Condit’s mission to transform Boeing hits some turbulence

Associated Press

CHICAGO – The televised plume of smoke from an airplane crash in New York this month was a familiar but sickening sight for Phil Condit, who was watching during a treadmill workout at a Detroit hotel.

“It stopped my day cold,” recalls the Boeing Co. chairman and CEO.

Running the world’s largest aircraft manufacturer can be a tense and troubling job these days. The solace for Condit is that the turbulence rocking the commercial jet business since September would have been far more damaging to his company had he not moved to create a more balanced Boeing, one that is steadily reducing its historic dependence on aircraft.

“Had we stayed in that mode, Sept. 11 would have been a really dramatic event for us,” Condit said in a recent interview at Boeing’s new Chicago headquarters.

This was to have been a showcase year for the 60-year-old technocrat and his plan for a new, more diversified Boeing, capped by the symbolic shift away from its airplane roots in Seattle. Instead, it turned nightmarish just a week after the new offices opened.

Four Boeing planes went down in the attacks, air travel declined precipitously, its stock sank and has lost half its value since May, and Condit was forced to announce layoffs of as many as 30,000 employees.

On top of that, Boeing lost out to Lockheed Martin last month for the biggest defense contract ever, the Joint Strike Fighter, wiping out $1 billion in projected revenue from 2002 alone.

Now the longtime Boeing engineer faces more tinkering with his reinvented company. And the turmoil is certain to slow its push into some of the new frontiers, including technology-intensive enterprises such as its in-flight Internet venture, Connexion by Boeing.

Yet, Condit believes the upheaval has confirmed the wisdom of his company makeover. He is convinced Boeing has made a much more fruitful transition to well-balanced aerospace giant than Wall Street gives it credit for.

“It’s actually been very gratifying to see that the strategies we set were robust,” he said.

Many industry experts agree, calling Boeing well-positioned to take advantage of an increase in U.S. military spending. The company derives nearly 40 percent of sales from its defense and space businesses, with airplanes’ share down to about 60 percent.

Condit asserted his role as corporate titan this year when he announced he would select a new headquarters city for the $51 billion company, setting off frantic lobbying among Chicago, Dallas and Denver.

But business colleagues and friends describe him not as a titan, but as collegial, approachable, professorial, sometimes cautious, private, even shy.

Those down-to-earth traits have served him well in labor relations, where union officials call him much more open and responsive than most CEOs. He has remained popular with the rank-and-file even through tens of thousands of layoffs and sometimes-tough labor tactics – partly by delegating firing duties to his second-in-command, Harry Stonecipher, Boeing watchers say.

The affable Condit also has built up enough trust to close deals on his own. James Guyette, former longtime chief operating officer of United Airlines, recalls working out a handwritten agreement with Condit in the middle of the night during negotiations for 777s – without lawyers.

“If you have a deal with him, you have a deal,” says Guyette, now president and CEO of Rolls-Royce of North America, which supplies engines for Boeing planes.

Associates suggest Condit’s role model for transforming Boeing is his friend Jack Welch, who turned General Electric into a powerhouse conglomerate that can thrive even in tough times. Asked if that’s true, Condit smiles and acknowledges, “Jack has been an influence. GE has been an influence.”

Boeing’s boss has had his share of rough spots.

The company had its first unprofitable year in a half-century in 1997 after airplane production was accelerated to record levels and foul-ups ensued. Boeing engineers went on a crippling strike last year.

“He had a difficult shift up to become chairman and CEO. The job is more visionary” than his earlier posts, says Guyette, who has known Condit more than 15 years.

“But he has matured in the job. He’s had some great successes – the acquisition of McDonnell Douglas, setting up three distinct businesses and allowing them to operate as such, and having the courage to pick up and leave Seattle.”

Condit already is seeing one personal dividend from the move to Chicago: Travel time is down sharply.

But he has had little time to enjoy his new city. An arts enthusiast who’s been known in the past to sing opera at karaoke bars, he has yet to visit Chicago’s Lyric Opera, even though he can gaze down on it from his window across the Chicago River. Weekend drives with his wife Geda and fix-up work on their downtown condo highlight his free time so far.

With this fall’s dramatic events, Condit has plenty more work to do, including a re-evaluation of the changing airplane picture and an intensified focus on two areas the company already was involved in: air travel security and air traffic management.

One thing’s certain: It likely will be years before his mission to transform Boeing is complete.