Boeing manufacturing is vital to the Puget Sound economy. Though we are fortunate that numerous pharmaceutical, health care, internet, software and coffee companies have chosen to locate their headquarters in the Seattle area, a mix of manufacturing and service industries is important to the continued success of the Puget Sound region. I have always wondered why it was that Boeing relocated its headquarters to Chicago, away from where the airplanes are assembled and further away from the Asian market which Boeing has always touted as the future of its aerospace business.
Recently, on Friday, June 17, 2011, an interview with former Boeing CEO Phil Condit appeared in the Puget Sound Business Journal. In this rare interview from the “solarium” of his 72 acre estate on Redmond-Fall City road, he commented on the Chicago move. Mr. Condit is now 70 years old and presided over the 2001 move of Boeing headquarters from the Seattle region to Chicago. Condit retired in 2004, after becoming embroiled in a Boeing defense procurement scandal. He cited three reasons in the article for moving to Chicago. First, that business leaders in Chicago are more prone to be cohesive and gather together to support civic projects. Secondly, that Chicago is in the center of the country and thus, more convenient for Boeing executives’ air travel. Thirdly, that he felt that locating the headquarters away from the manufacturing would promote top executive’s ability to “strategize for the entire company.”
The bottom line, according to Mr. Condit, is that Seattle is an out of the way place located off the beaten path, has provincial and narrow minded business leaders, and there was nowhere else in the Puget Sound to locate Boeing’s headquarters so that its executives would not be distracted by manufacturing. Condit was quick to point out that the move to Chicago in 2001 “wasn’t about getting away from Seattle, but about running the company better.” Nothing in the interview indicated in any way that the move benefited the Boeing Company.
I am thoroughly unconvinced by Mr. Condit’s logic. First, reasoning that Seattle is off the beaten path rings hollow with me. Seattle is the gateway to the Pacific, the future market for Boeing aircraft, as Boeing has repeatedly admitted. Seattle is much closer to the Asian market than Chicago. Second, the argument that Seattle businesses are provincial is inconsistent with the many civil accomplishments that have taken place in Seattle, not the least of which being the Marion Oliver McCaw Hall and Benaroya Hall. The many theaters and parks supported by the generosity of the local business community belie Mr. Condit’s assertions. Lastly, if his concern was that the headquarters should be apart from operations, Boeing could have located its headquarters in Bellevue, where no airplanes are assembled and which is geographically “apart” from operations.
My belief is that the move from Seattle to Chicago was Boeing’s way of sending a message to the state of Washington that it was either to become more business friendly or Boeing was going to move more of its manufacturing elsewhere. Exactly what occurred when Boeing located its 787 Dreamliner facility to the new plant in South Carolina. Boeing unabashedly advised the local machinists and engineering unions that the move was in retaliation for labor unrest. Boeing’s consistent message has been that the move from Puget Sound manufacturing to South Carolina was to punish their Puget Sound employees for having exercised their right to strike (and the fact that the union had the power to strike in the future). That attitude by Boeing management is the subject of a NLRB lawsuit ongoing in Seattle as of the writing of this blog (click here and here for other blog entries on the subject).
After reading the interview, the inescapable conclusion that I came away with was that Boeing’s move from Seattle to Chicago was a subtle message to Washington’s democratic Governors to shape up or Boeing was going to flex its economic muscle by moving more business out of the local area.