Boeing's restart restores hope

Kelly Ortberg’s appointment as new Boeing CEO and the company returning its headquarters to Seattle are promising steps toward rehabilitating the aerospace giant started over a century ago.

The Seattle Times editorial summarized it best: “Dare we hope?”

Ortberg has a sterling reputation, vast aerospace experience, and a record of accomplishment. Hopefully, his experience and success pave the way for Boeing to re-emerge as the pinnacle of aerospace---where it was before the Chicago move in 2001.

Boeing knows how to build good, safe airplanes. Half of all jets that major airlines fly today are made by Boeing and the preponderance of them are assembled here. There are now more than 10,000 Boeing jetliners flying passengers and freight to various places around the world.

Its Everett Facility is the largest aircraft assembly building on Earth covering almost 100 acres. According to Boeing, the facility functions like a small city, housing 36,000 workers and featuring its own fire department, banks, daycare, medical clinic, and water treatment plant.

Over a quarter of passenger airplanes flying today are 737s---all of which are assembled in Renton on the south shores of Lake Washington.

Boeing Defense, Space & Security is the third-largest defense contractor in the world, according to 2021 company data. The division builds military airplanes, rotorcraft, and missiles, as well as space systems for both commercial and military customers, including satellites, spacecraft, and rockets. In 2023, it generated $24.9 billion.

Seattle Metropolitan Chamber of Commerce’s updated study of the aerospace industry in Washington state found that in 2023 it generated more than $71 billion in business revenues, supported 194,000 jobs, and returned $19.4 billion in income to Washington employees.

According to the study, the industry is on a path to recovery with a five-year peak in 2023 of 1,456 new Boeing airplane orders and, as of June 30, 2024, an official unfilled order book of 6,156 airplanes which will provide years of work for Boeing employees and its suppliers.

Rachel Smith, Seattle Chamber CEO, added “With 77,400 aerospace employees in the state, over 66,000 at Boeing, aerospace generates more than $580 million in state tax revenue – money that is reinvested into communities to improve the quality of life for Washington residents.

Among Ortberg’s initial challenges is working out a new contract with its machinists’ union which wants higher pay, more generous retirement benefits, and Boeing’s commitment to keep production in Washington state.

The negotiations come amid a time when Boeing posts record losses-----$1.4 billion for the 2024 second quarter. Boeing’s net debt is now $45 billion.

Boeing needs to redefine itself. The company’s top leadership has been heavily criticized for its approach to maximizing short term profits.

In April, New York Magazine writer Jeff Wise slammed the company leadership contending Boeing’s first and only duty was to maximize shareholder value, and no other concerns could even be entertained, let alone prioritized leaving Boeing vulnerable in the longer term.

Regardless of one’s views of Boeing’s past, it is the future which needs to be the focus. Boeing’s success is vital to our state, nation, and the Free World.

Boeing has overcome its past difficulties and hopefully will again. With Ortberg comes optimism and confidence. There are opportunities again. The question is how long it take to restore profitability.

Ortberg has a solid base from which to build.

For example. Boeing is a major exporter in the aerospace industry. In 2023, Boeing’s total revenue was $77.8 billion, and a sizable portion of its revenue comes from international sales of commercial airplanes, defense products, and services. Boeing’s order backlog is valued at $520 billion.

Those are aircraft made and assembled in Washington. So, we can dare to hope.

–– Don C. Brunell is a business analsy. He can be reached at [email protected]