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The Inland Empire's once-unstoppable warehousing industry falls into a slump

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The Inland Empire's once-unstoppable warehousing industry falls into a slump

For years the growth of warehousing in the Inland Empire was relentless. At the confluence of port-bound freeways and rail spurs along the eastern edge of Los Angeles’ sprawl, box-like fulfillment centers popped up in business parks by the millions of square feet. They were an economic engine, a bringer of jobs, a shortener of commutes, and a workhorse during the pandemic.

But now that’s come to a halt — bringing uncertainty for thousands of workers and an industry that has been an economic bellwether for the region.

After the COVID-19 pandemic slammed the nation in spring 2020, the Inland Empire recovered all of the jobs it lost by the summer of 2021 — more than a year ahead of Orange County and almost two years earlier than Los Angeles County. Despite pandemic restrictions, the area’s machinery of storing and transporting goods kicked into high gear, outpacing better-paying and more glamorous sectors in the state, such as entertainment and tech.

But the tables have turned in the last year. Warehousing and storage jobs in the Inland Empire shrank for the first time in more than two decades. Once-booming truck transportation has been down since early in the summer, and the area’s wholesale trade employment is dropping fast, according to year-over-year data from the U.S. Bureau of Labor Statistics. Industrial building vacancies are up and rents are down.

Logistics businesses nationally are cutting back amid declines in freight volume. United Parcel Service said it would shed 12,000 jobs worldwide over the next several months after more than a $9-billion drop in revenue last year. A company spokesman said it didn’t have a breakdown of where those layoffs would hit, but UPS employs tens of thousands of workers in California.

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“Everything is different,” said Victor Ramirez, a Pomona resident who’s worked in warehousing for about 20 years. Speaking in Spanish, he remembered when times were better — much better.

The 59-year-old recalled not only getting full 40-hour workweeks in the past but bonuses during the pandemic. These days, things have slowed so much at his current place of employment, a warehouse that builds pallets, that he has taken on additional work as an Uber driver and canvasser for nonprofits.

“One job isn’t nearly enough,” Ramirez said.

With related business services and real estate also down, the Inland Empire’s overall job growth last year averaged just 1.2%, about half the rate for Southern California and the state as a whole. “We could be the weak link,” said John Husing, the region’s longtime economist based in Redlands.

The pandemic-induced surge of consumer purchases, transportation gridlock and prolonged labor negotiations at the ports all played a role in disrupting the flow of goods and exacerbating an oversupply of warehouses. But even before COVID, the industry was feeling increasing strains from environmental regulations, disputes over independent trucking and rising operating costs that have pushed more businesses to leave the state.

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The Inland Empire’s troubles come as the U.S. economy faces an expected slowdown and the tech sector continues to shed jobs. California’s tourism industry, another big economic engine, hasn’t fully recovered, and high interest rates have taken a bite out of the housing market. All of that has left the state trailing the nation in job growth. The latest unemployment rate statewide, as well as for the Inland Empire, was 5.1% in December, well above the U.S. figure of 3.7%.

“Right now I am not an optimist on this economy,” Husing said.

The long shadow of logistics

Thanks to lower housing costs than in Los Angeles and Orange counties, the Inland Empire’s population has been growing for decades. Over the years, many residents found work in a logistics industry that has surged along with the region. Since 2000, the Inland Empire’s population has increased by 45% to 4.7 million last year. And jobs during that period have jumped even faster, up 68% to 1.7 million. That’s about as many as in all of Orange County.

A lot of that came on the back of the logistics industry, which got a big boost from soaring trade with China. Today, about 40% of all containers entering the U.S. from Asia are handled by the ports of L.A. and Long Beach. More than 37,000 heavy and tractor-trailer truck drivers based in the Inland Empire haul that cargo to rails and some 4,000 warehouses that are scattered across Riverside and San Bernardino counties’ 27,000 square miles, double the land area of the next largest metropolitan area, Phoenix-Scottsdale in Arizona.

The growing number of jobs brought the promise of greater economic security and quality of life as more residents were able to get jobs closer to home. But the growth of the logistics industry has exacerbated environmental concerns in communities with some of the least-healthful air in the United States. And analysts say too many households in the area are struggling to make ends meet as earnings have not kept up with rising costs.

