Expecting the UNEXPECTED

By getting the right people posted in key European cities and regions, Boeing is better positioned to respond to the opportunities

BY MAUREEN JENKINS


Europe—home for decades to many loyal Boeing customers, partners and suppliers—continues to be an anchor of the company's globalization strategy.

And despite the very real challenges the worldwide aerospace industry faces—from the global economic downturn to SARS (severe acute respiratory syndrome) outbreaks, from the recent war in Iraq to ongoing terrorism fears—Boeing continues to see the diverse continent as a place of opportunity for sales as well as strategic partnerships in research, technology and production.

The enterprise's overall European strategy, said Tom Pickering, senior vice president of International Relations, is "to continue to retain a significant share of the European market and to find new opportunities where it is cost-effective to do business in Europe." Underlying this strategy is the principle that "being more effective globally means being more effective and present locally." But there's no one-size-fits-all formula. Increasing the understanding of Boeing as a local player that's invested in an individual country's aerospace industry and community is what it's all about.

That's where Boeing country and regional executives come in.

Realizing that transforming Boeing into a truly global enterprise takes time, Craig Johnstone, vice president and regional manager, Europe, said International Relations gave each country or regional executive a three- to five-year horizon to establish a local presence. Some, he said, have jumped out to a much faster start than was anticipated.

After all, these are people whose networks and spheres of influence stretch into areas of government, industry, and academia that Boeing rarely before could reach. And their ability to make a phone call, to generate an introduction, to help smooth the way for Boeing business unit campaigns from their countries is invaluable.

Today's rapidly shifting geopolitical scene—in Europe as well as throughout the world—presents Boeing with a set of unforeseen challenges. As Pickering said, "the strategy is designed to take into account a foreseeable number of variables, and be dynamic enough" to respond to new realities while taking advantage of opportunities.

Italy

Boeing and Italy have shared a cooperative partnership that dates back more than 35 years. But since March 2002, when Boeing named former Ambassador Rinaldo Petrignani president of Boeing Italy, the company has enjoyed a string of successes and announced new collaborations.

In partnership with Alenia, its subsidiary Aeronavali, and the Italian Ministry of Defense, Boeing is developing 767 Tanker Transports for the Italian Air Force. At last July's Farnborough Air Show, the company and Alenia Spazio announced the signing of a memorandum of understanding to cooperate on ballistic missile defense. Italian flag carrier Alitalia has taken delivery of new Boeing 777s since last summer, making the airplane a cornerstone of its fleet revitalization.

Just this January, Boeing and Finmeccanica agreed to strengthen their collaboration in aerospace and defense projects. And February's International Technology Summit, which included the most influential names in Italian aerospace, government, the military establishment and academia, helped Boeing further strengthen the ties so critical to business success in this country. (This fall, the two companies, along with German-based Aspen Institute Berlin think tank, will host a pan-European conference on ballistic missile defense in Italy.)

"What we wanted to do we achieved—to project an image of Boeing as a company at the cutting edge of high technologies," Petrignani said. And he hopes to showcase Boeing's capabilities as a system integrator to the Italian military establishment—even planning visits to the United States for high-level Italian officials.

But it's not just about helping to sell products. Petrignani has been working with Italy's Technology Initiative "in order to establish contact with Italian research facilities, universities and high-tech companies to identify areas in which Boeing and these Italian centers can work together in research and development and possibly production."

Spain

Of all Boeing Spain's accomplishments over the past year, it is the Boeing Research & Technology Center—the first non-U.S. research center to be staffed by Boeing employees—that makes Pedro Arguelles most proud. The Phantom Works center, under the direction of Miguel Hernan, opened last July, a few months after he joined the company as Boeing Spain president.

"From the minute we opened the center to the public," Arguelles said, "we've absolutely felt the support we were getting from government, industry and academia was a good demonstration of the value of globalization." The center's existence helps Arguelles make the case that Boeing, which has had a presence in Spain for more than 50 years, is taking an interest by researching key Spanish and pan- European aerospace issues, such as those surrounding the environment and air traffic management. And the center's joint projects with European universities and companies are beginning to show results that will benefit the entire Boeing enterprise.

Last month, the Spain-U.S. Chamber of Commerce honored Boeing Chairman and CEO Phil Condit in New York City as "Business Leader of the Year" for his and Boeing's leadership in building partnerships with Spain's business community. This, Arguelles said, shows that "we are gaining ground here and are beginning to be perceived as a different type of company, being part of the fabric and being present.

