The CEO of Boeing's commercial airplane unit is feeling confident about his management team, the new Dreamliner, and the global economic outlook in general
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Boeing's Scott Carson was planning to spend Labor Day weekend with his family before he got a call early on Sept. 1. On the line was Boeing (BA) Chairman and Chief Executive James McNerney. Alan Mulally, chief executive of Boeing's storied commercial airplane unit, had left to be the CEO of Ford (F). McNerney asked Carson, a Boeing veteran who was in charge of sales at the time, if he would run the airplane business. Carson, 60, said he needed about three seconds to decide to accept the offer.
His promotion was welcomed on Wall Street, and his first executive decisions have been seen as strong. First, he decided to bring back Chief Technology Officer Jim Jamieson from Chicago to once again oversee the airplane factories during the critical build-up of the all-new 787 Dreamliner and the new 747-8 jumbo jet. He recently named über salesman Larry Dickenson to head overall sales at a time when Carson believes that the good times will continue for the rest of the year and quite possibly into 2007.
Carson, who has twin passions for aviation and fast cars, has had a varied career since joining Boeing in 1973 as a financial analyst on the B-1 bomber avionics program. Since then, he has led Boeing's joint venture with the Norwegians and Russians to develop Sea Launch, a commercial rocket launch platform and he was the finance chief of Boeing's commercial airplane unit. He led Connexion by Boeing, a high-speed, in-flight Internet service that he marketed to airlines in Europe and Asia that was recently shut down due to lack of demand. He then was named vice-president of sales in December, 2004, and helped generate $22.8 billion of sales. Carson, who is married and has five children and four grandchildren, graduated with a BA in business administration from Washington State University and later earned an MA in business administration from the University of Washington.
In Carson's first extensive interview since becoming CEO of Boeing's Commercial Airplane division, he sat down with BusinessWeek correspondent Stanley Holmes to discuss his plans and the recent events roiling the aviation industry. Here are edited excerpts from that interview:
Could Boeing's 747-8 new modified passenger version, called the Intercontinental, benefit from the Airbus A380 woes? The 747-400 and the (747-8) have been doing very well in the marketplace. The 747-400 last year was a big seller, and we launched the 747-8 with two big customers. The market remains strong this year. We think the airplane was by design naturally fitting in a hole between the biggest of the intermediate airplanes and the ultra-high capacity of the A380. It does well because it fits in that big hole. That's what we intended. I haven't seen anything that I would attribute to A380 woes at this point. What we are seeing is market response to a product well-positioned in the marketplace.
Do you expect an order for the new passenger version of the 747 this year? Yes. I quickly add while I expect that, the precise timing isn't the most critical issue. The issue is if there is interest in the marketplace, and I can assure you there is interest the marketplace and the timing will end up being what the timing is. We are working very hard toward that goal.
As you enter the critical production phase of your new 787 Dreamliner, what worries you and what doesn't? ? We worry about bringing together all of our diverse manufacturing efforts from around the world for the first time and doing the first integration. We worry about getting engines certified and ready for flight. Those programs are going well, but we need more cycles on the engine. There are challenges in the way we designed the flight-test program. We are doing it at a more aggressive schedule than we have in the past.
What are you feeling good about on the Dreamliner? The team believes we know how to get this done. That's very reassuring. The supplier partners in Japan are doing a great job, and Wichita is doing an outstanding job; we're making good progress in Italy. If you look at the totality of the program, you feel it starting to come together. Generally, I feel good about where we are in the program, cautious because it is developmental and worried about the things we've talked about. [Schedule and weight challenges are among them, but Carson expects the plane to enter service in 2008 as expected.]
Why did you brink Jim Jamieson back to Seattle? I first met him when he was running the Renton (Wash.) factory. Here was a man who was technically very good and a compassionate human being. I also know my limitations. I'm a pretty good finance guy and a pretty good sales guy. I've done operational things, but knowing the heart and soul of a factory is not my long suit. Adding Jim and the strength I have observed in him has given me great confidence. He'll give us a fresh set of eyes, and we can really use him to help drive the development on the 787 and 747-8 home and also make sure, as we continue our ramp up across the factories, that we do it right. He adds strength to strength.
Why did you recently choose veteran Larry Dickenson as your top sales chief? When I was CFO [at Boeing commercial airplanes in 1998] Larry and I probably had more arguments than anyone I worked with in sales. He was aggressive, he was focused on his customers and not attuned to the economic realities we had to deal with. When I came to sales, and Larry worked for me, I also came to learn he is the consummate salesman. If I wanted to paint a portrait of the model salesman—a guy who knows his customer, represents his customer well, pushes for what his customer needs, understands our products, understands how to get things done—it's Larry. We started down a path when I came back to make sure the team was ready for the future. Having Larry complete that job in the time he has left—he is 63—he has two more years. I can't think of a better legacy and a powerful statement for him to make at the end of his career. It was not a simple choice but a fairly easy choice.
Business remains surprisingly strong. Do you think the good times will continue? What we've seen this year is the continuation of momentum we had coming out of 2005. The very gratifying thing is that it is very broad based. It reaches all regions of the world, and it reaches all models of our product and service offerings. That says to me we have the right products and services at the right time. There have been some fundamentals this year a little different and good for the industry. We are seeing the big U.S. airlines for the first time start showing a profit again. And while it's early, I think that speaks well for how the rest of this year plays out and next year. We have seen big European airplanes jumping into some new campaigns. It's all being driven by fundamental economics. This is a long recovery cycle we've been on. Good GDP growth here in the U.S. and good GDP growth globally, even in the face of tremendously high fuel prices and the conflict in the Middle East. It's a very different set of dynamics than we've seen in a very long time, and I think it speaks well for an extended recovery. It's driven by strong fundamentals in the economy: the housing boom and low interest rates here.
But it's more than that: strong industrial growth in China, strong growth coming out of India, and at the same time, you see the Pacific Rim with very strong economic growth, you see the oil-producing countries with phenomenal economic growth, even Europe, which is probably the slowest, is coming on like gangbusters, and you have Russia, the sleeping giant of the north, suddenly flush with cash and looking for investments. Strength on strength. If you imagine moderating oil prices and end to the conflict in Middle East, you could see this thing run for awhile.
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