Jan. 21, 2015. c. Leeham Co. Dennis Muilenburg, vice chairman, president and chief operating officer of The
Boeing Co., remains an enigma to Boeing’s largest unions a year after he was elevated to this position from his slot as CEO of Boeing’s defense unit.
Muilenburg assumed his current position Dec. 13, 2013. Boeing’s “touch labor” union, the IAM 751 here in the Seattle area, didn’t know much about Muilenburg then. It still doesn’t.
Neither does Boeing’s second largest union, SPEEA, which represents engineers.
Nor is there any understanding what Muilenburg’s view of future commercial airplane development is.
Muilenburg’s defense unit was is also represented by the IAM, but a different district, #837. IAM 751 and 837 don’t talk; 751 members believe 837 sold them out over the controversial contracts negotiated separately between Boeing and the two districts when 837 gave up its traditional pension plan and gave back health care benefits.
Members of 751 ultimately followed suit in January 2014 in exchange for Boeing siting the 777X assembly and wing production in the Seattle area.
Barely in his new job, Muilenburg had no visible role in those highly contentious contract talks. Ray Conner, CEO of Boeing Commercial Airplanes, and Jim McNerney, CEO of The Boeing Co., were targets of 751’s wrath, even more so than the Boeing negotiating team, whom 751 members viewed as little more than front men for McNerney, with no power or authority.
SPEEA represented few engineers within the Defense unit and has had no contact with Muilenburg, reports the union’s executive director, Ray Goforth. SPEEA is equally in the dark over Muilenburg’s views toward unions. But if Muilenburg becomes chief executive officer, as is widely expected, after McNerney steps down, Goforth assumes Muilenburg will be equally hard-nosed with a Board of Directors that remains anti-union.
A Wall Street aerospace analyst who knows Muilenburg says he hasn’t expressed his personal views about unions beyond the corporate lines.
A consultant who has worked with Boeing believes Muilenburg will be most cost-driven than McNerney, which will be bad news for labor and for the supply chain. Muilenburg, while still CEO of Boeing Defense, was faced with dramatic cost cutting as federal budget Sequestration kicked in and the Iraq and Afghan wars declined. Defense revenue continues to fall.
Muilenburg has, on occasion, spoken about the need for employee training and STEM education. Both are in keeping with long-standing corporate statements on these topics. Likewise, cost cutting and new product development has been aligned with McNerney’s strategic goals, as one would expect not only as No. 2 to McNerney’s No. 1, but also on the logical assumption Muilenburg is a participating architect of these policies.
While McNerney has been clear about new airplane development–no more “moonshots” and no 737 replacement until 2030–Muilenburg’s own views are a mystery.
The 737 MAX currently has only about a 43% share of the backlog vs the A320neo family, and the launch of the A321LR is likely to help Airbus retain or even increase this lead.
As long as Boeing is spending billions of dollars for stock buybacks and dividends, funding for research and development will be limited. The only saving grace is that Airbus wants to cut its R&D and concentrate on derivatives, too. We could be in for a period of Armed Truce and Status Quo.
But if the A320neo moves to a sustained 60% market share, or certainly if it begins to go beyond that, there is an expectation on Airbus’ part that Boeing will have little choice but to launch a New Small Airplane program to have an entry-into-service as much as five years before the current target 2030 EIS date.
Just what Muilenburg thinks about all this isn’t known.