The Globe and Mail - 21.10.2019

MONDAY,OCTOBER21,2019 | THEGLOBEANDMAIL O REPORTONBUSINESS| B7

The instant messages prompted

harsh reactions from several

Democratic lawmakers in Wash-

ington, with Representative Peter

DeFazio saying, “This is no isolat-

ed incident.”

“The outrageous instant-mess-

age chain between two Boeing

employees” suggests “Boeing

withheld damning information

from the FAA,” Mr. DeFazio, who

chairs the U.S. House transporta-

tion committee, said on Friday.

CEO Mr. Muilenburg, who was

stripped of his chairman title by

the company’s board nine days

ago, is set to testify before the

committee on Oct. 30.

Mr. DeFazio’s committee also

obtained details of a 2016 Boeing

survey that found nearly 40 per

cent of 523 employees handling

safety-certification work per-

ceived “potential undue pres-

sure” from managers, such as

bullying or coercion.

Other top concerns include

“schedule pressure” and “high

workload,” although 90 per cent

of the employees said they were

comfortable raising concerns

about “undue pressure” to man-

agement, according to a copy of

the Boeing presentation of the

survey results seen by Reuters on

Sunday.

The presentation was ob-

tained by the committee’s inves-

tigators and not among a trove of

documents handed over to the

committee by Boeing itself, a per-

son briefed on the matter said.

Evidence of “undue pressure”

was also pinpointed by a group of

international regulators review-

ing the 737 Max certification.

Boeing’s statement was re-

leased as its board of directors

and top executives from its air-

planes division and supply chain

gathered in San Antonio, Tex., for

previously scheduled meetings

on Sunday and Monday.

The board meetings come as

pressure mounts on the Chicago-

based company not only from

the regulatory and criminal in-

vestigations into the crashes, but

also from the financial burden

caused by the jet’s safety ban and

continued high production.

Several industry sources said

there was speculation inside the

company of significant job cuts

as Boeing, unable to deliver 737

Max planes to customers, contin-

ues to experience a cash drain.

The 737 production rate may also

have to come down if regulators

further delay the Max’s return to

service, the people said.

After business hours on Thurs-

day, Boeing turned over the in-

stant messages to the FAA after

having them for months. Boeing

had turned them over to the U.S.

Justice Department in February –

before the crash of a second 737

Max in Ethiopia in March, a

source briefed on the matter said

on Friday.

A second person briefed on

the matter said Mr. Muilenburg

told FAA administrator Steve

Dickson during a 25-minute

phone call on Friday that the

company did not believe it could

turn the messages over initially

because of the Justice Depart-

ment probe, an argument Mr.

Dickson rejected, citing safety is-

sues.

On Sunday, Boeing said it has

not been able to speak to Mr.

Forkner directly about his under-

standing of the document.

“He has stated through his at-

torney that his comments reflect-

ed a reaction to a simulator pro-

gram that was not functioning

properly and that was still under-

going testing,” Boeing said.

Reuters also reported on Fri-

day that Mr. Forkner was grap-

pling with a number of software

problems with the flight simula-

tor itself, according to a former

Boeing test pilot who analyzed

the transcript and who had direct

knowledge of the flight simulator

at the time.

Such software-calibration

problems may have contributed

in some way to Mr. Forkner’s ob-

servations and conclusions about

MCAS’s behaviour, said the for-

mer pilot and a second former

Boeing engineering employee,

Rick Ludtke.

REUTERS

Boeing:

CEOsetto

testifybefore

U.S.House

committee

FROMB1

Severalindustrysources

saidtherewas

speculationinside

thecompanyof

significantjobcuts.

