Interview of Boeing Commercial Airplanes CEO Ray Conner by Seattle Times aerospace reporter Dominic Gates on May 13, 2015
Interview of Boeing Commercial Airplanes CEO Ray Conner by Seattle Times aerospace reporter Dominic Gates on May 13, 2015
Ray Conner: I just want to take the opportunity to give a little context.
I know we’ve been through some difficult times over the course of the last few years and such. But when you think about the history of the company and you think about – even for me, I’m going into my 38th year now – when I look back on the relationships that we’ve had, the history of our company going back into, right after World War II, we’ve had these up and down relationships, particularly from a labor perspective, for quite some time.
It’s not like these are a little bit new waters in that sense, except for the fact that I would say that the world is so much different today than the world at which my father was here; at which . . . when I hired in. Things have changed dramatically over the course of time.
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The competitive environment is so much different than it was back then. We’ve got to change and the company has changed, evolved over time. We’ve got to keep evolving as the market place evolves. We have to keep evolving as the environment we deal with evolves, the competitive threats that we’re looking at.
In my job, the way I view this thing, and I’m sure the way (former Boeing CEO) Frank (Shrontz) viewed it, I’m sure the way (former Boeing CEO) T (Wilson) viewed it and I know the way (former Boeing president and chairman) Bill Allen viewed it before them, is to make sure that we’re here for another hundred years.
We’re going to celebrate our 100th year here next July, and we’re going to have to be in a position to be able to compete, and that’s what it’s really all about. Now, what I’m excited about is the fact that we do have a long-term agreement in place with our hourly workforce, in terms of the IAM. We have an opportunity to really work on the culture, re-establishing a great culture around what it takes to compete, being the very, very best in this industry and, moving forward, we’ve got eight years left on this agreement.
For the longest time we’d have these up and downs, every three or four years was typically a four-year agreement and we’d go through a number of strikes. There was always that stuff. Now we have this opportunity to put in place a long term type of relationship and hopefully we can do the same thing with the engineering community as well.
The things that we did over the course of the last several years, I think, a little difficult, there were things that we needed to do to put ourselves in a position to really compete going forward.
I just wanted to lay that context for you, as best I could.
Dominic Gates: By the way, I’ve forgotten. What did your dad do at Boeing?
Conner: Well, he started as a mechanic. He came in, in the World War II days, as a mechanic, moved up through the manufacturing ranks, then went into management from there. But he was always on the manufacturing side.
Gates: He must have fed some of your ambitions when you started.
Conner: You know, that’s funny, the ambitions. No. I think when I started it was more about, you know how it is when you’re in your 20s, you’re searching for what you want to do longer term and all that.
I came in and when I joined as a mechanic, I realized, I never really thought I was going to make a long-term career out of Boeing. But when I came here and I went to work here and I started to see what the company was about, got to see what the people were about, I got to see what the opportunities were. It was like being in a city, because it had every job you could think of. You could do whatever you wanted.
For me, it was like, “Okay, let’s figure out what you want to do and then let’s go figure out how you get there.”
After several months I looked at some things and the idea of being in the sales side, was certainly a place where I wanted to focus some of my . . . I thought I could do something like that. Or, running one of the operations such as Renton or Everett. These were big pictures down the road, but I had to think that way.
Then I had to assess where I was, just as an individual in terms of my capabilities, in terms of education, some of those other kinds of things. That’s really when I started going to get my graduate degree and work on that.
Once I got that, that really opened up a number of doors as I went along. Then, of course, a lot of mentors along the way. A lot of other things, a lot of luck. Really, I think that still exists today. Those same opportunities. The company paid for my education. The company pays for people’s education today. Particularly when it’s in alliance with what the company wants to do in terms of goals, businesses, things like that.
All I did was take advantage of the opportunities that were out there, but I had a clear vision of where I wanted to go, ultimately. Did I ever think I’d be here? No, but I certainly wanted to be either in the marketplace or running one of the factories.
The neat thing about it is I got to do both of those.
Gates: Well, going back to the workforce, given the context of wanting to be competitive, let’s just take in turn the machinists and, I think, the engineers might be a more difficult proposition at this moment. As you say, with the machinists you have a long-term deal now through 2024, but at the price of a lot of bitterness at the beginning of last year. A lot of pissed off people. Pissed off with their own union, pissed off with the company. Some of them wanting to leave as soon as the big incentives disappear in 2017.
