JULY 30, 2007
GLOBAL BUSINESS
Danger In The Repair Shop
FAA inspectors are warning about the risks of outsourcing maintenance
The global economy has given consumers a lot to worry about these days: lead-laced toy trains, tainted toothpaste and pet food, and counterfeit drugs. Now add this to your list of fears: commercial jetliners that are routinely repaired in maintenance shops around the world that the Federal Aviation Administration has neither the funds nor the staff to oversee properly.
No one seems more worried than some of the FAA’S 3,000 inspectors themselves. They are sounding the alarm that foreign maintenance shops receive inadequate oversight and have become a risk for shoddy work and counterfeit parts. In interviews and in recent congressional testimony, inspectors and their union representatives say they are able to scrutinize thoroughly the work of only a handful of the 698 overseas maintenance contractors licensed by the FAA.
These facilities are sometimes found to hire unskilled and untrained employees. Inspectors, moreover, don’t have any ability to oversee an unknown number of obscure maintenance shops that lack FAA certification.
Fears about the safety consequences of outsourcing maintenance have been around since at least 2001. Worries were heightened in 2003, when an Air Midwest commuter jet crashed, killing 21, following faulty work by a domestic maintenance subcontractor. Now those anxieties are on the rise again as major carriers, faced with soaring fuel prices and cutthroat competition, move more of their work overseas. In March, Delta Air Lines (DALRQ ) outsourced the maintenance of airframes on 12 Boeing (BA ) 767 aircraft to a Hong Kong company, part of a wider strategy of moving repair work overseas that the company says saves about $250 million annually.
Two years ago, United Airlines Inc. (UAUA ) outsourced its 777 maintenance to another Chinese company. Delta and United say overseas outsourcing is safe and the facilities they use meet FAA standards. “Safety is always our first priority,” says United Airlines spokeswoman Megan McCarthy. “We’re not worried about the quality of the work.”
Every major U.S. carrier, in fact, has outsourced repair work beyond U.S. borders. But the extent of such work is growing. The Transportation Dept. estimates U.S. airlines spent 64% of their maintenance budgets, or some $3.7 billion, at outsourced facilities last year, up from 37% in 1996. And with U.S. consumers ever more wary of tainted goods and services from China, the latest push could stir a fresh wave of anxiety.
Already, some legislators and safety advocates are warning that outsourcing repair work is a disaster waiting to happen. In an interview with BusinessWeek, Senator Claire McCaskill (D-Mo.), who chaired a June Senate subcommittee hearing on foreign maintenance facilities, said she thinks “Americans would be shocked if they knew we have foreign repair stations that are not secure, employees without criminal background checks, and mechanics who are not qualified.”
According to some FAA inspectors, there’s plenty to worry about. In Taiwan, for instance, inspectors have been deeply troubled by what they observed over the course of the past two years at Chiang Kai-shek International Airport, where Boeing is modifying four 747 jumbo jets into extra-large cargo freighters. Inspectors say they found discarded B-747 parts, which they worried could wind up back in a commercial aircraft. As the old parts came off the planes–everything from aluminum panels to generators–they were dumped into unsecured bins, according to two inspectors who each shared their concerns separately with FAA inspector Linda Goodrich, a 23-year veteran of the agency and a senior member of the FAA inspectors’ union.
The repair shop, a unit of the Taipei-based Evergreen Group, a transportation conglomerate, is required to seal off the work area and destroy the parts, according to FAA regulations. Inspectors worry that any scavenger could grab the parts and resell them into the brisk market for counterfeit aircraft parts. The FAA itself has estimated that some 520,000 counterfeit parts make their way into planes each year. “These parts could be installed back on a passenger jet,” says Goodrich, who is based in Washington, D.C. “There’s no telling where these parts might show up or what could happen.”
Boeing Co. officials say the company followed FAA regulations and the parts in question have been destroyed. A senior Evergreen executive agrees that the work complied with FAA guidelines and that the parts were disposed of properly.
[Following publication of the story, Boeing officials conceded that FAA inspectors’ account was accurate. Boeing officials confirmed that two years ago parts taken from 747 jets were not identified, destroyed or disposed of properly. But as soon as the problems were identified, Boeing and Evergreen resolved them, said Boeing spokeswoman Mary Hanson. “Boeing did have some initial issues with scrap part identification and marking when it first started up the modification program in Taipei,” Hanson said. “Procedures to ensure proper part identification and marking were promptly put in place.” She said Boeing and Evergreen have since been in compliance with FAA rules.]
More broadly, the FAA disagrees strongly with its unions that foreign maintenance facilities pose a risk, citing the impressive safety record of U.S. carriers in recent years. James J. Ballough, FAA director for Flight Standards Service, says the agency visits each foreign repair station annually. “I am confident that we get a true picture of the compliance posture of those repair stations,” he says. “We have a great safety record.”
Some FAA inspectors, however, dispute the official line. They claim their biggest problem is simply getting the funds and clearance to travel to overseas sites. One inspector based in the Midwest says he is charged with inspecting dozens of facilities in Asia and Europe. But he’s able to visit only one or at most two such facilities a year, and then only briefly. “We’re not able to oversee the work to ensure it’s been done properly, whether they are properly using the tools, whether they have trained technicians,” says the inspector, who insisted on anonymity for fear of losing his job. “When such facilities were located in the U.S., we’d be in the shops every day.”
When inspectors do get overseas to observe the overhaul of, say, a jet engine, they say they find myriad problems, including faulty engine installations and improperly documented parts, a red flag for counterfeiting, according to Goodrich and several other FAA inspectors. Another common violation is not cleaning critical rotating parts before they’re inspected and checked for possible cracking. Such cracks, if undetected, could lead to an air disaster if the component fails, the inspectors say.
Such accounts are similar to testimony before Congress last month. “Our mechanics have found that aircraft returning from overseas flights had departed with obvious mechanical problems,” testified Robert Roach, vice-president of the International Association of Machinists, which represents many of the U.S.-based airline mechanics. The union opposes outsourcing and views it as a threat to its members’ jobs.
The ranks of FAA inspectors are likely to thin, not grow, as half of them are set to retire by 2010. But more inspectors wouldn’t help what is perhaps the most worrisome aspect of repair outsourcing: the hundreds of unlicensed maintenance subcontractors that operate completely below FAA radar. Licensed outsourcers often turn to these shops to save money, according to recent congressional testimony by Calvin L. Scovel III, the Inspector General for the Transportation Dept.
The IG testified that uncertified foreign repair stations have been performing maintenance that goes well beyond the simple oil changes and tire pressure checks previously thought to be taking place at these facilities. Instead, they’re repairing critical components, such as landing gear, and performing complete engine overhauls. The IG said that the FAA did not know the extent of maintenance performed at uncertified repair facilities, though he said the FAA is trying to find out.
And how do U.S. carriers follow up to ensure the work has been done? The IG said they rely mostly on telephone calls to the repair shops with which they’ve contracted.
By Stanley Holmes
Posted by mudge 
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