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Sheheryar Kaoosji, executive director of the nonprofit advocacy group Warehouse Worker Resource Center in Ontario, said many logistics jobs are still too close to minimum wage, are temporary or seasonal and are often quick to disappear when the economy softens.

“The average worker is always in a position of uncertainty,” he said.

For all occupations, Inland Empire workers made $27.96 an hour on average in 2022, the latest according to the Bureau of Labor Statistics. That is compared with $33.43 for L.A. and Orange counties combined, and $45.37 for the San Francisco Bay Area.

More than 270,000 people in the Inland Empire work in transportation and material moving occupations. Their median hourly pay in 2022: $21.13. Stockers and order fillers made even less — $19.01 an hour, on average.

California’s statewide minimum wage for larger employers was $15 an hour in 2022. It went up to $16 this year, and for fast-food workers it’ll go to $20 an hour in April.

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“It’s a good starter job, but as far as long-term, a lot of people think they’re going to do it for life,” said Byron Williams, 48, of Moreno Valley, referring to logistics jobs at Amazon.

Williams once worked at Amazon, though on the finance side of logistics. The e-commerce behemoth operates more than a dozen distribution facilities in the Inland Empire. Williams said he left because of the pay. “It’s not a for-life position.”

The new boom and bust

Going through boom and bust cycles has been part and parcel of life in the Inland Empire. The area tumbled during the early 1990s downturn that was marked by defense cuts and overbuilding. And it was one of the hardest hit by the subprime mortgage crisis that brought the Great Recession in 2007-09.

The pandemic, at first, seemed to be an exception. The Inland Empire’s economy quickly rebounded thanks to surging orders for all kinds of stuff from people stuck in their homes. Rounds of government stimulus checks added fuel to consumer spending.

But in the last year the industry suddenly fell back, in part as consumer spending shifted more to services, such as travel and entertainment , and less on things such as cars and groceries. High inflation also was a factor, as was the unusual situation at the ports.

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Early in the pandemic, dozens of ships were lined up at sea waiting to berth in L.A. and Long Beach ports. When the logjam eased, merchandise flooded into the region, prompting wholesalers and distributors to double down on warehouses and workers.

“We couldn’t hire fast enough,” said Jeff Baldassari, who until August was president of U.S. Rubber Recycling in Colton, which got a burst of pandemic orders of rubber mats for in-home gyms and other uses. “Now the party ended, and it’s the hangover the next day,” he said.

Drawn-out labor talks with longshoremen that lasted more than a year prompted some companies to divert cargo to the East and Gulf Coast ports.

In the last few months, warehouses and distribution centers have shut down in Rialto, Fontana, Jurupa Valley, Perris and Chino, among other cities, according to WARN Act filings with the state. During the summer, the bankrupt trucking firm Yellow Corp. shuttered several terminals in the Inland Empire that eliminated about 1,000 jobs.

The downturn in logistics has spread to other industries too, including finance and real estate. San Francisco-based Prologis, the world’s biggest warehouse developer and a major player in the Inland Empire, reported a 7% drop in rents in the fourth quarter for Southern California. The company said its construction pipeline in the region was half of what it was at year-end 2022.

During a recent conference call with analysts, Prologis’ chief executive, Hamid Moghadam, said it’s always been difficult for retailers and wholesalers to correctly forecast demand and manage inventories. “They’re schizophrenic. They always have too much or too little. You can never get it right.”

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Still, he and other developers said they are bullish on the future. The logistics business in Southern California is getting back on its feet after the pandemic, they said. And key drivers of growth remain intact — e-commerce, global trade, demand for larger, more efficient distribution centers, said Iddo Benzeevi, chief executive of Highland Fairview, a developer working on a massive logistics center in Moreno Valley.

But that will also bring more consolidation, he said. Older, smaller facilities will get phased out, and payrolls aren’t likely to grow as fast as before. In the long term, logistics jobs may require higher skills and pay better as facilities become more automated and employ technologies such as driverless trucks — but they could employ fewer workers.

