After a brief retirement in St. Petersburg, Harry Stonecipher is back at Boeing, this time as president and chief executive of the troubled aerospace powerhouse.
By KRIS HUNDLEY
Published December 21, 2003
Over the Thanksgiving weekend, Harry Stonecipher hosted nearly three dozen relatives at his newly renovated waterfront home in St. Petersburg's Bayway Isles, strolled the neighborhood with his miniature schnauzer and played some golf at nearby Isla del Sol.
Then Stonecipher's 18-month retirement came to an abrupt end. His fellow directors at Boeing Co. tapped him to return to Chicago as president and chief executive of the troubled aerospace powerhouse.
Today, rather than tooling around St. Pete in his Porsche or BMW convertible, Stonecipher, 67, is jetting across the country, attempting to mollify Pentagon officials in Washington, investors on Wall Street and engineers in Seattle. Last week, Stonecipher scored big with some audiences when he announced that Boeing would move ahead with marketing its first new jetliner in more than a decade, the 7E7, and that it would be assembled in the Puget Sound area.
"I'm encouraged by how he took over, got a unanimous decision from the board and seems very enthusiastic about the future of Boeing's commercial airlines," said Connie Kelliher, spokeswoman for the International Association of Machinists, District Lodge 751 in western Washington state, which has 15,600 Boeing workers as members. "It was great news."
Richard Aboulafia, an aviation analyst and vice president of Teal Group Corp. in Fairfax, Va., was not impressed. He questions Stonecipher's commitment to Boeing's commercial division after a career focused on the defense business and thinks the company had little choice but to go ahead with the new 250-seat jet, dubbed the Dreamliner.
"Harry did what he had to do, nothing more, nothing less," Aboulafia said of the announcement. "That's what made it so uneventful."
Stonecipher, who declined to be interviewed, is a straight-talking Tennessee native who played a key role in making Boeing what it is today. In 1997, he was president and chief executive of McDonnell Douglas Corp. when it merged with Boeing to create the world's largest aerospace company.
Stonecipher served as Boeing's president and chief operating officer for the next four years, leading a campaign to slash costs and jobs that alienated rank-and-file workers. As second-in-command to chief executive Phil Condit, he pushed Boeing's expansion into defense and space projects. At the same time, Boeing's long-dominant commercial aircraft business stagnated, with two bold new aircraft programs announced, then abandoned.
Stonecipher left the executive suite in May 2001 but remained vice chairman of Boeing's board until June 2002. By then, the terrorist attacks of 9/11 had hammered the commercial airline business, reducing demand for new planes. Meanwhile, Airbus, Boeing's aggressive European rival, was gaining market share with its newer models (and, American critics said, with its extensive government subsidies). This year for the first time, Airbus will surpass Boeing in commercial aircraft production.
Boeing's diversification into the defense business also ran into problems. In June, the company admitted employees had used proprietary documents from competitor Lockheed Martin to win a rocket-building contract. The $1-billion contract was yanked by the Air Force, and Boeing was banned indefinitely from bidding on future launches.
Then Boeing's once-assured deal to lease, rather than sell, Boeing 767 tanker planes to the Air Force cratered. Politicians criticized the contract for its generous terms and insider dealings. The $17-billion contract, put on hold by the Pentagon, has sparked congressional and criminal investigations and resulted in the firing of two Boeing executives, including its chief financial officer.
Condit's sudden resignation Dec. 1, and Stonecipher's return, were seen as desperate measures by a board anxious to put the tanker scandal behind the company and move forward.
But some have questioned whether Stonecipher has the skills, savvy and foresight to put Boeing back on top. An engineer whose impatience has not lessened with age, Stonecipher once conceded he was more aggressive than Condit, the man he has since replaced.
"I'm more likely to shoot you and then ask your name," said Stonecipher, a strapping 6-footer with a deeply creased face and solid build. "Phil is likely to ask you your name and then shoot you."
A columnist in Fortune magazine recently described the feisty, opinionated Stonecipher as a "pugnacious cross between Donald Rumsfeld and . . . actually Donald Rumsfeld."
A Boeing executive who has worked with Stonecipher had a more diplomatic take on his new boss' temperament.
"When Harry knows that you know what your issues are and you're working them, he's very supportive," Jeff Turner, vice president and general manager of Boeing's Wichita division, said in a 2002 company profile of Stonecipher. "But if he gets the feeling you don't know what your issues are, then he's your worst nightmare."
No one doubts that Stonecipher's hands are clean in the tanker and military rocket scandals and that his integrity is intact. Nor do they doubt that, with enough time and effort, Boeing will regain favor with the decisionmakers at the Defense Department. He already has had meetings with top Air Force officials, as well as Deputy Defense Secretary Paul Wolfowitz.
"He'll have to grovel for several months before they let him off the hook, or else the Pentagon will be accused of giving in too easily," said Paul Nisbet, principal with JSA Research Inc. of Newport, R.I. "But Harry is very well-suited for the job."
On the military side of the business, Stonecipher's reputation for candor and keeping a keen eye on the bottom line is expected to solidify Boeing's position as the nation's No. 2 defense contractor.
But Stonecipher's history is less comforting to employees of Boeing's commercial aircraft operations, which are concentrated around Seattle, the company's former headquarters city.
Aboulafia of Teal Group said these Boeing veterans "regard their new CEO as if he was sporting a hockey mask and chain saw. And not without reason."
At McDonnell Douglas, Stonecipher had all but ended its commercial business, Aboulafia said, to concentrate on a single customer: the military.
"He quadrupled McDonnell Douglas' share price while he was there, but the company meanwhile was going one direction: out of business," Aboulafia said. "Harry has a history of doing well on the equity side, but when it comes to investing in the future, the jury is still out."
