Reputation

You Get What You Pay For.

Posted on by spr1334btenca

Is the long dreaded statement, “You get what you pay for” true? Or is it just a coined phrase that consumers overuse?

The recent numbers for the business quarter were released by Wall Street Journal and Costco’s numbers were nothing less than impressive while Walmart’s numbers were nothing spectacular. Costco experienced an 8% increase from last year’s benchmark and a 5% increase in same-store sales. These impressive numbers that Costco released may reveal that consumers are sick of receiving a shoddy service from corporations such as Walmart.

This grocery superstore (Costco) does charge a member fee; however with the 8% increase this quarter it doesn’t seem to be stopping anyone from coming and ditching Walmart. Walmart is known for its unbelievable cheap prices and record-breaking deals, but are these numbers revealing that consumers may be sick of it and switching to Costco?

The article suggests that the reason for this downfall at Walmart may be related to the minimal wage it pays its employees. On the other hand, Costco pays its employees a decent wage where they can afford even the extra remedies in life. Where a Walmart employee can barely afford to take their kids to the doctor. Even if the average employee at Walmart finds a loophole to squeeze a little more pay out of the company Walmart Corporation won’t hesitate to cut that stores employment roster by nearly one and a half percent.

As a result of these minimal wage efforts to their employees their quality of service has significantly decreased. Employee moral is down because there is an extreme lack of motivation between workers when they know pay is extremely low. Inventory remains pilled up in warehouses around the country and customer services line are metaphorically speaking “running out the door.” To add to another fall back Walmart is experiencing, is that when customers do want their products, they are nowhere to be found.

Walmart is experiencing these sales hit and we can see that they may be directly related to poor compensation received by their employees. Staff and salary cuts at Walmart have been occurring since the recession while customer service continue to drop. Yet Walmart still continues to open retailers around the world.

With the decrease in the quality service that Walmart is providing maybe it is time to revamp some of their strategies and move away from extremely low prices. They need to invest some of this money into paying their employees properly because with low wages we can see employee turnover and sales are at a low.

Personally, I have experienced Walmart’s poor quality service and am not a firm supportive of how they treat their employees; however I do enjoy their extremely low prices.

Will following Costco’s employee wages support team moral and inadvertently improve company sales at Walmart?

What quality tools can Walmart use to design a new business model to ensure this won’t continue to happen?

You get what you pay for; do you think Walmart provide shoddy quality service?

 

http://www.forbes.com/sites/rickungar/2013/04/17/walmart-pays-workers-poorly-and-sinks-while-costco-pays-workers-well-and-sails-proof-that-you-get-what-you-pay-for/
http://hbr.org/2004/12/outsmarting-wal-mart/ar/1
http://www.costco.com/employee-website.html

A Fake Tiffany Blue Box

Posted on by spr1334ksolis
Photograph by Timothy A. Clary/AFp via Getty Images

Costco is now selling Tiffany replica rings but at the Costco price and this is causing Tiffany to file a multimillion-dollar trademark suit against Costco.

A women on WeddingBee.com asked her blogger readers about what where their thoughts on jewelry from Costco, most women said that they would not mind a ring from Costco but they would not be entirely for it. Some of the responses included, that they only saw Costco as a grocery store and never thought about buying a ring from there, another response was that she had thought about buying a ring from Costco but was concerned when people would ask where she got the ring.

On a Good Morning America episode a Tiffany diamond and a Costco diamond where both appraised. The $16,600 Tiffany cut was 58% more expensive than its $10,500 value, and the $6,600 Costco ring was 17% under its evaluated value of $8,000. What allows Tiffany to have their prices $6,100 above the evaluated price is what the international recognized blue box means, Quality.

The dimensions of product quality that Tiffany offers are,

Conformance- When you buy an engagement ring at Tiffany’s you buy something that Tiffany has ultimately guaranteed that it   will meet the specifications of your loved one.

Reliability/Durability- Since it is a prestiges company that has spent many years building, you are assured with all the paper work that the ring you buy will have a useful life and a consistency of performance through out it.