A UPS truck driver stands in front of his truck

Mauricio Perez, 33, a UPS truck driver who has been at the company for 15 years. (Irfan Khan / Los Angeles Times)

(Irfan Khan/Los Angeles Times)

For truck driver Mauricio Perez, a 15-year veteran at UPS who lives in Rancho Cucamonga, it’s the near term that worries him.

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Work usually slows after the busy Christmas season, but he said this year looks different. During the holidays, Perez saw 53-foot trailers stacked to the brim with items and packages to be delivered. Nowadays, 28-foot trailers have barely two or three pallets inside.

What’s more, he said that the work-bidding process at UPS suggests that a lot more truckers in the Inland Empire are likely to be on a more flexible schedule that can vary week to week or shunted to the package hub, where they’d work fewer hours. That means drivers who don’t get assigned work may end up taking a “layoff week,” in which they won’t get paid unless they cash out vacation time or accrue pension benefits.

“It’s not looking like the economy is going to get any better in the next few months,” Perez said. “We just gotta brace ourselves for the worst.”

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After 57 years of open seating, is Southwest changing its brand?

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After 57 years of open seating, is Southwest changing its brand?

Jim Kingsley of Orange County, who recently flew Southwest on a two-leg journey from Minneapolis to Los Angeles, likened the budget-friendly airline to In-N-Out Burger.

Both brands are affordable, consistent and more simplistic compared with competitors, Kingsley said.

“They’re not trying to offer all the things everybody else offers,” he said, “but they get the quality right and it’s a good value.”

Change, however, is in the air.

Southwest, which since its founding nearly 60 years ago has positioned itself in the cutthroat airline industry as an easygoing, egalitarian option, upended that guiding ethos this week with word that it would get rid of its famous first-come, first-seated policy in favor of traditional assigned seats and a premium class option. They will also offer overnight, red-eye flights in five markets including Los Angeles.

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Experts say the changes, especially the switch to assigned seating, are a smart move and will appeal to many as the company tries to stabilize its precarious finances that included a 46% drop in profits in the second quarter from a year earlier to $367 million. But it remains to be seen whether Southwest will pay an intangible cost in making the moves: Will it be able to hold on to its quirky identity or will it put off loyal customers, and in doing so, become just another airline?

“You’re going to hear nostalgia about this, but I think it’s very logical and probably something the company should have done years ago,” said Duane Pfennigwerth, a global airlines analyst at Evercore.

“In many markets away from core Southwest markets, we think open seating is a boarding process that many people avoid,” he said.

That is all well and good, but “I didn’t ask for these changes,” Kingsley said. “Cost and quality is what I care about.”

Open seating has its pros and cons, Kingsley said, though he’s generally a fan. On his trip to Los Angeles, his group wasn’t able to get seats all together. But he likes that preferred seats are available on a first-come, first-served basis, instead of being offered for a high price.

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Eighty percent of Southwest customers and 86% of potential customers prefer an assigned seat, the airline said in a statement.

“By moving to an assigned seating model, Southwest expects to broaden its appeal and attract more flying from its current and future customers,” the airline said.

An even bigger draw of Southwest, according to Kingsley, is its policy of including two free checked bags per ticket. This perk often makes Southwest a better bargain, especially for longer trips or bigger groups, he said.

The free bags are a big deal to customers, experts said, and contribute to the airline’s consumer-friendly brand. The airline hasn’t indicated they plan to change their bag policy.

“Southwest has always had a really good, positive vibe,” said Alan Fyall, chair of Tourism Marketing at the University of Central Florida’s College of Hospitality. “It’s free bags, good prices and point-to-point routes. That’s what they stand for and that’s what people love about them.”

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Southwest’s change to assigned seating doesn’t mean they’re no longer a budget-friendly airline, Fyall said, but it does differentiate them from the lowest-cost, lowest-amenity options such as Frontier and Spirit.

The move will also require Southwest to update all or a portion of its fleet to include first-class seats. Currently, all seats on a Southwest flight are identical. Fyall said it’s worth the investment.

It’s an appropriate time for Southwest to make adjustments, said Chris Hydock, an assistant professor at Tulane University’s Freeman School of Business.

