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Boeing Company
The Once and Future King...

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By kingmaddmaxx
November 28, 2003

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You almost have to believe that this is part of a larger problem with Boeing's culture. If Boeing didn't appear the pillar of ethics back in July, this certainly hasn't helped. Perhaps the real surprise is that none of this has done much damage to Boeing's stock -- Boeing closed up three cents to $38.89 yesterday.
The above snippet appeared on the Fool yesterday. The next snippet appeared in The Washington Post:
And with its emphasis on engineering excellence, long-term investment and solid management, the Boeing culture stood in contrast to the quick-buck values of Wall Street.

Now, however, this great company has drifted off course -- strategically, operationally, financially, ethically.
These are enough to begin my blood boiling as a Boeing employee. It suggests that there is something festering under the skin of Boeing, that the culture is to blame for the latest ethics lapses at the top. The loss of seven major satellite launches and being barred from future contracts for one year was the first blow earlier this year. All due to a manager luring an employee and his proprietary documents into coming to Boeing to work. This latest debacle shows an executive, who was likely next in line for CEO, using exceptionally bad judgment in luring an Air Force acquisition officer to work for Boeing all while negotiating a huge military contract. He then proceeded to attempt and cover this problem up. The management involved in both of these "deals" just so happens to be ex McDonnell-Douglas employees who were brought in during the merger. This merger was supposed to open up defense sectors and the lucrative space market even more to Boeing, now it has only served to deepen our problems.

While it would be easy to blame these latest ethics snafus on the corporate culture brought over by the M-D management into Boeing it goes much deeper than that. It's actually a corporate identity crisis. Pre-merger Boeing was an engineering culture, turning out the best commercial aircraft in the world, while driving our domestic competitors out of the market all together. McDonnell Douglas was struggling to survive in the mid-90s as it had turned its back on engineering new products and had focused its energy on cost-cutting initiatives, nut producing a new jet in years commercially. They had truly become a management culture, which was focused not on the product but the profit, which eventually killed that company. The amazing thing is that when Boeing purchased this ailing company, at an extraordinary price, it kept their management intact, and indeed brought their management into the executive fold. They took a company on the brink of collapse and put its management in charge of Boeing. It's easy to see, as 75 percent of the top executives are pre-merger M-D management. In what industry does it make sense to purchase a sinking ship and then put it's skipper at the wheel of your own?

Within Boeing the engineering culture has been abused and neglected, along with the engineers, to the point that it is hard to do the right thing without management stepping in. Canceling three major plane programs in a row and several smaller derivatives has given a once technologically advanced company a black eye in the view of its customers. No program was allowed to go through without meeting ridiculous business case hurdles in many instances, and those markets were ceded to Airbus. The engineering ranks have been slashed since the aviation down turn and instead of aggressive product development there is a fairy weak movement to begin the engineering on the 7E7. In a down time when resources should be rallied and development begun for a plane to lead the up-turn, we have instead seen management devote two years of engineering wasted on a fantasy plane, Sonic Cruiser, and the misdeeds of management come back to haunt us.

Make no mistake; Boeing still has cutting edge technology and a strong and dedicated manufacturing and engineering work force, it just seems as if someone is asleep at the wheel. Instead of devoting time and effort to new products there have been major efforts devoted to cost cutting on older programs, to fatten the bottom line. A highly skilled workforce has been slaughtered and the youngest minds within the company have been let go, raising the median age of employees into the mid 40s. The engineering and manufacturing workforce are as intense as ever, and there have been no large reports of ethics violations in their ranks. Maybe it is finally time to begin shaking the top of the tree to see what falls out, rather than destroy its roots? Management has clearly grown comfortable and complacent; it is still the only part of the company where one can still expect to have their job until retirement. An ouster of our current CEO, as both an employee and a stockholder, would be my first suggestion as leading from the top down. Bring in someone fresh and ready to re-commit themselves to the product AND the bottom line, it is not one or the other. The company should take action now, commit itself to the 7E7 and with it Boeing's futures, less one other aerospace giant will join the ranks of the ghosts of past U.S. manufacturing giants.


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