COMMENTARY
Boeing Co., for the second time in two decades, is moving its headquarters. This time it’s relocating to Northern Virginia. The question is what lessons Boeing learned from its last move.
The company is a fixture in the Seattle area, which was long its home base and still is its main manufacturing hub. But in 2001, Boeing relocated from its long-time home to Chicago.
Critics say Boeing lost something by making that move – a commitment to engineering excellence, a company that emphasized passenger safety for the aircraft it produced. Instead, according to this line of criticism, the change of headquarters facilitated a shift where Boeing became concerned with quarterly results.
Boeing’s reputation has been sliding. Boeing’s 737 Max was in two fatal crashes that killed 346 people. The 737 Max was grounded globally until Boeing could make fixes that satisfied regulators.
The 737 Max crisis cost CEO Dennis Muilenburg his job. First, he was stripped of the chairman’s title in October 2019. The executive had testified before Congressional committees. Members of those panels were not impressed with Muilenburg’s explanations of how the 737 Max went wrong.
Then, on Dec. 23, 2019, Muilenburg was out altogether. David Calhoun, who had been a Boeing director, was now the president and CEO.
But that wasn’t the only crisis confronting Boeing.
The company’s 787 Dreamliner faces multiple manufacturing problems. Boeing suspended deliveries of the aircraft while it works with the Federal Aviation Administration concerning when such deliveries can resume.
When Boeing reported first-quarter financial results last month, it said it expects $2 billion in “abnormal” costs associated with the 787. Most of that will be incurred by the end of 2023.
The aircraft maker consolidated 787 Dreamliner production from Washington state to South Carolina in 2021 to take advantage of cheaper labor.
Boeing also said last month it is stopping production of the 777X through 2023. The plane is not yet certified. Boeing said it expects the first delivery of the aircraft in 2025. The company said it expects $1.5 billion in abnormal costs related to the 777X, starting with this year’s second quarter.
This is not the Boeing of old.
The company is moving to Arlington, Va., outside of Washington. Boeing has a large defense business. Its new headquarters puts top executives near the U.S. capital. The move may make it easier to lobby the U.S. government.
Rep. Peter DeFazio, Democrat of Oregon, didn’t sound pleased in a statement tweeted by Reuters reporter David Shepardson.
Boeing is “at its best when it focuses on engineering world-class airplanes with the highest standards of safety,” DeFazio said in the statement. Boeing’s move to Chicago “was a tragic mistake,” he said. Moving again to the Washington area “is another step in the wrong direction.”
Calhoun, for his part, said things will improve with the move to Virginia. “The region makes strategic sense for our global headquarters given its proximity to our customers and stakeholders, and its access to world-class engineering and technical talent,” the Boeing CEO said in a statement.
Perhaps. But until Boeing begins to recover, there will be a lot of skepticism. Tension at Boeing is not ending soon.
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