“All jobs will be impacted, but [for] prob-
ably 30 per cent [of them] over the next
10 years, you’ll see a more significant im-
pact,” said Helena Gottschling, Royal
Bank of Canada’s chief human-resources
officer. “And what we’re really looking at
is, what does that mean to our employ-
ees?”
New forms of automation, often driven
by advances in artificial intelligence,
could render scores of jobs built on repeti-
tive tasks obsolete. An analyst at Wells
Fargo Securities recently estimated that
200,000 U.S. banking jobs could be done
away with over a decade, mostly in back
offices, branches, call centres and corpo-
rate functions – although new hiring
would offset some of those losses. And
nearly two-thirds operations leaders at
banks surveyed by consulting company
Accenture PLC last year expect to shed 10
per cent to 30 per cent of middle- and
back-office jobs in three years as new
technologies take hold.
Aside from taking an occasional res-
tructuring charge, however, banks in Can-
ada have avoided the aggressive cuts un-
dertaken by banks abroad. Global giant
HSBC recently reported plans to axe 8,000
to 10,000 jobs in an effort to control costs

• or about 4 per cent of its 238,000 em-
  ployees. Other global giants, such as Bri-
  tain-based Barclays PLC, Spain’s Banco
  Santander SA and scandal-plagued
  Deutsche Bank AG, have also shed thou-
  sands of jobs.
  Canadian banks employ about 275,000
  people, according to the latest figures
  from the Canadian Bankers Association,
  which date back to 2017. That total was
  down just 1 per cent from about 280,000
  in 2013, although gains in Ontario – where
  banks’ expanded technology operations
  are concentrated – mask declines in every
  other province.
  But most bank executives agree that
  the pace of change in their ranks is getting
  faster. A recent report from consultants at
  McKinsey & Co. surmised that advances in
  robotic process automation, machine
  learning and artificial intelligence could
  reduce costs in areas from branches to
  back offices by 30 per cent to 40 per cent,
  “and fundamentally change how work is
  done.”
  Some of those changes will be apparent
  to customers. As transactions and day-to-
  day banking are increasingly done online,
  tellers and branch staff – who have been
  seen as endangered since the advent of
  automated teller machines in the 1960s –
  will be expected to give advice to clients
  and to sell products and services.
  But much of the upheaval will be be-
  hind the scenes. Manual tasks in line to be
  automated range from workers in call
  centres resetting customers’ passwords, to
  compliance staff vetting suspicious trans-
  actions for possible money laundering, to
  small armies of employees doing the vo-

luminous paperwork that still underlies

the financing of global trade.

Where there is disruption, however,

banks also see huge opportunities. They

expect to make employees more produc-

tive and services to clients more person-

alized. Advisers in wealth management

and relationship managers in commercial

banking could spend more time with cli-

ents if time-consuming administrative

and compliance work is automated. And

with help from artificial-intelligence-pow-

ered tools, they should be

able to better predict cus-

tomers’ needs.

But while one bank might

use the gains from that extra

productivity to hire more

bankers and expand its book

of business, another could

choose to do more with less

and shed staff.

“It is much less a big-bang

type of transformation,” said

Miklos Dietz, a senior part-

ner in McKinsey’s financial

services practice. “It’s much more a trans-

formation that is already ongoing, it’s in-

cremental, but it’s quite deep.”

One central challenge is how to rede-

ploy the human capital displaced by auto-

mation. Canadian banks have ramped up

retraining and skills programs in recent

years, offering a range of options from in-

house courses taken online to subsidies

for classroom learning outside the bank.

RBC uses assessment tools offered by

outside vendors to create reports for em-

ployees who may be affected by automa-

tion, gauging their ability to learn and

propensity for certain types of work, to

help them find training and chart new ca-

reer paths. Toronto-Dominion Bank has

signed up 45,000 staff to a self-serve learn-

ing platform called TD Thrive, which of-

fers interactive courses, videos, Ted Talks

and more topics ranging from digital flu-

ency to how to be a risk manager. And

HSBC provides training to staff around

the world through HSBC University.

“The challenge, I think, is one of pace

of change in the workplace and how we

equip and invest in our people to have the

agility to manage through that pace of

change,” said Chris Hatton,

chief operating officer for

HSBC Canada. “The perish-

ability of skills, the half-life

of skills, I think, increases.”

Not everyone is expected

to make the leap. Many roles

jeopardized by technologi-

cal advances are clerical in

nature, while skills in high

demand are in areas such as

data analytics, software en-

gineering and agile project

management. But to imple-

ment new technology, banks need new

teams of people to deploy, maintain and

explain it. As artificial-intelligence-en-

abled machines make decisions about

whether to extend credit, for example,

banks need people trained to explain the

reasoning behind those decisions to cli-

ents or regulators.

“The opportunity to retrain, redeploy,

reskill is certainly there,” said Robert

Vokes, managing director of financial ser-

vices for Accenture in Canada.