Service- Once a ring is purchased, it can be returned for cleaning or resizing at any time.

Response-  The jewelers have face to face interactions with their customers about the different kind of cuts and qualities of diamonds so they choose the best diamond for them.

Aesthetics- Every piece of Tiffany’s is a renowned design and over the years there have been a select number of designers to create exclusive pieces just for Tiffany.

Reputation- Tiffany has spent years building a reputation for themselves, with the help of many stars and the classy Audrey Hepburn endorsement raises not only the price of its jewelry but the reputation of the little blue box.

My parents own a jewelry store and I notice how peoples meaning of quality differ all the time. The one difference I constantly get from customers is the preference from 10kt and 14kt. Many people have had problems in the past with 10kt or have heard stories that created a bad reputation for 10kt. Although I explain to the customers how gold has changed and how 10kt is now a better quality the reputation and the durability of the past remains.

Is $6,000 more worth getting a lifetime of sizing and cleaning?

Or

Is the name Tiffany worth $6,000 more?

Also

If you found a similar ring to Tiffany’s at Costco with the same quality diamonds, would you still purchase the above evaluated Tiffany ring?

 

http://www.businessweek.com/articles/2013-05-06/tiffany-vs-dot-costco-which-diamond-ring-is-better

http://www.tiffany.com/About/TheTiffanyStory/default.aspx#p+1-n+6-cg+-c+-s+-r+-t+-ri+-ni+1-x+-pu+-f+/0

Can We Afford to Raise Wages to 29 Cents per Hour!?

Posted on by spr1313pnolan

After several major accidents in textile factories in Bangladesh over the past couple months, in which hundreds of workers died, Walmart sent a warning of its new “Zero Tolerance” policy to suppliers. At least two of these factories had what Walmart called “unauthorized” contracts with its suppliers. Walmart has reacted by informing its suppliers that it will no longer tolerate unsafe working conditions or unethical practices in the factories that make goods destined for Walmart stores. In a letter sent to suppliers outlining the company’s new policy, Walmart states that suppliers who fail to meet Walmart’s new guidelines could risk being permanently barred from doing business with the retailing giant. Is this move by Walmart just PR damage control or do you think the company will truly follow through on this new policy? If the company does follow through, is this new stance based purely on calculated analysis that will save money in the long run, or does Walmart truly care about human rights?

On April 24th a Bangladeshi garment factory complex collapsed killing 362 people, although the building housed nearly 6,000 employees and many are still unaccounted for (Link #1). This disaster is at least the third of its kind to occur in the south-Asian nation since 112 workers died in a factory fire in November 2012.

With wages and inflation increasing in China, Bangladesh has seen many garment manufactures move to the impoverished nation. China’s average hourly wage is now $1.34, while Bangladeshi wages are on average between 18 and 26 cents per hour, the lowest in the world. Spurred by cheap labor, the garment manufacturing industry in Bangladesh has grown to about $19 billion as of 2013 (Link #2). This quick growth, coupled with a low-cost focus, has led to unsafe conditions in which many factories have been converted from residential buildings, thus not meeting fire safety or maximum occupancy regulations. According to the executive director of the Bangladesh Center for Worker Solidarity, about half of the factories in Bangladesh do not meet legally required work safety standards, standards that are much lower than other emerging nations to begin with.

To combat this problem, Walmart has released a document spelling out its “zero tolerance policy” pertaining to working and safety conditions in factories suppliers subcontract with (Link #3). Within this document, Walmart states it “would like to improve the safety of [its] global supply chains”, and that it “is committed to value chains that empower people who work in them.” To oversee this goal, all factories in Bangladesh are to be audited by Walmart to ensure they are abiding by acceptable safety standard regulations and “Ethical Sourcing” requirements. Factories that fail to meet these requirements will be added to a “red card” list on Walmart’s corporate website, which will bar them from being included in the company’s massive supply chain. Further, according to the “Zero Tolerance” document, Walmart has been meeting with government officials and other companies who outsource manufacturing to Bangladesh in order to create a united front against subpar labor standards.

