Stonecipher, Harry C. 1936–

views updated

Harry C. Stonecipher
1936–

President and chief executive officer, The Boeing Company

Nationality: American.

Born: May 1936, in Scott County, Tennessee.

Education: Tennessee Polytechnic Institute, BS, 1960.

Family: Married Joan (maiden name unknown), 1954; children: two.

Career: General Motors, Allison Division, 1955–1959, laboratory technician; General Electric, Evendale Aircraft Engine division, 1962–1979, program engineer; 1979–1984, general manager; 1984–1987, head of division; Sundstrand, 1987, executive vice president; 1987–1994, president; 1989–1994, chief executive officer; 1991–1994, chairman; McDonnell Douglas, 1994–1997, president and chief executive officer; Boeing Company, 1997–2001, president and chief operating officer; 2001–2002, vice chairman; 2003–, president and chief executive officer.

Awards: Air Force Association, General Ira C. Eaker Historical Fellow Award, 1996; Navy League, Rear Admiral John J. Bergen Leadership Medal for Industry, 1996; Royal Aeronautical Society, fellow, 1998; Wings Club, Distinguished Achievement Award, 2001; America-Israel Chamber of Commerce and Industry, tribute, 2002; U.S. Army Association, John W. Dixon Award, 2002; Washington University, honorary doctorate of science, 2002.

Address: The Boeing Company, 100 North Riverside Plaza, Chicago, Illinois 60606; http://www.boeing.com.

■ Harry Curtis Stonecipher embodied the consummate corporate manager. Throughout his career, he emphasized three essential goals: manufacturing efficiency, consistent profit margins, and fair dealing with customers. This corporate code was never better articulated than in 1994, when as the new head of McDonnell Douglas Stonecipher promised the deputy U.S. secretary of defense, "I'm going to build you a great airplane, and I'm going to get it on schedule. And it's going to be done at a fair price" (Chicago Tribune, February 29, 2004).

Although Stonecipher ruffled many feathers with his blunt, no-nonsense style and all-capitals e-mail messages, even opponents conceded he was a strong leader.

EARLY YEARS AT GENERAL ELECTRIC AND THE EXAMPLE OF JACK WELCH

Stonecipher knew early in life that one had to be tough to succeed. Having been graduated from high school at age 16 and completed two years at Tennessee Polytechnic Institute, he met the woman he wanted to marry. To marry he had to leave school, so he worked as a laboratory technician in the Allison Division of General Motors, gaining hands-on experience with large engines and the factory system for four years before saving enough money to return to Tennessee Tech and complete his degree in physics in 1960. Stonecipher then went to work for General Electric as an entry-level engineer in the Evendale Aircraft Engine division. After a brief lateral move to Martin Aircraft in 1961–1962, Stonecipher rejoined GE, where he spent the next 25 years. The young engineer moved steadily through the ranks, demonstrating his ability to master the disparate demands of the modern company: customer support, marketing, and program management. Stonecipher played an instrumental role in the development of large jet engines for the Boeing 747 and 737 aircraft and of more specialized engines for military applications. In 1996 Stonecipher was awarded medals by both the Navy League and the Air Force Association for these contributions to military aviation and national defense, and he received another medal from the U.S. Army Association in 2002.

During his years at GE, Stonecipher learned from the example set by the managerial legend Jack Welch. Stonecipher acknowledged his debt to Welch many times, but perhaps his clearest acknowledgment was his consistent introduction of Welch's patented managerial innovations in every company he managed. These policies included centralized financial controls, emphasis on a smaller but better rewarded labor force, sale of underperforming units, and creation of what Stone-cipher called centers of excellence, managerial cadres whose performance served as models for those around them. By 1979 Jack Welch had tapped Stonecipher to be general manager of commercial and military transport operations. Five years later Stonecipher became head of the division.

SUNDSTRAND CORPORATION: THE FIRST TURNAROUND

In 1987 Stonecipher was hired as executive vice president of Sundstrand Corporation, a company that made alternators, compressors, and instruments for the military and civilian aerospace markets. He was promoted to president later that year and to CEO in 1989. For years Sundstrand had made artificially low bids on contracts then relied on cost overruns and sales of spare parts to make a profit. The company had just pled guilty to fraud charges and paid a $200 million fine. Draconian measures were called for, including layoffs of 3,500 workers and the sale of several corporate divisions, but Stone-cipher also engineered the acquisition of two new companies and a joint venture with a French maker of auxiliary power units. Furthermore, Stonecipher introduced into Sundstrand the management style he had learned at GE, including self-directed work teams and measures to assure quality control. Within five years Sundstrand's operating margin had doubled, and with both civilian aerospace and industrial markets accounting for 40 percent of sales, the company's reliance on defense contracts had been cut in half. When he left the company in 1994, Stonecipher was remembered as "a strongly opinionated man" but "a strong leader" (Defense Daily, September 27, 1994).

