The Shrontz Years -- Boeing Leader's Push For Change Has Left The Company Headed For A Strong Future

Frank Anderson Shrontz could have been pushing pills instead of $150 million flying machines.

But The Boeing Co.'s chairman and chief executive officer accepted a job with the airplane manufacturer in 1958 rather than stay with pharmaceutical giant Eli Lilly & Co. where he worked while in graduate school. At the time, friend and Harvard classmate Tom Brown urged Shrontz to join Boeing, but to "stay out of Boeing's commercial business because it might not last!"

But Brown, then working on the B-52 bomber, helped Shrontz get a job in the Boeing commercial group's contracts department anyway. Shrontz had a law degree and was, at the time, completing a master's degree in business administration at Harvard Graduate School.

"I thought Boeing would give him a professional challenge, and the department a chance to use his skills," recalled Brown, the retired chairman of Eldec Corp.

Some challenge it was.

Shrontz, Boeing's sixth leader in its near-80-year history, became one of the most powerful men in the world, leading a company expected to have sales of $22 billion this year. The country's top exporter and manufacturer of commercial jets also is involved in significant space and defense projects such as the Space Station and the Joint Advanced Strike Technology fighter.

Shrontz, the second lawyer (behind William Allen) to run the company, gave an engineer-run operation the stamp of business and legal discipline at a time when bottom-line interests became key and the business became global.

The 64-year-old chairman plans to pass his CEO duties to engineer Phil Condit, Boeing's president, on April 29, and retire near the end of this year.

Although he is one of the more modestly paid CEOs of a multinational U.S.-based corporation, Shrontz will leave well-compensated. Besides a salary and bonuses likely to exceed last year's $1.6 million, plus stock and pension benefits, he has 200,000 stock options at $40.56 each he can cash in anytime until 1998. At Boeing's recent stock price of about $82 a share, he would net nearly $8.5 million. The special stock options were granted by the board of directors in 1993 as an incentive to increase the stock price, then at about $40 a share.

Shrontz receives high marks from industry and community leaders and Boeing insiders for strong, decisive and caring leadership. They say he has positioned the company toward a strong future with its product line in commercial and defense businesses. The end of the Cold War limited the scope of defense work, but Boeing has targeted a few prime areas for future profits.

Boeing also has branched out in the space arena under Shrontz's guidance, not only as the prime contractor and developer for some parts of the international Space Station, but also in private ventures involving satellite launchings and satellite data transmission, which could open a new business line.

An agent for change

Shrontz became president in 1985 and chairman a year later, leading the company through an unprecedented commercial-jet-order boom, followed by the subsequent downturn that led to thousands of job cuts before business began recovering last year.

Despite a loss of 30,000 jobs since a 1989 peak of 106,670 in Washington, the company's payroll here today is about the same as it was when Shrontz became chairman - near 75,000. Companywide, it has slipped from about 120,000 to 105,185 in the 10 years, reflecting shrinkage in military business conducted mostly in other areas.

Through the boom, which peaked with 441 jet deliveries in 1992, and continuing through the downturn when it was difficult to consider spending money for anything new, Shrontz challenged his company to change its culture.

He pushed managers and others to communicate better with customers and co-workers in different disciplines, a strategy that led to the cross-functional teams that designed the new 777 twinjet. Today, the company is improving manufacturing processes, cutting delivery time and becoming more productive with fewer workers.

"I would have liked to have started cultural change earlier and pushed for process changes harder when we were not in crisis," Shrontz said in an interview in his spacious but modestly furnished office near Boeing Field. "But I'm pleased we've made the right decisions in production and the direction of the company."

With costs the most important concern for the government and for commercial-airplane customers in a deregulated environment today, Boeing needs to cut its own costs so it can keep ahead of competitors - including Europe's Airbus Industrie, a manufacturer that in the past has enjoyed government subsidies.

"Airbus will still be here 20 years from now along with, perhaps, a strong Asian manufacturer," Shrontz predicted. He believes McDonnell Douglas also likely will have a continuing role and cautions "don't write off Russia" when its financing and other problems get settled.

Shrontz stood out as he worked in sales, led the Renton division when 707, 727 and 737 jets were produced there, and, in 1975-76, worked at the Pentagon, including a year as an assistant secretary of defense. He returned to Boeing as corporate vice president for contract administration and planning. He also was a Sloan Fellow at the Stanford Graduate School of Business Administration.

His predecessor, T.A. Wilson, said last week that Shrontz was targeted as a potential leader for at least 10 years before he was named Boeing president by the board of directors.

"There was competition, but Frank had a very excellent working record at Boeing and was a positive influence," Wilson said. He cited Shrontz's management of the Renton division and other commercial and headquarters assignments, as well as his work at the Pentagon.

Today's Boeing managers praise their boss for being straightforward, decisive, willing to take risks and not letting his ego get in the way.

Gerald King, the company's Defense & Space Group president, said Shrontz was the right person at the right time for the top Boeing job.

"We needed to make fundamental changes in our business," King said. "He provided focus and leadership. We didn't recognize at the time the value of doing what we needed to do to become world-class."

