CORPORATE CASE STUDY: Boeing adjusts PR course to elevate commercial unit

Amid falling sales and stiff competition, Boeing's commercial arm is revising its airplane designs - and the accompanying PR strategy - to win over various internal and external audiences.

Amid falling sales and stiff competition, Boeing's commercial arm is revising its airplane designs - and the accompanying PR strategy - to win over various internal and external audiences.

Boeing, caught in the worst aviation downturn on record, is facing one of the most daunting challenges in its 87-year history. Not just from the 50% drop in orders from the world's airlines since September 11, 2001, but also from burgeoning competition from Airbus since the mid-'90s. In response, the company's commercial-airplanes division has revised both its designs for future planes and its PR strategy. Unlike its arch competitor Airbus, which reportedly won about $26 billion in orders this year, in contrast to its own $10 billion, Boeing believes that the public prefers to travel nonstop, point-to-point, and not have to depend on a hub system that relies on big planes. "To do that," says Tom Downey, the division's communications VP, "we have to build smaller, highly capable airplanes that can be economically and profitably operated, and enable the traveling public to fly where it wants to go and when." The 7E7, which Boeing hopes to have ready to fly in 2008, will make that possible, he says. Boeing expects the 7E7 - a fuel-efficient, 200-passenger model it plans to call the Dreamliner - to be the "best plane we ever built." It already has several countries and many US states salivating over the prospect of winning the contract to build it. It's also generating Boeing employees' concern over the outsourcing of the plane and the engineering of future designs. Support from the top To get its message across to its stakeholders, Boeing has developed an integrated communications and marketing program that involves all elements of its business unit within the commercial division, and includes executives at the company's corporate level. "We do our planning from both the top down and the bottom up," adds Downey, "so we have input and, yes, top management takes our advice - not just the president, but also each of the folks who sit at that table. We're helping develop and implement corporate strategy, not just communications strategy." The structure has Downey reporting directly to Alan Mulally, CEO of the commercial division, as well as to his functional boss, Tod Hullin, the new communications SVP at Boeing's world headquarters in Chicago. Hullin, in turn, has the ear of Boeing CEO Phil Condit. After staff reductions during the US economic downturn, there are just four dozen PR employees in the commercial division, down from more than 100 two years ago. And since that division accounts for some $25 billion in revenue - about half the corporation's total - the obvious question is how effective and internally influential its relatively small PR staff can be. "We've had to get down to an essential core," Downey explains. "So we're now lean and mean. But I couldn't be happier with the role that we play, the respect that we get internally." No PR firm is involved in US operations, but the company retains a "consultants network" that includes a few firms in some foreign countries to assist in routine and crisis communications efforts, and also help execute international sales campaigns that require specialized, local knowledge of the territory. The network includes Promoseven Weber Shandwick in the Middle East, Ogilvy Public Relations in India and Thailand, and Edelman in Singapore, Brazil, and Argentina. "In addition," says John Kvasnosky, communications director of components/operations, "during the past two-and-a-half years, we've set up a network of other consultancies, including the big agencies, in about 20 countries. That network is headed by Matthew De La Haye, VP for international communications, who also reports to Hullin." Educating the media Several times a year, Boeing holds classes for reporters around the world who cover the aircraft industry and for airline PR people, as well as appropriate government regulatory agencies. "Airplanes 101" is a two-day session that deals with the basics of designing and building an airplane and what makes it safe. "Airplane 201" covers environment, cabin pressure, and other matters of interest to passengers. The commercial group also sells to the US Department of Defense and foreign governments for defense and other uses. Air Force One, for example, is a 747. And Boeing sells its 767 as a tanker to Italy and Japan through its Integrated Defense Systems unit. It keeps the media in those countries interested in such programs, Downey says, by hosting them in the US to see those planes. While Boeing plans to produce major components of the 7E7 in some of those countries, states here, ranging from Alabama to Washington, are hungrily vying for contracts to make parts of the remainder, as well as the job of assembling the planes, by promising vast tax and other financial breaks for the privilege. Boeing plans to freight the parts made abroad to the US for assembly. In dangling the contracts before eager bidders, the company reportedly is asking for something that a few critics say is over the top. The company will, for example, build three 747s to haul the components, but won't confirm whether it is asking the bidders to provide them. In a recent article, Time quoted a Boeing executive as saying the company "wants to treat building an airplane like a pit crew treats a race car." Seattle Times reporter Dominic Gates, who has closely covered the birthing of the 7E7 from the start, told PRWeek, "This is the biggest story in Seattle [Boeing's former, long-time corporate home]. But the company is treating this important element of company strategy in a different way than normal by being very, very closed about site selection. Information from official sources has been zero, even when we call to confirm what we've learned from other sources. For Seattle, it will determine whether there's a future for the city in commercial aviation, which is vital to people here. So we're trying to help our readers, but without any help from Boeing. Although I get lots of cooperation from the company on other stories." In fact, says Gates, when he tried to write a parallel story about the 717, which is outsourced and assembled in Long Beach, CA, he was denied access to the plant and its executives "because, they said, they didn't want parallels drawn to the 7E7." Asked about such media reaction, Downey replies, "While we anticipated some reporters would be frustrated with us, we have stayed on message and found overall that the approach has paid off." Stimulating travel During the long downturn, says Yvonne Leach, director of communications for the 7E7 program, the company has worked with its airline customers to promote travel. "Starting with the 7E7, " she explains, "we're partnering with the marketing department in its promotion plans, and are reaching out to publications read by our passengers. "Last May," Leach points out, "we worked with marketing to develop a website for people to sign on to receive a periodic, online newsletter that updates them on the plane. Since May, more than 130,000 people have signed up and, in answer to questions we put on the site, gave us input as to their flying experience and suggestions. We let them know that we will give [this information] to our engineers to consider when they design this airplane. "In fact," Leach adds, "the name Dreamliner was chosen in a contest we held to name the plane. It reached over a million people, and we announced the result at the Paris Air Show last June." Meanwhile, Boeing, which has laid off more than one-third of its 93,000 workers since September 11, 2001, will continue to build some older models, including the 737, 747, and its flagship 777, for which there is still high demand. But what Boeing needs now, says one observer, is a launch customer - a major airline to order a significant number of Dreamliners so that the still-paper plane doesn't become just a flight of fancy or, worse, a nightmare. An industry analyst says that if Boeing does not launch the 7E7, it may never develop another jetliner. But for now, Boeing is letting its stakeholders know that the 7E7 is set for an on-time departure. ----- PR contacts VP, communications Tom Downey Director, airplane programs communications T. Craig Martin Director, 7E7 communications Yvonne Leach Director, components/operations communications John Kvasnosky Director, advertising/sponsorships Susan Bradley General media relations Peter Conte, Todd Blecher Washington, DC office Amanda Landers

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