Did the election of Donald Trump hasten the departure of Boeing Commercial Airplanes' outspoken president? Perhaps not, but the executive change is jarring, and significant.
Suddenly, Ray Conner is out as president of Boeing Commercial Airplanes. No announcement of a gradual glide path toward retirement. Just an unexpected move by Boeing CEO Dennis Muilenburg. Conner is gone, although he will be allowed to remain as vice chairman through the end of next year.
Is Conner the first major executive casualty of the election of Donald Trump?
A Boeing spokesman said categorically, “no.” The move by Conner “had been a winding down months in the planning,” this person said, and had nothing to do with Conner’s remarks on trade.
Still, during the campaign, Trump singled out Boeing for criticism. He warned that Boeing would move American jobs to China. Conner hit back, including during a September interview with me.
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“Trump has made an issue about our involvement with the Chinese assembly center, saying we’ll move all these jobs to China,” he said. He emphatically denied it and also expressed concern over the candidate’s anti-trade rhetoric.
Trump said Boeing was “building massive plants in China.” Not true. As for Boeing’s finishing center for airplanes there, Conner said, it is “our largest opportunity for sales, creating an expanded relationship, but it will also create more jobs here. It’s lopsided on what we get and give — we get more. It’s being portrayed as the opposite.”
Right up to Election Day, few gave Trump a chance of becoming president.
Boeing has enormous stakes riding on a good relationship with the new administration, not only in trying to temper its trade policies but also in keeping and gaining defense contracts. There’s also the behind-schedule KC-46 tanker, a program worth $49 billion, as well as a replacement for Air Force One (up to three “presidential ready” 747s). And don’t forget the Ex-Im Bank (criticized by Trump) and Boeing’s deal to sell airliners to Iran, which is controversial with Republicans.
As for Kevin McAllister, Conner’s replacement, it’s noteworthy that he comes from General Electric’s unit that supports users of its commercial aircraft engines. With an outsider, Boeing steps further away from its engineering culture based in the Puget Sound. McAllister may be a nice guy and at least he has a degree in materials engineering rather than a finance-focused MBA. But he’s taking over a much larger and more complex organization.
And he comes from the corporation molded by former CEO “Neutron Jack” Welch. The nickname came from the neutron bomb, which did in people but supposedly left most property intact. Welch led GE from 1981 to 2001, through two of the greatest economic expansions in American history. Nevertheless, he whacked nearly 100,000 jobs from the company. Former Boeing CEO Jim McNerney was one of his proteges.
It may be that McAllister’s appointment, along with a new unit charged with tripling revenue from so-called aftermarket services: spare parts, modifications and flight-data analytics, are the big deal here. With orders for airplanes slowing down, this is an important play. What it means for Puget Sound workers…stand by.
As for Conner, I’m sure I’m wrong. Boeing would stand behind everything he said. Maybe a bit quieter, though.
Today’s Econ Haiku:
Trump U fraud settled
But the cons keep on coming
It’s the foundation