Musk’s smoking Teslas
Updated: May 11, 2019
This Week – Boeing’s grounded aircraft, Tesla’s fires and RFG’s old cakes
Trump weighs in on Boeing grounding
Boeing is hoping to win approval from the regulators to get 400 grounded 737 MAXs flying again before the northern hemisphere summer is over. This follows the crash of two 737 MAX aircraft in which 346 people were killed.
However, new admissions by Boeing have raised fresh questions about the company's transparency with regulators and airline customers. Boeing has admitted discovering a safety alert in the cockpit of its 737 MAX aircraft was not working as intended, yet not disclosing that fact to airlines or US federal regulators until after one of the planes crashed months later.
The crashes were believed to be caused by sensor malfunctions on both flights, causing software on the planes to push their noses down. Pilots were unable to regain control of either plane. It is not clear whether having the safety alert warning light would have prevented either the Lion Air crash or the crash of an Ethiopian Airlines plane.
The result of the ground is estimated to cost Boeing between $US1.8 billion and $US2.5 billion in revenue (roughly AUD$2.5–3.5 billion) each month the fleet continues to be suspended.
US President Donald Trump has weighed in on the discussion urging Boeing to fix and ‘rebrand’ its troubled jetliner. The FAA also has been forced to defended modern complex aviation systems, which Trump denigrated over Twitter recently, claiming that modern aircraft are too complex to fly safely.
The unanswered questions now involve whether Boeing’s internal decision making could have prevented the catastrophic loss of life, not to mention their significant loss of revenue and opening an opportunity for the US president to comment on industry standards and Boeing marketing.
Tough business choices cannot be left to ad-hoc decision-making processes that leave an organisation open to scrutiny over lack of transparency.
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Musk’s smoking Teslas
The international media appears on a ‘hair trigger’ to report fires involving Tesla vehicles. The latest instance was when the San Francisco Fire Department reacted to a smoking Tesla Model S in an underground carpark.
It appears that fires have become an “hot-topic” for the company’s supporters and critics. Supporters accuse the media of making too much of the sometimes-grisly incidents. They point out that combustion-engine fires happen much more regularly without garnering any attention.
Tesla also fired back at reporting that counted at least 20 incidents of Teslas catching fire since 2013 and five deaths in the past 14 months. They have claimed that in most, if not all cases, the fires were caused by damage to the vehicle and fatalities were caused by the impact rather than the subsequent fire. Tesla has stated that their vehicles achieved the lowest probability of injury of any vehicles ever tested by U.S. government safety rating program and, based on our fleet of over 500,000 electric cars.
Tesla CEO, Elon Musk has also entered the debate via Twitter claiming that Tesla vehicles, like most electric cars, are over 500% less likely to catch fire than combustion engine cars.
For Tesla, this ongoing media attention comes during a significant campaign to raise upwards of $3.5 billion from shareholders. The funding is required to keep the struggling car maker afloat as it battles dropping sales, quarterly losses and ongoing development costs of the promised Model Y SUV and much-hyped Roadster.
Tesla's goals of becoming a mass producer of electric vehicles, producing one million cars a year, will inevitably be set back. Well-considered decisions are needed to continue to react to damaging media reports that have come at an inopportune time for Tesla.
Retail Food Group’s extended used-by dates
Retail Food Group’s (RFG) subsidiary, Michel’s Patisserie, has been found to have been deliberately selling batches of cakes to customers months after their use-by date.
Reporting on the incident has found that RFG instructed Michel’s franchisees to ignore expiry dates on packaging and adopt a new shelf-life extension date, ranging between two and six months. This includes extending the dates on chocolate cakes by three months and spinach and feta scrolls by two months
RFG has responded claiming they follow strict standards regarding food quality, and any product extension is granted following written approval from the supplier and with consumer safety top of mind. It has also withdrawn products which have received use-by extensions.
RFG’s share price has collapsed over the past two years after it was accused of badly mistreating franchisees, and a parliamentary inquiry this year said management had been either “unethical” or “incompetent”.
RFG shares had been worth more than $7 at the start of 2017 and were still valued at $4.40 in December that year, when RFG was first accused of running franchisees into the ground with excessive fees. The share price has continued to be decimated with this latest incident has seeing a further fall to around 20 cents.
While technically RFG may not have done anything wrong, no one wants to hear their birthday cake has had its used-by date extended. This negative media will likely discourage customers, dampen further franchise sales, and ultimately prevent RFG from regaining share value that is now at an all time low.
RFG appears to be at existential cross-roads. They need strong leadership and clear-eyed decision-making to realign their strategic goals to ensure their survival as Australia’s largest multi-brand retail food franchise owner.
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