Condit, Phil 1941–
Retired chief executive officer and chairman of the board, Boeing Company
Born: August 2, 1941, in Berkeley, California.
Education: University of California, Berkeley, BS, 1963; Princeton University, MS, 1965; Massachusetts Institute of Technology, Sloan School of Management, MS, 1975; Science University of Tokyo, PhD, 1997.
Family: Son of Daniel Harrison Condit and Bernice C. Kemp; married Madeleine K. Bryant (divorced); married (wife's name unknown, divorced); married Janice Condit (divorced); married (wife's name unknown); children (first marriage): two.
Career: Boeing Company, 1965–1968, aerodynamics engineer; 1968–1971, lead high-speed configuration engineer for the 747; 1971–1973, lead performance engineer for the 747; 1973–1974, marketing manager for the 727; Massachusetts Institute of Technology, 1974–1975, Sloan Fellow; Boeing Company, 1975–1976, manager of new program planning; 1976–1978, director of program management, 707/727/737 Division; 1978–1981, chief project engineer for the 757; 1981–1983, director of engineering for the 757; 1983, vice president and general manager, 757 Division; 1983–1984, vice president of the Renton Division; 1984–1986, vice president of sales and marketing, Boeing Commercial Airplane Company; 1986–1989, executive vice president, Boeing Commercial Airplane Company; 1989–1992, executive vice president and general manager, New Airplane Division (later renamed the 777 Division); 1992–1996, president; 1996–1997, chief executive officer; 1997–2003, chief executive officer and chairman of the board.
Awards: Edward C. Wells Technical Management Award, 1982; American Institute of Aeronautics and Astronautics (AIAA), aircraft design award, 1984; elected to the National Academy of Engineering, 1985; Aviation Week & Space Technology magazine, Laurels Award, 1990; Wright Brothers Lectureship Aeronautics award, 1996; Financial World, Chief Executive Officer of the Year, 1996, 1997; Japan America Society, Kokusai Shimin Sho (International Citizens Award), 1997;
Ronald H. Brown Standards Leadership Award, 1997; University of California, Berkeley, Distinguished Engineering Alumnus Award, 1998; Peter F. Drucker Strategic Leadership Award, 1998; United Negro College Fund, Frederick D. Patterson Award, 1999; Air Command and Staff College, Distinguished Eagle Award, 1999; Aerospace Historical Society, International von Karman Wings Award, 1999; Boy Scouts of America, Los Angeles Area Council, Aerospace Industry Distinguished Good Scout Award, 1999.
■ Philip (Phil) Murray Condit was a visionary engineer who helped shape the aircraft designs that would dominate the world. He was a problem solver, brilliant, a good listener, amiable, self-effacing, and willing to give credit to others. But some considered him to be indecisive and self-indulgent. As a chief executive officer he often seemed aloof and isolated. His greatest contributions to aeronautics may have been his elegant solutions to aircraft design problems.
As a child Condit liked watching aircraft take off and land at San Francisco's airport; airplanes filled his imagination. With his grandfather's help, he earned his pilot's license at age 18. Condit received a BS in mechanical engineering at University of California, Berkeley, and was offered a job at McDonnell Douglas. He turned the job down. On January 25, 1963, Condit married Madeleine K. Bryant, but his relentless dedication to work soured this and his subsequent marriages.
In 1965 Condit received an MS in aeronautical engineering from Princeton University and accepted a job at Boeing in Seattle. He made his presence felt by designing a flexible wing called the "sailwing," which improved the durability and maneuverability of jet aircraft. He received a patent for the wing design. In the late 1960s there was much concern at the Federal Aeronautics Administration (FAA) about the effect on smaller aircraft of turbulence created by the new jumbo jets such as the 747. Condit calculated the forces in the vortexes created by any size aircraft and the effects of the resulting turbulence on following aircraft, enabling the FAA to make rules for safely spacing takeoffs and landings of various aircraft, rules that remained in effect forty years later.
In 1974 Condit won a fellowship to the Sloan School of Management at MIT, where he earned an MS in management in 1975. The combination of graduate degrees in engineering and business management made Condit a force to be reckoned with at Boeing, but his long hours at work cost him his marriage to Madeleine, which ended in divorce in 1982. In 1983 he was appointed vice president of the Renton Division, responsible for the design and manufacturing of the 707, 727, 737, and 757 airplanes.