If the “Zero Tolerance” measures don’t work in Bangladesh, Walmart’s suppliers may have to move contracts to countries like Cambodia or Vietnam where average hourly wages are 29 cents and 55 cents, respectively. This move will undoubtedly raise costs associated with Walmart’s supply chain, as will implementing the auditing process of Bangladeshi factories.

As a reader of this blog, what do you think Walmart’s motives are for implementing these strategies? From a profit and loss standpoint, do you think this will help or hurt Walmart’s shareholders?

Tepco Faces Decision to Dump Radioactive Water in Pacific

Posted on by spr1311sabraham

Are ethical dilemmas an issue for operational management? If your answer is no, you are wrong.  There are many ethical dilemmas that companies face each day regarding their operations.  This Bloomberg article regarding an ethical decision needed to be made by Tokyo Electric Power Company (or ‘TEPCO’) , a Japanese electric utility company, is ground shaking with the large implications that will result per their ultimate decision.

TEPCO has discovered leaking in water storage pits within the Fukushima atomic station- The station was destroyed in March 2011 from an earthquake and tsunami simultaneously (link to article —-> http://www.telegraph.co.uk/news/worldnews/asia/japan/8953574/Japan-earthquake-tsunami-and-Fukushima-nuclear-disaster-2011-review.html)

From within the seven pits, leaks were found in the basements from when the disaster teams were called in to cool down the reactors. The company is now under pressure because it may be forced to dump the radioactive water in the Pacific Ocean.

Time is of the essence due to the water busting through basement walls at roughly 400 tons per day.  This water is then becoming contaminated, thus a huge issue.

TEPCO has two operational decisions to make to pass down to its work crew:  reduce radiation levels from the water by pouring it into the Pacific Ocean or continue their production of “above-group storage tanks”.

Why such a tough decision for management?  It is essentially impossible to keep up with the inflow of water that is leaking. Even with production of 450,000 tons of the tanks above ground by September 2013 and 700,000 tons by the middle of 2015 this company clearly is fighting an uphill battle.

What are the effects of their decisions? Well, an important factor in this are human lives.  The United Nations Scientific Committee on the Effects of Atomic Radiation (or ‘UNSCEAR’ link to their website here –> http://www.unscear.org/) has remarked that humans can get cancer, such as leukemia, with moderate to high levels of exposure to the toxins.

Even though TEPCO is working on the removal of many of the radioactive substances, the purification system they have created continues to see operational issues in functioning properly.  The company’s image continues to be at stake, they face legal issues, disrupting the fishing industry, and their company’s attractiveness to investors in the future. Other than the business side, their obligated to think of their own people as in their workers and also those people that this could affect.

The original cause of the leaks could have potentially been a flaw in the staffs proper inspection of the equipment and additional tests before dumping toxic water into the leaking pits.

This is an operational nightmare for TEPCO.  I feel that this story directly related to what we have already learned within class.  Within the puppet making exercise the workers continued to feel pressured by upper management to just get the job done. Also, within the tower exercise having an effective team leader was crucial along with the planning phase of construction.

I am curious to hear your thoughts on what truly caused these leaks and what you would do in this situation.

Link to article –> http://www.bloomberg.com/news/2013-04-11/tepco-faces-decision-to-dump-radioactive-water-in-pacific-ocean.html

“Worst Corporate Deal Ever” – How Did It Happen Again?

Posted on by w13heather

Last year, Hewlett-Packard bought Autonomy, a software company focused on data analysis and intelligent searching, for $11.1BN, or 12.6 times their 2010 revenue. Last week, HP announced an $8.8BN write-off related to the acquisition, effectively admitting that they overpaid for Autonomy by 79% (HP had a lost of $6.9BN this quarter, in large part due to this write-down). HP is now claiming that fraud was potentially committed by Autonomy during the acquisition process. However, HP was not the first company to look at Autonomy, and potential fraud aside, the deal was overpriced according to the earlier “courters” of Autonomy (like Oracle).

