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Freescale loss in Malaysia tragedy leads to travel policy questions

People walk under a Malaysia Airlines sign at Kuala Lumpur International Airport in Sepang March 8, 2014. REUTERS/Samsul Said
People walk under a Malaysia Airlines sign at Kuala Lumpur International Airport in Sepang March 8, 2014. REUTERS/Samsul Said

By Noel Randewich

SAN FRANCISCO (Reuters) - The loss of 20 key Freescale Semiconductor employees in the disappearance of a Malaysian airliner on Saturday raises questions about whether the company should have allowed so many of them to board the same plane, but security experts said that at big corporations it's hard to avoid.

The disappearance of Malaysia Airlines' Flight MH370 about an hour into its journey to Beijing remained a mystery on Monday as a search orchestrated by 10 countries failed to find traces of the plane or the 239 people on board.

It was a blow to Austin, Texas-based Freescale. The vanished employees were engineers or specialists involved in projects to streamline and cut costs at key manufacturing facilities in China and Malaysia.

Many large companies have policies to prevent chief executives, chief financial officers and other senior executives from flying together to minimize disruption in case of a fatal crash, but few firms extend strict policies much further down the ladder.

Large organizations from corporations to sports franchises almost never prevent key employees and team members from riding together in buses, limousines or cars, which are potentially more dangerous than flying, corporate safety and security experts say.

Even the Manchester United soccer team, which in 1958 lost eight players after a plane they were on crashed during take-off in Munich, continues to fly together to games across Europe, as do professional sports teams around the world.

For global companies organizing sales conferences and moving workers frequently between sites, fettering employees' travel plans is impractical and often not worth the inconvenience and potential extra costs, except in unique cases where their loss would be catastrophic, the experts say.

"When a lot of people are killed all in one place at one time, we spend disproportionate emotional focus on that risk: disproportionate to the probability and to the tradeoffs involved in any risk management choice, like spreading these guys out and putting them on a bunch of different airplanes," said David Ropeik, who writes and consults about risk perception.

The risk of dying in a plane crash differs depending on variables looked at, like total distance flown versus the number of trips. But in general, commercial flying is safer than driving, Ropeik said.

Freescale has travel policies covering all of its employees and the number of workers on the Malaysia Airlines flight fell within applicable guidelines, said Mitch Haws, the company's vice president for global communications and investor relations.

Shares of Austin, Texas-based Freescale fell 1.28 percent to $23.09 on Monday. They were down 2.7 percent at one point in early trade.

RIDE WITH ME

The Freescale employees on MH370 were mostly engineers and other experts working to make the company's chip facilities in Tianjin, China, and Kuala Lumpur more efficient. They were based in those two locations and traveled back and forth on a regular basis to work on different projects, according to the company.

While they accounted for less than 1 percent of Freescale's 16,800 employees, they were doing specialized work and were part of a broad push by Chief Executive Officer Gregg Lowe to make Freescale more cost-effective.

"Anybody who travels for a company is a relatively important individual," said RBC analyst Doug Freedman. "But Freescale has a deep bench. It has resources it will pull from other places to fill the void."

Letting a number of employees travel together is the norm rather than the exception for many companies.

Chipmaker Intel uses private planes to shuttle managers and executives between offices and factories in California, Oregon and Arizona. Those fly several times a day, often with more than 35 employees on each flight, and are also seen as ideal opportunities for executives to network.

Meanwhile, Google , Apple , Facebook and other big technology companies operate private buses to shuttle dozens of employees at a time from their homes in San Francisco to offices in Silicon Valley, a 50-mile trip. Those buses carry about 17,000 passengers a day back and forth, according to the San Francisco Municipal Transportation Agency.

Tim Horner, a managing director at Kroll and a specialist in security consulting, said corporations organizing major sales events and other employee gatherings should consider a host of travel-related risks beyond flights.

Some US companies sending employees to the 2014 Winter Olympics in Sochi worried too much about terrorism and not enough about more mundane risks like street crime and medical emergencies, he said.

"You also have to realize that this type of tragedy, as horrific it is, is very infrequent," Horner said of the Malaysian airliner loss. "This is not something that occurs with any great frequency."

(Reporting by Noel Randewich; Edited by Martin Howell)

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