My visit to Boeing’s St. Louis manufacturing hub for the F-15SG roll-out yesterday also included a mini-press conference with Chris Chadwick, president of Boeing Military Aircraft.
Chadwick said several interesting things, but the most newsy involved his statements about the C-17.
Boeing’s C-17 production line dies in 2010 unless it gets a new order next year. Boeing has always said they need to build at least 12 aircraft per year — and preferably 15 — to keep pricing at current levels — roughly $220 million/aircraft, depending on how you count it.
Chadwick told us this position has dramatically changed in the last few weeks. Boeing now is analyzing how to build C-17s at a rate of eight per year while keeping prices roughly the same, although he declined to elaborate on pricing details.
Here’s exactly what he said:
We remaincautiously optimistic in the near term. The supplemental will fund c-17s. We’vegot a big push on the international market for additional sales.
But we’vegot to look inward … cost a lot (??) C-17. So we’ve launched a concerted effortto come up with an approach that would allow us to reduce the production rate.Currently it’s at 15 per year. We’d like to get it down to around the eight ayear production rate at the right price, which is close to the price today.
And if wedo that we believe there’s demand out in the world internationally but alsodomestically that we can keep that production line going for a long time. It’sa heck of an airplane, the customer loves it.
You’ve gotto be realistic about what the market will bear. We’ve got to take out cycletime. We’ve got to take out cost. We’re very focused on doing that. I’ve got ateam working on that. They’re supposed to report out to me in about six weeks fromnow about how best to do that.
The realfocus there is your customer. The customer likes the capability.Internationally, a lot of customers are starting to take notice as we’ve seen.
We want to makesure we have the right product and the right price for a long long time.