Though Boeing's commercial aircraft business is profitable and accounted for 53 percent of the company's 2002 revenues of $54-billion, its workers remember Stonecipher as the executive who came to Boeing in 1997 with a single-minded focus on cutting operating costs and boosting profits in the division.
Within months of the merger, the company cut 12,000 jobs. Stonecipher also took direct aim at Boeing's paternalistic culture. The company, he said without apologies, is a team, not a family. The difference, he explained in a 1999 Fortune magazine interview, is that "in a family culture, you never throw out a bad performer."
Charles Bofferding, executive director of the Society of Professional Engineering Employees in Aerospace in Seattle, which represents 20,000 Boeing workers, said his members desperately want to work with the new regime. He was encouraged that during last week's 7E7 announcement, Stonecipher emphasized the people and the plane, rather than shareholder value.
"We used to count how many times they said "shareholder value,' " Bofferding said of past meetings with Boeing executives. "That should be an outcome, not an obsession. So they seem to be better balanced. And I shook hands with Harry and (didn't put him) in a headlock, so that's a good thing."
But the union leader said that after seeing 33,000 of their colleagues laid off since 9/11, his members are going to need continued reassurance from the new boss.
"They trust Harry to be Harry, but they're not exactly sure what Harry is in his new role," Bofferding said. "And it's hard for people to move forward if they feel like they're getting stabbed in the back."
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Stonecipher might be as surprised as anyone to find himself at the head of America's largest exporter, with more than 150,00 employees in 38 states. The grandson of a coal mine superintendent in Scott County, Tenn., he told a Boeing in-house magazine in 2002 that he never had any great career plans, "just kind of "go with the flow.' "
"And I enjoyed every job I ever had, so that was not a problem," he said. "Didn't have any great aspirations at all."
Stonecipher's grandfather told him early on that he'd never let him work in the mines. And his grandmother, a teacher, put aside enough money for Harry to go to college at Tennessee Technological University. After marrying at age 18, Stonecipher briefly quit college, then went back and got a degree in physics. Years later, a Tennessee Tech professor would recall Stonecipher as one of his four most memorable students.
"What all these students had in common," professor Fred Culp wrote, "was a genuine love of learning, and (they) found a special challenge in learning that which did not come easily."
Straight out of college, Stonecipher landed a job at General Electric. He stayed for 27 years, working his way up to head of its aircraft engine division. In 1987, he joined Sundstrand Corp., which was then mired in an accounting scandal and had been hit with a multimillion-dollar fine by the Pentagon. Stonecipher, who became Sundstrand's president and chief executive in 1989, repaired the damage, then moved on in 1994 to McDonnell Douglas.
After overseeing the merger with Boeing, working - and reportedly often clashing - with Condit, Stonecipher retired from Boeing's executive suite in May 2001 and from his position as vice chairman in June 2002. He remained on Boeing's board, as well as on the board of Paccar Inc., a truck manufacturer in Bellevue, Wash.
Stonecipher and Joan, his wife of nearly 50 years, chose St. Petersburg for retirement at least in part because a longtime friend, Barbara Smuland, had settled in the area. Smuland and her late husband, Robert, had both worked with Stonecipher at General Electric. Smuland initially worried that the hard-charging executive, used to rising by 5 a.m. and barreling through heavily scheduled days, would be bored in retirement (and drive his wife nuts).
"But he really seemed happy," Smuland said. "He's quite a reader - he reads intently and rapidly and likes a lot of different types of books. They love the art world, the symphony and the opera. They've wanted to get involved (in those activities) down here, but they just haven't had time."
The Stoneciphers have two children and two grandchildren, none of whom live in the area. Smuland said Stonecipher's dog, named Sam Francis after the abstract artist, is "one of the loves of his life."
During his abbreviated retirement, Stonecipher found time to play three or four rounds of golf each week at the Isla del Sol course. Club pro Fred Curtis said Stonecipher has a 16-handicap.
"He probably improved six to eight strokes a round," said Curtis, who described Stonecipher as cordial but appreciative of his privacy. "I knew his association with Boeing, but I also knew he liked to be left alone."
While Stonecipher was golfing, or tending to his board duties, his wife was busy refurbishing the couple's home in Bayway Isles. They paid $1.6-million for the property in late 2000, then had it gutted and rebuilt at a cost of $2-million.
Contractors installed a special beam in the entryway to support a massive cobalt blue chandelier created by famed Seattle glassblower Dale Chihuly. Joan Stonecipher showed her gratitude by throwing a big party for the workers after the house was finished in the fall.
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Smuland, the couple's friend, said the Stoneciphers were so certain they were finally settled, most of the furniture from their lakeside Chicago condo had been shipped to St. Petersburg in August.
Then Boeing got in political hot water as the tanker deal imploded. The board called, and Stonecipher was back on a plane to Chicago.
"He's a person who really enjoys a challenge," Smuland said. "The more challenging it is, the more he gets in there and does it."
Besides being one of the creators of modern-day Boeing, Stonecipher has a considerable financial stake in the well-being of the company. He's the second largest individual shareholder, with 1.74-million shares, worth more than $72-million at Friday's closing price.
Smuland expects Stonecipher's wife to split her time between Chicago and St. Petersburg and for the couple to return to the area permanently when this stint in Boeing's executive office is over. Stonecipher was adamant after his return that he was not a short-timer despite his age, but few believe him.
"It's very difficult to say how long he'll be there because even if he weren't going to stay long, he couldn't say," said Aboulafia, the aviation analyst. "But at 67, golfing in Florida has its charms."
- Information from Times researcher Kitty Bennett and from Times wires was used in this report. Kris Hundley can be reached at hundley@sptimes.com or 727 892-2996.
