Boeing Is Flying High by Staying Cautious, Its Chief Says : Management: The company is logging record orders. ‘We run scared,’ Chairman Shrontz says.

Despite record orders and rising sales and profits at his company, Boeing Co. Chairman and Chief Executive Frank Shrontz is still looking over his shoulder.

“I don’t think any private company can consider itself to be bulletproof,” Shrontz, 59, said in a recent interview. “I think as soon as you start getting complacent in that regard, you’re heading for serious problems.

“We run scared, and we think that’s the way it should be.”

He said Boeing, the world’s biggest and most successful builder of commercial airplanes, still faces losses in its defense and aerospace sectors. Moreover, he said, this year Boeing expects to further trim its work force in the Seattle area.

Still, Boeing’s performance with Shrontz at the helm has been anything but retiring. For the first nine months of 1990, Boeing reported a net income of $1.1 billion, or $3.09 a share, nearly double the $598 million for the previous year. Sales rose by about a third, to $20.6 billion from $15.4 billion.

The company forecast that sales for all of 1990 would reach $27.5 billion, up from $20.3 billion for 1989, and Shrontz said sales for 1991 “will be somewhat higher than that.”

Shrontz, who was elected CEO in 1986 and chairman in 1988, has seen many of the company’s ups and downs.

He joined Boeing in 1958, after earning a law degree from the University of Idaho and an MBA from Harvard University. He left the company in 1973 to become assistant secretary for installations and logistics for the Air Force, and three years later, he was named assistant secretary of defense.

Shrontz rejoined Boeing the next year as a vice president for contract administration and planning. He steadily worked his way up through management, as general manager for Boeing Commercial Airplane Co., vice president for sales, and president of the commercial aircraft operating company.

About a year after he replaced T.A. Wilson as chairman, a 48-day machinists’ strike virtually shut down the company. Another low point came in November, 1989, when Boeing pleaded guilty to two felony counts, admitting that it had received classified defense budget documents from a former employee. Boeing paid $5.2 million in restitution and fines.

Shrontz has been credited with strengthening Boeing’s financial health.

Much of the company’s success these days can be laid to its commercial jet business, which accounts for more than half the world market for commercial jets. This year, Shrontz said, Boeing is likely to add to its already record backlog of jet orders, which stood at more than 1,860 at the end of 1990.

Last year, Boeing delivered 380 jetliners and announced orders for 543 more worth a total of $47.7 billion. It also is increasing its production rate to 38 airplanes a month and plans to deliver 419 planes in 1991.

In 1990, Boeing launched its 777 wide-body jetliner, bought hundreds of acres in the Seattle area to expand, and estimated that it would spend nearly $1.4 billion on plants and equipment and more than $750 million on research and development.

Keeping growth under control, especially now, in a shaky economy, is one of Shrontz’s main concerns.

“We are already at the point where we are significantly overbuilt in some respects in the Puget Sound area,” he said.

Boeing cut about 2,000 employees from its work force in Washington state in 1990--most through attrition--leaving the company with about 104,700 workers at year’s end. Worldwide, Boeing employs about 161,000.

Shrontz said the work force is expected to shrink by “several thousand” in 1991, partly because of cuts in defense projects. The company said it hopes to achieve the reductions through retirements and voluntary departures.

Boeing’s problem areas include the defense and space divisions, which have lost money the past two years. Shrontz said it’s too soon to say whether 1991 will make them profitable, but he said that at the very least, the losses should be reduced significantly.

Boeing also has had a number of performance problems on the military side, among them the late delivery of the new Air Force One jumbo jets and cancellation of part of an Air Force contract to produce Saudi Arabia’s Peace Shield air defense system. The cancellation came because Boeing was not meeting the delivery schedule.

Shrontz said Boeing has had “an unprecedented” number of development contracts at the same time it had relatively little revenue-producing defense production work.

“We became more vulnerable to costs and schedules and technical problems that development programs usually get,” Shrontz said. “I think the good news today is that some of those development programs--we certainly hope--are going to go on to more full-scale development and eventually production if we’re successful.”

Three programs he cited as having good chances are the B-2 stealth bomber, the Advanced Tactical Fighter and the Army’s proposed light helicopter.