Boeing Says It Will Move Headquarters Out of Seattle

In a stunning blow to its hometown, Boeing Co. said Wednesday that it will move its corporate headquarters out of Seattle, where the company had grown from a fledgling wooden airplane maker to the world’s largest aerospace concern.

After 85 years in which the city and the company had become synonymous, Boeing executives said they have begun looking at Chicago, Denver or the Dallas-Fort Worth area as home for its headquarters.

Boeing’s surprising flight from Seattle, in which about 500 top executives will leave, reflects the company’s diversification from commercial jetliners.

Although it remains the world’s largest commercial aircraft maker, it has become a major builder of military aircraft and has increasingly focused on communications satellites and space-based weapons.

No other U.S. city has such a strong identification with a single corporation.

Seattle’s relationship with Boeing is unlike anything in Los Angeles, much stronger than L.A.’s linkage to Walt Disney Co.

“Boeing started in Seattle and has been a Seattle institution for generations,” said Eugene Rodgers, author of a book on the company.

“This is very shocking because Seattlites like to say they bleed Boeing blue,” he said.

In what may be a subtle snub of Seattle, Boeing said in a statement that it is seeking to locate its new headquarters in a “culturally diverse city that offers ready access to global markets, provides a strong pro-business environment, and allows easy access to major Boeing operations and customers.”

Fall Move Planned

Boeing Chairman Phil Condit said he began considering the move last fall and discussed it with the board of directors in December, then won approval in February.

The company hopes to have a site selected by this summer and to be moved into the new location by fall.

Officials with the cities identified by Boeing immediately welcomed the decision, saying they will do all they can to persuade the company to choose them.

Los Angeles and Long Beach officials also jumped into the fray Wednesday, saying they would try to persuade Boeing to consider their cities.

Two of Boeing’s top choices, coincidentally, are home to Boeing’s top two airline customers--United Airlines in Chicago and AMR Corp.’s American Airlines in Dallas.

While Seattle was smarting over the news, aerospace analysts and consultants said the company is sending a significant message to Wall Street by deciding to move its headquarters out of the city.

Although commercial aircraft manufacturing is still a core focus, Boeing has been diversifying into other aerospace-related businesses.

“Boeing is saying its future doesn’t look like its past,” said Loren Thompson, a military analyst with the Arlington, Va.-based Lexington Institute.

“Just as Boeing wants to center itself in the middle of the U.S., it wants to be in the middle of the aerospace market, not just for airliners, but for missiles, satellites and rockets,” he said.

In a hastily scheduled news conference Wednesday in Washington, D.C., Condit said relocating its headquarters is part of a larger corporate restructuring that will give leaders of Boeing’s three major business units more responsibility for managing and expanding their segments.

The managers of the units--Commercial Airplanes in Seattle, Military Aircraft & Missile Systems in St. Louis and Space & Communications in Seal Beach--were named chief executives, reflecting their increased responsibilities, Boeing said.

“As we’ve grown, we have determined that our headquarters needs to be in a location central to all our operating units, customers and the financial community, but separate from our existing operations,” Condit said.

Analysts said the restructuring should benefit Boeing’s Space & Communications business based in Seal Beach. The unit, with major operations in Huntington Beach and Anaheim, is the largest employer in Orange County. His new title gives James Albaugh, currently senior vice president, greater freedom to expand the business, a company spokeswoman said. It recently acquired Hughes Space & Communications Co. in El Segundo for $3.75 billion, making it the world’s largest satellite maker.

But the biggest reaction Wednesday was centered on the decision to move the Seattle headquarters, where about 1,000 employees work.

As part of the move, Boeing said, the size of the headquarters staff will be cut to 400 to 500. The rest of the jobs will either be absorbed by the three separate business units or phased out. No significant layoffs are planned.

Boeing’s major manufacturing facilities in the Seattle area, which employ nearly 80,000, are not affected by the restructuring, although union officials said they are concerned that the move could lead to shuttering some operations. Last fall, Boeing confirmed it was studying a proposal to close down a plant in Renton, a suburb of Seattle.

To Seattle officials, the decision is considered a symbolic blow to the city’s image and prestige.

Washington Gov. Gary Locke said he was “stunned and very saddened” by the news and vowed to fight to keep Boeing from moving.

The reaction is understandable when one considers Boeing’s heritage in Seattle. Its founder, William Boeing, created the company on the banks of the Duwamish River and crafted the first airplane in a barn.

Front Page Material

There is some mention of Boeing almost every day in the local media and important company news often garners banner headlines on the front pages.

Rodgers, in his book, “Flying High: The Story of Boeing,” writes that Seattle residents “tend to view Boeing as ‘our’ company, and unabashedly take the attitude that what’s good for Boeing is good for Seattle and therefore good for them.”

Although Microsoft Corp., which has its headquarters in nearby Redmond, also has helped to transform the Seattle economy, Boeing remains the city’s flagship company.

The news from Boeing hit Seattle with as much force as the earthquake that struck the city last month and damaged hundreds of buildings.

Local TV stations broke into regular programming with Boeing’s announcement, and then followed up with periodic news alerts. NBC affiliate King TV devoted an hourlong noon newscast to the story.

While it was shocking news to Seattle and aviation buffs, Wall Street barely noticed and took the decision in stride. On the New York Stock Exchange, Boeing shares fell $1.15 to close at $53.85 amid a general decline in stocks.

“It’s an interesting move, but I can’t imagine investors are going to change their opinion of the company,” said Paul H. Nisbet, senior aerospace analyst for Newport, R.I.-based JSA Research Inc.

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Boeing on the Move

Boeing says the reason for the move is to save money and give the world’s No. 1 maker of passenger jets a headquarters central to its operations:

Boeing Employment

Washington: 78,400

California: 42,300

Missouri: 15,300

Kansas: 17,100

Texas: 7,500

Pennsylvania: 5,600

Arizona: 4,500

Other locations: 28,200

Source: Boeing