So how have you dealt with the machinists’ population since then? Have you been able, do you think, to smooth out some of that?
Conner: Yeah, I think we have, Dominic. I’m not sure if, will that ever – this thing – go away? I’m not sure that it will for a lot of people. I was disappointed in a lot of ways . . . Look, could we have handled it differently?
Obviously, maybe we could have, but unfortunately it just came down to this timing where we needed to make some decisions about what we were going to do. The marketplace was pressing us on making some decisions about the 777X. Going back to that time, we were working, kind of behind closed doors, with the union leadership, on how to get there.
In retrospect, we probably should have been more forthcoming with respect to the workforce and where we needed to go and why. So it wasn’t such a shock.
But then once it happened, there was so much confusion, I would say, about what was involved in the offer. We really tried to make it. We knew where we had to go. The company was sitting and staring at this huge pension obligation out there and that really was the big deal. In order for us to be competitive long term we had to deal with this at some point in time.
So we needed to do that. So we tried to put together a package that was going to be as attractive as it possibly could be. It never got really quite . . . It was hard to get the thought process, of what it really was about, through.
I think we’ve done some things now. We did a series of meetings with people that are impacted, particularly from the hourly workforce around what it entails. I think a lot of clarity has come around that and I think people realize it’s not probably, as drastic and difficult as it may have appeared, initially.
At least we’re communicating in detail. We tried to communicate in detail as best we could, but I think they’re now getting a lot more sense of what the true nature of it is.
Irrespective, change like that is always difficult and I certainly respect that.
Gates: I think what made it really difficult for people was the element of threat. You know, “You have to agree to this or you’re going to lose work.” and to me, what was really upsetting about that was that Washington State won the competition, yet, because of that way it was done, people felt like losers. Your workforce felt like losers, I thought. It should have been a cause for celebration and it was all poisoned by the way it was done.
Conner: Yeah, I can understand that, but I can’t change that now. But certainly I think there was a lot of people that still were celebrating, associated with that. The vote was to keep it.
Sometimes you have to make these tough decisions in order to make change and it felt like. . . certainly it felt like a threat.
But look, we were trying to set ourselves up for the next 20 – 30 years. When you’re doing that, when you’re making those kinds of decisions, you have to project forward. It’s very hard, I know, for everyone to understand that, at times. But you think about . . . We were going to spend huge sums of financial resources. We were going to . . . basically going to say we’re going to be here for the next 20 years and we wanted to know we were going to be in a position to be able to really compete long term.
Now, obviously that was what we were trying to say, but it was hard, I think, for people to hear that through everything that was going on. But that was the reasoning behind it.
It came on people really quickly because of the way we were doing it. Kind of back-room, but I certainly respect the emotion that comes with that. It was a very tough time, no question about that. But we got there, that was the important thing. Now we’ve got to move forward and now we’ve got to figure out how to really compete long term to make that happen, and continue to make this a big success.
I’ll just maybe put it in this way too: If I think back, in 2008 we had that terrible strike that occurred. In the midst of the worst recession since the Depression.
If you were sitting on the other side, you’d say “Geez, that felt like a threat too.” Right? I mean this has been the kind of the. . . This head-butting. That’s why I say I’m so glad that we’ve got that agreement in place. That means we can change the culture going forward, for the long term.
Those are things that happened in the past and we want to move forward from, but they were tough too. They were very tough. They were tough on our customers, they were tough on everybody involved. So I understand.
I think what we’re trying to do now is to move on from that and get people focused on being the very best that we can be. And be the number one company in the world. We’re up against an incredibly tough competitor in Airbus and we’re going to be up against other competitors here, very, very soon.
We, as a company, we as individuals, need to be prepared for that and that’s why I say the world has changed dramatically, since I first hired in. Since, really, year 2000. 2003 the world started to change a lot for us, after 9/11. The competitive environment is nothing like I’ve ever seen before.
Airbus has a full family of airplanes. They’ve improved their product line immensely over the course of time. We’re competing head-to-head now. Every single market segment. We’ve never had to do that before in our history and they are dead set on being the number one producer of commercial airplanes in the world.
