It’s probably because “we” are not married and have no children and therefore not concerned about the future. Do I get points for restating the conclusion of a certain Harvard professor?

  6. skippy

    HA~ Was at sons football practice not 15 minutes ago and sitting right next to me, is a long haul pilot. So I ask, do you know the name TAECO. He says sure, a friend – was – an executive at TAECO. Well I hand the reader over to him and after some some smirks and such, missing screws mostly. He calmly said, what about the fake parts… D R O L L Y…

    skippy… to bad practice ended at that moment and were off to the winds of kiddy caddying, will catch up more on Sundays match…

    1. Mad King George

      This has all been going on for years. The fake spare parts scandal is one of the best kept non-secrets in the industry. There was even a documentary about it (Horizon or Panorama, I think) about 20 years ago.

      The thing is, we are ALL guilty of this: we are all indoctrinated with the unassailable belief that cost-cutting is good; it’s good for the company and it’s good for the workers, because the company remains competitive and successful, which means it stays in business which means we, the workers, get to keep our jobs a bit longer. So we start to buy cheap – paper, pens, office furniture …. and ultimately labour, which is just what the people above us in the food-chain are doing too – and then we suffer the consequences when it’s our turn to be outsourced. But you can’t argue with the numbers.

      1. skippy

        Sadly George in my scope of employment (high and low – front to back), over some decades, I’ve witnessed such machinations across a wide swath of industry’s and services. Now when I multiply that observation by the power of association, across an even larger vista, well a bleak future is all I can predict.

        skippy… It would not be so bad – if – for the critical economic components not being savaged in nearsightedness and the diminishment of those that actually give a damn. I’ve watched successive generations of skilled and knowledgeable people railroaded out of service, because, they would only bend so far. Only to be replace by a psychopaths molding clay, recompense a bit of street cred, amongst other lumps of clay.

    2. Lambert Strether

      I would think that “overengineering” would compensate for a percentage of missing bolts and fake parts.

      Raising the question: Was tht 787 overengineered? I would bet no.

      1. skippy

        CAD is just another tool, it can be beneficial or abused, sadly the administrative system has a propensity for the latter.

        Skippy… no need to illuminate that ethos around here…

      2. bhikshuni

        My late father, who was a senior QC test engineer at Pratt & Whitney building engines for Boeing and Rolls Royce (which opened a opened a regional chop shop in Singapore)before he got sold out in early retirement in the early 90s told me that those airliners were designed for “CATASTROPHE X 4”, i.e., to withstand up to 4 simultaneous catastrophic systems failures.

        A lot of this can be traced back to Reaganomic deregulation. That plane that went down in the Everglades was caused by careless unregulated “techs” patching an on-board passenger gaming system into vital electronics.

        The regulations went first, then the unions, then the QC, then the educational culture of knowledge base.

        By now, after decades of outsourcing and decimated mfg base in the USA, where are the knowledgeable mechanics OUTSIDE of China to do this work now? Are there even people still on the lines at Boeing who would know how to do it? Like surgical sponges sewn into the stomachs of cancer patients due to lax OR accounting, our aerospace QC “regulation” is literally out of control.

        Tie executive pay to mechanics pay and make them stop flying in private jets, then perhaps we will see QC controls come back.

  7. jjmacjohnson

    This has been going on for a long time. United was sending it’s aircraft to Brazil for repairs a while back.

  8. Tom Ford

    Make no mistake — somebody, somewhere, always pays when it comes to cheap labor.

    1. bhikshuni

      Yes, that preventable death trap factory in Bangladesh ~ 1 WTC tower, but its back to Dancing with Stars stateside.

  9. grayslady

    My insurance agent used to be a mechanic for American Airlines. He told me that American started sending their planes to a non-union shop in Tennessee, I think it was, for the various required check levels (not sure if that included the D level check). The planes would always end up back at the union shop in Chicago where the mechanics would have to fix all the work that hadn’t been done correctly down south. Then American closed down its Chicago maintenance facility and my agent lost his job.
    I’m just grateful I don’t have to fly anymore.

  10. PQS

    Frontline had an episode just last night on this very issue….it is apparently a rerun from 2011, but relevant nonetheless.


    the mechanics were complaining that the foreign-owned company doing aircraft maintenance in America was importing workers and paying for their visas to make repairs.

    And we wonder why UI is so high…because those in charge are letting corporations get away with stuff like this.