The AOL-Time Warner deal in 2000 is largely considered the worst acquistion in history, but there is now speculation that this deal is worse. For example, the AOL-Time Warner deal resulted in a 50% decrease in value, while HP-Autonomy is approaching 60%, and the fallout is still unfolding.

So, how did it happen? There is quite a bit of “he said, she said” going on in the public eye, and likely more of it privately.

In both of these acquisitions, the acquiring company was a “has been” in the industry looking for a way to transform. HP bought Autonomy to transform their software division for the 21st century. If we speculate a bit, it is not hard to draw the conclusion that instead of trying to transform what HP currently had, they chose to buy a transformation, and thus overpaid for it – either out of optimisim for the deal, desparation for a solution, or both.

If we read a bit into the “he said, she said” that is public, it appears as though a couple of things are going on:

(1) HP overpaid for Autonomy, regardless of potential fraud (based on earlier companies that passed on Autonomy, and former Autonomy executives admitting publicly that HP “paid a full price”);

(2) No one besides HP’s board or CEO thought the acquisition was a good idea for HP;

(3) There were power struggles within HP that caused speculation and indecision on whether they would be a hardware company, software company, or both; and

(4) The cultures of the two companies were not taken into consideration.

This last point is potentially the most important from a longer-term strategy perspective. HP, a larger, mature company that has not kept up with industry changes, was likely “stuck in its ways” in terms of how the company operated – from R&D all of the way through sales and support. Autonomy, a smaller, “trendier” company was likely more nimble and able to respond to market demands, which was one of the reasons they were more relevant in the market. Based on some of the public comments, it seems as though Autonomy was bought, and then forced to change it’s ways to the “HP way”, instead of integrating the two sets of cultures and processes to get the best of both worlds. If you take a successful company and force it into the processes for a struggling company, it will not reach the revenue potential that was the basis for the price paid – hence the current situation.

It will be interesting in the coming months to watch the fallout of this situation. There will most certainly be litigation that comes out of this as a result of the write-down and potentially the accusations of fraud. There is already speculation that HP could become a takeover target. And, most importantly, this is likely a “make or break” situation for HP – they could either become yesterday’s news, or if the embrace the need for change, transform the company.

Sources: http://www.nytimes.com/2012/12/01/business/hps-autonomy-blunder-might-be-one-for-the-record-books.html?; http://www.businessinsider.com/shane-robison-hp-autonomy-2012-11; http://www.law.com/jsp/ca/PubArticleCA.jsp?id=1202579983940; http://www.businessinsider.com/mike-lynch-hp-autonomy-mismanagement-2012-11

Quality And Innovation – The Rat Race!!!

Posted on by f1213araza

The electronics world has changed rapidly in the last few years. Some companies pioneered the changes, while others were too slow to adapt to the fast changing trends and requirements. Not long ago, Japanese companies ruled the market like lions in the jungle. Companies like sharp, Sony, Panasonic and Nintendo were the biggest and unbeatable brands in the entire industry. Now, on the contrary these market kings have lost their market share drastically.

What could be the reason behind their downfall? I have noticed a similar trend in Japanese companies and in someway have the same characteristics. However, these well known companies still follow the highest quality standards and produce highest-quality hardware devices. But the market demand now is not limited to quality only. Japanese companies were slow to catch with competitors with regards to design, operating system and software technology. For instance: Sony was the market king in 1990 when it introduced ‘The Walkman’. At one time, was the ‘must have’ gadget for everyone like the apple iPods currently.  Just in a couple of years Apple managed to shake off and challenge Sony’s position in the market with their IPhones and iPods. Sony’s fell, profits shrunk and once one of the best image in the world is battered.