Our job is to make sure that doesn’t happen. That we continue to win in the marketplace, and to win in the marketplace we’ve got to have great products but we also have to be very competitive.
Gates: Since last year’s labor deal with the IAM, things have happened that have created tension with SPEEA now, with whom you don’t have a long-term agreement yet, and they’re up for (contract talks) actually, next year. What of course has upset them is the transfer of engineering work. Several thousand jobs moved – transferred to Huntsville and South Carolina, southern California and so on.
Again, it wasn’t handled terribly well, in my opinion.
Conner: No, and I would agree with that. I would agree that there was a portion of it that wasn’t handled very well.
Gates: Well, the EO&T stuff was handled terribly.
Conner: Yes I would agree with that.
Gates: The people were left hanging, families were left hanging.
Conner: Dominic, I want you to know I agree. I understand how that would feel for people. I do, I absolutely do.
Gates: Well, let me just ask this: Are there more such transfers in the works? Engineering transfers?
Conner: That’s not the plan. I mean, we’ve got to step back and think about the company now as it exists today. It’s a much different company than what we had previously.
When the merger occurred we picked up a tremendous amount of engineering talent. We picked up a lot of talent in places that we never had before. Then with the defense going down, there’s a tremendous amount of capability that sits in some of these places. So, when I go and I think about – you know, people say that the 777X work that went to St. Louis, that was Puget Sound work. That wasn’t Puget Sound work that went there. That was work that was being done in the supply base and we transferred that into St. Louis because we had a tremendous amount of capability down there that we were going to either end up losing, or we’d have to add new capability here.
So we utilized some of the capability that we had. We were having a hard time with respect to our customer support organization, keeping people in customer support, attracting customers. And we had this great capability of people down in southern California that we could make a customer support center of excellence. If you were to go down there, Dominic, and I would encourage you to do that at some point, because it is – I mean, the capability of that place. We’ve transferred some of the top talent from the C-17 and all these different places. And of course, the customer support one I think we handled much better.
We were much more forward about that with the people that we were dealing with. And we offered everybody the opportunity to move and so on. A lot of people have taken us up on that. We’ve really created something special down there.
With respect to the customer support. We were having to hire contract engineers into our customer support organization to keep things going.
Here, we’re able to attract a lot of talent and get them into there and keep them there. So we’re creating this really nice focused group of people to support the customers.
Gates: I think, initially, when you announced that, you were hoping that some percentage was put out there that, something like 30% or something might take the offer and move down to serve as a base. What I’ve heard is that it was more like 5% took you up on it.
Conner: No, no. I don’t know exactly what the number is, but I can tell you it’s more than that.
Gates: Is it working well?
Conner: Yes, it is. Then when we bring the customers in and they see it and, you know, when you think back Dominic, I can’t remember exactly the timing of this, but we had transferred all the out-of-production work down there, from a customer support standpoint, was down there with that group. It was even before we announced that.
They’d done a fabulous job of supporting the 57, the 737 classics — all those kinds of things was being done out of that area. So they’ve done a lot of really good work.
We’ve had more people take us up on the move and a lot of people have decided – some have decided to retire. Some, we’ve found jobs within the programs.
We put a room in place, Dominic and our goal was to try to find everybody a job, that was affected by the customer support move. We were very focused on this. Stan Deal and myself really were – that was what we were trying to make sure happened. We weren’t able to do that with everyone, not everyone took the package, but a lot, I think a lot more than 5% took the package.
[Later, Boeing Communications said that 25% of the CAS unit accepted the move to Southern California.]
Gates: By the way, obviously the (Boeing Research & Technology engineering) transfer was not your organization.
Conner: Unfortunately, yeah.
Gates: That was John Tracy. Out of Chicago.
Gates: CAS (the customer support group), though was (your group). But is the dispersal of engineering capability that (Boeing VP of Engineering) Mike Delaney has talked about . . . is that something that’s emanating from a decision in Chicago that that kind of diversity is wanted?
Gates: Or is it something that you, like the CAS move, did you decide you wanted that?
Conner: No. We wanted to make sure we were utilizing the capabilities of the company in the best way possible and trying to keep as many, from a geographical standpoint, as many of our locations still viable, as much as possible.
Gates: So it was like an enterprise-wide thinking?
Gates: Not just BCA (Boeing Commercial Airplanes)?