  11. allcoppedout

    What really underlies this kind of crap? I understand the cheap labour argument as it confronts the company bean counter – what I can’t get a grip on is why the over-arching free trade/comparative advantage stuff still holds sway. We’ll all be better for competition in the long run. It’s obvious we already aren’t.
    There were magnificent skills in industries I worked in – shipbuilding and textiles – that had nothing to do with schools, colleges and universities – learned on the job. In exchange for this massive de-skilling we get graduate secretaries and telephone sales operatives and sell higher education to all parts.
    How did they swing an ideology that tells most of us we are better off poor and scared of losing our jobs?

    1. OMF

      What really underlies this kind of crap?

      A 23-26 year old junior MBA, straight out of college, given the task of reducing maintenance costs by carrier MBAs in their 30, who were in turn given in by managers in their 40s as part of a general cost cutting directive from a board which consists largely or part time directors.

      Not one individual in this chain knows anything about planes other than that they can fly. “Maintenance” to them is a word that appears next to bracketed numbers on their spreadsheets.

      The solution is pretty simple. Require all managers, MBAs, directors, etc, to spend a certain amount of hours flying in the companies aircraft — during their working hours.

  12. TC

    I am aircraft Technican and have been in the business of Maintaining commercial jets since 1983. I have worked for Two Major Airlines that no longer exist and now another that is doing well (for a change). I whole-heartedly agree with this article and really, at this point in time, there is no denying the affects of such outsourcing. What I can say for sure though is that commercial airplanes were no better off when overhauled in the states when Airlines had theyre own facilities. We always said the worst airplane to receive on the flight line is one fresh out of overhaul (check) There have been many mishaps over the years by American /Euro and Asian Technicans and many cowlings and panels that departed airplanes from work done by Union as well as non union, well trained Americans. We are all people and we do make mistakes. Toiltes overflow, screws get missed, pieces fly off the plane. These things have been happening ever since man took flight and likey always will. Outsourcing is not good for our world, no doubt. But you cannot point fingers at poor workmanship when you have the same happen here. It was good old American Technicians that elected not to inspect and Lubricate the stabilzer Jack Screw on the Alaskan Airlines plane that crash in the pacific.Humans and Machines dont always blend well together.

    1. Stan Musical

      Thanks TC for some words of experience; it’s important that the thread not descend into knee-jerk China-bashing.

      That said….having lived in the US, Germany, China, and Japan (and speaking the languages of all places at least pretty proficiently) I feel there are cultural differences that align pretty well with stereotypes: Germans and Japanese are indeed more apt to make sure the job’s done right–not all the time and it depends of course to some extent on a particular corporation’s culture (see TEPCO/Fukushima Daiichi).
      As much as I prefer, in general, to be around more easy-going Chinese and Americans, there seem to be more instances of sloppy work in these two societies, and my experience would single out the Chinese, on the tech side, for being prone to committing the errors mentioned above. Back in the day I saw such shoddy work in China it was shocking, and even nowadays I encounter more lacadaisical attitudes there than in the US or certainly Japan.

      It’s just one instance but I had a horrible experience with brand new luggage being wrecked by Air China–30+ years flying and never saw a bag mangled at all, say nothing of so badly–and then so poorly “repaired,” despite assurances, that it was laugh-and-cryable. I’ve flown Chinese airlines too often (mostly because they’re cheap, sometimes suspiciously so, leading me to wonder “just how do they do it?” while deciding not to think about the probable answer too much) and have seen some rather unsettling things–minor, but enough to make me wonder, if for ex. they can’t keep the bathrooms working, how about the important parts?

      The myth of Japanese efficiency and perfection is mostly just that, in fact working at my first Japanese company was an eye-opener in terms of how inefficient and frankly lazy a lot of employees were (merely good at looking busy). But only in Japan would I expect to meet a guy like an ESL student of mine, a brilliant young man who’s job was polishing out imperfections in the paint jobs on cars. I opined he was wasting his fine intellect in such a job, but he called it his Zen meditation. There’s definitely that sense of pride of craftsmanship in Japan, and German, and no doubt elsewhere to some extent (and of course in the US, but IMO not so much any more).

      FWIW a Chinese businessman I know, who flies all over China all the time, said China Eastern’s the least reliable of the majors, Air China and China Southern being better. Another anecdote, again back in the day our short-hop flight in Yunnan was canceled because the plane was “broken,” so said the announcement. After an hour or two, another turboprop landed and we were assured “this plane is better.” That was a long one-hour flight, fortunately the FA’s grimly walking down the aisle slinging bags of peanuts at us provided some entertaining distraction from thoughts of plunging to our deaths.

      If you look at accidents per passenger mile, IIRC the PRC airlines AND China Airlines out of Taiwan are on the bad end of the bell-curve, lending some weight to my argument, however distasteful it seems (to me as well).
      So my gut reaction is that this isn’t a good thing.

