Big Boeing Changes Before Farnborough By Rebecca Rayko, Associate Editor Farnborough, England - Boeing seems to have cleaned house and shifted gears before heading to Farnborough. Just days before the show began, Boeing ousted Commerical Airplanes Group president Ron Woodard citing continued poor financial performance in the division, with cost overruns at the company's Wichita division being the final straw. Woodard was replaced by 53-year old Alan Mulally who had headed up Boeing's space and defense division and is rumored to be a future successor of Phil Condit. The departure of Woodard was expected after the production lines under his responsibility continued to be plagued with problems and high costs. It was also speculated that Condit would be asked to leave as Boeing's troubles have worsened, but this now seems unlikely. Boeing stock has plummeted despite record orders in the commercial division, and the company has taken more than $2 billion in charges to earnings due to production problems. Many who felt Condit had been protecting Woodard from being ousted long ago say Condit could offer no help after the Wichita snafus came to light. Mulally has a reputation as Boeing's fair-haired boy, and turned down a high level position at Raytheon earlier this summer perhaps having a hint of his impending destiny at Boeing. Mulally took over the development of the Boeing 777 before leading the space and defense division. Despite the failed launch of the Delta III rocket last week, Boeing's space and defense division has largely escaped the tarnished reputation that plagues the commercial division and is seen as a more market driven unit within Boeing. Recognizing that it wasn't a market leader in space and defense, Boeing stepped up development of the space and defense programs it inherited from the McDonnell Douglas merger as seen through the Delta IV and the Joint Strike Fighter programs. Condit cited Mulally's years of commercial airplanes experience and his success during the past year in organizing the Information, Space & Defense Systems operations as well as his intensity and focus as key to his appointment. Condit adds that the company expects double-digit profit margins from the division. The reorganization also includes the appointment of James Albaugh as president of the newly formed space and communications group, which includes the information systems unit, and Michael Sears to president of the newly formed military aircraft and missile systems group. Mulally, Albaugh and Sears were all named senior vice presidents. Boeing emphasized the "breadth and balance" of its products in a speech last week hoping that will sustain them through the impending cyclical downturn. After the McDonnell Douglas merger, Boeing's products outside commercial aircraft have grown to become 40 percent of overall revenues. Boeing in a pre-Farnborough speech empasized the need to focus on strong, long-term industrial teams to build future success, underscoring a theme of consolidation in the industry. Boeing last week awarded a 10-year $4.3 billion contract for its flat-rolled aluminum products to five suppliers in the US and Germany. Boeing says its strategy of buying from only five suppliers will help it forecast requirements better and save money. The reorganization was announced one day after the company initiated a 15 percent stock repurchase program which will cost the company more than $4.5 billion. Boeing says it will use ash in excess of operations and the expected generation of future cash to complete the stock buyback, which it hopes will buoy its lagging stock price.