MCDONNELL DOUGLAS AND THE BOEING MERGER

Stonecipher left Sundstrand to become president and CEO of McDonnell Douglas Corporation, the third largest commercial airplane manufacturer in the world. He came into a company that had already experienced drastic cost-cutting measures. Two-thirds of McDonnell Douglas's 1991 workforce was gone, and debt had been pared down to 27 percent of capital, but the company held only 10 percent of the commercial airplane market, and its military contracts for planes such as the F-15 fighter and the F/A-18 attack aircraft were winding down. Again Stonecipher initiated work teams, established centers of excellence, reemphasized quality, and offered an employee incentive plan to reward executives and labor alike for success. He also determined to pursue commercial contracts more aggressively. In 1995 Stonecipher signed a $1 billion order from ValuJet for the MD-95 aircraft. It was the first order for the plane, a new design based on the proven DC-9, and it allowed the production line to begin operating.

Stonecipher had billboards erected around the McDonnell Douglas plant in Long Beach, California. The boards bore Stonecipher's picture next to a signed declaration: "I want to see us … become No. 2." However, when he understood that making McDonnell Douglas competitive again would require massive capital investment, on the order of $15 billion over the next decade, in a market with growth projected at only approximately 5 percent, Stonecipher changed his projected course and began to seek either an asset swap or an outright merger with the largest company in aerospace, The Boeing Company. "Gentlemen," he announced to his senior executives, "We're going to merge our way out or sell our way out" (Defense Daily, September 27, 1994).

In August 1997 McDonnell Douglas and Boeing merged, and Stonecipher became COO, just under Philip M. Condit, the Boeing CEO. It was an excellent move for both companies. McDonnell Douglas gained the capital reserve that only a $25 billion company could provide. Boeing gained access to the military contracts and the government backing for research and development that had underlain Boeing's original rise to prominence but which the company had lost in recent years. In addition, Boeing had recently been shaken by its own costcontrol problems, and an executive who had overseen two financial shake-ups was likely the one to restore Boeing's delivery schedules and make every branch of operations a profit center again. As Stonecipher put it, "The underlying cost [of our products] was eating away at us…. You can't talk to me for more than five minutes without talking about cost" (Interavia Business and Technology, September 1998).

Under Stonecipher's leadership, Boeing scrapped its old configuration control system of numbering parts, which had been based on a process developed for production of B-17 aircraft during World War II, in favor of a specific configuration table, which listed parts not as unique variations of an original design but as stratified option sets. In a modern airplane, which has more than three million parts, this change alone was expected to reduce Boeing's costs 25 percent. Stonecipher also echoed his previous success at Sundstrand, where expansion into new, profitable areas had helped turn the company around. He led a drive into the aircraft services business, using his four decades of experience working with the military to obtain a contract to upgrade planes originally built not by Boeing but by Lockheed Martin. Stonecipher pushed Boeing to compete for a lead role in upgrading the aging U.S. air traffic control system.

Although Stonecipher reached retirement age in 2001, Boeing's board asked him to stay on an additional year as vice chairman to complete what he had begun. Stonecipher retired in 2002 but returned in December 2003 after ethics scandals had led to a top-level shakeup. With Stonecipher in charge, a $9.5 billion military contract immediately followed. Stone-cipher immediately set out to restore Boeing's image both with the public and with the U.S. government and to work one on one with military and political leaders to restore Boeing's domestic dominance in the aerospace business. In the commercial aircraft market Stonecipher still had to face heated competition from Airbus Industries, which surpassed Boeing in market share in 2003. Stonecipher was betting heavily on the new-generation 737 and the proposed 7e7 aircraft. An agreement he reached with the International Association of Machinists recognized that the union's High Performance Work Organization proposal complemented Stonecipher's vision of self-directed work teams while assuring Boeing that it could outsource more and more subassembly work.

Stonecipher was committed throughout his career to the role of the corporate leader as public spokesperson. His public speaking schedule rivaled that of any major business executive. In one speech he listed his secrets for making good decisions in bad times. The five maxims he passed along epitomized his lifelong approach to business: "Do not tolerate complacency." "Change the people, or change the people. " "Don't try to please everyone." "Be prepared to alter your plans and make new ones without delay or regret." At the end of the day, however, "Have fun."

Stonecipher received many awards during his career. In addition to medals from military associations, he won the Wings Club Distinguished Achievement Award in 2001, an award from the America-Israel Chamber of Commerce and Industry in 2002, and an honorary doctorate of science from Washington University, St. Louis, in 2002. He was made a Fellow of the Royal Aeronautics Society in 1998. Stonecipher's interests ran the gamut from skeet shooting to lyric opera. He brought to the recreational aspects of his life the same intensity and desire to excel that he showed in his vocational efforts.

See also entries on The Boeing Company, General Electric Company, and McDonnell Douglas Corporation in International Directory of Company Histories.