A recent top executive appointment at Textron signifies more than just a leadership change. It was also part of a continued reorganization of the company’s corporate structure that started about a year ago and will affect its operating units, including Cessna Aircraft and Bell Helicopter.
In late October, long-time Garrett/Honeywell engine executive Steven Loranger, 50, was named executive v-p and COO to oversee Textron’s manufacturing business units, including Bell and Cessna. Russ Meyer, 70, once more becomes Cessna’s chairman. Loranger was at Honeywell for 21 years and most recently served as president and CEO of Honeywell Engines. He was a pilot in the U.S. Navy from 1975 to 1981 and is “an active pilot today, with more than 3,700 hours of flight time,” Cessna said.
With Loranger’s appointment, Textron reverts to its former “COO” structure from a “sector” arrangement formed just a year ago. Under the sector organization, Textron said its aim was for Cessna and Bell Helicopter to be “more closely aligned” so they would operate together under a newly established aircraft sector. Former Cessna chairman Meyer, then 69, who spearheaded Cessna’s success for nearly three decades, was named president of the sector. (Textron’s non-aviation products were organized under the new Industrial Sector.)
Meyer, who joined Cessna as executive v-p in June 1974, was CEO and chairman of the Wichita manufacturer until Jan. 1, 2000, when Gary Hay was named CEO. Meyer retained the title of chairman. With Meyer tapped to lead the aircraft sector, Hay remained CEO and chairman of Cessna and John Murphey became chairman and CEO of Bell Helicopter, replacing Terry Stinson. The appointment of Meyer to this role was meant to help extend Textron CEO Lewis Campbell’s “line of sight” into the operations of Bell and Cessna, the company said at the time.
Hay and Meyer also were to become part of a new executive-level “transformation leadership team,” chaired by Campbell. That 16-member team will continue indefinitely.
The pairing of Cessna and Bell under a single oversight surprised many in the industry. Cessna has been a profit maker for Textron since it acquired the company from General Dynamics (now the parent of Gulfstream Aerospace) in 1992. Bell Helicopter’s financial performance has not been spectacular in recent years, although it performed better than usual in the third quarter.
Bell Helicopter’s revenues increased $17 million thanks to greater intake from the U.S. government, primarily on the V-22 tiltrotor program and higher foreign military sales. These revenues were partially offset by lower commercial sales. Textron says Bell’s profit increased $121 million in the third quarter, primarily due to $115 million in “unfavorable profit adjustments” in 2001. The remaining $6 million in profit improvement was the result of higher yield in both the commercial and U.S. government businesses. Backlog at Bell was $1.4 billion at the end of the third quarter.
Textron today refers to its structural reversal as “restructuring expanded” and describes it as part of a strategic effort to improve operating efficiencies, primarily in its industrial businesses. The expanded restructuring program will include further reductions of about 2,000 employees.
With the expanded program, the company now expects a total reduction of 9,500 employees, representing approximately 16 percent of Textron’s global workforce since the restructuring program was first announced late last year. Textron said annual ongoing restructuring savings are now estimated to total $250 million this year, $325 million next year and at least $400 million in 2004. To date, the company’s restructuring efforts have reduced costs by $225 million with a cumulative reduction of about 6,400 employees.
Meyer, who had been president of Textron’s now-defunct aircraft sector (overseeing both Bell and Cessna), has returned to Cessna in his previous role as chairman. He will also continue to serve as interim CEO there until a successor to former CEO Hay is found.
Last June 30, Hay left Cessna over “philosophical differences between him and other senior managers,” Cessna said at the time. Those “differences” appear to have had something to do with Textron’s continued structural reorganization. In announcing Hay’s departure last June, Textron CEO Campbell alluded to those differences when he said that the company is 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.” Hay, who went to work in Cessna’s manufacturing section in 1966, served as CEO for just over two years.
Meanwhile, Honeywell named Mike Redenbaugh acting v-p of its engine systems and services business. He will continue as v-p and general manager of Honeywell’s propulsion systems enterprise.