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Boeing Pares 50 Defense Executives, Eliminating Management Layer

June 14, 2017
The moves advance Boeing Chief Executive Officer Dennis Muilenburg’s efforts to tamp down costs.

Boeing Co.’s defense business is shedding about 50 executive positions, eliminating a layer of management and expanding the operational role of the division’s boss, Leanne Caret.

Starting July 1, the $29.5 billion defense unit’s main businesses -- Boeing Military Aircraft and Network & Space Systems-- will split into smaller entities reporting directly to Caret, the company said in a statement Tuesday. A third segment is being transferred to Boeing Global Services, a new operation to be launched next month.

The moves advance Boeing Chief Executive Officer Dennis Muilenburg’s efforts to tamp down costs. Caret has the added challenge of meeting the CEO’s goal for bolstering profit margins while losing a lucrative segment to the services unit. The changes are designed to speed decision-making, Caret said in an interview.

“Everything is moving faster,” she said of the competitive environment for defense contractors. As she took stock of the second-largest U.S. defense business last year after taking over as its head, Caret said her priorities were to lower costs, encourage innovation and determine “how we can be most responsive to our customers.”

One of her first moves was to shift work or close sites in Southern California, Missouri, Alabama, Washington, Texas and Virginia. Caret also moved the defense unit’s headquarters from St. Louis to Northern Virginia to be closer to the Pentagon. Caret had mulled streamlining the management structure, but decided to wait as plans evolved for the services group.

“Change upon change is hard,” she said. “So we wanted to make sure we do it in a smart fashion.”

About 60 defense executives will be transferred to the services operation, said Todd Blecher, a spokesman for Chicago-based Boeing (IW 500/9). That unit -- which will combine defense and commercial aircraft parts, maintenance and information technology products -- is a key initiative for Muilenburg, who sees it evolving into a $50 billion business.

Boeing’s development, global operations and Phantom Works segments reporting to Caret will be largely unchanged. The main businesses will be divided into four smaller units:

Strike, Surveillance and Mobility will be led by Shelley Lavender, Boeing’s senior executive in its former St. Louis defense hub. It replaces the segment formerly known as Boeing Military Aircraft, which Lavender also ran.

Space and Missile Systems will be headed by Jim Chilton. It includes Boeing’s share of the United Launch Alliance joint venture with Lockheed Martin Corp., the International Space Station and other areas.

Autonomous Systems, which includes the Insitu and Liquid Robotics subsidiaries, will be led Chris Raymond. It includes the Echo Voyager maritime drone and unmanned vertical lift.

Vertical Lift, headed by David Koopersmith, will manage Boeing’s Apache and Chinook helicopter programs and the V-22 Osprey tilt rotor.

By Julie Johnsson

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