Conner: No, no, no. We had to look at it as an enterprise because we were looking at these resources as a total enterprise. Gosh, when you look at some of the talent, it’s pretty phenomenal, really.
So we were trying to utilize that talent as much as possible, because we were potentially going to lose it all. So that had a lot to do with it. I think, things may change in the course of time but, that’s where we are today. . . At least, as we see it right now, that’s where we’re going to be.
Gates: Well in terms of relations with the state, the legislators in the state went out of their way to pass the 777X deal and to get the 777X for here. The Governor went out on a limb even against the unions that support him and so on. But now, subsequently, because of those engineering transfers, there’ve been a couple of moves in Olympia by legislators and one of them is – they call it “Accountability.” Shouldn’t Boeing be accountable? We’re giving you all these tax breaks, so how can you lose jobs? How can you send jobs away, immediately after we do it?
You have opposed that legislation which, I think, is not going to pass at this time, but why shouldn’t Boeing be accountable in that way?
Conner: I think we are. I think we’ve been very accountable. This was an extension of a legislation that was done in 2003. You recognize that, right?
Gates: Of course.
Conner: Okay, so it was an extension of legislation that was done in 2003. That extension applies to all aerospace companies. This is an aerospace bill. It’s not a Boeing bill. If Airbus was here, they would get the same benefit.
Gates: Never mind who gets the benefit, whoever gets the benefit. . .
Conner: No, I think it’s important. You can’t say it’s a Boeing . . . Have you been to Everett? You’ve seen what we’re doing in Everett? Do you see how many jobs we’re putting into Everett? We have almost 40,000 people there. Do you see what we’re doing in Renton? How much we’ve put into there?
How many jobs do you think are created just in the construction of that? We’ve added 30,000 jobs since 2003 when we first got the bill in 2003, I think it was.
Could we have handled that situation on the (Boeing Research and Technology) thing differently? Absolutely. I completely agree with that. I’m not here to say that was our finest moment.
But I am here to say that we have stood by our commitment in terms of what we’re doing associated with the 777X and other things. We are committing huge, huge things in terms of our commitment to the Puget Sound, in terms of what we’ve invested in Everett, in what we’re investing in Renton, what we’re investing down in Auburn, in the Frederickson site. We’re busting at the seams … We don’t have enough places to park people.
I give full credit. Our teams have done a terrific job of doing a great job on all these things. I think we have been accountable. I think we’ve done what we said we were going to do.
The timing was unfortunate, it really was. I know how it feels but the amount of work that’s been added in terms of jobs that have been added to this state, with this decision and with what we’re doing around the region, I think, has been pretty substantial.
Gates:There’s no denying the tremendous number of jobs added since 2003 and I think, people would certainly feel reassured if they felt that the slight downward trend in the last two to three years is a one-time thing. This transfer of engineering jobs, this diversification. . .
So let me just ask, how do you see the projection for the future of Puget Sound in terms of employment, from here on?
Conner: Certainly, I can’t project the future with respect to what’s going to happen in the marketplace. When you’re surging forward with a new program, when you’re going up, there’s going to be a natural attrition that’s associated with the learning curves and coming down through efficiencies and those kinds of things, over the course of time.
Let’s talk about where I see the future. We’re going to have a tremendous amount of people that are going to retire, that are going to be eligible to retire, over the course of the next several years. What are we going to do about that? And what is the Boeing Company doing in terms of preparing for that, here within this region?
What we’re doing is that we are being very active in terms of setting up training and working with the education side of the house in terms of the high schools, in terms of the community college, in terms of the training centers to prepare ourselves for this 20,000 – 30,000 jobs that will have to be replaced over the course of time, here within the region.
That’s the kind of rate of attrition that we’re going to see as we move forward.
Will the numbers stay absolutely the same? It’s probably going to fluctuate, you know. We’re going to have to become more efficient, we’ll have a big surge . . . As we come off the new programs, what are we going to do in terms of that? We’re really trying to prepare a new workforce coming forward.
Pat Shanahan, because of his knowledge, he’s on the Board of Regents at the University of Washington. I’ve given him kind of the [inaudible 00:31:08] but my vision of this is almost going back to, you know, the European model, the German model? Where you go upstream into the high schools and you create the apprenticeship-type programs.
