In speech, Conner says Boeing isn’t leaving Washington

SEATTLE — The Boeing Co. is growing in Washington and around the world, where it faces fierce competition. So, despite the company’s big profits, it has to cut costs.

That was Boeing Commercial Airplanes CEO Ray Conner’s message Wednesday to foreign ambassadors, local officials and business people at the Trade Development Alliance of Greater Seattle’s annual dinner.

The Chicago-based company “is not leaving Puget Sound; our footprint has grown,” said Conner, 59.

Boeing has committed to assembling its newest airliners in the area — the 777X in Everett and the 737 MAX in Renton.

“These two ground-breaking airplanes represent the future of our company and our region,” he said.

At the Everett plant adjacent to Paine Field, Boeing is putting up a 1.2-million-square-foot building for fabricating the 777X’s massive composite material wings, which will be assembled along with the airplane inside the factory.

“The job site will cover more than 60 acres, ringed by two miles of construction fencing. That’s the length of the Alaskan Way Viaduct replacement tunnel,” Conner said. “Portions of the construction will go on 24/7 — the equivalent of six trucks per minute working around the clock, seven days a week — for four months.”

Boeing’s Fabrication Composite Manufacturing Center in Frederickson has been tapped to produce horizontal stabilizers and vertical fins for the 777X, which it does for the 777 classic, he said.

The company is also doubling the size of the Commercial Delivery Center at Boeing Field in Seattle as it increases production rate on the 737 line.

Through the first five months of the year, Boeing’s average monthly workforce has been 81,267, making it the state’s largest employer. That is an increase of 9,234 over the same period in 2010, according to data on Boeing’s website.

Boeing’s presence buoys Washington’s wider economy, Conner said. “Last year, we spent $5 billion doing business with nearly 2,000 Washington suppliers.”

Conner downplayed Boeing’s controversial decisions to move thousands of engineering jobs to Alabama, Missouri, South Carolina and California.

The moves fueled concerns that the airplane manufacturer is headed away from Washington and has been called an anti-union move by the Society of Professional Engineering Employees in Aerospace (SPEEA), which represents many of the affected workers.

But shifting work will help Boeing retain talent in areas that could be hardest hit by declines in defense spending, said Scott Hamilton, an aerospace analyst with Issaquah-based Leeham Co. “At the same time, there’s a very transparent effort to diminish SPEEA.”

Several times, Conner referred to Boeing and Washington as having a shared past and future.

But when Machinists union members balked at concessions demanded late last year by Boeing, the company started a much-publicized search for a 777X assembly site outside Washington.

The test for Washington will really come later this decade, when Boeing moves ahead on its next clean-sheet airplane, likely a successor to the 737 and 757 families, Hamilton said.

Nearly one of every three 737s assembled today end up in China, which has a booming air travel market, Conner told the trade alliance.

The Asia-Pacific market is driving global demand for 35,000 new airplanes worth about $4.8 trillion over the next 20 years, according to Boeing forecasts.

China alone is expected to need nearly 6,000 new airplanes worth about $780 billion.

But “I’ve never seen such a fierce marketplace,” Conner said.

To win, Boeing “must — both internally and throughout our supply chain — drive productivity, increase profitability, deliver innovation and, more importantly, provide unmatched value to our customers — at a competitive price,” he said. “I know it can be confusing to some people, because we’re doing so well at the moment, but in our industry, business cycles are long.”

Airlines often operate commercial jets for 15 or 20 years, sometimes longer, so “when we lose a sale, we feel the impact for a long, long time,” he said.

Conner shared some of his own history. His dad worked on the B-17 bomber, and he followed one of his brothers to Boeing as a mechanic in 1977.

If Boeing succeeds globally, the benefits will flow back to Washington, Conner said.

The company’s culture is defined by “our spirit of innovation, and the incredible pride of the people who invest years of their lives in designing, building and supporting our airplanes,” he said.

Conner’s boss, Boeing chief executive Jim McNerney, struck a different tone speaking to stock analysts in April, when he said the company was done with innovative “moonshots” and instead would deliver incremental technological improvements.

Boeing worker pride has been tested in recent years.

In addition to laying off engineers and moving their jobs, the company pushed the International Association of Machinists and Aerospace Workers (IAM) union to approve concession-laden contracts in metro Puget Sound and St. Louis.

Conner “is supposed to be leading us. He’s not supposed to be treating us like the plague,” said a veteran engineer with Boeing’s Commercial Aviation Services, one of the groups affected by the moves.

Last month, Seahawks head coach Pete Carroll appeared with Conner at the company’s Everett and Renton plants. Carroll, who led the team to a Superbowl win this year, got rousing applause, while Conner got booed, said several employees.

Dan Catchpole: 425-339-3454; dcatchpole@heraldnet.com; Twitter: @dcatchpole.

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