I believe the major downfall of Japanese brands is due to the fact that they were slow to realize the changing demands and the need to improve software rather than only focus on quality hardware.  From a technological perspective, the explanation of how that happened is straightforward and that apple always was, is very good at software and Sony never was. Sony understood music technology but they were bad at software and they didn’t do what apple did. That is making use of computers and Internet. They created ITunes which made accessing and syncing music to apple devices easily. The Walkman was a success in their era when it did not have to interact with computers.

As discussed in class, acquiring Six Sigma, ISO or other quality certification does not guarantee profits. These methodologies are used to help businesses reduce failures in quality. Talking about Sony, they also had obtained certification under ISO 9001 for all sites manufacturing electronic products yet faced backlash from competing brands. Fast pace dynamic fulfillment of consumer market should be a big factor of management department to maintain the success of a company. Big portion of company’s budget should be allocated for R&D while maintaining the quality of their current successful products.

Do you agree that Sony was too slow to adapt to the fast changing trends?

PS: I think Apple is also slowing down its innovation pace. Watch the video and share your views. http://www.youtube.com/watch?v=RyWSEwKPo8s

Hold on to your Seats!!! We’re Going Down!!

Posted on by f1213spalreddy

 

 

 

If the airline industry can’t properly maintain the inside of a plane, how can we trust them to take care of the outside of the plane?

 

Recent financial troubles have not been the only source of difficulties for American Airlines.  The airline is now experiencing complications with their seats.  “A Boeing 757 from Boston to Miami carrying 175 passengers diverted to New York’s John F. Kennedy Airport on Saturday when three seats in row 12 came loose shortly after takeoff.  A second American Boeing 757 returned to JFK on Monday morning after a similar seat issue was discovered” (CNN).  This kind of quality oversight could be the straw the broke the camel’s back for American Airlines.

Initial claims pointed at the saddle clamp “improperly installed on the foot of the row leg” (CNN).  Due to this improper diagnosis, American Airlines inspected a total of 47 Boing 757 Airplanes that were using this type of clamp.  Through this inspection, American Airlines found “that six — including the two involved in the recent diversions — had seats that were not properly secured” (CNN).  It was later discovered that the clamps were not the source of the problem.  Even though this problem was misdiagnosed, it led to a discovery of improper equipment.  Would the faulty equipment been discovered if the problem was diagnosed correctly the first time?   Or did this error lead to a great deal of lost revenue, time, and labor.  These are the types of things that are not in excess for a company dealing with bankruptcy.

The financial implications of mismanaged time and resources are pretty severe for a company with major financial woes.  American Airlines had to ground almost 50 of their Boeing 757 planes.  This is on top of the problem American Airlines is having with their labor force.  American Airlines is in a difficult battle with their pilots union.  The airline suspects that pilots have been filing frivolous reports to cause massive slowdowns.  This slowdown is composed of 12,000 delays and 1000 canceled flights within the month of September.  The question here is whether or not the pilots have been leveraging false safety concerns to improve their union position.  Regardless of the validity of these claims, the airline must address each concern to avoid an even bigger situation.   Being a major airline, American Airlines must deal with problems coming from all directions.  Not only must American Airlines worry about the problems of their own employees, they must also worry about their manufacturers and the partners of their manufacturers.

More and more companies work with various manufacturers to supply them with the parts and pieces required to complete their final product.  It is almost impossible to find a major manufacturer that creates all of the pieces in house that are needed to complete an intricate product.  Many reach out to other manufacturers that specialize in that specific part/piece.  With all of these various pieces, it is very difficult to insure the quality of every one of these different parts.

The seats in question were manufactured by Weber Aircraft.  This Texas based company “manufactured the seats for American’s 757 planes, also made seats for 25 other airlines, including Delta Air Lines, United Airlines, Air Canada and Korean Air Lines”(Martin 2012).  To prevent future problems and issues, the FAA has essentially demanded that the various airlines rigorously inspect their planes using the 11 Weber seat models.  Over time we have learned that in this global economy it is necessary to make manufacturing partnerships.  However, in this case, it is evident that there is a complete lack of quality management.  How can an industry with so many moving parts avoid situations like this?

