At Boeing's annual investor conference in Seattle yesterday, Chairman Lewis Platt dropped some new clues about the company's search for...
At Boeing’s annual investor conference in Seattle yesterday, Chairman Lewis Platt dropped some new clues about the company’s search for a new chief executive that suggest the board is taking a long look outside the company.
And Platt was unfazed when asked about the possibility Boeing might lose top leaders such as commercial-airplanes chief Alan Mulally and defense chief Jim Albaugh if they are passed over in the CEO search.
“We hope we don’t,” he said. “But we have a robust succession plan and are ready to take action to replace anyone in the senior leadership team should that become necessary.”
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In an awkward moment for Mulally, he was forced on the defensive after Platt referred to complaints from airlines about the commercial unit’s arrogance.
Yet Mulally also had some good news to share. Boeing has pushed back decisions on closing the 747 and 767 production lines in Everett until summer’s end at least, due to encouraging signs of customer interest. Previously, a decision had been expected by the end of June.
On the CEO search, Platt said the board is taking its time to find the right person. It wants someone from the manufacturing field who has run a large and complex business. Aerospace experience, while preferred, is not a requirement, he said.
In addition, he emphasized the CEO should be someone who can work closely with government, Boeing’s most important customer. Some 59 percent of Boeing’s business comes from defense work.
“Knowledge and comfort in dealing with Washington [D.C.] is pretty close to a must,” Platt said.
Platt specifically ruled out hiring someone currently running a smaller company with revenues in the neighborhood of $5 billion.
That remark seemed to scratch from the list one candidate mentioned in news reports: Clay Jones, chief executive of Rockwell Collins, a well-regarded aviation-electronics company with 2004 sales of less than $3 billion.
Boeing has been searching for a new CEO since March, when Harry Stonecipher was forced out over an affair with a female Boeing executive.
Platt’s comments on the arrogance of the Boeing commercial sales force were not entirely new. Stonecipher had publicly expressed displeasure with Boeing’s customer relations last year.
“I told Alan this,” Platt said. “It’s a little embarrassing.”
Then Platt described a perception among airlines of Boeing “arrogance” and a conversation with one executive who told him “the Boeing salesperson starts saying no before I finish my sentence.”
Platt said attitudes at the company have been turned around. “We’ve got them in good listening mode,” he said.
Mulally responded by stressing the difficulties behind him and the opportunity ahead.
He listed the problems of the last five years — a period in which Boeing’s commercial side reduced production by 60 percent and deferred delivery on about 600 airplanes as the airline industry faced collapse.
During that period, the commercial unit slashed its work force by about 40,000 people.
Mulally said his team “got a little inwardly focused while we were going through this.”
“We were really busy over the last five years trying to survive,” Mulally said. “We weren’t as attentive as we needed to be to a few customers and we let them down.”
But Mulally stressed that the situation was now radically better. The aviation industry is back on an up cycle and the company’s airplanes, especially the new 787, are selling well. Boeing has now regained its focus on good customer relations, he said.
“You can’t believe how neat it is to be back with customers,” he said. “It is so fun.”
The meeting, at the Fairmont Hotel, was closed to the media but audio and slides were provided over the Internet.
Mulally said the company has seen new interest in the 767 as airlines seek to cover their needs for medium-sized wide-bodies until the 787 is available in 2008. The plane received three new orders this month.
If the 767 can keep going until Boeing gets a new shot at the stalled Air Force tanker contract, a program that looked doomed could be saved.
And Mulally said Boeing is in final negotiations with some customers on a new version of its largest jet, the 747 Advanced. Prospects for the plane “look really good,” he said, meaning that the venerable jumbo jet could also get a new lease on life.
Mulally showed some slides at the conference, including something new in commercial-airplane construction: a large molding tool for shaping the entire 787 nose and cockpit in a single plastic piece.
Afterward, a Boeing spokeswoman confirmed that the tool, at Boeing’s Wichita plant, is wrapped in carbon-fiber tape, ready to go into a high-pressure oven next week.
Dominic Gates: 206-464-2963 or firstname.lastname@example.org