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Monday, December 01, 2003 - Page updated at 03:30 P.M.

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New Boeing CEO Stonecipher known as a tough cost-cutter

By Helen Jung
The Associated Press

Harry Stonecipher
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SEATTLE — The man who will lead Boeing is known as a tough-minded cost-cutter who is unpopular with employees but lauded by shareholders.

Harry Stonecipher, 67, a former president and chief operating officer for Boeing, agreed to leave his life of retirement and golf in St. Petersburg, Fla., to take over Boeing following chief executive Phil Condit's resignation today. Boeing's board waived a mandatory retirement age of 65 for Stonecipher.

Emphasizing that he shared Condit's philosophy about Boeing's strategic direction, Stonecipher said he plans to focus on helping restore the credibility of the company's defense unit.

Boeing has been hit recently by controversies over alleged unethical conduct in its efforts to win a multibillion-dollar defense deal, culminating in the firings of two executives. The Pentagon has also indefinitely banned Boeing from bidding on military satellite-launching contracts as punishment for stealing trade secrets from Lockheed to help win rocket contracts.

Showing the government "that we are not only compliant but an exemplary supplier to them is one of the first and foremost and most immediate tasks I have," Stonecipher said. "This hiccup we had will cause us to have to do a lot of reassuring with the government."

Stonecipher has already started contacting some Congressional representatives. "He's got a major job in turning around the credibility of The Boeing Co.," said Rep. Norm Dicks, D-Wash., who knows both Condit and Stonecipher personally.

The former McDonnell Douglas chief executive will also bring unsentimental financial discipline to his role, analysts said.

"His reputation is as a cost controller par excellence," said Richard Aboulafia, an analyst with aerospace consulting firm Teal Group.

His popularity among shareholders isn't surprising, noted independent airline analyst Scott Hamilton, considering Stonecipher is one of the company's single largest individual stockholders. Stonecipher holds more than 172,000 shares and another 1.6 million options and deferred shares.

Hamilton, who notes he is a Stonecipher critic, said he is concerned what his role means for Boeing's future as a commercial jet maker. Stonecipher, he said, presided over McDonnell Douglas' withdrawal from the commercial jet business, which ultimately led to the 1997 merger with Boeing.

Union representatives said employees aren't cheering over Stonecipher's appointment.

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"The initial reaction from employees is going to be one of trepidation," said Bill Dugovich, a spokesman for the Society of Professional and Engineering Employees. "There was no love lost between Mr. Stonecipher and the SPEEA-represented employees three years ago when our union went on strike."

When asked about Stonecipher's reputation among employees, Mark Blondin, president of District 751 of the Machinists Union sighed.

Rather than "go negative," he said, he hopes that "Boeing really re-evaluates the direction that they've been going and understand they can be a top rate company if they commit to good relationships with their employees. ... What put them at the top (in the past) is the skill and dedication and the strength of their work force for generations here."

For years, employees have bitterly joked that the 1997 Boeing acquistion of rival McDonnell Douglas was in fact the reverse - that "McDonnell Douglas bought Boeing with Boeing's money." Many longtime Boeing fans have criticized the merger as a turning point for Boeing, which has since moved its headquarters from Seattle to Chicago and outsourced more of its jet production.

"Certainly it signals that the McDonnell Douglas side of The Boeing Co.has won out," Dugovich said. "Whether they will win in the long run is another big question, but today it looks like they're in charge."

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