"Boeing is very brave to make a decision to globalize the company at this turbulent time for the aerospace industry," Arguelles said. "It's of great importance for every Boeing employee to know that our management is very serious that when they make a decision, they stick to it."

Russia

Ten years of Boeing presence in Russia has brought numerous deliverables to the company's business units. A representative office was opened in the early 1990s mainly to support the development of the Russian segment of the International Space Station. But over the years, the office has launched a number of joint programs in research, materials, design, space, information technology, development of polar routes, and titanium acquisitions.

"We're in a long-term operation here," said Boeing Russia/Commonwealth of Independent States President Sergey Kravchenko. "We work to win the benefits of cooperation for the good of our countries."

Since last August, when Kravchenko was named to his post, the country has witnessed the gradual expansion of the Boeing Design Center, which works on Commercial Airplanes and International Space Station projects.

The Technical Research Center, where about 350 Russian aerospace professionals collaborate with their U.S. counterparts on commercial aviation, information technology and space programs, may well provide cutting-edge technology that will be applied to the 7E7 jet, said Kravchenko. This spring, Boeing entered into a contract with Sukhoi Civil Aircraft Company to consult with Sukhoi in the development and marketing of the Russian Regional Jet, designed to replace aging Russian airplanes. This jet will serve a different market niche than the existing Boeing 717.

As the leader of Boeing Russia/CIS, Kravchenko aims to find synergies between Commercial Airplanes, Integrated Defense Systems, Boeing Capital Corp., Phantom Works and Connexion by Boeing in the implementation of projects here, adding value to the enterprise.

Turkey

Although Boeing officially named Greg Pepin president of Boeing Turkey last August, he's been the company's main presence since 1999, when he established the Boeing office in the capital city of Ankara. Since then, he has worked to gain the trust of stakeholders ranging from government officials, military leaders, and community service providers—and these relationships have paid dividends. Witness the recently completed negotiations on the final details of a $1 billion-plus contract for four 737 airborne early warning & control systems. Boeing will do the modifications of the first aircraft in Seattle, with Turkish Aircraft Industries, a key partner, completing the other three aircraft.

"We were able to mobilize the resources of Tom Pickering, myself, and even [Boeing Chairman and CEO] Phil Condit, but the key is having a guy on the ground who's on top of the issue," said Craig Johnstone, who said Boeing couldn't have completed the deal without Pepin's in-country presence. Pepin also will provide support to business units in upcoming campaigns for Turkish Airlines, Chinook helicopters, and a recently signed memorandum of understanding between Boeing and Turkish industry to cooperate in the area of missile defense systems.

Boeing Turkey is a company leader when it comes to community service, which Pepin is committed to maintaining in good times and bad. Just last month, an earthquake in eastern Turkey killed more than 100 schoolchildren and destroyed their school. As Boeing has in past disasters, it will help rebuild the school.

"It's presence—and presence is critical, to get out and contact people so they know who you are, who Boeing is, and more importantly that they have a partner in the country," Pepin said.

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Already this year, Boeing has named four new executive posts for Europe—and has charged all with building upon existing Boeing relationships in their areas while developing new networks for Boeing access.

France

Announced as Boeing France president on May 20, Yves Galland faces a challenge unlike his country executive peers: he oversees Boeing France headquarters, which sits right in the middle of Airbus' and the European Aeronautic Defence and Space Company's home turf. He realizes that it won't be easy to convince French stakeholders—and the public—that Boeing can offer opportunities for mutual value creation, but he considers that part of his charge as country president. And the fact that French-U.S. government relations have become strained due to the Iraq conflict presents Galland with an additional challenge—as well as unique new opportunities for Boeing—in his country.

One way Galland said he hopes to integrate Boeing into the local fabric is by developing "strong markets of cooperation" in space, air traffic management, defense, civil aviation and homeland security issues. "This is not expected here," said Galland, "and we have to let them know that we are open to any form of cooperation—mergers and acquisitions, joint ventures, technical cooperation and the purchase of minority interests."

Partnerships between the French industry and Phantom Works might be useful, he said. "In these sectors, investment in technology is very large. To be able in some sectors to share the research and development [costs] might be a clever thing to do."