"He's stable, not like the squirrels," said Dean Thornton, retired president of Boeing Commercial Airplane Group, who more than a decade ago competed unsuccessfully with Shrontz in a bid to become Boeing president.

Thornton, who knew Shrontz in college, said people sometimes incorrectly think that his quiet and reserved approach precludes him from taking risks and making big decisions. But that is not the case, Thornton said.

Shrontz is "the most objective person I know," said Ron Woodard, Boeing Commercial Airplane Group president. "He can make a decision one day based on a set of facts. And, if the data changes, he'll change his decision."

Shrontz also has a tremendous sense of humor, say his managers. "He can laugh at himself and doesn't take things too seriously," Woodard said.

He and others said Shrontz is easy to talk with, fun to be around and likes to talk with the troops. He doesn't have a nickname within the company. Most call him Frank or "sir," while Wilson was known as "chief."

`Usually late to class'

An only child, Shrontz grew up in Boise. He lived across the street from the high school and said he wasn't particularly interested in his studies.

"As a result, I was usually late to class."

Like many others, he said, "I was not dedicated, motivated or highly focused and didn't know what I wanted to do when I was in high school."

But at the University of Idaho, he got interested in business, particularly finance and marketing. He decided a law degree would be helpful in business, so he majored in law. He was a finance major at the Harvard Business School.

Between college and graduate school, he did a two-year stint in the Army, doing legal work for a physical-evaluation board in a hospital. He said his legal background taught him discipline in thinking, enabling him to consider various aspects of a situation before jumping to conclusions through case study.

"My father had a lot of influence on me with his high integrity and work ethic," Shrontz said. His father supported several generations of family with a sporting-goods shop that also sold cutlery and repaired bicycles and lawn mowers. Shrontz worked there summers and learned to fix things but said he's not a "workshop type."

One English professor, whom Shrontz described as "very liberal for Idaho," taught him to "think outside the box" and to read a lot.

Mentors at Boeing, he said, included Bruce Connelly, vice president and general manager of the transport division, and "later, T (Wilson) kept his eye on me."

Family comes first

Shrontz and his Seattle-born wife, Harriet, met as seniors in college and were married here 42 years ago after a six-month courtship.

"He was intelligent, charming and attractive, and I knew he would do well at whatever he did," Harriet Shrontz said.

They live on Mercer Island and have three sons: Craig, a Bellevue lawyer; Rick, a social worker in San Diego; and, David, a student seeking an MBA from Seattle University. He has one granddaughter.

Harriet Shrontz said her husband is "wonderful to be with, very thoughtful, kind, loving and interested in many things." He's also loyal to his many friends and likes to be with his family.

Craig Shrontz said that, despite a busy schedule, his father always maintained a balance between work and family, and "family always came first." He happily recalled their activities in Indian Guides (a YMCA program for boys and dads), skiing at Snoqualmie Pass and water skiing at their cabin on South Puget Sound. They still spend time together. Two years ago, the entire family vacationed in Italy.

Craig Shrontz said he often has a hard time thinking of his dad as the important person he is, particularly at times such as two years ago when he saw him share a podium with President Clinton and Russian President Boris Yeltsin.

"I thought to myself, this is the guy who taught me how to ride a bike."

The Boeing chief wouldn't say which Boeing jet is his favorite. But he confided that developing and delivering the 777 is his proudest achievement, partly because of the success of its new process that has helped set up the company for the future.

Plans for the future

Shrontz, who likes Italian food and drives a Ford Explorer, said he wants to improve his golf score, fish, hike, ski, read light fiction and travel for fun. He's been on the road more than half the time in recent years but said he hasn't had a chance to explore some of the places he's been.

Besides the cabin, Shrontz has purchased a home in Sun Valley, Idaho, where he said he expects the clan to spend more holidays.

Shrontz won't lack things to do. He's on the boards of Citicorp, Minnesota Mining & Manufacturing and Boise Cascade Corp.

Pursuing a relatively recent interest, he is vice chairman of New American Schools Development Corp., an effort to develop and finance novel educational ideas for the kindergarten-to-12th-grade system.

He's also on the board of regents of the Smithsonian Institution; chairman of Partnership for Learning; a member of the national Business Round Table and a member and past chairman of the Washington Business Round Table. He headed the local United Way fund drive last year and serves on the National Business Council.

He particularly wants to continue efforts toward improving education. "I don't think anything is more important to the future of this country," he said.

Shrontz said it's imperative that Boeing keep its workers motivated. Calling them the best paid and most skilled in U.S. industry, he said the company must continue every effort to retrain them as needed. He also said he regretted last year's 69-day Machinists' strike.

The Boeing chief said that through the years at Boeing he always had good advice and depth of management behind him. His advice to successor Condit is that he be willing to make tough decisions and to lead.

Condit said the most important thing he has learned from Shrontz is the ability to listen to a wide variety of people and then really listen.

Shrontz's biggest contribution, he said, is "getting us started down a path of change and in seeing the need for the company to evolve, and he encouraged and motivated that process."