Some Hail, Some Fear Return of Boeing Ex-Exec

By James F. Peltz

Dec. 2, 2003 12 AM PT

Times Staff Writer

After Boeing Co. bought McDonnell Douglas Corp., that company’s chief executive could have quietly moved on or retired, as do many CEOs whose firms have been acquired.

Not Harry Stonecipher. Urged by Boeing Chairman and CEO Philip Condit to stay as Boeing’s president, Stonecipher helped push the commercial airplane maker’s expansion into defense and space projects. He also led a wrenching campaign to slash operating costs and the huge sums spent on developing airplanes and other products.

The former McDonnell Douglas executive’s influence became so pronounced that some observers said a reverse takeover had occurred. After he retired from Boeing last year, he remained a board member and one of the biggest individual stockholders, with about 1.7 million shares.

Now Stonecipher is in charge, replacing Condit, who resigned Monday from the Chicago-based aerospace concern. Stonecipher, 67, said he had no intention of being an interim CEO.

“I’m going to be here as long as the board puts up with me or if my health deteriorates,” he said at a news conference. “Hopefully that won’t happen anytime soon.”

Unlike Condit, who is known as a deliberate, reflective and easygoing executive, Stonecipher is blunt, decisive and tough-minded. The son of a Tennessee coal miner, Stonecipher is a stocky 6-footer who wears steel-rimmed glasses, quotes Harry Truman and embraces being a catalyst for change.

He takes over as Boeing is trying to recover from scandals and struggling to define its future -- a struggle Stonecipher helped initiate.

When he arrived in 1997, the company had long been the dominant builder of commercial jetliners. It also was an inefficient producer, many observers agreed, and Stonecipher rapidly introduced stricter cost controls and production methods to streamline Boeing and boost its profit.

At the time, the aerospace and defense industry was quickly consolidating into a few players, and Stonecipher and Condit pushed for Boeing to be a survivor by acquiring other defense companies.

Boeing’s growing defense work reduced its reliance on its commercial business, which now accounts for about 50% of annual sales, down from 80% or more a decade ago. With the military business booming, the shift helped Boeing weather the slump in travel -- and airplane orders -- that followed the Sept. 11, 2001, terrorist attacks.

Some analysts wondered whether Boeing and Stonecipher were sacrificing Boeing’s famed airplane innovation for profit. Archrival Airbus, majority owned by European Aeronautic Defense & Space Co., recently passed Boeing to become the commercial aviation market leader. Boeing hasn’t introduced a new jetliner in years.

“I’m concerned that [Stonecipher is] more focused on the immediate bottom line as opposed to the long-term opportunities of the company,” said Barbara Beyer, president of Avmark Inc., a commercial aviation consulting firm in Arlington, Va. Before it was bought by Boeing six years ago, McDonnell Douglas had faded as a commercial competitor because it was mostly building derivatives of existing planes, Beyer said. “I’m seriously concerned that Boeing is going the same way.”

Boeing is in substantially better health than McDonnell Douglas was when Boeing acquired it. And Boeing does have one new plane on the drawing board, the 200-seat 7E7.

Stonecipher is among the Boeing directors who reportedly urged that Boeing be cautious about how much it spends to develop the 7E7. But on Monday, he called himself a “proponent” of the jet. He didn’t elaborate but said there would be a key presentation to Boeing’s board Dec. 15, when the directors would decide whether Boeing would start marketing the 7E7to airlines.

One of Stonecipher’s early challenges will be repairing morale, which has been damaged by questions about Boeing’s conduct in winning contracts. Condit’s resignation followed by a week the ouster of Michael Sears, Boeing’s chief financial officer, for what the company said was Sears’ improper meeting with an Air Force procurement officer later hired by Boeing.

But union leaders and some analysts also have blamed Stonecipher’s focus on cutting costs and boosting profit with damping spirits at the company. And a spokesman for the union representing engineering and technical workers at Boeing said Stonecipher’s ascension to CEO would cause trepidation among workers.

“There was no love lost between Mr. Stonecipher and the SPEEA-represented employees three years ago when our union went on strike,” said Bill Dugovich of the Society of Professional Engineering Employees in Aerospace.

At the news conference, Stonecipher suggested employees shouldn’t have preconceived notions.

Responding to a question about a possible restructuring at Boeing, he said, “I’ll be telling people to stop seeing ghosts around the corner, because there are none.”

Associated Press was used in compiling this report.

(BEGIN TEXT OF INFOBOX)

Harry C. Stonecipher

New position: Named president and chief executive of Boeing Co. on Monday

Age: 67

Education: B.A. in physics from Tennessee Technological University, 1960

1960: Joined General Electric Co.’s aircraft engine operations

1984: Named chief of GE’s aircraft engine division

1987: Joined Sundstrand Corp.

1989: Became Sundstrand’s president and CEO

1994: Became president and CEO of McDonnell Douglas Corp.

1997: Elected president and chief operating officer of Boeing after it merged with McDonnell Douglas