“They’ve not been profitable the last couple of quarters and they’ve had some activist investor pressure to increase their revenue,” he said.

Costs such as wages and maintenance have risen across the airline industry even as travel increased after the pandemic. Southwest saw a net loss of $231 million in the first quarter of 2024. Wall Street analysts estimate that assigned, premium seating could boost revenue by $2 billion per year.

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“This is one of the options where they could potentially increase their revenue and do something that a lot of consumers have a strong preference for anyway,” Hydock said.

For Southwest’s changes to pay off, it has to stick to its roots when it comes to its culture and brand, experts and travelers agreed.

“I love Southwest being different,” Kingsley said. “If they’re trying to be like the other airlines, I think they’re shooting themselves in the foot.”

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Column: 99 years after the Scopes 'monkey trial,' religious fundamentalism still infects our schools

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Column: 99 years after the Scopes 'monkey trial,' religious fundamentalism still infects our schools

Almost a century has passed since a Tennessee schoolteacher was found guilty of teaching evolution to his students. We’ve come a long way since that happened on July 21, 1925. Haven’t we?

No, not really.

The Christian fundamentalism that begat the state law that John Scopes violated has not gone away. It regularly resurfaces in American politics, including today, when efforts to ban or dilute the teaching of evolution and other scientific concepts are part and parcel of a nationwide book-banning campaign, augmented by an effort to whitewash the teaching of American history.

I knew that education was in danger from the source that has always hampered it—religious fanaticism.

— Clarence Darrow, on why he took on the defense of John Scopes at the ‘monkey trial’

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The trial in Dayton, Tenn., that supposedly placed evolution in the dock is seen as a touchstone of the recurrent battle between science and revelation. It is and it isn’t. But the battle is very real.

Let’s take a look.

The Scopes trial was one of the first, if not the very first, to be dubbed “the trial of the century.”

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And why not? It pitted the fundamentalist William Jennings Bryan — three-time Democratic presidential candidate, former congressman and secretary of State, once labeled “the great commoner” for his faith in the judgment of ordinary people, but at 65 showing the effects of age — against Clarence Darrow, the most storied defense counsel of his time.

The case has retained its hold on the popular imagination chiefly thanks to “Inherit the Wind,” an inescapably dramatic reconstruction — actually a caricature — of the trial that premiered in 1955, when the play was written as a hooded critique of McCarthyism.

Most people probably know it from the 1960 film version, which starred Frederic March, Spencer Tracy and Gene Kelly as the characters meant to portray Bryan, Darrow and H.L. Mencken, the acerbic Baltimore newspaperman whose coverage of the trial is a genuine landmark of American journalism.

What all this means is that the actual case has become encrusted by myth over the ensuing decades.

One persistent myth is that the anti-evolution law and the trial arose from a focused groundswell of religious fanaticism in Tennessee. In fact, they could be said to have occurred — to repurpose a phrase usually employed to describe how Britain acquired her empire — in “a fit of absence of mind.”

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The Legislature passed the measure idly as a meaningless gift to its drafter, John W. Butler, a lay preacher who hadn’t passed any other bill. (The bill “did not amount to a row of pins; let him have it,” a legislator commented, according to Ray Ginger’s definitive 1958 book about the case, “Six Days or Forever?”)

No one bothered to organize an opposition. There was no legislative debate. The lawmakers assumed that Gov. Austin Peay would simply veto the bill. The president of the University of Tennessee disdained it, but kept mum because he didn’t want the issue to complicate a plan for university funding then before the Legislature.

Peay signed the bill, asserting that it was an innocuous law that wouldn’t interfere with anything being taught in the state’s schools. The law “probably … will never be applied,” he said. Bryan, who approved of the law as a symbolic statement of religious principle, had advised legislators to leave out any penalty for violation, lest it be declared unconstitutional.

The lawmakers, however, made it a misdemeanor punishable by a fine for any teacher in the public schools “to teach any theory that denies the story of the Divine Creation of man as taught in the Bible, and to teach instead that man had descended from a lower order of animal.”

