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After Merger, Some Changes Are Expected Location Of Defense, Space Unit May Shift From Kent To St. Louis

The Seattle Times

With Friday’s completion of Boeing’s $16.3 billion acquisition of McDonnell Douglas, the aerospace industry’s weekend buzz will be over what changes may be announced Monday when the new company begins operating.

Boeing Chairman Phil Condit and President Harry Stonecipher, the latter formerly McDonnell Douglas’ chief executive, will brief the world about their plans at a news conference Monday at the Smithsonian Institution in Washington. It’s a location chosen to emphasize that Boeing no longer is just a Seattle company, but a global business.

Of foremost interest is the future headquarters of Boeing Defense and Space operations, now based in Kent. It was widely publicized earlier this week that Condit and Stonecipher disagreed.

Condit wants to keep the headquarters here, with Boeing’s Alan Mulally in charge. Stonecipher wants Michael Sears, president of McDonnell’s aerospace division, to lead the defense and space unit from St. Louis, where jet fighters are built.

The executives said they hoped to have a decision by Monday.

Stock analysts think it unlikely that Condit would agree to move the defense and space headquarters to St. Louis.

Condit has said there won’t be major disruptions for workers scattered across the country, partly because there are few duplications of activities. But he also has said Boeing hopes to save $1 billion in operations costs in the first year by eliminating overlapping management operations.

Officials stress there are plenty of other opportunities in growing company businesses, so minimal layoffs are expected.

Already, Boeing is combining marketing, sales and contract operations for commercial jets at Boeing’s Commercial Airplane Group headquarters in Renton, Wash. Douglas Aircraft workers are expected to be moved here from California in that unit.

Other consolidations, including duplicate offices in Washington, D.C., and in personnel and benefits operations, are planned, but they may take up to a year.

Boeing unveiled its new board of directors Thursday. As expected, Stonecipher was named Boeing’s president and chief operating officer. Other former McDonnell executives who now sit on Boeing’s board include John Biggs, chief executive of Teachers Insurance and Annuity Association-College Retirement Equities Fund; and Kenneth Duberstein, chief executive of the Duberstein Group.

Frank Shrontz, Boeing chairman emeritus, and Harold Haynes, former head of Chevron, will retire from the board.

Monday’s “Day One” event will be celebrated at every company outlet. Locally, Boeing employees will view the executives’ presentations on huge outdoor video screens.

In St. Louis, McDonnell Douglas’ F-18, F-15 and other military jets will be displayed on the company’s airport apron adjoining headquarters. A Harrier will hover over a parked MD-80 and a Boeing 757, commercial jets operated by TWA. While hovering, the Harrier will bow and tip its nose in salute to employees gathered nearby.

A next-generation Boeing 737-700 will be displayed alongside a competing MD-90 narrowbody at the Douglas Aircraft plant in Long Beach, Calif. A 747-400 will be near the stage and Kingdome-sized video screen outside the Everett plant.

New signs and banners bearing the combined company’s logo will emphasize a new era in aerospace. Condit said last week that Boeing will lead the world in aerospace and “define the future of flight.”

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