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Boeing’s New CEO Is Hands On. He’s Being Handed a Company in Crisis.

Kelly Ortberg inherits a troubled ‘go, go, go’ culture and a manufacturer burning through billions of dollars

JOHN JAY CABUAY

JOHN JAY CABUAY

Robert “Kelly” Ortberg was well known on Wall Street for striking big deals as the leader of Rockwell Collins. But back in Iowa, the aerospace executive was known for paying attention to issues that rarely made headlines, like the VIP spots in the company parking lot.

With little fanfare, Ortberg removed the assigned spaces for higher-ranking employees at the headquarters of Rockwell Collins. Brad Neilly, an employee, recalled how one Friday night he walked out of the building at the same time as Ortberg. The chief executive had parked even further away from the building, “deep into the parking lot,” Neilly wrote on LinkedIn in 2021. “It was a little thing but had a big impact on me.” 

Ortberg, 64, who takes over Thursday as the CEO of Boeing BA -1.09%decrease; red down pointing triangle, will need both strategic vision and an eye for such details as he tries to revamp an American manufacturing giant that has been hobbled by production delays, factory flubs and quality lapses that have marred its reputation and drained its finances. 

It is a turnaround that his two predecessors—Dennis Muilenburg, an engineer who spent his entire career climbing the Boeing ranks, and David Calhoun, a General Electric veteran and Blackstone executive with a fix-it reputation—attempted and failed to pull off.

“They clearly need to get back to basics, and Kelly is a person who will do that,” said Don Beall, former CEO of what was then Rockwell International, who worked with Ortberg as he rose through the company. “He’s a very hands-on guy. He’ll get out on the shop floor.”

Boeing—whose nearly $80 billion in annual revenue dwarfs the $5 billion at Ortberg’s prior employer—has a raft of problems. It faces federal monitoring due to its guilty-plea agreement related to two fatal 737 MAX crashes. Investigators are probing how a fuselage panel on a 737 MAX fell out midair on a Jan. 5 flight. Workers have portrayed management as dismissive of quality and safety concerns due to its “push, push, push, go, go, go” focus on production, according to evidence released this week by U.S. accident investigators. It has burned through more than $8 billion in six months, sparking liquidity fears. 

Ortberg declined to comment. Boeing says it has taken steps to improve quality and cooperated with federal probes. Calhoun recently apologized to the families of the MAX crash victims and acknowledged the company’s culture was far from perfect. 

 

‘The Wonder Years’

Ortberg spent much of his life and early career in Iowa. He grew up in Dubuque, where his father worked at John Deere and his mother cared for him and three siblings. A former Boy Scout who achieved the top rank of Eagle, he studied mechanical engineering at the University of Iowa, about an hour-and-a-half drive from his hometown. 

The coming-of-age TV show ‘The Wonder Years,’ which he liked, reminded him of his childhood, Ortberg said in a 2013 interview with Iowa Now, a university publication. “This upbringing instilled some key values in me that have served me well. You need to work hard to earn your keep,” he said.

After graduation, Ortberg spent much of the next three decades in nearby Cedar Rapids, where he rose through the ranks at Rockwell Collins, a niche supplier of avionics and interiors that Ortberg sold to rival United Technologies in 2018. A successor company was later renamed RTX.

 

At Rockwell Collins, Kelly Ortberg understood how the products worked, walked factory floors and knew up-and-coming workers. He’s shown here in the middle, posing with employees after a company meeting in 2017. PHOTO: BUSINESS WIRE/AP
At Rockwell Collins, Kelly Ortberg understood how the products worked, walked factory floors and knew up-and-coming workers. He’s shown here in the middle, posing with employees after a company meeting in 2017. PHOTO: BUSINESS WIRE/AP

 

He was living in West Palm Beach, Fla., where he had retired after stepping down from RTX in 2021, when Boeing called. He remained on the RTX board until last week when he took the Boeing job. 

Former Rockwell Collins CEO Clay Jones, Ortberg’s immediate predecessor and a longtime mentor, said he believed Ortberg was content in retirement. Jones was surprised when Ortberg called him to say he was considering the Boeing job. But, as they discussed the role, Jones said, “it made perfect sense.”