I wouldn’t confuse this because we have an apprenticeship program. But it’s where you give these young people – you give them a choice.
You want to come and have a job, a really good, middle class paying job at the Boeing Company, and you can start thinking about this in high school. Start taking these kinds of courses that are going to be available to you and, when you graduate, come work for the Boeing Company. Then, like me, figure out what you want to do long term and then you can go, take advantage of the things that we offer.
Gates: How near term can something like that be in place?
Conner: Well we’re trying to make it happen as soon as possible. We’re trying to make it happen within this next year. That’s what we’re trying to move this thing, quickly.
Conner: This is really an important thing, not only for us but we view it as an important thing for the community. We want to create the next generation of Boeing people here. This is a company of people. What we do is really special. The products we work on are really special. The people, the culture that we’ve developed over the course of the years is really incredible. Particularly on the commercial side, just because it’s so centralized here.
I want to replace these people and have it be a great opportunity for some people. Not every kid should go to college. At least when they’re coming out of high school. Right? They haven’t figured that out yet. But I want them to know that there’s an opportunity for them here, if they do the work, up there.
That’s what we’re trying to do.
Gates: Do you think the coming influx of new hires, which is going to be pretty massive. . .
Conner: Yeah it will be.
Gates: . . . is going to help you change the culture?
Conner: Well, that’s my responsibility. That’s the responsibility of this leadership team. We want to bring them in and make sure, and this is another really good thing about having the long-term agreement in place. Because then we don’t have to deal with the strike issues or the arguments over the contract or these kinds of things. Those things that can create, you know, walls, I suppose, between us.
That’s why I would like to see us create a more partnership relationship with the union leadership. That’s what we’re looking for.
And they would say, well that’s dependent on us. But I think partnership is with two.
Gates: Apart from the IAM, what about SPEEA, I mean the relationship looks pretty bad from the outside right now.
Conner: Yeah, I understand. I’d love to have a better relationship with the SPEEA leadership, and that’s not to say that . . . I’d like to have a better relationship with, it’s not just this. I want to make sure that we have the same equal relationship, not only with the IAM but with the SPEEA as well – with all of our employees, frankly. That’s why we’re trying to keep people focused on the environment we’re working in, what we need to do to compete to win and the philosophy and the culture that we’re trying to create here.
We can give you what we’re kind of building ourselves around, but I talk about it with people. (Former CEO of Boeing Commercial Airplanes) Alan (Mulally) called it “Working Together.” I’ve moved it into more of a “Winning Together” because of the environment that we’re in. But it’s built on a philosophy around people. It’s built on a philosophy of “make a commitment, meet the commitment”. That’s what the company was built on.
It’s built on being people-centered, treating everyone with respect, being responsible. It’s built on a belief system that relationships do matter. That every detail matters and that we have customer-focused innovation. That’s our belief center around it.
It’s built on a DNA culture, a DNA that’s within the Boeing Company of courage, passion and integrity. That’s what’s made this company great, is to have the courage to step out there and do things that are really tough.
It’s having the courage to take responsibility. It’s having the passion to do whatever you need to do to make that commitment, you know? It’s not only a commitment to our customers: it’s a commitment to our community; it’s a commitment to our employees; a commitment to each other; it’s a commitment to our suppliers. This is what creates trust.
That’s what’s going to ultimately win. And a continuous theme that’s always there, that’s underpinning all that. A theme that is of continuous improvement, and continuous improvement in those areas that really matter to our customers that make us more competitive in the long term, against anybody that comes in to the market.
I was down in Long Beach, when was it? About a month ago. You sit down there and you look, and you sit in the office where we’re developing this customer-support center of excellence. Where we’re doing a number of different things. You look out and you go, “This was a thriving, commercial airplane business.” You look out the window and you see parking lots, you see abandoned buildings and you see a place that’s gone from over 50,000 people at one point in time, to like, 1,300. That’s just something that we can’t let happen to the Boeing Company.
With a competitor like Airbus who now is pushing it hard. They want to be a 60% player. We’ve never faced that before. Ever. We’ve got to make sure we set the culture that not only comes and pulls on all those really great things that made this place really special, that continues to make it special. The things that I grew up with, that a lot of people that have the same kind of years in service that I do, with the families that have come up through this, that have made this place really special.
