Boeing HQ in Chicago a ‘ghost town’ as priorities shift

SEATTLE, October 7 (Reuters) – Twenty years ago, just days before the September 11 attacks on the United States crippled the aerospace industry, Boeing Co (BN) moved its headquarters from its center from Seattle’s historic fabrication to an elegant downtown Chicago skyscraper.

The move was at the heart of Boeing’s plan to forge a new identity as a diverse global juggernaut, removing top executives from day-to-day operations in distant business units and closer to Wall Street and its major customers.

Two decades later, amid another industry crisis, Boeing’s corporate hub is in limbo.

A new generation of primarily coastal-based senior executives are handling industrial certification and safety issues across its key divisions and the lingering fallout from the 737 MAX and coronavirus crises. At the same time, the tax incentives offered to Boeing by Chicago and Illinois run out at the end of the year.

Once a symbol of a new Boeing, the vision of a corporate epicenter rising above its building blocks is at odds with the imperative to reclaim engineering dominance and mend customer relationships. and federal regulators.

General manager Dave Calhoun, for example, spent the start of the year at the Boeing plant in South Carolina dealing with production-related flaws that hampered the program, people familiar with the matter said. Read more

Other senior executives, like new CFO Brian West, are also based primarily on the east coast of the United States and silence has settled on the exclusive but functional top floor, although the pandemic has also been a major factor. , people said.

“It’s a ghost town,” added one of the people.

The corporate headquarters – a 36-story, $ 200 million riverside skyscraper – stands at the crossroads of a cost-cutting campaign that has seen Boeing part with real estate, including its corporate headquarters in commercial planes in Seattle.

Several people close to the company say cost cuts and a more practical corporate culture have raised questions about Boeing’s long-term future in the city, and in turn about the general direction Boeing has taken. ‘intention to take as he tries to regain his pace.

Boeing, however, insists that major operations are still taking place there and rejects any suggestion that the giant could leave its base in the Midwest. “Chicago is strategically important to Boeing’s US and global operations,” a spokesperson said.

“As with other companies, we have adapted to hybrid ways of working in the midst of the global pandemic to engage with our employees, customers and other stakeholders.”

Boeing and its employees have invested nearly $ 50 million to support Chicago communities in recent years, Boeing said.

Despite the new focus, others warn leaving town would risk a local firestorm and stay away from Boeing’s immediate priorities amid a host of industrial and regulatory issues.

NEUTRAL LOCATION

Boeing left its Seattle home after 85 years after merging in 1997 with St. Louis-based rival McDonnell Douglas – a move that angered mechanics and core engineers.

Boeing was looking for a post-merger headquarters in a neutral location separate from these existing divisional power centers.

But some critics saw Boeing’s Chicago move as a symbol of a company that prioritized short-term profits and shareholder returns over long-term engineering dominance – a repeated accusation after the 737 MAX crashes. who killed 346 people in 2018 and 2019.

“It started as a way to signal that they would make future investments regardless of any inherited loyalty,” said Richard Aboulafia, analyst at Teal Group. “For some, it has just become a way of indicating that they will not make any future investments.”

EXPIRING INCENTIVES

Chicago, Cook County and Illinois have given Boeing more than $ 60 million in tax and other incentives over 20 years to move. Those credits have expired or will expire at the end of the year, although Boeing will receive funds for 2021 next year, the spokesperson said.

The incentives, which were temporarily swept aside by a trade feud with Airbus in Europe over mutual claims of unfair support, forced Boeing to keep 500 full-time employees in the office.

Boeing reported 513 full-time employees in Chicago for 2020, a city spokesperson said.

Boeing also employs thousands of people in Chicago and the Metro East region in southern Illinois near St. Louis, a state spokesperson said.

But last year’s analysis by the Better Government Association, which reviews Illinois state rulings, found that Boeing had not hit the 500-employee mark in at least four years.

“The figures reported by the company to the state and the city differ, have never been audited and in some years have not met the public target,” he said.

The indirect impact of Boeing employees in the Chicago area had been valued at $ 4.3 billion over 20 years, Pam McDonough, former director of the Illinois Department of Commerce and Community Affairs, said in an article. on LinkedIn last year.

“These big projects are complicated and strategic, but translate into huge financial and civic benefits.”

Reporting by Eric M. Johnson in Seattle Additional reporting by Tim Hepher in Paris Editing by Nick Zieminski

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