Ortberg and his wife will be moving to Seattle, where Boeing has factories that build its 737 and 777 planes. Boeing’s headquarters, once in the Seattle area, are now in Arlington, Va.He will have less time for his favorite pastime: golf. He told Iowa Now he loved to play because it is a time when he can shut off his cellphone and, he said, “it’s a game that keeps you humble, and there’s only one person to get credit or blame for the results.”

 

Deep relationships

In Ortberg, Boeing’s board has selected an outsider who is intimately familiar with the plane maker’s vast supply chain. Former Boeing executives who have worked with him describe him as a good listener with deep relationships across the industry, including with airlines frustrated by the manufacturer’s persistent delivery delays.

Alan Mulally, the former head of Boeing’s commercial business who left in 2006 to steer a turnaround at Ford, said that Ortberg while at Rockwell Collins was key in developing the cockpit for the 777 and 787 jetliners—from flight control to vision systems to maps—and that doing so required him to navigate the needs of Boeing, suppliers, pilots, regulators and air traffic officials. 

Ortberg has the temperament and experience, he said, to create an environment in which employees feel safe flagging problems.

 

A Boeing production facility in Everett, Wash. PHOTO: JENNIFER BUCHANAN/AGENCE FRANCE-PRESSE/GETTY IMAGES
A Boeing production facility in Everett, Wash. PHOTO: JENNIFER BUCHANAN/AGENCE FRANCE-PRESSE/GETTY IMAGES

 

“As an engineer, this is the way we grow up,” Mulally said. “The whole idea is that you are creating a skilled, healthy and psychologically safe environment because that type of environment is what allows people to share everything that’s going on.”

Ortberg took over the Rockwell Collins commercial unit in 2009 amid the global economic crisis and then the company’s government business a few years later when the U.S. was drastically cutting military spending. He presided over layoffs and restructurings and was able to maintain high morale and quality, said Jones, his old boss. 

“He faces issues head on. He doesn’t sugarcoat them,” Jones said. “He communicates well to his people so they know what the circumstances are, and they know there is cause and effect.”

 

‘Dig, dig, dig’

Ortberg expanded Rockwell Collins with a pair of acquisitions, including one deal that he struck just a few days after taking over as CEO in 2013. He had a habit of obsessively communicating with board members, former directors say, often calling them individually to update them on acquisition developments. 

The executive offices at Rockwell Collins were close by the manufacturing lines, said Kevin Michaels, an aerospace consultant who started his career alongside Ortberg. “He liked to see the operations — and learn,” he said of Ortberg.

 

Ortberg at the Rockwell Collins production facility in Manchester, Iowa, in 2016. PHOTO: DANIEL ACKER/BLOOMBERG NEWS
 
Ortberg at the Rockwell Collins production facility in Manchester, Iowa, in 2016. PHOTO: DANIEL ACKER/BLOOMBERG NEWS
 
At Rockwell Collins, he understood how the products worked, walked factory floors and knew up-and-coming employees. He also appeared at ease talking about detailed product issues with engineers and others, skills people who worked with him there expect him to apply at Boeing.

“He’s just going to dig, dig, dig,” said Andrew Policano, a former business-school dean who spent about 12 years on the Rockwell Collins board, working closely with Ortberg. 

When asked difficult questions in board meetings, Ortberg would often pause and consider what was being asked. “Kelly is not the kind of person to shoot from the hip,” Policano said. “It was always clear to everyone around the table that he knew every aspect of what needed to take place.”

An ardent Iowa Hawkeyes fan, Ortberg once invited Policano and his wife to a college-football game. 

When the director arrived, Ortberg ushered him to an RV in the parking lot, where his friends were tailgating. “There’s no greater fan than Kelly,” Policano said. “You’ve got to know how to enjoy yourself in a high-pressure job, and he does.”

Andrew Tangel and Doug Cameron contributed to this article.

Write to Sharon Terlep at sharon.terlep@wsj.com and Chip Cutter at chip.cutter@wsj.com

 

 

Author: Sharon Terlep, and Chip Cutter

Source: WSJ:

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