Scopes’ arrest and trial proceeded in similarly desultory manner. Scopes, a school football coach and science teacher filling in for an ailing biology teacher, assigned the students to read a textbook that included evolution. He wasn’t a local and didn’t intend to set down roots in Dayton, but his parents were socialists and agnostics, so when a local group sought to bring a test case, he agreed to be the defendant.

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The play and movie of “Inherit the Wind” portray the townspeople as religious fanatics, except for a couple of courageous individuals. In fact, they were models of tolerance. Even Mencken, who came to Dayton expecting to find a squalid backwater, instead discovered “a country town full of charm and even beauty.”

Dayton’s civic boosters paid little attention to the profound issues ostensibly at play in the courthouse; they saw the trial as a sort of economic development project, a tool for attracting new residents and businesses to compete with the big city nearby, Chattanooga. They couldn’t have been happier when Bryan signed on as the chief prosecutor and a local group solicited Darrow for the defense.

“I knew that education was in danger from the source that has always hampered it — religious fanaticism,” Darrow wrote in his autobiography. “My only object was to focus the attention of the country on the programme of Mr. Bryan and the other fundamentalists in America.” He wasn’t blind to how the case was being presented in the press: “As a farce instead of a tragedy.” But he judged the press publicity to be priceless.

The press and and the local establishment had diametrically opposed visions of what the trial was about. The former saw it as a fight to protect from rubes the theory of evolution, specifically that humans descended from lower orders of primate, hence the enduring nickname of the “monkey trial.” For the judge and jury, it was about a defendant’s violation of a law written in plain English.

The trial’s elevated position in American culture derives from two sources: Mencken’s coverage for the Baltimore Sun, and “Inherit the Wind.” Notwithstanding his praise for Dayton’s “charm,” Mencken scorned its residents as “yokels,” “morons” and “ignoramuses,” trapped by their “simian imbecility” into swallowing Bryan’s “theologic bilge.”

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The play and movie turned a couple of courtroom exchanges into moments of high drama, notably Darrow’s calling Bryan to the witness stand to testify to the truth of the Bible, and Bryan’s humiliation at his hands.

In truth, that exchange was a late-innings sideshow of no significance to the case. Scopes was plainly guilty of violating the law and his conviction preordained. But it was overturned on a technicality (the judge had fined him $100, more than was authorized by state law), leaving nothing for the pro-evolution camp to bring to an appellate court. The whole thing fizzled away.

The idea that despite Scopes’ conviction, the trial was a defeat for fundamentalism, lived on. Scopes was one of its adherents. “I believe that the Dayton trial marked the beginning of the decline of fundamentalism,” he said in a 1965 interview. “I feel that restrictive legislation on academic freedom is forever a thing of the past, … that the Dayton trial had some part in bringing to birth this new era.”

That was untrue then, or now. When the late biologist and science historian Stephen Jay Gould quoted that interview in a 1981 essay, fundamentalist politics were again on the rise. Gould observed that Jerry Falwell had taken up the mountebank’s mission of William Jennings Bryan.

It was harder then to exclude evolution from the class curriculum entirely, Gould wrote, but its enemies had turned to demanding “‘equal time’ for evolution and for old-time religion masquerading under the self-contradictory title of ‘scientific creationism.’”

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For the evangelical right, Gould noted, “creationism is a mere stalking horse … in a political program that would ban abortion, erase the political and social gains of women … and reinstitute all the jingoism and distrust of learning that prepares a nation for demagoguery.”

And here we are again. Measures banning the teaching of evolution outright have not lately been passed or introduced at the state level. But those that advocate teaching the “strengths and weaknesses” of scientific hypotheses are common — language that seems innocuous, but that educators know opens the door to undermining pupils’ understanding of science.

In some red states, legislators have tried to bootstrap regulations aimed at narrowing scientific teaching onto laws suppressing discussions of race and gender in the classrooms and stripping books touching those topics from school libraries and public libraries.

The most ringing rejection of creationism as a public school topic was sounded in 2005 by a federal judge in Pennsylvania, who ruled that “intelligent design” — creationism by another name — “cannot uncouple itself from its creationist, and thus religious, antecedents” and therefore is unconstitutional as a topic in public schools. Yet only last year, a bill to allow “intelligent design” to be taught in the state’s public schools was overwhelmingly passed by the state Senate. (It died in a House committee.)

