The same week Boeing returned some workers to its Puget Sound facilities—mainly for military programs—it has announced a number of management changes that consolidate programs under CFO Greg Smith. The changes, Boeing said, are aimed at “streamlining senior leadership roles and responsibilities; and preparing now for the post-pandemic industry footprint.” Boeing has seen its deliveries drop dramatically over the last year, and industry experts foresee a long, rocky road to recovery in a post-pandemic world market.
Boeing says that a “newly formed group—Enterprise Operations, Finance & Strategy—will consolidate several important areas, bringing together teams responsible for manufacturing, supply chain and operations, finance, enterprise performance, strategy, enterprise services and administration.” In addition, Corporate Audit, which still reports to the Boeing board, will be rolled into this group. Greg Smith has been the executive VP of business development and has been responsible for a wide range of Boeing’s manufacturing. Other changes in the re-org include combining Boeing’s legal and regulatory units into one. “This approach will enhance Boeing’s already strong compliance and internal governance program through focused accountability for, and a more integrated approach to, Boeing compliance responsibilities,” the company said. “It also will help the company proactively address new legal and compliance obligations arising from an increasingly complex global regulatory environment.”
Earlier this week, a Chinese leasing firm canceled orders for 29 737 MAX aircraft, which takes its order down to 70 units; the firm also altered the contract to defer delivery of some MAXes to as late as 2026. Late last week, U.S. lessor GE Capital canceled orders for 69 MAX airliners. It’s believed that Boeing has already lost nearly 250 orders for the jet. Still the most in-demand model in Boeing’s lineup, the 737 MAX retains more than 4,700 orders, though it’s likely it will be delivering much later than intended. More than 13 months after it was grounded, the path for the MAX’s return to service is as murky as ever.
“Greg Smith has been the executive VP of business development and has been responsible for a wide range of Boeing’s manufacturing.”
Greg Smith might be a multi-talented genius, but if your CFO is in charge of manufacturing, you’ve got fundamental conceptual problems.
Couldn’t have said it better. Boeing has been run by bean counters since the merger with MD in ’97 and the move to Chicago in ’01 – and the proof is in the pudding – the main focus now is not on building great aircraft, but vacuuming up as much revenue as possible.
Enough said there: ““This approach will enhance Boeing’s already strong compliance and internal governance program through focused accountability for, and a more integrated approach to, Boeing compliance responsibilities,” the company said. “It also will help the company proactively address new legal and compliance obligations arising from an increasingly complex global regulatory environment.””
“Greg Smith might be a multi-talented genius, but if your CFO is in charge of manufacturing, you’ve got fundamental conceptual problems.”
To paraphrase Oscar Wilde, ‘Beware the person who knows the cost of everything and the value of nothing.’
Absolutely agree. Is this effecting worthwhile change or simply rearranging the deck chairs on the Titanic? Maybe too big to fail is, in reality, too big to effectively manage.
The market has changed in a big way thanks to the virus and the change has yet to be realized. It’s the market that will force change on Boeing. I don’t see a whole lot of people all that anxious ready to crawl into a skinny tube with hundreds of other people literally inches from each other for hours at a time with all their Care Bears, therapy sheep etc. People have have been traumatized, or terrorized depending how you want to look at it and have had a whole lot of time to think about life in general. Priorities have changed, different opportunities have presented themselves. There is a new world wide focus. Some of these changes will be short term and soon forgotten. Others will remain for a lifetime and extend into future generations.
Well said…”The market has changed in a big way thanks to the virus and the change has yet to be realized. It’s the market that will force change on Boeing….”
The market has changed, but no one really understands what it will continue to evolve into since the pandemic is far from over. For the moment, commercial aviation is at almost a virtual standstill. Boeing has a backlog of orders, with a ramp full of undelivered new airplanes, and a global parking lot of barely used 737 MAX’s.
Boeing is seeing a small but undoubtedly growing erosion of the new airplane production backlog as airlines re-access their present economic position. How many airlines want a new 737 MAX today or even within the next 12 months? How many airlines have the cash flow to pay for those airplanes already built but not yet delivered? I would surmise that a lot of those 400+ Max’s already built but yet to be delivered will be sitting longer as homes for those airplanes shrivel up. MCAS issues are far from over. Covid-19 has displaced that process.
As a result, manufacturing and/or production issues, quality control problems, regulatory hurdles, and employee safety are all on the back burner compared to the basic, raw, economics of company survival for the next year. Since Boeing has evolved into a company primarily led by the accountants, those execs are being reshuffled, bureaucracy downsized, with financial power more centralized and concentrated to a comparatively select few.
Is Boeing the 21st century Titanic? Covid-19 seems to be the iceberg that is ripping large holes in the hulls of many companies “too big to fail” or considered “unsinkable”. I personally believe “Boeing Dave” will be soon making his public appearances, including carefully orchestrated photo ops released as behind the scenes negotiations with government officials are leaked to the news media. This will set new precedence’s and condition the public of those new precedence’s whose present focus is also economics survival. Lots of economic deals are and will be made that never would have been publicly considered prior to Covid-19. Most of those, in my opinion, will be made behind closed doors. The deals will be done. And then the tax-payer will be notified of the bill to be paid.
In my mind, Boeing is setting the table showing the company direction, priorities, intentions, and management placement to facilitate those goals. Is it the proverbial re-arrangement of the deck chairs on a company “too big to fail” or “unsinkable”? Time will tell.