Admirers describe Jim McNerney as a numbers guy whose relentless push for efficiency and lower costs has consistently delivered stellar profits in his decade as Boeing chairman and chief executive.
Yet McNerney has alienated engineers and machinists — and even some executives — in the Pacific Northwest with what they see as his coldblooded approach to moving work and forcing union concessions.
All agree on this: He is an iron-willed strategist who redrew the map of Boeing’s manufacturing and engineering sites, gaining tremendous leverage over the company’s pugnacious labor unions.
Just turned 65 with retirement looming by 2016 or sooner, McNerney has polarized opinions.
“McNerney ought to get a gold star,” said Gordon Bethune, a former Boeing vice president who ran the Renton 737 plant and later led Continental Airlines.
“There’s nothing sacrosanct about building airplanes in Washington,” Bethune added, saying McNerney is “making Boeing competitive internationally.”
But Boeing’s local workforce won’t be awarding him any gold stars, said Leon Grunberg, a University of Puget Sound professor of sociology who surveyed more than 3,000 company engineers and machinists for an upcoming book.
“A lot of employees feel top management doesn’t value them, treats them as expendable,” Grunberg said.
McNerney has created an atmosphere of “lowered trust, anger and disgruntlement,” he said, and “pretty much put the final nail in the coffin of the old heritage Boeing.”
John Feren, a former senior Boeing executive who is now executive vice president at aircraft lessor Aviation Capital Group, said McNerney is a different kind of Boeing leader.
“Some people grew up in Boeing and just loved the smell of jet fuel and were totally enthralled with aviation,” said Feren, a friend of McNerney’s.
“Jim came from working for Jack Welch. He had GE training.”
Feren said McNerney’s GE-style focus on financial performance has ensured that Boeing has the money to thrive against bitter competition from Airbus.
But some who’ve worked with McNerney found the Harvard MBA’s approach off-putting.
“The sense I always got from him in meetings is that it could have been any business,” said a former Boeing executive, who spoke on the condition of anonymity.
“If we’d been making cameras or autos or doing bond trading, it would have all been the same to him,” the executive said.
“The net effect is a distancing from the people who come to work there every day, who bring their hearts and souls to it and want to make it more than a job.”
Another former executive who also spoke on the condition of anonymity said McNerney in person can come across as “a guy’s guy” who is “fun to be around,” making easy small talk about sports.
Yet he maintains a distance.
“I don’t think anyone gets really close to him. He keeps his own counsel,” the executive said. “He doesn’t let emotions get in the way of him making decisions he thinks are best for the corporation.”
“It’s all about the business,” the executive added. “He’s pretty dispassionate.”
McNerney rarely makes himself available for interviews and declined repeated requests by The Seattle Times.
‘HE RIGHTED THE SHIP’
McNerney took over Boeing in July 2005 at a low point in its reputation after two major military-procurement scandals.
Six months later, at the company’s annual leadership retreat in Orlando, Fla., McNerney orchestrated a “scared-straight” speech by Boeing’s top lawyer, who laid out in blunt terms the potential consequences of any further breaches of integrity.
That worked, said Feren.
“People were asking lots of questions about the character and the moral compass of Boeing,” he said. “He righted the ship.”
For the 260 or so top executives at the retreat, McNerney also clearly laid out his plan to steer Boeing’s operations according to strict financial metrics.
The ensuing results have been mixed.
From 2007 through 2013, McNerney’s term as chief executive was dominated by the disastrous and expensive troubles of the 787 Dreamliner program — stretching from the initial delivery of the jet more than three years late to the grounding of the Dreamliners worldwide for three months last year due to overheated batteries.
Boeing acquired the South Carolina 787 parts plants not out of any grand McNerney vision, but because its outsourcing partners had failed.
Yet while other executive heads rolled over the 787 debacle, McNerney survived unscathed.
Toby Bright, former head of jet sales at Boeing and now an airplane-leasing executive, said: “All of us scratched our heads during the 787 delays over how he came out of that with no scars.”
With the move to build planes in South Carolina, the transfer of thousands of engineering jobs out of the Northwest and management’s gun-to-the-head negotiating tactics with its unions, it’s no surprise that McNerney is extremely unpopular among Puget Sound-area employees.
“The workforce busted a gut to push out the 737 and 777 at record rates,” said Issaquah, Wash.-based aerospace analyst Scott Hamilton of Leeham.net. “Yet when it came to new contracts, McNerney wanted to do nothing but crush them.”
McNerney’s public comment in July that employees “will still be cowering” before him — for which he later apologized, calling it an unsuccessful joke — merely reinforced his unpopularity.
“That cowering remark was the first thing he’s ever done to be helpful to the Machinists. He united us,” said Larry Brown, chief lobbyist in Olympia for the International Association of Machinists (IAM).
In January, the Machinists were forced to accept the freezing of their pensions to secure assembly of the future 777X jet in Washington state.
To the local workers, Boeing management’s ultimatum felt like they were being “threatened and put up against the wall,” said Grunberg.
LOST JOBS
Jon Holden, the new IAM district president, said the outcome of the 777X negotiations “could have been a win/win.” Instead, “morale is at an all-time low, and not just among IAM members.”
Boeing’s white-collar union, the Society of Professional Engineering Employees in Aerospace, also has suffered repeated blows from a series of work transfers that will cut more than 6,000 local engineering jobs.
John Tracy, Boeing’s Chicago-based chief technology officer and senior vice president in charge of its 55,000 engineers, in an interview defended the transfers as necessary to tap expertise around the company and insisted that McNerney respects engineering.
Still, the cold way those cuts were implemented sent a very different message to local engineers.
Many longtime company workers like to think that the old Boeing — before the 1997 merger with McDonnell Douglas — would have handled things another way.
Yet Frank Shrontz, the last “heritage Boeing” chief executive before the merger, praised McNerney’s backbone.
“When you take work out of a city that had it in the past and has every expectation of keeping it, you’ll make some enemies,” he said. “But in the circumstances he was faced with, I think (McNerney)’s made some good decisions.”
“I would not have done it differently,” Shrontz added.
IN THE LONG TERM
Some industry analysts disagree with Shrontz, believing that McNerney’s confrontational approach — which he uses with suppliers as well as employees — may damage Boeing in the long term.
Despite having reached the company’s customary retirement age, analysts say, McNerney has privately expressed his wish to remain at the helm until Boeing’s 100th anniversary in 2016.
With the decade-long boom in jet production expected to continue until then, McNerney is flying high.
The accounting costs of the 787 have been pushed way out into the future and, seven years on, the jet appears finally to be over its problems.
Airlines are happy with the 787; South Carolina is rolling out jets; Boeing’s unions are seriously weakened; overall airplane production and cash generation are at all-time highs.
Wolfgang Demisch, a veteran Wall Street aerospace analyst who is retired, said Boeing under McNerney has become “a financial enterprise first and an aviation enterprise second.” Yet, Demisch said, whoever replaces McNerney at Boeing — Dennis Muilenburg, the chief operating officer, is considered the anointed one — could face a much different aviation market than today’s.
“The cycle has been so very good, I worry that it could be very bad,” Demisch said.
