A Bigger Boeing Reorganizes Itself

Boeing Co. on Monday announced management and structural changes in operations from Anaheim to Alabama, changes designed to integrate McDonnell Douglas Corp. into what is now the world’s largest aerospace company.

Boeing Chairman Philip M. Condit and President Harry C. Stonecipher announced the post-merger organization at a Washington news conference beamed by satellite to rallies attended by most of the manufacturer’s 220,000 employees.

A crowd of nearly 5,000 at the former McDonnell Douglas Space and Defense Systems facility in Huntington Beach cheered as a helicopter lowered a huge black tarp on the side of the administrative building to unveil the new Boeing sign.

“This is Boeing time,” Condit declared, noting that the Seattle-based company expects sales this year of $49 billion and an order backlog of more than $100 billion.

Under the new organization, Alan Mulally, who was recently promoted to run Boeing’s own defense and space business, is now president of the new Information, Space and Defense Systems Group, which will run all of Boeing’s growing military and space businesses now that its purchase of McDonnell Douglas is complete.

Part of the new group will be the Space Systems unit, headquartered in Seal Beach. It encompasses the Huntington Beach space facility as well as the former Rockwell International Corp. space and missile units that Boeing acquired in December. John A. McLuckey, who came from Rockwell to preside over the combined Boeing and Rockwell space and missile operation, was named Space Systems’ president.

McLuckey told employees Monday morning that the merger brings together operations that have cooperated for more than 30 years on development of the Delta family of rockets and the new International Space Station.

R. Gale Schluter, vice president of the space and defense operation in Huntington Beach under McDonnell Douglas, said he doesn’t expect the combination of the space businesses to affect employment or workload.

“We are in a period of expansion, and I expect that it will continue for several years,” he said, predicting that employment at the Huntington Beach plant will grow to 9,500 by 2001 from 5,900 now.

The Space Systems unit will be the prime contractor on the International Space Station and will oversee operations that include the Rocketdyne rocket engine facility in Canoga Park, satellite manufacturing in Downey and missile guidance, rocket launch systems and space station component development in Orange County; Houston, Texas; and Huntsville, Ala.

McLuckey will report to Mulally, whose promotion gives the 52-year-old executive control of almost everything Boeing does outside the commercial aircraft business. It is a victory for him over McDonnell Douglas executives who have much more experience in military products.

“Boeing wants someone with Boeing blood to run this new business,” said Peter Jacobs, an analyst at Ragen MacKenzie in Seattle. “The number of programs Mulally manages just doubled.”

Before January, Mulally had spent most of his 27 years designing jetliners. He made his name at the company managing the launch of the 777, one of Boeing’s best-selling planes.

On the New York Stock Exchange, Boeing shares fell 6 cents to close at $58.44.

With McDonnell Douglas, about 40% of Boeing’s revenue will come from defense and space work, up from 25% before.

Boeing made the announcements on the first day of operations with McDonnell Douglas after completing the acquisition on Friday.

Mulally has three large divisions reporting to him, including the new McDonnell Aircraft and Missiles Systems, which will run all of Boeing’s military aircraft operations.

That division will be based in St. Louis, McDonnell Douglas’ former headquarters. It will be run by Mike Sears, formerly president of McDonnell Douglas Aerospace. The division will handle production of F-18 and F-15 fighters and the C-17 transport, which is built in Long Beach.

The Space Systems unit in Seal Beach replaces the 7-month-old Boeing North American, which was formed after the purchase of Rockwell’s space operations. It will have almost 19,000 employees in Southern California, including 5,900 in Huntington Beach, 2,000 in Seal Beach and 3,300 in Anaheim.

The third division, Information and Communications Systems, based in Seattle, will handle Boeing’s airborne laser project, its airborne surveillance business and strategic missile programs.

It also will handle Boeing’s work with Teledesic, a company that is building a satellite network designed to beam Internet access to all parts of the globe. The group will be run by Jim Evatt.

Times wire services contributed to this report.

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Boeing in Orange County

The combined operations of Boeing and McDonnell Douglas give Boeing a strong Orange County presence, with more than 11,000 employees in the Space Systems unit of the newly formed Information, Space & Defense Systems Group:

SEAL BEACH

* Space Systems

Projects: International Space Station, unit administration, research and development

Employees: 2,000

HUNTINGTON BEACH

* Space and Defense division

Projects: Delta rockets, International Space Station

Employees: 5,900

ANAHEIM

* Autonetics and Missile division

Projects: Missile guidance and submarine navigation systems

Employees: 3,300

Source: Boeing Co.