“In some cases ... it will be difficult, and

certainly in some individual cases it will

be close to impossible. But in aggregate,

it’s not.”

Banks:Mostexecutivesagreepaceofchangeisincreasing

astechnologyfundamentallyshiftshowlenders’workisdone

FROMB1

WorkersinToronto’sfinancialdistrictwillseeincreasingchangesasformsofautomation,

oftendrivenbyadvancesinartificialintelligence,rendersomebankingjobsbuilton

repetitivetasksobsolete.GARYHERSHORN/GETTYIMAGES

Wherethereis

disruption,however,

banksalsoseehuge

opportunities.

Theyexpecttomake

employeesmore

productiveand

servicestoclients

morepersonalized.

MONTREALMore than 300 passengers
resumed their journey to Montreal Sun-
day after their Air Transat flight from
Italy had to make an emergency landing
in France.
The airline says flight TS571 took off

from Venice on Saturday, but had to

make an emergency stop at Paris Charles

de Gaulle airport because of a technical

problem with a floor heating panel.

Spokeswoman Debbie Cabana says the

landing went smoothly and the health of

the passengers was not compromised.

The 310 passengers spent the night in

Paris and departed for Montreal Sunday

morning in a different aircraft. Ms. Caba-

na says the passengers will be eligible for

compensation.THECANADIANPRESS

ALLPASSENGERSSAFEASMONTREAL-BOUNDAIRTRANSATFLIGHTMAKESEMERGENCYSTOPINPARIS

So the key question for the nextgovern-
ment is: What is the problem that needs
fixing?
In spite of offering no coherent answer
to this question, both the Liberals and
Conservatives are proposing new incen-
tives for home buyers.
Andrew Scheer’s Conservatives, for ex-
ample, would lower buyers’ monthly costs
by letting them amortize insured mortgag-
es over 30 years, up from the current limit
of 25. Mr. Scheer is also promising to “fix”
the mortgage stress test, introduced in
2018 by the Liberals, to deter Canadians
from taking on too much debt, presum-
ably by relaxing the rules.
The downside of the Conservative plan
is that it risks encouraging Canadians to
buy more expensive homes, take on exces-
sive debt or both.
Liberal Leader Justin Trudeau says his
government would implement and en-
hance a new $1.25-billion “shared-equity”
program for first-time home buyers, an-
nounced in the March budget. Under the
plan, Ottawa would offer interest-free
loans covering up to 10 per cent of the
down payment on a house in exchange for
a proportional share of the future gains
when the house is sold. The Liberals plan
to boost the program’s house price limit to
make it viable for buyers in the priciest ci-
ties of Toronto, Vancouver and Victoria.
The implicit assumption of both the
Liberals and Conservatives is that more
Canadians should own their own homes.
But neither party has offered a clear ra-
tionale for why raising the rate of home
ownership is an appropriate policy goal.
And if a two-thirds household ownership
rate is too low, what is the appropriate lev-
el for Canada? Ninety per cent? One
hundred per cent?
In China, more than 90 per cent of
households own their homes, although

these are typically small apartments, pur-

chased with savings, rather than a mort-

gage. The Chinese are great savers and they

place a high cultural value on owning real

estate.

Canadians, on the other hand, generally

take on a mortgage and enduring debt

obligations.

Renting is on the rise in North America,

even for high-income earners. The Wall

Street Journal reported last week that the

share of U.S. households with six-figure in-

comes opting to rent rather than own has

risen sharply since the 2006-07 housing

crash. The newspaper said the trend is

partly due to high prices and inadequate

savings for a down payment, but also be-

cause some people want more disposable

income and fewer home-maintenance re-

sponsibilities.

The nextgovernment would be wise to

look at the bigger picture before doing any-

thing further to stimulate home owner-

ship in Canada.

McKenna:Liberals,Conservativeshavenotofferedrationale

forwhyraisinghome-ownershiprateisappropriatepolicygoal

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ApedestrianwalksbyanelectronicdisplayataRe/MaxUltimateRealtyofficeinToronto.

Renting,ratherthanowningahome,isontheriseinNorthAmerica,evenamong

high-incomeearners.FREDLUM/THEGLOBEANDMAIL