Jim Albaugh, 62, a champion of Boeing's engineering prowess and the capabilities of its production workforce, stepped down Tuesday as CEO of the Commercial Airplanes division and was replaced by Ray Conner.

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Jim Albaugh, a champion of Boeing’s engineering prowess and the capabilities of its production workforce, stepped down unexpectedly Tuesday as CEO of the commercial-airplanes division.

Taking over is Ray Conner, a local boy who has climbed through Boeing’s ranks from mechanic to top gun.

At the changing of the guard, union officials and aerospace analysts offered accolades for both men.

Richard Aboulafia, an industry analyst with the Teal Group, said Albaugh, 62, did a “fantastic” job at a challenging time for Boeing.

“Boeing needed to restore an engineering culture. He did that,” Aboulafia said. “When he came in, the 787 was a nightmare; and when he left, they were getting planes out the door.”

And Tom Wroblewski, president of International Association of Machinists (IAM) District 751, welcomed Conner as fair to the union and a product of Boeing’s local heritage.

“He’s passionate about the fact that he’s third generation here at Boeing,” Wroblewski said. “He’s proud that he’s from the Puget Sound area, and he wants this region to stay an aerospace region.”

Many expect Conner, 57, to one day take the top job in Chicago when Boeing Chief Executive Jim McNerney retires.

With Albaugh three years shy of Boeing’s standard retirement age, the move came as a surprise. Neither executive was made available for interviews. Boeing spokesman Marc Birtel said Albaugh’s retirement was “a personal decision.”

Mission accomplished

Albaugh told his leadership team in a meeting Tuesday, according to Birtel, that he had accomplished the three most important goals he set when he became CEO almost three years ago:

• Winning the Air Force tanker contract against intense competition with Airbus;

• Delivering the new 787 Dreamliner and 747-8 jumbo jet, planes that had endured years of delay;

• Securing a labor agreement with the IAM after the bitter failure of talks over the location of a second 787 assembly line.

Albaugh, previously head of the company’s St. Louis.-based defense division, was brought in to lead the commercial-airplanes unit in September 2009.

His immediate focus on restoring Boeing’s reputation for engineering excellence played well with the white-collar union, the Society of Professional Engineering Employees in Aerospace (SPEEA).

SPEEA Executive Director Ray Goforth said the union had “a contentious relationship” with Albaugh’s predecessor, Scott Carson.

Albaugh changed that, Goforth said, by bringing in negotiators “who listened to us and were candid with us and worked to solve problems.”

Albaugh quickly established himself as an advocate for Boeing’s internal talent — production workers as well as engineers.

Dealing with the aftermath of the 787 program’s costly delays, he repeatedly declared publicly that Boeing had made serious mistakes in outsourcing too much of the 787 work and that it would do more in-house in the future.

He offered constant assurances that the Puget Sound region would remain the center of gravity of Boeing’s commercial jets.

Still, just a month after he arrived here, it was Albaugh who made the final recommendation to the Boeing board in Chicago that the second 787 assembly line should be in North Charleston, S.C., not in Everett.

With him on that presentation was Ray Conner.

Conner rose through the ranks

Conner grew up near Renton and was hired by Boeing in 1977 as a mechanic on the 727 program.

Shortly after starting, he joined his older brother and his IAM workmates in a 45-day strike. But ambitious from the get-go, Conner joined management within a few year and began to rise.

As a top executive, he recently played a key role in contract negotiations with the IAM, drawing on his experience as a former Machinist to establish relationships with union leaders.

Both Albaugh and Conner were deeply involved last year in reaching the historic agreement with the union that secured the 737 MAX assembly line for Renton and assured an extended period of labor peace.

Wroblewski said he has a “real close relationship” with Conner.

“He understands the mechanics of the company all the way up from the shop floor through sales,” Wroblewski said. “You can talk about any part of the airplane, and Ray knows how it’s put together.

“It’s a good promotion for Ray, a good promotion for The Boeing Company, and a good promotion for the IAM.”

Boeing deliberately rotates its top executives through many areas of responsibility to nurture talent. On the commercial jet side, few have a résumé with the breadth of experience to compare to Conner’s.

Before leading global sales, he was responsible for the commercial-airplane division’s worldwide supply chain as well as Boeing’s in-house fabrication divisions. From 2008 until 2010, he was in charge of the extensive development of the manufacturing site in South Carolina.

He also built airplanes, managing both the 777 and 747 programs. .

“Ray’s breadth and depth of experience in commercial airplanes is unmatched in our industry,” McNerney said in a statement. “He has built airplanes, sold airplanes, serviced airplanes, managed our largest programs, knows our customers extremely well, and is respected by our employees. He is the natural next leader of our growing commercial-airplanes business, and this move is consistent with our executive succession plan.”

Message to employees

In a note to employees Tuesday, Albaugh recalled growing up in Eastern Washington, watching the contrails from 707s and B-52s flying overhead.

He urged employees “to continue to live up to the tremendous legacy of Boeing, a great company that does great things.”

Conner sent employees a separate message, declaring Boeing is positioned “for an extended period of growth and renewed industry leadership.”

He vowed to stick with the company’s current strategies for future planes and focus on improving performance in its factories.

“Those who came before us achieved greatness,” Conner wrote to employees. “Your passion and commitment will be responsible for extending that legacy.”

Wall Street analyst Robert Stallard of RBC Capital Markets commented to investors that “the generational shift in Boeing management is now almost done, with only CEO Jim McNerney left of the old guard.”

McNerney also is 62. Boeing’s defense division is led by a young executive star, Dennis Muilenburg, 48, whose experience is almost all on the military side of the company.

But for the foreseeable future — one of shrinking defense budgets and booming commercial-jet production — the airliners will drive Boeing’s profits.

When Conner was appointed head of commercial-jet sales in 2010, the move was widely interpreted as a clear sign he eventually would head the commercial-airplanes unit and, one day, all of Boeing.

Dominic Gates: 206-464-2963

or dgates@seattletimes.com