The Elusive McNerney:some historical perspective

The Wall Street Journal has a long profile on the elusive Jim McNerney, CEO of The Boeing Co., and his role in the 787 crisis. (Subscription required.) The story is detailed. For those of us who follow Boeing like the US follows the Kremlin, McNerney’s elusiveness is nothing new. When McNerney was named CEO, we researched him and found that (according to reports at the time) one reason he got passed over by Jack Welch as CEO of GE was that McNerney didn’t like to do press interviews and he didn’t like to schmooze investors. According to profiles when he was CEO of 3M, he didn’t like to do earnings calls, either. This is pretty clear as we listen to Boeing earnings calls, on which he is scripted, halting, clearly uncomfortable and gives the impress he can’t wait to get off. Reports and our own impressions suggest that if he had his druthers, he’d just stick around the office and let others do the public stuff.

So it doesn’t surprise us that McNerney has been ghostly throughout the 787 crisis. Boeing said it’s restricted as to what it can say during the investigation, but we checked with others and are told Boeing can talk about whatever was said about the airplane prior to the investigation and that restrictions come into play about what happened after the investigation started.

We know from our own conversations that Boeing is worried about the brand of the company and the airplane. The launch of the 787 information update site and the long WSJ article make it clear that Boeing is now trying to protect the brand.

As for McNerney’s ghostly presence to investors and media, aside from his natural tendency to avoid them, we believe Boeing’s legal team is taking a conservative approach to what it can and can’t say. We conclude this not based on anything we know in connection to the 787 crisis, but based on what we know Legal’s approach is to pretty much any public statement on sensitive issues. Media often complains about the timeliness and brevity of responses from Corporate Communications (and general uselessness in many cases). We know that in some of these instances, Legal had to vet the responses and they’ve been watered down into meaningless pap. Based on this long history, we think Legal has a lot to say about what the company can and can’t say–or will or won’t say. We know Corp Com would like to do more.

42 comments on “The Elusive McNerney:some historical perspective

  1. Well, Boeing should be worried about brand identification. Sooner, rather than later to public and media will begin calling all Boeing products the “B-787″.

    I was just reading this story this morning on FoxNews.com

    http://www.foxnews.com/world/2013/02/22/japan-identifies-spate-boeing-787-jet-problems-but-still-investigating/

    All it is about is the rehash of prior B-787 events, like cracked windows, fuel leaks, etc. These are things we in the industry already knew about, but now it is “news”.

  2. Boeing is clearly in major, off the record, PR mode. On the one hand their PR is very aggressive: let’s get the planes flying again. As long as those flames are kept more or less in the box we will be OK. In any case the fire will have burnt out well before we get to our ETOPS diversion in 5 hours time. But this contradicts a let’s play it safe, make sure things are done properly because we have our reputations to protect, type of PR.

    Every time an aggressive approach meets the precautionary approach, Boeing has always taken the aggressive option. This is bound to affect the way people view the company.

  3. Crank up the Flapdoodle Crew and the BARF teams (Battery Airworthiness Readiness Force).

    Oh and lets not forget to blame it all on Al Mulally.

    And on the Bored an old standby Case 94- C-633-H James R Millsap et al vs McDonnell Douglas Corporation 5 Sept 2001 about ripping off employees/retirees in Oaklahoma

    231. The fact finder’s disbelief of the reasons put forward by a defendant “may be
    quite persuasive” of intentional discrimination “particularly if disbelief is accompanied
    by a suspicion of mendacity.”[cite ] {cite] – . Here, Defendant’s mendacity is
    manifest Specifically, as identified in the Findings of Fact, MDC’S
    mendacity is established by the untruthful and misleading answers
    provided to Plaintiffs under oath in its discovery responses, its
    depositions and in its trial testimony.
    232. The record further reflects a corporate culture of mendacity, as
    evidenced by the testimony of plant manager Mr. Bittle and the disregard
    for the truth evidenced by the testimony of CEO John McDonnell. As the
    Court observed during the trial:
    We have sat here for two weeks and listened to testimony that I
    think at some places is almost knee buckling in the way in which it
    evidences an abject disregard for people’s representations, people’s
    representations to their employees, their teammates, people’s
    representations to the public, people’s representations to public
    officials. We have other kinds of testimony: Mr. Bittle himself indicating
    he believed himself to be an unwitting instrument of fraud on the
    employees and the public; I think that the notion of engaging in
    negotiations that are known to not to mean to go to anything; and the
    ultimate question of closing a plant, recognizing the broad latitude the
    company has under the law, it’s entirely appropriate to review the numbers as long
    as improper numbers are not considered; but to hear testimony that there was never
    even consideration as to whether there were commitments, express or implied, to
    employees, to the public, to public officials.

