A mea culpa, and Boeing’s “tough times” explained

My Farnborough log on Day 2 opens with a quick statement I posted moments after leaving an interview with Chris Chadwick, president of Boeing military aircraft. It reads:

0944: Justtalked corporate strategy w/Chris Chadwick, president of Boeing militaryaircraft. My takeaway: tough times ahead for Boeing!”

That drew a sharp question from Royce, a frequent commenter here at TDL. He asks:

“Regarding Chadwick seeing tough times ahead for militaryaircraft, can you flesh that out a little? Is just a budget issue, or is hetalking strictly about Boeing’s prospects in that market?”

I’m very glad you ask because it gives me a good opportunity to write a needed mea culpa.

Writing one-sentence wrap-ups in the midst of the Farnborough Air Show media frenzy is a new thing for me. I love that technology allows me to do it, but sometimes it can also lead to some unwise decisions.

That’s the one quick-post from the show that in retrospect Iregret making. The way it was presented wasn’t fair to Boeing, nor did it do anything to help the reader understand what I was talking about. Lesson learned.

Here’s what I was trying to say. 

Chris Chadwick said Boeing is about to enter a huge strategysession to look for growth over the next 10 years, but he is very confident about their prospects.

“We think we’re really solid for the next 10years,” he told me. 

I told Chadwick that some people think Boeing faces a pretty toughoutlook. The F-15, F/A-18, C-17 lines all are due expire by 2015 unless hugeand unexpected changes are made in the Pentagon’s acquisition plans. 

Boeing’s still got a future building Apaches and militaryderivatives of civil aircraft (including, possibly, tanker), but nothing firmin hand to replace the production lines of combat fixed-wing aircraft inheritedfrom the McDonnell Douglas merger.

Chadwick replied that he foresees positive growth on threefronts — unmanned systems, NGB and F/A-XX. I replied that these are all highlyspeculative and subject to the whims of competition and budgeting priorities.

Boeing’s competitors (Northrop Grumman and Lockheed Martin)at least have signed contracts in hand that carry through current productionorders through the end of the next decade and beyond. Of course, these are alsosubject to the whims of Pentagon budgeting.

The story about how Boeing deals with the looming demise ofits three biggest cashcows over most of the last three decades is justbeginning. There are new reports of Pentagon “wargames” evaluatingthe potential consequences of maintaining only a single fighter production lineafter 2015. Boeing executives will soon have to make a good case for continuedgrowth to present to the company’s shareholders.


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