GUY NORRIS / LOS ANGELES
New chief executive means business as he returns to sort out troubles at world's biggest aerospace company
A scurrilous email image depicting Harry Stonecipher and Phil Condit as Laurel and Hardy - entitled "another fine mess" - has been doing the rounds over the past week. Condit's eight-year reign as Boeing chief executive - during which he successfully transformed the company from its reliance on civil aircraft into a diversified aerospace giant with a series of acquisitions and a bold move of the corporate headquarters from Seattle to Chicago - ended almost in farce eight days ago.
His resignation followed the sacking of his chief financial officer Mike Sears a week earlier and a series of scandals which has seen the reputation of the industry's biggest business take a hammering. Stonecipher - the former deputy chairman and president - has been brought out of retirement to solve the mess. He will have his work cut out.
Within hours of assuming the role of president and chief executive, Stonecipher showed he meant business by slashing the executive council by more than half to just 12. He also pledged to begin an urgent review of the company's costs, schedules and profitability across the board, and to do so at monthly intervals from here on in.
Aged 67, Stonecipher, who retired last year to spend much of his time playing golf (although he retained a seat on the Boeing board), insists he is here to stay because he "has a job to do". Assisting him as non-executive chairman is former Hewlett-Packard chief executive Lewis Platt who will act as go-between for Stonecipher and the directors.
The appointment of both Stonecipher and Platt is widely viewed as an urgent double-edged move by the board to repair its damaged relationship with Boeing's number one customer, the US government. Stonecipher's hard-edged, no-nonsense executive management style is well-known in Washington DC where reaction to the appointment of the former McDonnell Douglas head was immediately positive. The US Air Force, for example, says in a statement that Stonecipher "has a stellar reputation as an executive with high standards for performance and impeccable integrity". Platt, meanwhile, has been a Boeing board member since 1999 and appears to enjoy a solid reputation in the capital where he served on one of President Bill Clinton's trade advisory panels, as well as being a member of high-powered lobbying association, the Business Roundtable.
Stonecipher's immediate task is to restore Boeing's corporate and industrial credibility. After being comprehensively tarnished first with the embarrassing Evolved Expendable Launch Vehicle (EELV) scandal in mid-year, Boeing's Integrated Defense Systems (IDS) arm reeled under the Pentagon's investigation into the KC767 tanker deal and the subsequent sacking in November of Sears for alleged unethical conduct. Dealing with his immediate priorities Stonecipher has moved quickly to open talks in Washington with the USAF on lifting the suspension on bidding for space launch contracts imposed in July as a punishment for the EELV debacle. He has also reportedly "plunged" into talks with the air force to get the stalled tanker programme back on track.
The vital importance of both moves to Boeing cannot be underestimated. In mid-year, IDS announced a $1.1 billion write-off against its collapsing commercial space launch business. Shortly after, the company lost another $1 billion in USAF launcher business over the EELV fallout, while a little over a month ago Boeing reported a 31% decline in third quarter earnings, much of it tied to the planned 2004 closure of the 757 line in Renton.
The latter decision makes the future of the 7E7 even more critical, and Boeing workers in the Seattle area even more nervous. Although the leadership upheavals are not expected to affect the 15 December board meeting at which the go, no-go decision is expected on formal authority to offer the 7E7, the equally important decision on the site selection could slip into early 2004. Given Stonecipher's reputation for hard-nosed product development decisions at bothMcDonnell Douglas and Boeing Commercial Airplanes (BCA), the reaction to his ascendancy among rank-and-file BCA workers is said to be mixed at best.
Although reports circulated earlier this year that Stonecipher, as a board member, was prepared to veto the 7E7 unless a rock-solid business case was proven, he now appears to be moving swiftly to support the project. Rushing to Seattle last week to be briefed by BCA president Alan Mulally and 7E7 project leader Mike Bair, Stonecipher said: "Everything we have seen about it says the airplane has the potential to be a game-changer." He added that Mulally and his team have performed "yeoman's work" in making BCA "stronger than it has ever been, considering the market situation".
Condit, a Boeing engineer by background, whose stalwart leadership helped guide the company since 1996 through the post-merger turmoil and the market collapse after 11 September 2001, will undoubtedly be missed, but all eyes are on Stonecipher to see if he too can be a "game changer".
Source: Flight International
