Boeing Commercial Airplane Group
"A Long-Term Strategy for the Community"
Seattle Chamber of Commerce
September 19, 1996
Good afternoon everybody. It's great to have lunch with you and catch up on what's happening.
Some of you heard Phil Condit, our CEO, speak last week about his vision for The Boeing Company in the year 2016. One of the things Phil mentioned was the need for all of us who live in Seattle to be committed to keeping Puget Sound a good place to live and work and run a business.
There's a reason Phil talked about 2016 ... not just because it will be our company's 100th anniversary, but because we're always looking 20 years out as we develop our business strategies. This includes our product strategy and our people strategy. We try to stay focused on the long term. I think it's time for the Chamber of Commerce -- all of us here today -- to develop a strategy for our community in the year 2016. I'd like to talk about why the health of our community matters so much to The Boeing Company and every member of the Chamber. To understand why that's important to us, it helps to understand where we've been as a company and where we're headed.
Back in 1992, we delivered 446 airplanes -- our highest number ever. As a result of the recent airline industry recession, however, we were down to just 206 airplanes last year. That 50 percent drop in production in just three years inflicted some real trauma, including the loss of about 20,000 jobs in the Commercial Airplane Group alone. Those lost jobs had everything to do with lost production, and nothing to do with work placed overseas.
As grim as things were, we continued to invest in developing the most complete airplane family in commercial aviation. We brought to market a marvelous new airplane, the 777, and launched the Next Generation 737 family. Both of those airplanes immediately become the preferred aircraft in their class (we haven't even rolled out the first new 737 yet but we already have 392 announced orders).
During this same time, we also began significant process improvements to become more competitive. We've made good progress in reducing the cost and time it takes to produce airplanes while increasing the quality. We have a long way to go, however, because our business is fiercely competitive and we can never stand still. So changing the way we do business -- always looking for the better, faster or less expensive way to do something -- is what will keep us in business.
One thing hasn't changed, however, and that is how important the global market is to our success. Year in and year out, we sell about 60 percent of the world's airplanes, with about 70 percent of those sold to international customers. In fact, last year 88 percent of our airplane orders came from international customers. And the fastest growing air travel markets are outside the United States ... especially in the Asia-Pacific region.
So our future depends on our success abroad. It's hard to gain access to many markets overseas unless you can show that you're there for more than just a sales pitch. International trade is a two-way street. We can't expect to sell our airplanes around the world and sustain jobs for Americans right here at home if we're not willing to participate in the economies of other nations. That means buying things from them, not just selling to them. Unfortunately, too many people refuse to accept this.
For virtually every other major American company -- whether it's Intel or Ford or 3M -- owning and operating entire plants overseas is a routine part of doing business. So common sense tells us it should not be an issue for The Boeing Company to buy airplane parts from the very countries that buy our airplanes.
To remain the world leader in commercial aviation means, over the long term, becoming a premier global enterprise. You can expect to see us continue to become engaged internationally as we compete in current markets and seek out new markets and new opportunities for growth.
As we compete around the globe, we're also looking at the overall environment here at home as a key to maintaining our competitiveness. That environment is, quite simply, the educational, social and economic infrastructure of the communities where we live and work and run our business.
And there are some real danger signs:
I recently saw a newspaper article that said 25 percent of Seattle's high school students dropped out of school in 1995 -- that's a frightening prospect for Boeing or any other company here to consider.
Earlier this week I learned something even more alarming: By the time he's 24, a 16 year-old urban African-American male in Washington state today has a higher probability of ending up dead or in prison than of graduating from a university. Here's another shocking example: Washington ranks 47th among the states in per capita access to public university education. 47th! Yet the number of high school graduates in Washington is projected to increase nearly 50 percent by the year 2010 ... and I don't see much in the way of funding or programs that will expand access to those new students.
To continue to be the world's No. 1 manufacturer of commercial airplanes, Boeing must have the best educated and most highly skilled people in the world working for us. That's why these current trends in education are so disturbing to us ... and should be disturbing to you, too. There are other changes that impact the social infrastructure and which business must adapt to successfully. I'll mention just two. The first involves the family. When I grew up, more than 80 percent of families could afford to have a parent stay at home to care for the children. Today that figure is only about 15 percent. The traditional family structure and routine have changed dramatically. Another change involves the labor force. Looking out over the next 20 years, diversity in the labor force is an inevitable, demographic reality. At Boeing, diversity used to mean that you were from Idaho or Montana. Now we know better.
