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Originally published November 29, 2014 at 8:01 PM | Page modified November 29, 2014 at 9:09 PM

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McNerney’s impact at GE, 3M also stirs debate

Jim McNerney’s stint as 3M’s CEO was dominated by cost cutting that some criticized as overzealous and potentially damaging.


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Boeing Chairman and CEO Jim McNerney built his management credentials at GE and was credited there in the 1990s with making its jet-engine division the world leader.

Yet his subsequent stint as 3M’s CEO, before coming to Boeing, was dominated by cost cutting that some criticized as overzealous and potentially damaging.

At GE, thanks to one transformative engine deal, he won a reputation not only for managing financial performance but also for strategic vision.

In 1997, just before McNerney took over the aircraft-engine division, sales of GE’s largest engine — the GE-90, built for the Boeing 777 — had disappointed, and CEO Jack Welch canceled further investment.

But McNerney saw an opportunity to increase the engine’s thrust to power an even bigger, longer-range 777 and persuaded Boeing to make an updated GE-90 the sole engine offered on what became the 777-300ER.

According to a GE insider, he also persuaded Welch to take the risk of paying a substantial portion of Boeing’s 777-300ER development costs.

That bet paid off big time.

Boeing has sold nearly 800 777-300ERs, acclaimed as the most efficient large twinjet in the sky today. And the GE-90 technology propelled GE to become the world’s leading supplier of big commercial-jet engines.

“That engine ... changed aviation,” said veteran GE engineer Dick Ostrom, who worked on it under McNerney. “He was a visionary leader.”

But McNerney’s legacy at diversified manufacturer 3M, where he was CEO for the four and a half years before joining Boeing, is still debated.

Larry Wendling, 3M’s vice president of research, said the board brought in McNerney to make the company more efficient.

He initiated a productivity and cost-cutting drive and, “We returned significantly greater margins due to a lot of the work he put in place,” Wendling said.

However, Art Fry, inventor of the Post-it note and a venerated 3M research scientist who consults for management in retirement, says innovation declined drastically under McNerney.

Historically, 3M depended upon new inventions to keep growing. Yet McNerney directed its technical teams to focus on improving existing products, which typically meant producing them more cheaply, Fry said.

When McNerney left for Boeing, his replacement at 3M, George Buckley, reversed some of McNerney’s policies for the research division, saying, “You cannot reduce invention to a process.”

Fry believes McNerney’s tight financial focus at 3M was almost ruinous.

“If he had been there another three years, we might have gone down the drain,” Fry said.

— Dominic Gates



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