Boeing was based in Seattle from its founding in 1916 to 2001. During its heyday, it was known as an engineering-powered company that produced the best and safest aircraft. But many industry observers say the reputation has been lost as Boeing focuses on the end result – and they cite their 2001 decision to move headquarters from Seattle to Chicago as a clear sign of this reckless change.
The company’s announcement on Thursday that it will relocate to Arlington, Virginia, only fuels critics: Moving into the shadow of both the Pentagon and Congress, Boeing appears to be signaling that it has lost the commercial race to Airbus and wants to to be considered above all as a defensive and space executor.
The fact that the announcement comes the same week, Airbus (EADSF) revealed that it is increasing the production of commercial aircraft at its plant in Mobile, Alabama, seems to only lead to this point.
“One company says, ‘We’re going to build a lot of planes.’ Another said, “We will lobby the Pentagon and Congress for defense dollars.” This is a great contrast, “said Richard Abulafia, managing director of AeroDynamic Advisory and a leading aerospace analyst.
Boeing said in a press release that Arlington’s move was intended to bring the company closer to its “customers and stakeholders, as well as its access to world-class engineering and technical talent.”
“The road is not paved”
Abulafia is not surprised that Boeing has decided to move its headquarters to Arlington, but is disappointed. Moving back to the Seattle area would send a strong signal that Boeing is ready to embrace engineering again, he added.
“This would be great for morale and would show an intention to focus on their poorly neglected commercial airline products,” Abulafia said. “Imagine the power if they say, ‘We’re going back to our roots.’ It’s just disappointing. This is the path that has not been taken. “
Boeing’s engineering and quality problems posed major challenges for the company. The crashes of two of the 737 Max planes, which killed all 346 people on board the flights, crippled the plane for 20 months. It was also one of the most costly corporate mistakes in history, costing Boeing more than $ 20 billion. But there were problems, delays and financial charges for almost all his other passenger planes.
Although Max is already in the air, carrying passengers to most markets around the world, this has not solved perhaps its most serious problem: it lags far behind Airbus in sales and deliveries of commercial aircraft, especially among single-lane aircraft.
Convergence with the Pentagon and Congress can help Boeing in its defense and space business, but even in these areas it is struggling to keep up with other defense executives such as Lockheed (LMT) and Raytheon (RTN), as well as new space companies. such as SpaceX.
In addition, moving to suburban DC does not bring many benefits to Boeing, said Ron Epstein, an aerospace analyst at Bank of America. The company already has nearly 100 lobbyists and a lobbying budget of $ 13.4 million a year, according to the Responsive Policy Center’s Open Secrets website, which tracks lobbying. This is the fifth most from each individual company.
“I don’t think anyone would accuse Boeing of not having enough presence in the District of Columbia,” Epstein said. “When I saw the message, it was a little shocking. You have to ask, what does it give them?”
Not only analysts and media critics question Boeing’s culture. Last week, Donal Slattery, CEO of Avolon, one of the world’s leading aircraft leasing companies and a major customer of Boeing, suggested that the company needed a change in culture – and perhaps leadership.
“I think it’s fair to say that Boeing has lost its way,” he told an Airfinance Journal conference in Dublin on Thursday, in comments first reported by Reuters. “Boeing has a legendary history … They build great planes. But culture is said to eat strategy for breakfast, and that’s what happened at Boeing.”
An Avolon spokesman confirmed the comments, although he warned that Slattery was not talking specifically about the Boeing headquarters’ decision.
Representative Peter DeFazio, a Democrat from Oregon who chairs the House Transport Committee, also criticized Boeing’s move.
“Moving their headquarters to Chicago and far from their roots in the Northwest Pacific was a tragic mistake that … enabled Wall Street bean growers over the line engineers who built their once great reputation,” he said in a statement. . “Boeing’s problem is not the lack of access to government, but rather the ongoing production problems and management and board failures that led to the fatal crashes of the 737 Max.
“Boeing should focus on building safe aircraft, not lobbying federal regulators and Congress,” he concluded.
Some of the company’s problems – especially the blow it inflicted on airline finances and the demand for new aircraft – were beyond Boeing’s control. Even Boeing CEO Dave Calhoun admits that most of the problems are self-inflicted.
“I will be the first to admit that these are not events caused by the outside world, but unfortunately wrong steps inside,” he told investors in a conference call in January. However, he insisted that Boeing had taken steps to improve its focus on engineering.
“Our culture is focused on getting as close as possible to our work from the very top of the company through engineering,” he said. “I think we’re getting a lot better. We’re actually getting really good at it.”
Beyond Max and the pandemic, however, Boeing has other problems to solve. Problems with the quality control of the wide-body 787 Dreamliner forced the delivery to be stopped for almost a year. And problems with the certification of its latest wide-body, 777X, have delayed its planned first delivery of the passenger version by two years, at least until 2025. Meanwhile, Boeing’s attempts to fix all its problems with the Max, 777X and Dreamliner took time and attention from its original plan to invent a new long-haul aircraft on a runway to compete with the hot-selling Airbus A321XLR.
“Almost every one of their programs has taken over [financial] charge, and this is in both commercial and defense, “Epstein said.” It is difficult to design and construct aircraft. Nobody is perfect. But it seems that Boeing has more warts on its programs than all their counterparts. Everything goes back to engineering. Does moving to Arlington change the engineering culture in a good way? It’s hard to see. ”
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