You draw on all those really good things, but you recognize the fact that you’re competing in a different world than you did back then, and that you have the passion to compete that way. That you have the passion to go do what you need to do to win.
You have the courage to make some tough decisions. But when you make those tough decisions you do it in a way that is very people-centered, that understands. So you don’t do something – you do it better than what we did on the EO&T thing. You try to do it more along the lines of how we did the customer support thing, if we have to make a tough decision.
You have the integrity, you know? You want to be able to look your customers in the eye. You want to be able to look your people in the community in the eye. Know that you’re doing things the right way. You’re being honest about how you’re doing things.
That’s the most important thing for me. Bringing the new people in and driving that kind of culture is what’s the most important thing.
Gates: Just one last question on SPEEA. Like I said, it seems like a difficult relationship at the moment, but, if I heard you right earlier, the transfers of engineering work is largely done?
Conner: For the most part, yeah.
Gates: So this feeling that local engineers have that “Oh, Boeing doesn’t respect us. They’re moving our work. Giving it away to other people.” If you can. . .
Conner: That’s not about respect … I would never … There’s no way … This is not about a respect thing. This was about trying to utilize the resources in the best way possible.
Gates: But are you able now to assure them, to go to them and say, “Look, we had to make those tough decisions but we don’t need to do that anymore” and somehow reassure them that the respect is there? That they are needed.
Conner: I can assure them that the respect is there, that’s for sure. I can do that. Look, I can tell you that I don’t see anything, I don’t ever want to. . . You don’t want to get out there and say that, because I don’t know what – the world, something could change down the road. But, you know, that’s my only caution on that comment. But I can assure you that, if something was to change, we would be forthright about it and going to be communicating about it.
Gates: Another difficult issue. Down in Olympia again, I wrote a story recently about the . . . Not about Boeing so much, but about the suppliers and about the low wages in this state at the manufacturing level among the suppliers in the aerospace business.
So there’s been this movement at Olympia to create a minimum wage. We have a minimum wage in Seattle already but now there’s an idea that a minimum wage should be linked to the aerospace tax benefits.
It wouldn’t affect you, or at least not much. Maybe new hires, but not much. But it would affect your supply base dramatically.
Conner: Well, I think you’ve got to take into account too, this is not just about wages. You’ve got to look at . . . Think about it. You’ve got to look at the benefit packages. You have to look at all that stuff when you think about people’s pay. So I don’t know what some of the suppliers. . . We all are being paid what the market forces drive. Our suppliers sometimes complain to us that we are paying too much because they can’t keep people in place here, because they are coming to work for us, when we’re hiring.
It’s so hard to know, because every one of those jobs is based on some type of a market in terms of what pay for what that is. If people could go someplace else and make more money, I’m sure that they would do that. So it’s very hard for me to comment on the wages that our suppliers are paying.
Gates: Some of them blame “partnering for success”. When I wrote that story, it wasn’t just one or two, it was several executives told me, “We couldn’t possibly do this. Boeing would never accept the price increases that would be necessary, for us to pay the wages that Olympia’s talking about.”
Conner: But again, those are in terms of what items? That means that we can buy these products from someplace else for less money then. So, again, we’ve got to be competitive on a total basis. The “partnering for success” is about just that. It’s about a collaborative effort with our suppliers, to try to get their costs down, so we can then all benefit through increased market share, or increased sales opportunities.
This is not just a one-way street on that. We would have those conversations irrespective. This is, again, about competing. If they’re saying that we wouldn’t accept it, that means we’ve got some other place that we can probably go get that. What kind of a product are we talking about? Is it a commodity issue? I don’t . . . That’s a pretty general statement, you know.
That would say that those are things that are easily acquired from someplace else. I’m not going to throw any of my suppliers under the bus, but that’s kind of a cop out.
Gates: I appreciate you’re taking the time to answer some of these tough questions. But I think they’re questions that have been out there and it’s good to get your answers.
Conner: I know. I don’t have a problem answering those questions. Look. I’ve grown up here and I feel like a real part . . . and the company feels like a big part . . . of this community.
Gates: Have you worked, personally within Boeing — as a local man and someone who came through the ranks — have you worked to keep work here?
Conner: Sure. Absolutely, but I’m going to make the best decision for us on a competitive basis. If I think it’s the best thing for us to do, to keep that work here, I’m going to fight to do that.