    Old habits die hard !!

      • MEA CULPA – I plagerized without attribution

        I copied it from another site ( on the BA yahoo message board) but did not include the name since it seemed to be from someone who probably knows a bit too much – and apparently does not know of this site.

        MEA CULPA

  4. This doesn’t help either from Bloomberg

    Japan Says Object, Stuck Valve Cause of Boeing 787 Leak
    By Chris Cooper & Kiyotaka Matsuda – Feb 21, 2013 10:44 PM PT

    Japan Airlines Co. (9201)’s fuel leak on a Boeing Co. (BA) 787 plane at Boston last month was probably caused by a foreign object that caused a valve to temporarily open.

    Either a valve to prevent fuel flowing backward in the left tank, or a valve between the main and left tanks was temporarily open, causing the overflow, Japan’s transport ministry said in a statement today.
    Enlarge image Japan’s Transport Minister Akihiro Ohta

    Akihiro Ohta, Japan’s minister of land, infrastructure, transport and tourism. Photographer: Tomohiro Ohsumi/Bloomberg

    The ministry said checks should be made on the central pump to prevent a similar problem happening again, according to the statement. About 40 gallons of fuel spilled onto the ground from a Japan Airlines 787 when it was taxiing for takeoff at Logan International Airport on Jan. 8.

    “We estimate that an object about 1.5 millimeters (0.06 inch) in size was in the tank,” Tatsuyuki Shimazu, a chief airworthiness engineer at Japan’s Civil Aviation Bureau, told reporters in Tokyo today. “We haven’t been able to determine what that was.”

    A separate fuel leak on a Japan Airlines 787 at Tokyo’s Narita airport the following week was caused after a microswitch was painted with an insulating coating that wasn’t needed and a hair from a brush had stuck to it, causing it to lock, Shimazu said.

    To avoid a repeat incident Japan has agreed with Boeing on measures to prevent the U.K.-made switch from being incorrectly painted again, and to improve the system that alerts the cabin when the valve is open, according to the government.

    All Nippon Airways Co. (9202), the biggest operator of 787 jets, Japan Airlines, and six other operators have canceled thousands of planned Dreamliner flights since two separate lithium-ion battery incidents last month, which led to a fire on a parked Japan Airlines plane and the emergency landing of an ANA plane.

    “Our main priority is to solve the problems and then return to service,” Taro Namba, a spokesman for Japan Airlines, said by telephone from Tokyo today.

  5. This program is a complete mess. The batteries are just a symptom of a more general issues with the overall electrical system.

    Note the WSJ article comment that Boeing first assumed the fire in Boston was due to the electrical panels (which caused two flight diversions in December and a serious inflight fire over Laredo in 2010). Will the “battery fix” address that problem? How long after these planes go back into service will we see another emergency landing like UAL 1146 on 12/4/13, which had nothing to do with batteries?

    Paint problems, fuel system problems, landing gear problems, wind screen problems – this is what you get when you put an aircraft into production before type cert and even final design, ending up with dozens of unique, under-documented, effectively custom kits.

    Note also in the WSJ article McNerney’s Feb 5 visit to Everett. Was there really a 3 week gap between the ANA fire and his first face-to-face with the engineering team? Meanwhile he apparently made several trips to DC for a “business leader” black tie dinner and meetings with bureaucrats.

    Boeing management is focused on lobbying and PR (and, eventually, bail-out). The upper echelons of management have been almost completely purged of engineers. Is there a more sad, absurd, yet emblematic image than the “Harvard MBA,” 1700 miles removed from the actual problem solvers, pretending to review technical drawings as a puff piece reporter enters his office?

    • …Paint problems, fuel system problems, landing gear problems, wind screen problems – this is what you get when you put an aircraft into production before type cert and even final design, ending up with dozens of unique, under-documented, effectively custom kits…

      Well no- not really.
      Since ww2 , virtually all large commercial aircraft have started production and have had 3 to 5 or more planes in the fab and assembly positions by the time the first one flies.

