Jason Trennert, Chairman and CEO of Strategas Research Partners, spoke with Quartz for the latest installment of our “Smart Investing” video series.
Watch the interview above and check out the transcript below. The transcript of this conversation has been lightly edited for length and clarity.
ANDY MILLS (AM): Boeing is in the news. Their CEO stepped down. Dave Calhoun. Does this fix the stock? Does this fix the company? Should people be buying it right now?
JASON TRENNERT (JT): I don’t know if they should be buying it, but I also think that it doesn’t fix the issue because I think what the issues that Boeing have had I think suggests that there’s a cultural problem within the company that is not easy to fix in a company of that size. The company, one of the great gems of US corporate America and had always been very focused on engineering first, safety first, and then over time the culture changed. They moved their headquarters away from Seattle to Chicago and there was a different focus and focus more on the bottom line. And of course that’s very dangerous. And when you’re producing things like commercial airplanes, so to me, the stock might be a buy, but I think that the issues that these problems are exposing are much deeper and are going to take a revamp of the culture of the company maybe to go back to its roots for me to get really comfortable in buying the stock on more than some sort of speculation or a flyer.
Read more: A timeline of Boeing’s brutal 2024 (so far)
AM: Yeah. I saw the John Oliver piece on it. And it seemed to me like the engineers need to be listened to, like that safety is the number one concern of the engineers. And that on a C-suite level, those concerns were maybe being overlooked or not prioritized in the grander scheme.
JT: And I think in the way they once were at Boeing, ‘cause it really was a paragon of that culture. And I think its business is very competitive. Right. I’m sure it feels like it’s in some sort of death match between it and Airbus and Bombardier and everything else. Very competitive business. By the same token, you also have to realize that it’s there. The mistakes are, when you make a mistake, it’s large and very costly. Right. If you’re producing deodorant or something, you know, the costs are not that great to make a mistake. Whereas if you’re producing commercial airplanes, it’s probably better to listen to the engineers a little bit more, even if it costs you more and costs you some short term profits.
AM: I feel like the government might have to step in and bail them out at some point because it seems like they’re just gonna lose money hand over fist.
JT: Yeah. I don’t know enough to know.
AM: Yeah, me neither.
JT: And whether that’s the case, and, I have to say, I just as someone who’s somewhat skeptical of large government, I would pray that it doesn’t come to that because I don’t think that would result in necessarily better outcomes. One of the ironies is that Boeing has very strong relationships with the government. And one of the problems with very large government is that it tends to benefit very large companies who have the ability to lobby government and have the ability to write their own rules. And there’s a certain amount of that with Boeing as well, in terms of its own self-regulation. And so I would be skeptical of that relationship getting closer. As a matter of fact, I’d like to see the relationship get a little bit further apart where the government regulators are not so close to the company. And I think, and again, let the justice of the markets meet out or encourage the companies to do the right thing.