It has to be because it’s for the right reasons. It has to be because we are the best ones to do this, and that we can compete long-term to do it. I’ve felt strongly about all the things that we’ve done. I felt strongly about the 777X — but if we couldn’t get that done, because we needed to get it done, then we would have had to do something else. But certainly I, as a local person, yeah, I have a great compassion for this place.
But I’m also a steward of this company and I want to make sure that when I leave, we’re in a good position to be able to compete against the world. We have to win every day. And I think it’s hard, sometimes, for people to understand just how competitive the marketplace is right now.
It is incredibly competitive. We have to win in order to secure jobs, we have to go out there and win those competitions. Those are competitions that are going on for airplanes that are going to deliver in 2022, 2023. So we lock the price down at that point in time, when we sell it. And we’re selling out in 2022, 2023. All the things that we’re delivering today we sold back in 2000, 2002, 2005, 2006, 2007. A lot of that stuff. But now we’re way out there.
So we had to project ourselves, “Okay, where are we going to be, out there?” and that was one of the big items with the 777X that we’re going to deliver it so far out. And it takes such a long time to develop one of these airplanes.
Gates: One of the decisions that you were involved in, one of the tough decisions, was putting the work in South Carolina. . .
Gates: And moving forward from here, South Carolina is now working much better and it’s producing the 87 and some other work. . . . There’s all this talk of “one Boeing” within the company. How do you make one Boeing out of these two workforces, given the history that’s there and the fact that the company pitches one against the other when it comes to industrial incentives? One state against the other.
Conner: I’m only pitching one thing, and that is … We have one group that we’re trying to beat, and that’s Airbus, okay?
I want to get people focused on being the very best, collectively, that we can be. Charleston is now a part of the Boeing Company, bar none. And I will tell you this, that the Everett team has been very supportive in terms of helping make them successful, and we’re starting to share more things. There’s some things that the Charleston team does, that is very good too, and that’s being shared back up here.
I think it’s going to take a while, but we’re going to move past that Charleston-versus-Everett or Puget Sound kind of thing. This is the 87 program. It happens to be built in two different places. That’s just kind of the way it is and they’re doing a good job down there, as is Everett. It’s kind of like, in football, offense and defense, right?
We have one thing that we want to do and that’s go win the championship.
Gates: Well, Everett can’t succeed in the 87 program, unless Charleston delivers those fuselages . . .
Gates: So there is a dependence there.
Conner: And there’s a dependence on the other way too. Because most of the engineering and stuff is being done, like all the customer intro stuff and everything like that is being done up in Everett. Passed down to Charleston, so there’s an interdependence and the communication, actually, is going better than I think people maybe give it credit for.
Gates: You talked about market forces for pay and I did want to ask you this before we run out of time, because, as I mentioned, you’re at the top of the executive ranks, though you started as an hourly worker. There’s this chasm in the United States, I’m not just talking about the Boeing Company. But in the United States, between executive pay and worker pay.
You yourself were just given an extra $7 million worth of shares to convince you to stay another three years. What do you make of that chasm, having started where you started and being where you are now? Is it healthy? Is it unhealthy? Is it necessary? Is there no other way to do it?
Conner: You know, I stay focused. I mean, look, in every job code that we have, whether it’s my job code or it’s the grade four mechanic, or the grade three mechanic, or a grade zero – I don’t even know if we have grade zero, but that’s what I hired in as, grade zero. Okay?
There is a span of wages you can make. And those are all driven off of what the market now drives. The market says that for the work the mechanic is doing, that’s the way the pay is. And we have all the data for this. For the work that I’m doing, the market says this is what the pay is. I made a choice a long time ago, that I wanted to . . . And it wasn’t driven by pay, trust me. If you knew me you’d understand. If you knew me well and you came by my house, you’d understand that that’s not what drives me. I don’t pay attention to a lot of different things. That’s not what drives . . . What drove me is that I wanted to do something bigger and have more responsibility to really push myself.
I started here, through a lot of hard work, through a lot of support by a lot of different people, I was able to get here. The market pay, where that put me in terms of pay, is just different. But it’s driven off of what the world, or at least corporate America, says that’s what the market is.
Do I think it’s right or wrong? I can’t even touch that. I don’t even know. I mean, it is what it is.
