Boeing HQ to depart From Seattle

Aerospace giant The Boeing Co. (BA) made a surprise announcement Wednesday that it will move its corporate headquarters out of Seattle, its home for the last 75 years, to an as-yet-undecided location.

Boeing said it will also restructure itself, elevating its three major business divisions into more-independent units, each with its own CEO.

The reorganization and planned move will have a major impact on the high-tech economy by increasing the profile of the company's California division, which operates Boeing's space-based businesses. Those businesses include the world's largest satellite manufacturing plant as well as the integration of major defense-related communications systems.

Speaking at a press conference in Washington, D.C., Boeing CEO Phil Condit described the proposed move as part of a fundamental transformation aimed at "creating an enterprise dedicated to growth."

"Constrained to the classic role we've had in our businesses, we are a 5 percent kind of growth business," said Condit, adding that this restructuring is aimed at hitting double-digit growth by moving capital and resources to high-growth areas. The high-tech space and electronics engineers in Boeing's California unit have been seen as the vanguard of that kind of growth.

Boeing's Commercial Airplanes unit will be run from Seattle and headed by CEO Alan Mullaly, the Military Aircraft and Missiles unit will be run from St. Louis by CEO Jerry Daniels, and the Space and Communications unit will be run from Seal Beach, Calif., by CEO Jim Albaugh. Each of these will be run as a separate, autonomous business, in the style of General Electric.

The management restructuring is effective immediately, and the move of the corporate headquarters is slated to happen by the fall. A decision on the new location expected in early summer.

Chicago, Dallas/Fort Worth and Denver are all being considered as potential locations for the new headquarters, the company said.

The move will be a bitter psychological blow to the Seattle area, which has been the headquarters of Boeing since its founding by Bill Boeing 75 years ago. Seattle will lose up to 1,000 jobs, half of which would disappear, and the rest move to the new headquarters. The city could lose further support services jobs. However, because Boeing's commercial airplane production is expected to remain in the Puget Sound area, the impact on jobs in the region will be relatively small. Boeing will still be the largest employer in the state of Washington, where it employs some 78,000 people.

In California, Boeing is already the largest manufacturing employer, with some 40,000 employees at facilities in locations around Los Angeles, including Anaheim, Canoga Park, El Segundo, Huntington Beach, Long Beach and Seal Beach.

The Space and Communications employees are mostly high-tech engineers, many of them inherited from the acquisitions of Rockwell in 1996 and the Hughes Electronics (GMH) satellite division last year. Smaller than the two big airplane divisions of Boeing, S&C is nevertheless considered the real growth center with the potential for development of high-tech businesses related to information systems and communications.

This unit is currently involved in major electronics system integration projects, including national missile defense; a "spy-in-the-sky" satellite program for the government; and the integration of battlefield communications using open Internet standards. Also largely based in California are projects to distribute Hollywood movies via satellite and to develop broadband Internet access for commercial airplanes.