Tomorrow's best and brightest will be a highly diverse group: Only 15 percent of the new entrants to the workforce over the next 20 years will be white males. If we want the best and brightest to work for us, our company culture must value and reward diversity -- so everyone feels that his or her contributions and uniqueness are valued.
The economic infrastructure of the community is also something that demands our attention. Seattle and the Puget Sound region are truly fortunate ... our superb natural setting and our presence on the Pacific Rim have attracted a bounty of economic growth. But we have to be careful to protect that bounty. For instance, getting around on our highways is increasingly difficult. Boeing has 100,000 employees -- most of whom live here in Puget Sound. We need to have a transportation system that allows our employees to get to work and home again without spending countless, frustrating hours stuck in traffic. And where we can move airplane parts up and down the Everett-to-Auburn corridor quickly and easily. The RTA plan will help make that possible. It will also provide one of the improvements needed for continued regional economic growth.
Another crunch that's coming is at Sea-Tac Airport. We are very much a part of the Pacific Rim and a gateway to Asia ... but there's no law that says airplanes must stop in Seattle on their way to Asia. There are other "gateway" choices -- Vancouver and Portland, for instance. If we want to continue to share in the prosperity of the growing markets of the Pacific Rim, we must have the economic infrastructure to take advantage of that growth ... and a third runway at Sea-Tac is a necessary part of it. From our own perspective at Boeing, we also want to make sure we can continue to ship spare parts to our airline customers quickly and efficiently. I've indicated how changes in the educational, social and economic infrastructure of our community can impact business. It's clear there is plenty of need out there in society, and we recognize that government can't -- and shouldn't -- do everything. That's where companies such as yours and mine come in.
I'd like to mention a few of the steps we at Boeing are taking to strengthen the community and respond to some of these changes. The Boeing Employees Good Neighbor Fund was started 45 years ago and is now the largest employee-owned charitable fund in the world. B-E-G-N-F raised $22 million in 1995.
Besides being the largest employee charity in the world, B-E-G-N-F was the second-largest grant maker in the Pacific Northwest last year, second only to The Boeing Company itself. The company directly contributed $36 million last year, with our biggest emphasis on supporting education, followed by social service agencies and the arts.
Together, The Boeing Company and its employees in 1995 gave a total of $61 million -- including in-kind gifts -- to the communities in which we live and work. On top of this, Boeing employees and retirees volunteered more than one million hours to support community projects. We're very proud of our record ... although we look at this as only a start. Strengthening our community also means being a good employer. We're working hard to become the employer of choice for a diverse talent pool. Companies that don't understand, accept, and make the most of a diverse workforce won't make it in the future. After all, there are some great companies around here to work for, many represented by you today. We're all competing for the best people. And it's not just a smart business thing to do ... it's also the right thing to do.
Another commitment we've made at Boeing is our new Employment Stability Policy. We will retrain and reassign willing employees whose jobs are changed or eliminated as a result of the process improvements we're implementing to become more efficient. Few companies have gone this far.
We also just took $1 billion in cash and invested it in Boeing's new Share Value Program, a plan for distributing Boeing stock to our employees. This program is an investment in our people. We want everyone at Boeing to know they are valued, to share in our success, and to own a piece of the company as shareholders.
Our new Boeing Family Center is another example of what we're doing to become an employer of choice. This Center in Everett will provide high-quality day care for 200 children of our employees. It's now under construction and we plan on opening in January 1997. We expect more to follow.
Just as all of us here today share the goal of making the Pacific Northwest a better place for future generations, we at Boeing want to make our company a great place to work not just for us, but for our children, too. A business is much more than today's work; managed well, it can be a legacy for tomorrow. The same is true of a community. The things we're doing at Boeing are only a foundation ... and a modest one at that ... for how we begin to address the long term needs of our community as a place to live and work. There is so much more to do -- and I think the Chamber has a unique and powerful role to play in developing a community strategy for the year 2016 ... a strategy that will increase Seattle's share of world commerce. For instance, I mentioned lack of access to higher education as a major problem for this community. I hear it talked about as a budget issue; but the real cost has nothing to do with the state budget. The real cost is not being able to compete in the future because we won't have an educated workforce. This should be a fundamental concern for every company represented here today. Education is something that we, as business leaders, can do something about. We must make both the public and our elected officials aware of the consequences of failing to adequately fund higher education in this state. If we don't, we simply won't be ready for the economy of the 21st century. This community is very important to The Boeing Company and, I know, to each of you. As a community and as companies, we need to make the choices today that will create the kind of tomorrow we want to leave for our children. It's up to us to make those choices. I want to thank you for inviting me here today, and for supporting our community through the Seattle Chamber of Commerce.