Gates: Is it true you still live in the same house you lived in 20 years ago?
Conner: More like 30. Yes, that is true. I bought that house when I was, yeah, 30 years ago. My wife and I celebrating . . .
Gates: And what was your position at Boeing?
Conner: Well, let’s see. I was in the Supplier Management, I wasn’t in management yet, even, when I bought that house, when we bought that house. We still live in that house, yeah.
And you know what? That will be the last house we live in, because we’re not moving. My wife feels the same way. We live a pretty simple life. It’s one of those things. I grew up, your parents probably worked too. They probably went through the Depression, right?
Conner: My parents went through the Depression, so they both came from very difficult financial backgrounds. Then growing up in a Boeing family, I lived through the “Last one to leave Seattle turn out the lights.” So you kind of grow up with this mind set of living very conservatively. Saving your money, doing these kinds of things. So we never paid it much attention. We’ve always been very happy and we’re very happy with where we are. That’s just our lifestyle.
Gates: We’ve run out of time and I didn’t even get to the product questions. Unfortunately for you, you got all the tough questions and all the easier ones are left for another time.
Conner: You know, again, I feel very strongly about this company.
I really believe in the people of this company. I just want us all to pull together and make this place really successful. Gosh, we have such a great opportunity in front of us. How we do it? The future will be set here in the next few years. We will define the real future of the company in the next few years.
We’ve gone through some tough, tough times. I mean, gee, the whole 87 – I mean, going back, going back in time, you’ve seen these really difficult times. But if we can pull together, all of us, create the right future together, and we have an opportunity to do that. Boy, we can do great things, but we’re going to have to really tighten up here.
Because the other guys are good. I give them a lot of credit. Sometimes, I think there’s a view that they’re not as good as they are. They’re pretty good. They’ve gotten a lot better over the course of . . . they’ve been at it now for forty years. I was reading a speech that (former Boeing chief executive) Frank Shrontz gave to the Chamber of Commerce back in 1991. They had . . . 29% market share. Look what’s happened since then, you know?
I just don’t want one of them to be talking about that, about us, in the future.
Conner:I really want to get this workforce stuff going. It’s really important, I think. You really want kids to feel like they’ve got a future. You know?
Gates: Yeah. Is there any more detail on that specific project?
Conner: I’m a little frustrated it’s taken so long. You know? It shouldn’t take that long.
Gates: It’s hard to move a big organization like Boeing and then a big thing like the educational system . . .
Conner: Christine Gregoire and I talked about this when she was Governor and I was kind of working with the union a bit upon it. But we can’t seem to get. . . We’re just going to do it on our own. And do it with the high schools and some of the districts. And of course, with the technical communities too.
See, my vision of this would be, so you start maybe sophomore year or junior year, you start to say, “Okay, here’s the curriculum that we want to have,” and we’ve got to go in and we’ve got to tell people, “Hey look – here’s the kinds of jobs that are going to be available,” so we can project out in the future what they’re going to be. The curriculum is based on this and we can start moving people towards their interests and they can start taking those kinds of courses, and get credit for their high school education through taking these courses.
Then, when they graduate, they can move right into those jobs, which is very similar to what they do in Germany and some of these other places.
Why can’t we create that same model here, in Puget Sound, for us? We, today, and this is one of the worlds that’s changed too, Dominic, whenever you talk about the diversification a bit. The U.S. is only producing a third of the engineers that are required here in the United States for jobs. We’re not producing enough engineers.
We couldn’t attract enough – I mean it’s hard for people to get their heads around here, in the Puget Sound, but you know what? Sometimes people maybe want to go, they want to live in a sunny place in southern California, you know? So you’ve got to be able to attract some talent sometimes. You know what I mean to say?
Conner:It’s true. So, and you want to be pulling from a number of different places for your future. We have a number of great institutions here, but we’re still not producing enough engineers over the course of time to fill all that need.
When you think about what Microsoft needs, when you think about what Amazon, what everybody needs – so we’ve got to keep thinking about how we’re going to set ourselves up for the future. The workforce is going to be much different in the future then as well. It’s going to look different.
We’ve got 2,500 suppliers in the region here, this, if we don’t have a job, they’ll have a job. Or, we should be creating a workforce for the whole region, around aerospace. That’s what I’m really trying to get going. It’s what we need to do.