In France, there is concern that proven Boeing products such as the C-17 Globemaster III transport may take away sales from still-in-development projects such as the A400M. But Galland—as he works to share the Boeing story with French stakeholders—hopes to show that there is room for both transports in the marketplace, as they fill different niches. At the same time, he wants to show that Boeing is ready to continue competing with Airbus—and believes that the new 7E7 could help level the playing field in France by offering a unique market option.

"The way I see my mission is two-fold," he said. "Increase Boeing's market share in France and at the same time, have the share of the French industry participation grow within Boeing."

United Kingdom

In Britain, Boeing enjoys much more than a buying-selling relationship. Instead, there is a real partnership that stretches back more than 40 years.

"I'm boarding a moving train," said Sir Michael Jenkins, who was named president of Boeing UK in April. "The UK is an extremely mature market for Boeing." Boeing is the biggest commercial customer for the UK's aerospace industry, and Sir Michael expects the country's suppliers—and airline customers—to be "big players in the 7E7 story." Boeing UK still is celebrating British Airways' successful test launch of Connexion by Boeing, and is involved with a consortium that in April submitted a bid for the Royal Air Force's Future Strategic Tanker Aircraft program. If chosen, the consortium will convert British Airways 767 jets into air refueling tankers and then provide the RAF with a tanker transport capability under a 27-year private finance initiative program.

Sir Michael knows it's critical that Boeing integrate itself into the local fabric of the United Kingdom. The company is sponsoring the refurbishing of the lecture theater—to be renamed the "Bill Boeing Theatre"—at the prestigious Royal Aeronautical Society in London. Boeing also is sponsoring significant high-tech research and development programs at three university centers.

Building stakeholder support for Boeing's increased presence is a priority for Sir Michael. Along with International Communications, Boeing UK is launching a pilot program that will "get an impression of what our broad stakeholder audience, including politicians and the media, think when they hear 'Boeing,'" Sir Michael said. The 18-month test will use focus groups and analyses to gauge opinion in one of Boeing's largest and most mature overseas markets, and then track and measure perception improvements over time.

Boeing, Sir Michael said, "needs to be seen not as a challenger to the mature British aerospace community, but a partner to it." And shaping public opinion is part of it, he said, because "the average person votes for members of Parliament and other politicians, so you need to start at the grass roots."

Germany

When Horst Teltschik began his country executive duties in March, he drew up a list of key contacts. But before he could begin placing calls, "I was surprised that I was immediately approached by high-tech companies, universities, research institutions and publications from all over the country asking me could we meet and discuss all kinds of cooperation." That early reception, he said, signaled the support and respect that Boeing already enjoys in Germany.

Pointing to customers such as Lufthansa—which conducted a popular and highly successful test of the Connexion by Boeing system—and business partners like Siemens, which partnered with Boeing Integrated Defense Systems on explosives detection systems at U.S. airports, Teltschik believes he began his job with a set of advantages. Yet, he said that one of his main tasks is to develop R&D relationships and strategic alliances—and "to position Boeing in Germany as a German citizen." He said it's critical that his country's politicians get this message.

And despite the U.S. and German governments' disagreement over Iraq, "it's a political signal that a big, successful company like Boeing is entering the German market," said Teltschik of his recent appointment. "For me, this was the right signal at the right time. This was quite helpful and welcomed by Chancellor (Gerhard) Schroder and the Minister of Defense."

European Union/NATO

Joris Vos' charge is quite different from that of his country executive peers, because, as he said, "the European Union does not have an airline which buys aircraft." But this former diplomat's role will draw on his extensive European contacts, his political know-how, and his knowledge of continental and transatlantic issues on behalf of Boeing.

As he sees it, his main task is to "really have my ear on the ground here and follow as closely as possible developments in the European Union and NATO which may be relevant to Boeing and do what I can to ensure our interests are taken into account. It's eyes and ears for Boeing on the one hand, and a mouth for Boeing on the other."

At the same time, he is drafting a company strategy for the EU and NATO institutions to complement Boeing's overall Europe strategy. He also is paying keen interest to long-standing trade issues pending in the World Trade Organization, as well as to discussions within NATO about the growing gap between its members' military technology capabilities and those of the United States. Vos will look for ways in which Boeing's high-tech edge—whether in aerial refueling of jets or unmanned vehicles—might play a role in building a bridge.

maureen.l.jenkins@boeing.com