 

 

http://www.chicagotribune.com/business/breaking/la-fi-mo-faa-recommends-seat-inspections-20121105,0,5493337.story

http://www.cnn.com/2012/10/02/travel/american-airlines-problem/index.html

Best Buy Boss: Bolster Business By Bettering Bungling Bureaucracy

Posted on by f1232skrissanov

Just as the title has way too many “B’s”, Best Buy believes it has too many upper-management positions in their organizational structure. With the company’s stock hitting a 10-year low recently, Best Buy believes leadership and organizational roles must be revamped to turn Best Buy back in the right direction.

Best Buy used to be known as the place to go (sometimes the only place) for any and all electronic needs. They had been leaders in the consumer electronics retail industry. Unfortunately, Best Buy has been relatively slow and complacent in terms of evolving and innovating their operations strategy. However, competitors have leap-frogged Best Buy from all angles. The last few years have seen internet retailers like Amazon and other large retail stores like Wal-Mart and Target capitalize on Best Buy falling asleep at the wheel.

Wal-Mart and Target have refined their operations efficiency enough to make them low-cost leaders. This is an essential part of why they can offer lower prices than many other outlets. They positioned themselves in consumer minds as the place to go to save money. Therefore, people figured if they save money at Wal-Mart for everyday items, the same must be for electronics. In addition, consumers also have the convenience factor of buying the electronics from Wal-Mart in that they could buy their groceries and other items there as well.

Amazon is also a big reason for Best Buy’s decline. While Best Buy and other retailers have an online store, Amazon’s specialization in online retailing has Best Buy “against the ropes”. Amazon beats Best Buy through lower prices, higher product variety, fast shipping, and in many states, tax-exempt purchases.

To stabilize the business, Best Buy’s new CEO, Hubert Joly, is condensing the management structure. They are cutting out high positions such as “President of U.S. Business” and “Chief Administrative Officer” organizing the company structure into three divisions. The heads of each division will answer to Joly directly. The reason behind the change is the hope that the company, can make a better connection to its functional-level employees (to be retrained as well) and customers. Best Buy has closed dozens of stores just this year and is reducing store sizes due to lack of in-store demand for certain products. With competitors doing the opposite, Best Buy’s relevancy  to consumers is fading.

It seems part of Best Buy’s sluggishness to be competitive had been a cumbersome organizational structure and the inevitable “bureaucratic red-tape” that hinders decision-making in an organization. In my opinion, this move by the newly appointed CEO is totally necessary for any long-term strategy to keep the company alive. However, I also feel it may be too little, too late for Best Buy to catch-up to its competitors. In the short-term however, I believe Best Buy will regain some traction due to the holiday shopping season and their new offer to customers of matching competitor prices on their items.

Will Best Buy eventually recover and be competitive in the market, or are their days numbered?

http://online.wsj.com/article/SB10001424052970204530504578077061835914282.html

iPad’s Little Brother

Posted on by f1223hlodhia

Apple Inc., one of the world’s largest innovators, has, once again, announced the launch of a new product: a smaller version of their best-selling iPad Tablet. Once again, early adopters and loyal customers flock to see the newest hype that the company has to offer.

After being under the scope of the public for their iPad, Apple Inc. has decided to take on the challenge of creating a product that can compete with Amazon’s Kindle Fire HD, Google’s Nexus 7, and others. Previously, many customers had complained that the iPad itself was very large and heavy compared to its competitors., as well as being very costly. Although Apple has not commented about any specific features about the product itself, many excited and loyal Apple customers have come up with their own list of potential features and rumors of production that Apple may consider when creating the mini iPad since the company is known to put customer satisfaction at the top of their priorities.

First, a “major Apple investor” has publicly claimed that the iPad mini will be unveiled on October 17th, 2012 and that the official launch date of product will be November 2nd, 2012, which gives customers plenty of time to obtain the new creation for the upcoming holiday season.