      The concept of build ONE flyable plus one or two structural test versions – test it- fly it- finalize drawings before building or committing to production works for things like cars and other items- but is cost prohibitive for commercial aircraft. And is still the way most military planes are done – with way too much cost and time results.

      FWIW – over 20 years ago – I spent a few hours trying to explain the build-test-fly -produce concept to a few lawyers as part of a patent battle involving a unique tool I had made. The argument was that there was a time limit from first PRODUCTION use re patent bars.

      They simply refused to believe that the first 767 built was other than a prototype, and the use of my tool on that plane and about 2 others did NOT trigger the time BAR.

      Problem was the first 767 was eventually sold to as I recall United, and by the time it first flew, there were about 6 or 7 planes in the ” final assembly ” positons in everett.

      The gamble is/was of course that there are NO major redos needed for tooling, and major system revisions.

      The 787 is proof that MBA types may be good at sales and production of post it notes ande sticky tape- but it takes engineers with experience and a motivated work crew and experienced management early on.

      Now RAy Conner is such a person, having gone from shop floor to the top but he had minimal input during the early phases, and got handed the bag of poo way to late in the game AFTER several earlier heads rolled cuz they didn’t meet the PR driven schedules at the cheapest way possible.

    • The BA fix now comes to light ( pun intended ) with a SS box and exhaust tubes

      This fix sounds like a rube goldberg machine( apologies to rube, even his machines worked while accomplishing nothing )

      In normal use during charging, batteries get warm
      In normal use during providing power batteries get warm

      So we make an virtually airtight box – with some sort of power vents to the outside and insulate the hell out of it – and ditto between cells

      Since there seems to be no discussion of cooling- and we have a open (?) exhaust system ?? what happens to the normal heat generated in use ?

      What happens when you put your pizza in an insulated box for delivery ?

      IT STAYS HOT !

      Better yet- lets say this mess is approved – I’m sure the power point rangers have some purrty pic-tures

      well the plane lands . And the battery gets used for braking and running lights and fuel doors and . . .

      Its still hot from the beginning of the trip for starting engines- and the FAST recharge.

      Now it gets a bit hotter !

      What next ?

      Train the ground crews – STAND CLEAR OF BATTERY EXHAUST TUBES

      So 10 minutes later- the automatic ejection system activates as the temperature reaches 500 degrees F and thermal runaway starts.

      Ejecting toxic gas and maybe sparks and portions of molten lithium all over the place – as on the fueling truck !

      Ladies and gentleman- If you look out the windows on gate 66, you will be treated to the latest fireworks display
      OR

      Move on move on – nothing more to see here !!

      • Hmmmm- interesting article re boeing battery game

        http://news.yahoo.com/boeing-787-battery-fix-proposal-faa-not-temporary-194512893–finance.html

        And especially the last part

        Another source, who is also familiar with the 787 investigation but not authorized to speak publicly, said a key challenge for Boeing would be to redesign the battery box so that it could truly contain a fire if one occurred.

        Despite Boeing’s statements about containment being the plan for a battery issue from the start, the blue box that held the current lithium-ion battery was clearly “not designed to contain a fire,” said the source.

        Another person familiar with the engineering work said the new box would be made of stainless steel nearly half an inch thick. It would be capable of containing an explosion, and would have a tube to vent smoke and flame outside the jet.

        However, the source said engineers have raised questions about the safety of venting flames outside the plane, especially if it is on the ground and being fueled. The effect could be something like a flamethrower, this person said.

        +++
        NO it wasn’t me !! Or I

        Great minds think alike – but it appears the engineer who raised the questions got the same answers

        “The open door policy swings both ways ” Which team are You on ???

    • So Boeing will now provide a free matching BARF box to go with the BARF bag-
      Thats almost as good as the Vomit Comet of NASA fame

      maybe we can call it the BARF liner ??

  6. “One reason he got passed over by Jack Welch as CEO of GE was that McNerney didn’t like to do press interviews and he didn’t like to schmooze investors.”

    I always asked myself the question “why did Boeing hire someone who was turned down by GE?”

    Another question I often ask myself is “in what position would Boeing be today if Allan Mullally had been promoted CEO?”

    - Would Mullally have stopped the move to Chicago?
    - Would he have prevented the aggravation of the Dreamliner crisis?
    - Was he one of the instigators of the current crisis?
    - Would he have authorized the 737 NSA?
    - What would have he done with “his” 777?
    - Would the 787 be any different than it is today?
    - Would we have had so many conflicts with the unions?
    - Would he have moved to South Carolina?
    - Would he have pulled from Wichita?
    - Would Mullally spend money on stock-buyback?