In 1989 Condit put his intelligence, creativity, and management skills to work as executive vice president and general manager of the New Airplane Division, which was later renamed the 777 Division. He wanted to create not only the preeminent jet of the twenty-first century but also a new manufacturing process for building jet aircraft. Boeing budgeted $6 billion for development of the 777 wide-body airliner, but it may have cost as much as $12 billion (poor accounting meant that no one knew how much for sure). Condit introduced numerous new manufacturing techniques and aircraft designs that later resulted in huge savings in manufacturing all of Boeing's aircraft. Among Condit's innovations was the replacement of models with computers, which reduced design costs and created parts that fit precisely. By using lasers to guide parts into place, Condit halved the number of workers required to assemble a fuselage. Parts fit together so well that the noise of the aircraft was greatly diminished. He solicited suggestions from airline companies for the 777, and thousands of ideas came in, which computer software turned into numerous customer-satisfying features in the aircraft. To improve the assembly process Condit studied Japanese automobile manufacturers, trying to imitate the efficiency with which Toyota and others manufactured soundly designed vehicles.
Boeing executives had a tradition of living modestly, but Condit was flamboyant. In the early 1990s he built a medieval-style mansion. For it he designed a small railroad that would carry drinks from room to room. He partied lavishly. He may have been burning the candle at both ends because he had much to absorb him at work. Boeing had 450 computer programs that did not talk to each other. As president from 1992 to 1996, he tried to unify the computer programs into one set of simplified off-the-shelf software that all Boeing's employees could use.
In 1991 Condit married for the third time, this time to his first cousin Janice Condit. His fifteen-hour-plus workdays were hard on her. In May 1995 the first 777 came off the assembly line and was delivered, and the following month it took its first commercial flight. That same year Boeing, which usually had good labor relations, endured a 69-day strike by 32,000 members of the International Association of Machinists. The strike seemed as though it was not going to end soon, so Condit put on his wool sweater and walked into the picket lines and talked with picketers. He helped to find compromises that brought the strike to an end, and he won the enduring respect of the union members and of Boeing's engineers as well. He would always be seen by labor as a friend. Heavy competition from Europe's government-subsidized aircraft manufacturer Airbus and others cut into Boeing's sales in 1995, and Boeing began lowering its prices to undersell its competitors. In the past, Boeing had relied on its superior quality to attract buyers.
THE ENGINEER'S CEO
In April 1996 Condit became chief executive officer (CEO), replacing Frank Shrontz. He acted decisively to fix problems he perceived in the company. He cancelled Boeing's program to design and build a super jumbo-jet to compete with Airbus's A380. Airbus claimed it could sell 1,400 A380s over 20 years, a rate almost double what Boeing's 747 had achieved in its manufacturing lifetime. Condit believed that there was not enough of a market to make a super-sized airliner profitable, and he predicted that Airbus would give up on the A380. In that he was mistaken.
Of greater concern to Condit was the boom-and-bust cycle of commercial aircraft manufacturing, something that bothered Wall Street investors as well. In 1996, 80 percent of Boeing's income came from manufacturing commercial aircraft, which meant that its stock value would swing wildly as sales rose and fell with each new cycle of demands for aircraft from airline companies. He tried to ease the impact by diversifying Boeing's holdings. Previous CEOs had tried to do this by investing in furniture manufacturing and other nonaeronautical businesses. Condit instead went looking for complementary matches to Boeing's core business of commercial aircraft.
When he became CEO Boeing had three corporate jets, but Condit built a fleet of jets, eventually including his own personal 737, which was decorated in the style of an English library. He logged hundreds of hours in corporate jets as he put together his deals. He had Boeing buy Rockwell's space-related manufacturing business, and in December 1996 he engineered Boeing's takeover of McDonnell Douglas. Many McDonnell Douglas executives were absorbed into Boeing's headquarters, and as a group they resisted some of Condit's efforts to create an open atmosphere of cooperation among employees; they were used to the stern discipline of Harry C. Stonecipher, former CEO of McDonnell Douglas, who became Boeing's president. Michael M. Sears was another McDonnell Douglas manager who joined Boeing.
