McDonnell Executive’s Comment Creates a Stir
McDonnell Douglas executives have raised the possibility that if massive problems experienced by the company’s commercial aircraft unit in Long Beach are not solved, the operation may be “history.”
Douglas Aircraft Deputy President John Capellupo, who has been making an effort to reduce complacency at the Long Beach operation, made the comment at a recent meeting of company employees. News of that meeting spread through the plant after an employee wrote a memo paraphrasing Capellupo’s statements.
It was left unclear exactly what Capellupo meant, if he was quoted accurately, by saying Douglas could be “history.” The parent company is already transferring significant amounts of work from Douglas, including the Navy T-45 trainer jet program, an ejection seat program and bomb-rack production program. Additional work could be transferred, resulting in a gradual erosion of Douglas’ role as an independent subsidiary.
But company officials denied Thursday that they have any plans or are considering options in which Douglas Aircraft would be closed.
“We have no plans to close the plant here,” said John Thom, a Douglas spokesman. “The comments from Capellupo were paraphrased and then jotted down in memo form. Capellupo holds meetings quite regularly and they are open meetings and frank meetings. They are intended to impress on people to get on top of their productive capabilities.”
Securities analysts doubted the veracity of the report, noting that Douglas has a massive backlog and McDonnell still has large resources.
But in a memorandum last month, Capellupo said the company had a discipline problem and that too many people appeared to be “walking and talking” rather than working. At that time, he also said that the management system seemed to be “permissive.”
Douglas is behind schedule in all three of its major production programs and lost $84 million in the first quarter.
“The company is in big trouble,” the memo said. Indeed, the Air Force has issued 34 contractor deficiency reports against Douglas and an undetermined number of even more serious “letters of concern.”
