Boeing - "Continued"

“Boeing –The Continued Saga”

As many of you know, I have been following, and writing about, what is happening at Boeing for the past year. Obviously, they haven’t made a great deal of progress with respect to their manufacturing and quality issues.

Last week the Chairman of the Board, Larry Kellner, announced that he would not be standing for re-election and would be leaving the company. President and C.E.O., David Calhoun, announced that he would step down from his position at the end of the year. Also, Stan Deal, C.E.O. of Boeing’s Commercial Aircraft Division announced that he was resigning and leaving the company immediately.

Stephanie Pope, a 30 year Boeing veteran, a financial type with no real operational experience, was appointed C.E.O. of the Commercial Aircraft Division.

This appointment has raised additional questions by the industry, the airlines and Wall Street.

They also announced that they were in talks to purchase Spirit AeroSystems. Spirit is a major sub-contractor to Boeing. This is the organization that has had significant quality issues, and was previously the Wichita Division of Boeing’s Commercial Aircraft business, before being sold off in 2010.

There is a belief, outside of Boeing, that the person heading Boeing and their Commercial Business, should have a strong manufacturing/engineering background and not just a financial background.

There is obviously a reason why that is true, but one could also make the case that a financial type with operational experience might also be satisfactory. The guidance here is “operational experience.”

In large organizations you have financial types that fit the definition of “green eyeshade accountant’s," and you have financial types that do have manufacturing/operational experience that is relevant. Normally, a large organization’s financial structure would consist of both types. General ledger accounting: including accounts payable, receivables and payroll fall into the “green eyeshade” category.

Cost accounting, estimating and project/program management and analysis fall into the other category. Here the financial individuals must interface with engineering and manufacturing in order to do their job. They need to understand the manufacturing process in order to advise management of the cost impact of operational decisions. These individuals are more tuned to what makes an organization successful then those that are involved in day to day record keeping.

An individual, with a finance background, that has that operational experience will be indispensable to an organization, and will usually have an advantage in achieving an upper management position.

Some members of the aviation community believe that Boeing needs to relocate their corporate office from Arlington, Va. to the Seattle area where they can be more directly involved where the action is. This also includes moving finance from Connecticut. I believe that Boeing’s issues began when they moved their corporate office from Seattle to Chicago, and then to Arlington. “Out of sight out of mind.”

As I reported before, Boeing’s Board of Directors consisted of financial types with no operational experience, political types, and others with no direct business experience. This needs to be rectified going forward.

To put Boeing back on the path to success will not be an easy chore. The entire culture needs to change, from the leadership to the factory workers. A complete housekeeping is in order. They need leadership who understand manufacturing, engineering and finance. What a “novel idea.”

Jess Sweely

Madison, VA.

March 30, 2024

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