Boeing's assembly lines were very inefficient, with a partsdistribution system that left large portions of shop floors covered by bins of parts. Condit tried to introduce a system in which parts were delivered when they were needed. This would eventually result in improved efficiency, but in 1997 it collided with a huge upsurge in orders from customers. In 1997 Condit became chairman of the board as well as CEO. He strove to integrate McDonnell Douglas's defensecontracting business into Boeing's operations, hoping to use defense business to offset commercial-airline down cycles. By the end of 1997 Boeing had become the world's largest manufacturer for both commercial and military aircraft. That year Condit imitated the corporate structure of General Electric by establishing three divisions—commercial, defense, and space—and naming their leaders CEOs in the hope that each division would function as an independent company. In early 1997 Boeing had a $79 billion backlog of orders, and in April Boeing's stock rose to $104 per share.
All was not well, however. Longtime Boeing employees complained of a reverse takeover, bitterly joking that McDonnell Douglas had purchased Boeing with Boeing's own money. They did not like Stonecipher's harsh style, and they wanted Boeing to remain a company with its goals set in technological advances, not stock returns. Condit had hoped that Stonecipher's style would complement his own style of visionary innovation. In August 1997 Boeing spent $1.4 billion to shut down McDonnell Douglas's aged, outmoded assembly lines.
To meet the huge backlog of orders, Condit pressed his divisions to speed up their manufacturing processes, but the assembly lines were still in the process of reconciling his new software with the old software, and the assembly lines backed up. In October 1997 two of Seattle's commercial-aircraft assembly lines had to be shut down completely, costing Boeing $2.6 billion to fix. The backlog of orders became a nightmare as Boeing missed commitments to customers, and the company lost $178 million in 1997, its first annual loss in 50 years. The fallout from this fiasco included the loss of many jobs; between 1997 and 2001 Boeing laid off over 48,000 employees.
During 1998 Boeing lost many of the orders it did not fill because the global market for commercial aircraft declined. Condit won high marks from Wall Street analysts and journalists that year for successfully using McDonnell Douglas's defense contracts to soften the impact of the decline in commercial business. But when Boeing was caught illegally using proprietary information taken from Raytheon Company to win a contract to build antimissile warheads, the contract was taken from Boeing and given to Raytheon. In August 1998 a Boeing-built Delta rocket exploded, destroying a $225 million communications satellite. This highlighted quality-control problems that threatened Boeing's rocket and defense programs. That month Condit met with Wall Street analysts and was excoriated for Boeing's seeming to have overpaid for McDonnell Douglas and for Rockwell's space business, as well as for the falling value of Boeing's stock. On August 5, 1998, Condit assembled his top executives and told them he had been humiliated and wanted them to tighten their control of expenses. A few weeks later, when nothing had been undertaken to solve the problems, Condit fired 80 of his top executives. Meanwhile, Boeing held on to 35,000 pages of proprietary Lockheed documents that had been used in a failed joint venture and were supposed to be returned to Lockheed. These documents gave Boeing an edge in bidding on rocket contracts, winning a $1.37 billion contract in 2003 with the ill-gotten information. This would eventually contribute to Condit's downfall. To make the year even worse for Condit, he and Janice divorced, and she got to keep the medieval-style mansion.
In 1999 Condit sold Boeing's information-services and electronics-warfare projects. He instituted the Managing for Value Program, trying to make his employees more conscious of the desires of the marketplace. This made many long-time Boeing employees even more restive; they felt Boeing's strength lay in innovating and leading the marketplace, not in following the marketplace's sometimes-unimaginative desires. It was another sign, some believed, that the corporate culture of McDonnell Douglas was taking over and ruining Boeing. Yet the Managing for Value Program more likely came out of Condit's studies of Japanese manufacturing and his own desire to make Boeing focus on improving the quality of the goods it sold. It was a sour time for Condit; due to continuing manufacturing glitches, Boeing lost over $4 billion in 1998 and 1999.
CONDIT TRIED TO BE BOLD
Condit was criticized for being timid and having Stonecipher do most of the tough, unpleasant work of disciplining employees and setting standards of behavior that Condit himself should have been doing, he was still the man who had revolutionized aircraft manufacturing with his 777 work in the 1980s. In 2000 Condit spent 584 hours in the air in his 737, striving to pull the pieces together that would keep Boeing dominant in an industry in which Airbus, whose losses were covered by government, was rapidly gaining ground. Boeing bought the Space & Communications Division of Hughes Electronics Corporation for $3.75 billion and the Tribune Company's flight mapmaker and pilot services company Jeppesen-Sanderson for $1.5 billion. These further diversified Boeing's business while keeping the company anchored in the aerospace industry. The hope was that the new businesses would help Boeing achieve steady growth for many years in a row. Since about 85 percent of the world's airliners had been built by Boeing, Condit began a new business dedicated to maintaining the aircraft for their owners, a business that had the potential to earn $74 billion a year. Another positive development was that Condit's innovations in assembly-line efficiency finally took hold, with the labor hours required to build a 737 dropping from a high of 30,000 to 6,500.
