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NEW YORK (Reuters) - Boeing Co <BA.N> chief executive Jim McNerney is betting his career that the world's biggest-selling plane maker can survive a strike by its assembly workers and emerge stronger by holding firm on its right to outsource work on its aircraft. The decision to play hardball with the company's biggest union is a gamble for McNerney, 59, a star baseball pitcher at Yale, where he was a classmate of U.S. President George W. Bush. The outcome will dictate the direction of the most famous name in aerospace and one of the biggest U.S. exporters. "If it's a choice between getting it (the strike) stopped quickly, or doing what is good for the company in the long run, he's going to choose the second," said Richard Aboulafia, an aerospace analyst at research firm Teal Group, based in Fairfax, Virginia. "To a certain extent, he has no choice. Compromising on the company's competitiveness is a losing game." Simply put, Boeing wants to design and assemble planes, but leave the labor-intensive manufacturing to others. Its new 787 Dreamliner is being built by other companies in Japan, Italy, South Carolina and elsewhere, and only assembled by Boeing in the Seattle area. The machinists' union sees this as an attempt to destroy local jobs. But McNerney is committed to the new way of working and is calculating that the long-term benefits of outsourcing will outweigh the bad will, cost and delay caused by a strike. A week into the stoppage, he still has the support of Wall Street. The company's share price is holding steady around its 12-month low, but most analysts expect a jump when the strike ends. "Things could turn around here after the strike has been resolved," said Paul Nisbet at aerospace equity specialists JSA Research, based in Newport, Rhode Island. "I would expect things to start moving pretty favorably in the company's direction." STRIKE! Boeing's 27,000 machinists walked off the job last Saturday after rejecting the company's final contract offer, idling its massive aircraft factories in the Puget Sound area. The International Association of Machinists and Aerospace Workers (IAM), sensing the upper hand as Boeing reaps record profits, is holding out for a hefty pay rise and removal of contract wording giving Boeing almost unfettered power to use outside suppliers. The company came close to meeting pay demands, but is refusing to budge on outsourcing with no further talks planned. Resolving the strike, which is costing Boeing $100 million a day in revenue, looks to be the biggest challenge in the CEO's career. Walter James McNerney Jr., who prefers to be called Jim, worked his way quietly into one of the most important positions in U.S. business. He came to Boeing after four and a half years at the helm of manufacturer 3M Co <MMM.N> and a 19-year career at General Electric Co <GE.N>, where he lost out to Jeff Immelt in the race to take over from Jack Welch. His time in charge at Boeing has been relatively calm, after the company lost two CEOs in dubious circumstances. Philip M. Condit resigned in December 2003 after it emerged that Boeing had improperly offered a high-paying job to the U.S. Air Force's No. 2 acquisition official. The successor, Harry C. Stonecipher, resigned in March 2005 when it was revealed he was having an affair with a Boeing executive. CLEANING HOUSE After taking over in July 2005, McNerney moved quickly to clean up Boeing's legal and ethical problems, settling long- running federal investigations into its procurement practices and illegal appropriation of Lockheed Martin Corp <LMT.N> rocket program documents. His leadership has coincided with a three-year boom in commercial plane sales and steady growth in U.S. defense spending. Last year, Boeing had a banner year, crushing rival Airbus with an industry record 1,413 plane orders and its highest-ever annual profit of $4.1 billion. Despite those successes, Boeing's shares have plunged about 36 percent in the past 12 months, compared with a 15 percent drop in the Standard & Poor's 500 index <.SPX>, hit by the credit crisis sell-off, spiking oil prices, and worrisome delays on the 787. "He's not coming out smelling too much like a rose at this point, with problems on the 787 and not being able to reach an agreement with the workers," said Nisbet. "But they (Boeing) are definitely right. They could be leading the aerospace industry down the same path of the airline industry and the auto industry if they didn't take a stand." (Editing by Andre Grenon) By Bill Rigby
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