McDonnell Shakes Up Helicopter Division
McDonnell Douglas Corp. said Tuesday that it is replacing some top executives at its Mesa, Ariz., helicopter subsidiary as part of an effort to reorganize and cut losses at poorly performing operations.
The shake-up--including two resignations and three early-retirements--follows a loss at McDonnell Douglas Helicopter Co. in 1989. The corporation has not disclosed the size of the loss, but the trade publication Aerospace Daily last month put it at $37 million. Much of the red ink was due to cost overruns associated with production of the Apache military helicopter.
The vice-president of the Apache division--Stuart Dodge--resigned. So did James Brown, marketing chief of McDonnell Douglas Helicopter. Three executives--managers of manufacturing and quality-control operations--took early retirement. The positions were filled by other McDonnell Douglas executives, some on a temporary basis.
The major personnel changes are the first under Thomas Gunn, a senior McDonnell Douglas executive who was appointed president of the helicopter unit May 31.
Gunn on Tuesday released a reorganization plan that establishes a marketing division and consolidates some operations under other divisions.
“Today we took a major step in preparing . . . to be competitive in the world helicopter and (military supply) marketplaces by reorganizing several elements of our management structure,” Gunn said. “The company’s financial performance in the past year makes it clear that we must change the way we do business.”
Company spokesman Ken Jensen said that, as part of the reorganization, support staff for commercial helicopter manufacturing will be increased.
Gunn said the reorganization will reduce costs, but he provided no details. Facing serious technical problems in its military aircraft programs and financial difficulties on its commercial jetliner business, McDonnell Douglas is looking to cut costs company-wide. Last month it announced that it will trim $700 million from its annual operating costs--a move that could lead to an estimated 10,000 layoffs.
Such cutbacks would come on top of a plan to lay off 7,000 workers at the Long Beach-based Douglas Aircraft unit, which is losing money and facing a cash squeeze. St. Louis-based McDonnell also has plants in Torrance, Huntington Beach and San Diego. The company is the second-largest aerospace employer in Southern California, with an estimated 50,000 workers here out of a total work force of 129,000.
Personnel changes and some reorganization at the helicopter unit were expected because the subsidiary’s previous management team underestimated costs on the Apache helicopter, industry analysts said. However, some analysts were surprised that the changes took place so soon after Gunn took over.
“I’m surprised at the pace at which Gunn is moving,” said Howard Rubel of C. J. Lawrence, Morgan Grenfell, a New York investment firm. “He’s grabbing the bull by the horns and making some hard decisions.”