Condit had to spend much of his time on damage control. Employee morale had plummeted: An internal survey had shown 69 percent positive feelings about Boeing among employees in 1998, while a survey the next year drew a 31 percent positive response. Boeing's white-collar engineers were angry over the lack of creativity in their work, and they affiliated with the AFL-CIO. In February 2000 they went on strike for 40 days, which delayed the completion of 50 aircraft. Union leader Charles Bofferding later said, "We weren't fighting against Boeing. We were fighting to save Boeing" (Fortune ). Only when Condit spoke directly with the strikers did they come to a settlement. Other problems included continued rocket failures and the loss of $323 million by the space business acquired from Hughes.
On March 12, 2001, Condit announced that he was moving Boeing's headquarters out of Seattle. He said he wanted to keep management out of day-to-day business operations, an explanation that would seem nonsensical to many hands-on CEOs. On May 10 he announced that the corporate headquarters would be moving to Chicago, and he took the opportunity to cut headquarters staff from one thousand to five hundred. Condit wanted to give the heads of Boeing's divisions more independence, but increasingly decisions were bogged down in committees and corporate bureaucracy now far removed from the core commercial business in Seattle.
Boeing developed Connexion, a system that allowed individual passengers to combine phone calls and Internet surfing while in flight, but there were no buyers. But Condit's maintenance services unit had a big boost when it won a contract to upgrade the Pentagon's five hundred C-130s, aircraft that had been built by Lockheed Martin. Condit worked a punishing schedule, but the hard work seemed to be paying off. He secured a deal to supply Italy with 767 air tankers, which opened access to a potential international market of $50 billion for new tankers.
In 2002 some shareholders sued Boeing, accusing the company of using accounting tricks to mislead people about the effects of the 1997 assembly-line disaster. Boeing gave them $92.5 million to settle the suit. Meanwhile, Boeing's share of the commercial-airliner market was shrinking, from 70 percent in 1996 to 50 percent in 2003.
In January 2003 former Pentagon procurement officer Darleen A. Druyun was hired by Boeing. In November it was revealed that she had given Michael M. Sears a copy of Airbus's rival bid for an $18 billion Air Force contract for one hundred new tankers. Boeing used the information to outbid Airbus, winning the contract. In response, Congress reduced the contract to 20 tankers, then chose to delay the contract indefinitely. Condit fired Sears and Druyun. In July 2003 the Pentagon suspended Boeing indefinitely from bidding on rocket contracts after Boeing's illegal use of Lockheed's documents was finally revealed and took $1 billion in contracts away from Boeing and gave them to Lockheed. Thirty-eight women employees filed a class-action lawsuit against Boeing, alleging that women had been paid less than male equals and had been denied promotions in order to inflate Boeing's bottom line; the case went to trial in April 2004. In 2003 Boeing had to write down a $1.1 billion loss on its Hughes acquisition, $1 billion on Jeppesen-Sanderson, and $1 billion in operational losses.
In November 2003 Condit offered to resign if asked to do so by the board of directors. After meeting twice a day to wrestle with Boeing's mounting disgraces, on December 1 the board demanded and received Condit's resignation as CEO and chairman of the board. The board, dominated by old McDonnell Douglas directors, then hired Stonecipher as the new CEO and director Lewis E. Platt, once the chairman of the board for Hewlett-Packard, as nonexecutive chairman. Condit stayed on to help with the transition of power until officially leaving Boeing in March 2004.
See also entry on The Boeing Company in International Directory of Company Histories.
sources for further information
Holmes, Stanley, "Boeing: What Really Happened," BusinessWeek, December 15, 2003, pp. 32–37.
Osterland, Andrew, "Philip M. Condit of the Boeing Company," Financial World, April 15, 1997, pp. 66–71.
Serling, Robert J., Legend & Legacy: The Story of Boeing and Its People, New York: St. Martin's Press, 1991.
Useem, Jerry, "Boeing vs. Boeing: America's Export Champion Is Going Head-to-Head with a Company Even Tougher than Airbus: Itself," Fortune, October 2, 2000, pp. 148–160.
—Kirk H. Beetz