Cuts at Boeing Defense Spurred by ‘Not Winning,’ Executive Says

A driving factor behind Boeing Co.’s latest announcement to cut more than 50 executive positions within its defense and space unit is based on “not winning a collection of things,” its CEO said Wednesday.

“The longer you stay in any position … it becomes harder, not easier,” to make changes, Leanne Caret, chief executive officer of the Chicago-based company’s Defense, Space & Security unit, told audiences at a DefenseOne event in Washington, D.C. “Time is money.”

Caret, who has been in the job for about a year, said no single event prompted the move, which could eliminate dozens of positions beginning July 1, DefenseOne reported.

But clearly, a significant loss to the company was not winning the Air Force’s B-21 Long Range Strike Bomber program.

Northrop Grumman Corp. in 2015 landed the multi-billion-dollar deal to develop a fleet of next-generation stealth bombers. Boeing protested the contract award, initially worth $21.4 billion, but the Government Accountability Office denied the challenge.

Caret said that “perpetuating doing business the old way” became a disadvantage to its customers, both in the U.S. and foreign buyers.

It’s “about taking out a layer of executive management, which is what we’ve done, flattening the organization so it elevates some of the programs, so that there are direct reports to me … able to have a more streamlined approach to how we’re going to do business,” she said.

Even so, the future of dozens of executives at the company remains unclear.

Caret said, “We will be working with them … [some] may be exiting the company, there may be a few opportunities for a few of them in a different position at a different level.”

The move is part of a three-part strategy, she said. The first steps focused on moving and consolidating facilities — Boeing relocated its defense division headquarters from St. Louis to the Washington, D.C., region.

At the time of the relocation announcement in December, Pentagon defense spending made headlines after then-President-elect Donald Trump singled out large defense programs for being too costly — notably, the Air Force One recapitalization program, which Boeing is working on.

When asked if President Trump has been good or bad for the defense business, Caret on Wednesday replied, “I don’t think there is a good or bad. I think it’s fair to say that in any administration … what I like, and I think that’s what we’ve all seen, is that he’s focused on business results. He’s focused on getting a great deal for our taxpayer.”

Other executives have made similar comments.

Lockheed Martin Corp. CEO Marillyn Hewson in March credited Trump for accelerating the price drop on the F-35 Joint Strike Fighter program. Even though the price point was already coming down — also noted by then-F-35 program executive officer Air Force Lt. Gen. Chris Bogdan — Hewson said Trump’s involvement in discussions on low-rate initial production (LRIP) for Lot 10 “absolutely” made a difference.

Read more at: DoD Buzz

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