Harry Stonecipher is a man used to tough decisions, and he will need to make some to put Boeing on the right road for the next decade
Harry Stonecipher's return from retirement to take the controls at Boeing, following the resignation of chief executive Phil Condit, has created less turbulence than a sudden change of leadership at the world's largest aerospace company would seem to warrant. That is because Stonecipher has always had one hand on the reins since he joined Boeing as chief operating officer in the 1997 merger with McDonnell Douglas.
As its chief executive, Stonecipher sold McDonnell Douglas to Boeing and stayed on to support the company's transformation into a balanced commercial and defence business. He and Condit spent much time working to break down the barriers between the two cultures. He has been accused of favouring the "old McDonnell Douglas" defence side of the business, but one of his first actions as chief executive has been to publicly praise the "old Boeing" commercial side of the business.
Whatever competitors and critics claim, Boeing needs both sides of its business. Not long ago the company's commercial aircraft business was under attack because of the impact of Airbus competition and the airline crisis, while rising US military spending was pushing Boeing's defence revenues past the 50% mark for the first time. Now Boeing Commercial Airplanes (BCA) looks to have built a strong business case to launch the 7E7, and has remained profitable through the delivery drought, while Integrated Defence Systems (IDS) struggles to restore its credibility with its customer, the US government.
Boeing is not in bad shape, so Stonecipher can focus his efforts where they are needed. Condit's decision to split the company into two distinct and equal-sized businesses, united by a corporate headquarters geographically separated from both business units helps make clear, internally and externally, that the issues facing the two sides of Boeing are very different in nature, requiring equally different solutions.
BCA is a traditional aircraft manufacturer, and its task is to make the business case for renewing its product line. The 757 line is closing, the future of the 767 depends on military programmes and the end of the 747 line could be on the horizon. BCA needs the 7E7 and the technology it embodies, but Stonecipher is a tough audience. His decision not to back the MD-12 and begin a multi-billion dollar renewal of MDC's airliner range led to the merger with Boeing and closure of the MD-80/90 and MD-11 lines. He faces a similar decision, because BCA cannot stop at the 7E7: to remain competitive with Airbus other new aircraft must follow. But, publicly at least, Stonecipher seems to suggest that the business case is being made, and the 7E7 will go ahead.
IDS, on the other hand, is a complex organisation where the former Boeing, McDonnell Douglas and Rockwell military businesses have been thoroughly mixed. This has created a strong defence organisation, but has also led to disappointments. There have been damaging write-offs in the space sector, first in satellites then in launch vehicles, forced mainly by the deep downturn in the commercial market. Then there were the issues of misconduct in the US Air Force Evolved Expendable Launch Vehicle (EELV) competition, the controversial 767 tanker programme and the hiring of a former USAF official. IDS's issues are more complex than BCA's, and will be more difficult to fix.
IDS has one principal customer: the US government. Doing business means obeying the rules while riding the political punches. Stonecipher's biggest task is to restore the company's credibility with the US Department of Defense while rebuilding its relationship with Congress. He must get the tanker programme back on track or the 767 line is in jeopardy, and he must persuade the US Air Force to reinstate Boeing as an EELV competitor or the company's launch business will crash to Earth. And he must prevent any more damage. The recently restructured Future Imagery Architecture spy satellite programme is a continuing source of concern, and the re-examination of the business cases behind Boeing's biggest programmes, begun under Condit, is likely to be deepened under Stonecipher.
At the same time, Stonecipher has to convince Wall Street that Boeing remains a good investment. His no-nonsense reputation has gained a positive reaction, but soon the analysts will be looking for action. Stonecipher is 67. He is unlikely to be the man to lead Boeing for the next 10 years. But he is the man who will set Boeing on its course for those 10 years, and beyond. And he is a man who has shown that he can take tough, often dramatic decisions, to ensure the best return for the investor.
Source: Flight International