    • IMHO-
      - Would Mullally have stopped the move to Chicago? – NO couldn;t
      - Would he have prevented the aggravation of the Dreamliner crisis? Probably
      - Was he one of the instigators of the current crisis?-Doubt it – would not have allowed the battery fiasco in the first place
      - Would he have authorized the 737 NSA?– who knows- probably
      - What would have he done with “his” 777?- worked on an upgrade of some sort
      - Would the 787 be any different than it is today?- Most likely yes except he could not get Bored approval without major outsourcing – since MCD types did not want to risk money which could be used for executive bonus
      - Would we have had so many conflicts with the unions?- probably not – he was outspoken to be sure- but also very pragmnatic and most of all he listened to Engineers as he is/was one
      - Would he have moved to South Carolina?- toss up
      - Would he have pulled from Wichita? probably not
      - Would Mullally spend money on stock-buyback?- doubt it

      Full disclosure – I am one of a few hundred people who got hugged by Allen when introducing myself as the person who sent him some critical and or supportive or informative emails from time to time which he always answered – knowing I was a retiree – The email in question was my saturday AM notification of the illness of a good friend of myself and Allen.

    • A minor correction to my previous .. .I am one of a few hundred people who got hugged by Allen when introducing .. S/B hugged by allen. This happened when I introduced myself . .

      But back to your question.

      McNerney came aboard the BOD in 2000- 2001 per Boeing site. ( At that time he was an executive of GE – or starting in 3M having lost the Jack welch sweepstakes)

      ” Previously, he served as Chairman and Chief Executive Officer of 3M Company (diversified technology) from January 2001 to June 2005.

      “Beginning in 1982, he served in management positions at General Electric Company, his most recent being President and Chief Executive Officer of GE Aircraft Engines from 1997 to 2000. Mr. McNerney also serves on the boards of The Procter & Gamble Company and International Business Machines Corporation. ”

      Harry Stonecipher was bringing in several of his old buddies from GE. Jim ascended to CEO in 2005 – so was not an outside hire. The Board chose him over Allen M.

      And as they say – the rest is history- including the love of unions

    • hey thats great – the last para of the story also raises an interesting conundrum

      r. McNerney just approved plans to have Boeing repair crews ready to be dispatched around the world to install modified batteries and make other changes—as soon as the FAA gives the word.

      OK- the international orgs have said NO MAS lithium batteries over a few pounds in aircraft.

      So how does boeing ship the batteries – battery boxes and crew around the world

      1) Ship batteries by cargo ship to nearest port
      2) tranship by train or truck to airplane
      3) Fly crew to airport – ss box 1/2 thick according to another news source ) as cargo
      plus some classy chrome plated headers with glas pack mufflers
      4) a few feet of new cabeling and harness
      5) modifed computer programs
      etc etc

      AFTER the mess gets approved, it might take 3 weeks just to get all the parts and crew in one place.

      And then the ground training and maintenace manuals plus spares
      Crew training

      And the above is just a thumbnail

      • That’s great: approving plans to send repair crews when the cause is unknown. How do you know you are going to fix the problem?

        It is all hot air and no substance.

        I hope the NTSB is doing their job and adds some substance, and if it takes time, that is ok to me.

    • Now only the FAA has to become forgiving, cooperative and enthousiastic. Maybe Conner can tell them to stop frustrating progress, hurting exports, displeasing the customers and helping Airbus. Congress members should use their weight and start asking questions about the commitment the FAA shows towards the national industry and jobs. That should get them moving.

    • [quote]He studied a graph showing temperature compared with voltage. “Why aren’t you more focused here?” he asked. [...]

      “Good progress, but turn up your game. You understand that, right?”[...]

      install modified batteries and make other changes—as soon as the FAA gives the word.[/quote]

      So… we’re watching Tony Stark in action in the latest Iron Man movie. That means the hero CEO *must* win out in the end… Well done Boeing PR and the compliant WSJ journalists! :D

      • Endearing story, isn’t it?

        How much of that is fiction like Dan Brown’s historic research work “The Da Vinci Code” ;-?

        Would Tom Hanks fit the lead role?