    2. KnotRP

      The above is just misdirection.

      Quality, Cost, Time – pick two.

      Guess what every MBA/CEO picks?
      (Hint: the only two which can be measured in the short term)
      It’s worse when the MBA/CEO flies a private corporate
      jet, where the maintenance methodology is…ahem…different.

      Airline managers aren’t the only ones gaming the system
      for personal profit, though. For example, Bankers have effectively done the finance equivalent, and they aren’t the only ones. An entire generation of managers has been
      trained to do this….and they are milking that cow to

      1. UAVGeek

        Except in this case the Airline execs ARE MBAs, and they are set to ruin an otherwise famously reliable and safe system to make a few extra bucks.If MRO based maintenance causes passenger fatality then we should hang the CEO and all of the operations managers with aircraft grade control cable.

    3. UAVGeek

      I’d agree with you except for one caveat: In many cases (need to read the FAA accident investigation, it’s some truly scary stuff) there is management (MBA/finance types) pressure to keep planes flying and out of specified maintenance “fly till it fails” mentality. This pressure keeps people from doing what they are supposed to. The fact is until operations managers and CEOs start going to jail over corporate policies that degrade safety nothing will change.

      1. Walter Map

        Not exactly.

        Nothing will be done about the problem until a planeload of MBAs goes down. Then something will be done.

        A fresh batch of MBAs will get hired, that’s what will happen. People are disposable. Planes are disposable. In the economy of the 21st century, money is God, and only profit matters.

        The hyperrich have their own planes, and they are not serviced by TAECO.

        In a sordid swamp harmonious Greed was born in yonder ditch,
        With a longing in his bosom, and for other’s goods an itch.
        As Christ died to make men holy, let men die to make us rich!
        Lo, Greed is marching on!

    4. ChrisPacific

      Humans do make mistakes, which is why a truly robust process needs to recognize that fact and provide multiple opportunities for errors to be checked and spotted by things like reviews and quality control before they actually make it into use. Any process that assumes perfection on the part of its workers is guaranteed to produce a flawed end product.

      I do agree with your point that highlighting quality deficiencies isn’t the strongest argument against outsourcing. Maybe there are quality issues with outsourcing and maybe not. Put that aside for a moment. Suppose there aren’t. Is outsourcing still a problem? If so, then the quality issue is a red herring.

  13. KFritz

    Bottom line: air travel needs to be regulated in the manner of public utilities. The drive to wring profit out of every aspect of the business and the inevitable corner-cutting and sloppiness that accompany that drive will eventually cost lives. Air fares can only be driven so low–there IS a bottom line to keep a plane safely in the air–and the industry will not self-regulate to keep fares above the line.

  14. run75441


    If one takes into consideration the materials used to maintenance / repair an airplane, Labor comes in a distant third to materials and overhead. The issue is what cost can be controlled the easiest . . . Labor.

  15. Skinny Fiber

    An impressive share! I’ve just forwarded this onto a co-worker who had been conducting a little research on this. And he in fact ordered me breakfast simply because I discovered it for him… lol. So let me reword this…. Thank YOU for the meal!! But yeah, thanx for spending the time to talk about this issue here on your internet site.

  16. hidflect

    My bro just got a job based in China. 8 weeks he has to wait to get his visa processed. Barriers to entry, anyone?

  17. OMF

    Then, quietly, it restarted using TAECO, “for purely financial reasons,” the union pointed out.

    Financial reasons? Look, you’re either going to pay for proper maintenance of the planes, or you’re not going to fly them. The person or office at Air France responsible for making this decision is unfit for their position. This decision contaminates the reputation of the whole fleet.

    Air France planes should all be grounded until every plane is checked by actual maintenance professionals.

  18. washunate

    This isn’t China’s fault, and this isn’t a story about outsourcing.

    This is the same story we see all over the US economy – the only way to shift wealth upward is to skim off of the productive economy, to transfer wealth from the broad public to the connected few.

    Deregulation is US policy. Abandoning passenger rail service is US policy. Busting unions is US policy. Decreasing training and investment in employees is US policy. Etc.

    Cheap labor doesn’t cause problems – that entirely misreads the cause and effect. Cheap labor is just what happens when the government allows a predatory class to take stuff that doesn’t belong to them.

    So now we have airports with expensive but useless pornoscanners, but yet, we can’t afford to have planes fly directly between cities anymore for all but the largest destination hubs or invest in training and development and compensation for a skilled workforce to maintain the equipment.

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