Oklahoma’s reactionary state superintendent of education, Ryan Walters, recently mandated that the Bible should be taught in all K-12 schools, and that a physical copy be present in every classroom, along with the Ten Commandments, the Declaration of Independence and the Constitution. “These documents are mandatory for the holistic education of students in Oklahoma,” he ordered.

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It’s clear that these sorts of policies are broadly unpopular across much of the nation: In last year’s state and local elections, ibook-banners and other candidates preaching a distorted vision of “parents’ rights” to undermine educational standards were soundly defeated.

That doesn’t seem to matter to the culture warriors who have expanded their attacks on race and gender teaching to science itself. They’re playing a long game. They conceal their intentions with vague language in laws that force teachers to question whether something they say in class will bring prosecutors to the schoolhouse door.

Gould detected the subtext of these campaigns. So did Mencken, who had Bryan’s number. Crushed by his losses in three presidential campaigns in 1896, 1900 and 1908, Mencken wrote, Bryan had launched a new campaign of cheap religiosity.

“This old buzzard,” Mencken wrote, “having failed to raise the mob against its rulers, now prepares to raise it against its teachers.” Bryan understood instinctively that the way to turn American society from a democracy to a theocracy was to start by destroying its schools. His heirs, right up to the present day, know it too.

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NASA identifies Starliner problems but sets no date for astronauts' return to Earth

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NASA identifies Starliner problems but sets no date for astronauts' return to Earth

After weeks of testing, NASA and Boeing officials said Thursday they have identified problems with the Starliner’s propulsion system that have kept two astronauts at the International Space Station for seven weeks — but they didn’t set a date to return them to Earth.

Ground testing conducted on thrusters that maneuver Boeing’s capsule in space found that Teflon used to control the flow of rocket propellant eroded under high heat conditions, while different seals that control helium gas showed bulging, they said.

The testing was conducted after the thrusters malfunctioned when Starliner docked with the space station on June 6 and a helium leak that was detected before launch worsened on the trip to the station. The helium pressurizes the propulsion system.

However, officials said the problems should not prevent astronauts Suni Williams and Butch Wilmore from returning to Earth aboard the Starliner capsule, which lifted off on its maiden human test flight June 5 for what was supposed to be an eight-day mission.

“I am very confident we have a good vehicle to bring the crew back with,” Mark Nappi, program manager of Boeing’s Commercial Crew Program, said at a news conference.

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NASA and Boeing officials have said previously that the Starliner could transport the astronauts to Earth if there were an emergency aboard the space station, but they opted to conduct the ground tests to ensure a safe, planned return.

Decisions on whether and when to use Starliner or another vehicle will be made by NASA leaders after they are presented next week with all the information collected from the testing, which will include a “hot fire” test of the engines of the Starliner docked at the space station, Nappi said.

Rigorous ground testing conducted at NASA’s White Sands Test Facility on a thruster identical to the ones on the Starliner found that, despite the issues with Teflon degradation, the thruster was able to perform the maneuvers that would be needed to return Starliner to Earth, said Steve Stich, program manager for NASA’s Commercial Crew Program.

Official also have said that the Starliner still has about 10 times more helium than is needed to bring the capsule back to Earth.

The problems that have cropped up have been an embarrassment for Boeing, which along with SpaceX was given a multibillion-dollar contract in 2014 to service the station with crew and cargo flights after the end of the space shuttle program. Since then, Elon Musk’s Hawthorne-based company has sent more than a half-dozen crews up, while Boeing is still in its testing phase — with the current flight delayed for weeks by the helium leak and other issues that arose even before the thrusters malfunctioned.

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Should NASA make a decision not to bring the crew home on the Starliner — which could still return to Earth remotely — the astronauts could be retrieved by SpaceX’s Crew Dragon capsule, though SpaceX’s workhorse Falcon 9 rocket is currently grounded after a failure this month.

The Russian Soyuz spacecraft also services the station and carries American astronauts.

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