Boeing forces CEO out

Published 9:00 pm Monday, March 7, 2005

Harry Stonecipher’s ouster as the Boeing Co.’s chief executive shouldn’t affect key decisions involving the future of the Everett factory and its work force, observers of the company said Monday.

“I don’t think it’s going to have a big material impact,” Teal Group analyst Richard Aboulafia said.

Stonecipher was forced to resign Sunday after an investigation found he violated the company’s code of conduct by having a consensual relationship with a woman who is a company executive.

“We thought that it showed poor judgment on Harry’s part,” Boeing board chairman Lewis Platt said during an interview with CNBC on Monday. “We thought it put the company in a situation where we could be embarrassed.”

Stonecipher will be replaced on an interim basis by chief financial officer James Bell, who has an accounting background and comes out of Boeing’s space and satellite business.

Early speculation named Boeing Commercial Airplanes chief Alan Mulally as one potential successor for Stonecipher. Other early candidates named by analysts were Boeing defense unit chief James Albaugh and 3M Co. CEO James McNerny Jr., who is a Boeing board member.

Stonecipher, a former McDonnell-Douglas chief executive, joined Boeing as its president and chief operating officer in 1997 following the merger of the two companies. He retired in 2002, but came back after the resignation of former CEO Phil Condit, who stepped down in the wake of the 767 tanker scandal.

Stonecipher ushered in a new round of ethics training companywide to try to reassure the government and other customers that Boeing behaved appropriately, which included requiring that all employees sign the new code of conduct.

The conduct doesn’t forbid affairs between employees, but it does prohibit activities that could put the company in a bad light, Platt told CNBC. “When you are the CEO of the company, you’re held to a very, very high standard,” he said.

The woman involved was not identified.

The change at the top comes at time when Boeing is weighing whether to continue two Everett-based airplane programs – the 747 and 767.

Stonecipher has said a decision on whether to close the slow-selling 767 would come in “mid-year” – which could be months before the Pentagon is ready to decide whether to restart talks on a new tanker order to replace the original 100-jet deal.

Boeing also is trying to determine customer interest in its proposed 747 Advanced, a stretched version of its venerable jumbo jet that would incorporate advanced 787 technology.

Boeing will decide this year whether to go ahead with the new plane, Stonechiper said last month. If it doesn’t build it, that’s likely the end of the line for the 747, the plane that brought Boeing to Everett in 1966.

Officially, Boeing is saying the change at the top won’t change the timeline for making those decisions.

Bell has worked closely with Stonecipher as they’ve reviewed Boeing’s ongoing programs, Boeing spokesman Myron McCracken said. “He’ll work just like Harry would with Alan (Mulally) and his team,” McCracken said.

Union leader Charles Bofferding said having a new chief executive could change the decision.

“A different CEO might have a different set of criteria,” said Bofferding, the executive director of the Society of Professional Engineering Employees in Aerospace.

As the company ponders those decisions, managers also are months away from contract talks with SPEEA and the International Association of Machinists.

Not everyone was sad to see Stonecipher go.

“The company started going downhill after … Harry Stonecipher came on board,” said Nolan Foss, a former Boeing worker and a member of The Herald’s Reader Network. “I had former Douglas employees tell me the type of leader that Mr. Stonecipher was and what exactly he would do to the Boeing Co., which unfortunately is what he did.”

Stonecipher’s “leadership was ineffective and incompetent,” added Peter Carrig, a recently retired Boeing worker and another Reader Network member.

During the past 15 months, after he’d returned as CEO, Stonecipher’s relationship with labor unions improved. He made a point of reaching out to the Machinists, and helped push forward an employee incentive plan – a first for union workers – during talks last year with an SPEEA bargaining unit in Wichita.

“Our relationship with Harry matured and improved over his tenure,” Bofferding said. “It’s not like he was the Great Satan. His style was more abrupt than (long-time) Boeing people were comfortable with.”

Stonecipher’s departure from Boeing isn’t likely to directly affect contract talks this fall, Bofferding said.

Likewise, Stonecipher’s departure doesn’t change anything for the Machinists union, spokeswoman Connie Kelliher said.

“Whoever’s at the top, it’s not going to change our focus,” she said. “We met with (Stonecipher) several times, and now we’ll meet with the new person.”

Reporter Bryan Corliss: 425-339-3454 or corliss@ heraldnet.com.

Harry Stonecipher

* Dismissed as Boeing CEO on Sunday following an affair with a company executive.

* Has served as a chief executive for Sunstrand Corp., McDonnell Douglas and Boeing. Retired in 2002, only to come back to Boeing in 2003 amid scandal over a refueling tanker.

* He’s 68 years old. Started career as a lab technician for General Motors’ aircraft engine division.

* Married to Joan Stonecipher and has two children and two grandchildren.