Meyer again at controls of Cessna as Hay retires

 - April 9, 2008, 6:15 AM

Gary Hay, who started working on Cessna’s manufacturing floor in 1966 and worked his way up to CEO just over two years ago, retired unexpectedly from the Wichita-based airframer on June 30. Russ Meyer, president of Textron’s new aircraft sector and who was Cessna CEO and chairman from 1975 to 2000, announced he would serve as interim chairman and CEO until a permanent replacement is appointed. Candidates will be sought from both inside and outside the company.

The news of Hay’s departure took the industry by surprise, but the 59-year-old executive wasn’t available to comment on what precipitated his decision. A Cessna spokeswoman said there were “some differences in philosophy between him and other senior [Textron] managers,” over the transformation going on at all Textron divisions but that the decision had “absolutely nothing” to do with the recent downturn in orders and the diminishing backlog. The spokeswoman wouldn’t elaborate further. (Although orders are down, the 62 Citations shipped in the first quarter were just two units fewer than the tally for the same period last year. However, Cessna delivered only 106 single-engine recips in the first quarter, compared with 157 a year ago in the first quarter.)

Textron chairman, president and CEO Lewis Campbell alluded to those “philosophical differences” in his comments on Hay’s retirement. “Over the past 18 months we have undertaken extraordinary changes to Textron’s business model…So far these changes have had a very positive impact at each and every Textron operation. However, we are at an important juncture. The entire management team must be committed to, and engaged in, every aspect of transformation. In this context, Gary has decided, with my support, to retire from the company.”

In a letter to Cessna employees announcing Hay’s departure, Meyer praised his contribution at Cessna over his 36-year tenure with the company, particularly his leadership to “improve Cessna’s cost structure, maximize the supply chain and enhance the focus on customer relationships.” Meyer also alluded in the letter to the ongoing operational and structural changes at the company. “We have some major challenges to overcome as we work through the effects of the soft economy and slower rate of new aircraft orders while undertaking some major changes in support of Textron’s transformation.”

Hay’s leaving surprised employees and the industry alike. He was groomed and hand-picked for the CEO role by Meyer himself. He became vice chairman at the end of 1995, and he completed the transition to CEO on Jan. 1, 2000, when Meyer, who turns 70 this month, scaled down his hands-on, daily management of the company, although he retained the title of chairman.

Hay’s Decision Influenced by Transformation?
But in January Textron brought Meyer back to full-time status under a major reorganization (“transformation”) that is still ongoing, in which Textron subsidiaries Cessna Aircraft and Bell Helicopter would be more closely aligned and operate under a newly established aircraft sector. Meyer, then 69, was named president of this sector. (Textron’s non-aviation products were organized under the new industrial sector).

Under the reorganization Hay was named chairman and CEO of Cessna, and John Murphey became chairman as well as CEO of Bell Helicopter. Murphey, Meyer and Hay also became part of a new executive-level “transformation leadership team,” whose chairman is Textron CEO Campbell.

There are “a lot of changes going on at Textron,” said a spokesman at the time the re-alignment was revealed, adding that the appointment of Meyer into this role is meant to help extend Campbell’s “line of sight” into the operations of Bell and Cessna. Did that “line of sight” clash with that of Hay’s? Although the news of Hay’s leaving was revealed officially by Textron on June 10, AIN was told that he actually submitted his resignation “some time ago.”

In spite of the weakening economic conditions and the events of September 11, Cessna was able to “meet and in most cases exceed its 2001 goals,” Hay reported earlier this year. “We delivered a record number of Citations [306], continued development of the Sovereign, successfully launched four process-based management design teams and substantially expanded Six Sigma and lean manufacturing. We completed construction of our new Citation parts-distribution facility and broke ground on a new Citation service center, Sovereign assembly expansion and a health and fitness center in Wichita. In addition, the 3,000th single engine; 1,000th Citation 550, a Bravo; and the 200th Excel were delivered.”

Hay recognized early, however, that Cessna would be seriously challenged this year. “Although we were planning to ramp up Citation production this year, the declining economy caused us to reevaluate our original plan [now looking at about 300 Citations this year and 250 next],” Hay said. “Unfortunately, some workforce reductions were necessary at our single-engine facility in Independence, Kansas. The company also plans to reduce employment by about 1,000 [through attrition] next year.”