      • Nowadays everybody down to SVP level has his own staff of internal and external marketing advisors plus professional trainers striving to turn SVPs into perfect ‘actors’. May be this is what ‘virtual reality’ is about after all. :-D

  7. I think you have it nailed right on the head. The basics of the problem say it is a battery charging problem. Why hasn’t anyone talked about this problem more?
    So BA is going to build a stronger thermal bomb instead of creating a path for the heat to escape? They are going to leave the charging regime as it is? This is not a fix.
    This is Boeing calling the FAA out: approve our fix or Wall St. will say the FAA is responsible for killing Boeing.
    IMO any company putting it’s stock price above the safety of its customers and the public needs to be put out of business.

    • The cells, the charger all were found to meet specs.
      If the charger follows the patent it has a phase of “blind charging” a fixed amount of charge to achieve 100% charge.
      A charging cycle like that has the potential to trigger previously created minor cell damage into thermal runaway. only one cell has a temperature pickup in the existing design.
      It is mandatory that Boeing find the abuse moment and fix those first.
      ( or will they try to fix that silently as a cosmetic software fix ?)

      Some (German) RC plane modeller may remember RULAG prismatic Lead Acid cells.
      Fully hermetic cells charged in a thickness checking holder that stopped charge on expansion of the cell.

  8. Jim said’Good progress but turn your game up,you understand that’s right’ well Jim it’s not a game it’s aircraft taking human person’s from AtoB safely and at the moment

    • You haven’t figured out the Boeing business plan – its a variation of the Gillete razor blade model – give away the razor and make your profits on overpriced replaceable blades>

      In this case, with a unique battery like no other in the world now or in the foreseeable future, Boeing will sell the planes at a major discount- and make it up in replaceable battery costs !!

      ooops – JIM ? Uhhh remember the arrangement ? Subs and vendors put up their money to join in- and we agreed that they would get theirs back when we sold/delivered. And if profits were3 to be made on the parts they made – those profits would be theirs.

      Looks like we have set up the battery maker to make a bundle of money- being the only vendor !

      Yikes – you mean we get the expense and they get the profit !!
      Yep – But but but – it worked on post it notes and duckit tape for us at 3M !!!

      Jim- its not a video game – or an office supply item !

      Well I’ll be dammed !!

      Oh well – I got mine – let the grunts and passengers eat hot dogs and roasted marshmellows !

  9. JAL Chairman: 100% Reliance on Boeing ‘Abnormal’

    http://www.cnbc.com/id/100488815

    Somehow it sounds different if a Chairman of the Japanese state supported airline says so. Listening to the rest of the video interview, this is not a quote out of perspective at all.

    The hottest offerings from the Airbus catalogue seems
    - 230 Seat GTF A321NEOs?
    - A380s to JFK, LHR, CDG and LAX?
    - A350-1000 as 777-200ER replacements?
    - This yr A333 slots to recover from 787 delays?

  10. Meanwhile,

    Chairman Kazuo Inamori told CNBC: “When I first became chairman of JAL in February 2010 I found out that 100 percent of Japan aircraft were made by Boeing – I felt that was abnormal.”

    He added, “In a normal market there is tremendous risk from relying on one vendor. In order to provide good products at good prices, at lower prices a dual vendor system is a must.”

    http://www.cnbc.com/id/100488815

  11. ANA has said the Dreamliner is grounded until the end of May how much is this costing Boeing i hope the 787 does not become ‘Aircraft that did not fly’ program that a lot of scrap carbon fiber Boeing has parked up in Wa/Sc & growing by the day & no talk of slowing the lines down i will feel sorry for the workers who have worked so hard over he years to get the aircraft in the air only to have there dream shaterd by BEANCOUNTERS.

  12. From the CNBC article:

    “Inamori said balancing the risk of testing out new technologies with safety regulations was a challenge specific to the aviation industry.

    “It is unacceptable to jump at every advance of new technological breakthrough. Technology used in aviation must be proficient, endurable and confirmed to be extremely reliable,” he added.”

    http://www.cnbc.com/id/100488815

    • Still too many PowerPoint Rangers blabbering about ‘game changers’ and ‘disruptive innovation’. Good old engineering judgment has been all but flushed out of the system.

  13. For years I’ve been seeing comments how MD people, MBA, marketing is behind all the 787 trouble.

    I’m waiting for Boeing Engineering to step forward and take responsibility for over reliance on technical progress, approving innovative technologies and saying everything is under control when it isn’t.

    Or is it still too early for that last taboo?

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