Second, rumor has it that the iPad mini will have a 7.85 inch liquid crystal display (LCD) with a 2,048-by-1,536 pixel resolution, although the screen will not have the same retina display of the original sized iPad. This may be to simply keep the cost of the product lower and more affordable to the public.

Since the cost in the market is a major driving factor behind this new product, there has been some speculation that the cost and price was also very important to Apple. There were many concerns that the iPad was priced too high for many people, which is why Apple decided to come out with a newer, more cost effective alternative for those people who do not want to spend $399-$499 on the iPad. Instead, it is expected that the iPad mini will retail for about $249, which is slightly higher than the prices of its major competitors.

Along with the rumors of its features and displays, there have been some claims that people have obtained leaked photos of the final product. Some of the physical attributes that can be seen in the final product are:

  • Wi-Fi adaption
  • nano SIM tray for cellular connectivity (thought to be for a pricier model)
  • An 8-pin “Lightning” connector found
  • A microphone jack in the same upperleft corner as current iPads
  • Aluminum backing
  • volume buttons on the right side of the tablet with a switch
  • rear-facing camera
  • two speaker grilles at the bottom

The last major rumor about the iPad mini is the location of production. Although nothing has been confirmed by Apple, production has been thought to be in China and Brazil.

 

Potential leaked photo of the new iPad mini

More information about can be found at http://shopping.yahoo.com/blogs/digital-crave/ipad-mini-almost-know-162420535.html

American Airlines: A Battle of Wavering Trust

Posted on by f1213lpalarz

Picture is of American Airlines flipped seats displayed on ABC Local 10 Miami News Station.

American Airlines has found three separate occurrences of their seats being improperly bolted to the floor during passenger flights. Two of these incidents caused emergency landings, and in one case flipped passenger’s seats’ back midflight. On an additional aircraft, passengers were told to brace for emergency landing after the landing gear jammed shorting after takeoff. As a result of this, the airline has gradually inspected 757 aircrafts. In the past week, American Airlines has taken half of their 757 Boeing fleet out of service in order to inspect the seats. It is great that half of the fleet has been examined, but what about the other uninspected planes? Are they still safe to fly on?

Some people have pointed to mechanical sabotage instigated by recent labor issues. As a result American Airlines mechanics have lost their jobs due to outsourcing, which has people wondering if mechanics have unsecured bolts on purpose. The mechanics union refutes this claim saying that mechanical issues should be pointed the new maintenance procedures.

However, the FAA did note that the first two aircrafts had undergone maintenance, in which the seats were removed and re-installed, recently before the seat incidents.  While this opens a window of possibility to the sabotage claim, it also may indicate human error. It is very possible that these incidents occurred because they were not secured properly, which reflects the management personnel on duty and inspection of mechanical work. As Deming noted, 94% of problems occur because of a faulty system, not because of the workforce. It is possible that the process structure did not allow for sufficient time to review work or added stress to the mechanics process which created the human error.

The recent incidences have caused a lack of trust in both employees and customers of American Airlines, two areas that the airline should strive to satisfy.  Employees are scrutinized for the American Airlines mishaps and may feel like their jobs are unstable while the airline deals with this rough patch. The pilots of the aircraft with the landing gear issues have even been blamed for sabotaging the plane in an effort to sway the negotiations with the pilots’ union. Customers who have been on the defective aircrafts are dissatisfied with the service being provided to them. In one case, passengers were told to brace for crash landing, thinking that their lives were in danger. A crash landing did not end up being used.

It seems as if American Airlines has various issues that they need to resolve, and resole fast if they hope to retain their customer base. While it is not definitive what caused the mechanical issues or if labor negotiations played a part, I do not feel comfortable boarding an American Airlines plane at this time. In the airlines current condition, would you take the chance of boarding one of the uninspected planes?

http://abcnews.go.com/Travel/american-airlines-blames-saddle-clamp-loose-seat-problem/story?id=17372830#.UHBEEk3R5m0

http://abcnews.go.com/Travel/american-airlines-passengers-told-brace-crash-landing-maintenance/story?id=17382130#.UHBVeE3R5m0