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Originally published June 25, 2014 at 9:35 PM | Page modified June 29, 2014 at 5:29 PM

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Ray Conner asks for understanding as Boeing cuts costs in ‘fierce marketplace’

In a major public speech, Boeing Commercial Airplanes chief Ray Conner declared Washington state an enduring and central part of the jet-maker’s future and asked for more understanding of the company’s need to cut costs as it strives to remain competitive.


Seattle Times aerospace reporter

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In a major public speech Wednesday evening in Seattle, Boeing Commercial Airplanes chief Ray Conner declared Washington state an enduring and central part of the jet-maker’s future and asked for more understanding of the company’s need to cut costs as it strives to remain competitive.

“I’m incredibly proud of our Puget Sound roots and our continuing presence here as a generator of jobs, revenue and trade,” Conner told some 300 business people and local government officials at the annual dinner of the Trade Development Alliance of Greater Seattle at the Bell Harbor conference center on the downtown waterfront.

“Boeing and Washington state have a shared future,” Conner said. “We need each other. So it’s important to understand the competitive environment that drives Boeing’s decisions.”

Citing the “shared past” consisting of almost 100 years of making airplanes in the state, Conner sought to counter the unease aroused this year by news that Boeing will shift several thousand engineering jobs out of the region to new centers in Alabama, Missouri, South Carolina and Southern California.

He noted the company remains the state’s largest private employer, with more than 81,300 jobs, up 10,000 from four years ago.

“Boeing is not leaving Puget Sound,” Conner said. “We are expanding our footprint.

“We’re investing heavily in our Puget Sound sites as we prepare for production of the 737 MAX and the 777X,” he said.

He added that the company’s leaders must make tough decisions in the face of intense competition from Airbus and the threat of other potential, new competitors.

“Our survival depends on it — and the state of Washington has a lot at stake,” Conner said. “By taking steps to remain competitive, much like we did earlier this year ... we will ensure that Washington continues to benefit from the jobs, revenue and technological skills we contribute to this region.

“I’ve never seen such a fierce marketplace,” he added.

He said Boeing’s success depends on delivering more capable, more fuel-efficient and better-performing airplanes “but at a much more affordable cost.”

“The realities of our business require us to constantly renew and refresh our focus to ensure we can compete and win,” Conner warned. “This is a harsh reality of our business today, and it’s here to stay.”

He addressed the paradox that Boeing is making cuts to employee benefits and shifting some jobs to cheaper locations at a time when it is seeing record profit — $1.5 billion in the first three months of this year.

“I know it can be confusing to some people, because we’re doing so well at the moment ... but in our industry, business cycles are long,” Conner said. “We can’t rest on our laurels. We have to take the long view.”

As evidence that Washington will continue to be the core of Boeing’s Commercial Airplanes business, he cited Boeing’s construction of a new facility in Everett to build the giant composite wing for the new 777X.

It will be “the size of 24 football fields and will house three of the largest autoclaves in the world,” Conner said, referring to the massive high-pressure ovens used to bake carbon-fiber-composite parts to hardness.

He also noted that in 2012, Boeing’s commercial-airplane division pumped $70 billion into the state economy and generated $476 million in state tax revenues.

And he cited the indirect economic impact from the company’s suppliers.

Last year, Boeing spent $5 billion doing business with nearly 2,000 Washington suppliers, he said.

“All told, aerospace supports more than a quarter of a million jobs in Washington,” Conner said. “Those jobs pay 11 percent of all the wages earned in this state.”

A 29-strong contingent of foreign ambassadors attended the Wednesday event of the Trade Development Alliance, which promotes international commerce.

Conner used the occasion to speak publicly for the first time in some detail about his personal life experience and how it illuminates Boeing’s role in the region and in the world.

He told how his dad worked as a B-17 mechanic at Boeing, how his brother started at the company as a mechanic at 19, and how he himself joined his brother as a Boeing mechanic in 1977.

Conner, 59, recalled that he grew up during the Vietnam War. His older brothers registered for the draft, though they didn’t end up going to Vietnam. But years later, in 2000, he went as the head of Asia sales at Boeing Commercial Airplanes.

“I still remember flying into Hanoi for the first time to meet the prime minister,” he recalled. “It was a strange feeling when we were looking out on approach, and I could see the crater shapes in the ground from the B-52 carpet bombing that had taken place during the war. It was a very surreal experience.”

After that groundbreaking visit, Vietnam began to open up to the United States. Later that same year, President Clinton visited America’s former adversary.

Vietnam became a big Boeing customer and has developed an aerospace industry that is part of the Boeing supply chain.

Conner said Boeing was “at the leading edge in developing a trade opportunity that allowed the United States and Vietnam to forge a new alliance for the 21st century.”

In a question-and-answer session after his speech, Conner also made a vigorous call for Congress to reauthorize the U.S. Export-Import Bank, which finances Boeing’s foreign sales and has become a hot issue in Washington, D.C.

Conner said if Congress kills the Ex-Im Bank, that would help Airbus and be a “very, very serious situation for us” and other U.S. manufacturers.

“Tens of thousands of jobs could be lost,” Conner said.

Dominic Gates: (206) 464-2963 or dgates@seattletimes.com



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