Emma Kelly/LONDON
BAE Systems, Boeing, Lockheed Martin, Raytheon and e-commerce expert Commerce One have formed the aerospace and defence industry's biggest e-commerce initiative. The participants believe the move will "revolutionise the aerospace industry".
The partners have signed a memorandum of understanding to form the unnamed venture, with a definitive agreement due early in the second quarter and a launch in mid-year, says Phil Condit, Boeing chairman and chief executive.
A new company will be formed by the partners that will own and operate an Internet trading exchange for the industry. The exchange, based on the Commerce One Microsoft-powered MarketSite Portal Solution, is expected to move online the bulk of the partners' annual procurement outlay of $71 billion. The four aerospace companies' 37,000-plus suppliers, hundreds of airlines and national governments will be invited to join the marketplace, which is expected to provide an exchange for products, services and technical data.
The exchange will provide an "enormous opportunity for efficiency gains", say the partners, with sales benefits, reduced transaction and acquisition costs and enhanced transparency of the supply chain.
The partners will take equal ownership stakes, with adjustments to be based on the individual flow of e-commerce through the exchange over the first three years. Commerce One will have a 5% share, while 20% has been set aside for other participants. "We hope that more large partners will come in," says Harry Stonecipher, Boeing president. The partners "expect a flood of requests to join".
The participants are keen for European Aeronautic, Defense and Space to be involved. "We've had talks and we have no doubt the advantages will bring them into it," says BAE chairman Sir Dick Evans. Other large companies, including Northrop Grumman and Rockwell Collins, have yet to commit to industry-wide e-commerce initiatives and may be attracted to the venture.
The partners decline to detail their investment, but BAE chief executive John Weston says it is "minimal" compared to what they are creating. The participants, which plan an initial public offering - probably next year - do not expect anti-trust immunity problems, but concede that e-commerce ventures are attracting interest from the authorities.
Although the new e-commerce venture is not the first of its kind, it could become dominant because of the size and industry reach of its founders. The breadth of the initiative "will make it the prime site and is the reason that we all sat down together, but that doesn't mean that there can't be other sites in other areas", says Condit.
Two other big aerospace e-commerce initiatives - MyAircraft.com from Honeywell/United Technologies and SITA/AAR's aerospan.com - are set for launch by mid-year.
Honeywell says: "We believe this new [Boeing, BAE, Lockheed Martin, Raytheon] venture further validates the concept of multicompany sites. We were the first to espouse this concept and we are on the way to implementing it."
Honeywell aims to announce new partners shortly and launch in the second quarter. It intends to be "the leader" in aerospace e-business, but has not ruled out co-operation with the rival initiative.
Source: Flight International
