NEW YORK (The Deal) -- Boeing's (BA) outgoing CEO spent his decade in charge revitalizing the commercial side of the business and shepherding the 787 Dreamliner aircraft into production. His successor's task is to continue to bring down costs at the ever-expanding commercial arm, while plotting a renewal of the company's lagging defense unit.
The Chicago-based aerospace giant said late Tuesday that CEO Jim McNerney would step down July 1, handing control to current President and Chief Operating Officer Dennis Muilenburg. The transition had been expected, with Muilenburg in 2013 winning what was seen at the time as an internal bakeoff when he was named to his current roles.
The executive, a 30-year Boeing veteran, has long been a feature in company investor presentations and strategy meetings, suggesting that there will be few if any radical changes to the company with the transition.
Boeing plucked McNerney from 3M (MMM) 10 years ago when the company was operating under the cloud of scandals. During his time, he oversaw an impressive expansion of the commercial business, but to get there he had to navigate significant cost overruns and product delays made worse by a near-disastrous attempt to build a worldwide supply chain and sour relations between management and labor.
Muilenburg's challenge is to continue to extract costs from Boeing's existing commercial lines, with a need down the line to make difficult decisions on how and when to update or replace the company's 737 narrowbody and 757 midsized jets. He must also balance ever-increasing demand for new jets with fears of overexpansion, with Boeing suppliers in particular beginning to voice doubts over the substantial investment needed to meet what could be a temporary surge in orders.
His job on the commercial side could be made easier if the change marks a reboot in relations between management and labor, where challenges include continued unrest in Seattle over a strike early in McNerney's tenure and more recently attempts to organize Boeing's South Carolina 787 assembly line.
Boeing is unlikely to shed or shrink defense, with the company seeing its diverse business as a strength, and Muilenburg if anything as a former head of the defense side figures to be more of a champion of that business. The Iowa-native has strong ties to St. Louis, where Boeing Defense is based and where Muilenburg serves on the board of both a university and a handful of local civic groups.