With the Pentagon cutting its budget and demanding more affordable military hardware, Boeing’s new defense-unit boss said Monday the collaboration between his St. Louis-based military unit and the local commercial-airplane division is Boeing’s key competitive advantage.
Chris Chadwick, chief executive officer of Boeing Defense, Space & Security (BDS), said the Navy’s P-8 anti-submarine jet, based on the Renton-built 737, and the forthcoming Air Force KC-46 tanker, based on the Everett-built 767, will provide work here “for decades.”
And Boeing hopes other military jets that are built around the aging 707 platform can be superseded by similar commercial derivatives built here, he told a Chamber of Commerce lunch in downtown Seattle.
Those planes include the airborne early warning and control system (AWACS) airplanes used by the United States and by allied countries, the variants of the RC-135 family of reconnaissance aircraft and the E-6 airborne command and control airplanes.
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“Every 707-based military product, in time, will need to be replaced,” Chadwick said. “Our goal is to leverage the relations we have with Boeing Commercial Airplanes for whatever different airplane (the Pentagon) might want, whether it’s a 737, or a 767, or if they want to go in a different direction.”
Over the years, about 125 AWACs, RC-135s and E-6s were built. It’s likely they will be replaced with fewer planes, and over many years, but each one has such specialized systems that building those replacements should be a lucrative business.
“The opportunity is huge, and it will be spaced over a long period of time,” Chadwick added.
He said that one Boeing goal is to make the complex military software systems on such airplanes as easy to upgrade as an app on an iPhone.
He cited a Boeing project called Phantom Fusion, which provides a flexible, upgradeable software architecture for tracking and targeting enemy platforms.
Declaring that “warfare will be transformed,” through digitization, data analytics and real-time access to information, Chadwick said Boeing wants to partner with leading high-tech companies in this region to stay abreast of that wave.
Boeing will pursue such innovation within an increasingly restricted budget, however.
Chadwick said that because of the spending cuts mandated by the Congressional process known as sequestration, the defense budget has declined about 24 percent over the past few years. Boeing projects that it will continue to decline.
As a result of the budget cuts, Boeing has slashed $4 billion in spending from its defense unit with a target of a further $2 billion in additional near-term cuts.
Chadwick said two-thirds of the savings have come from the supply chain. Boeing has also laid off thousands of defense-side employees, shuttered its remaining operations in Wichita, Kan., and announced the closing of the assembly line in Long Beach, Calif., for the big C-17 military cargo and troop-carrying jet.
Boeing’s defense and space group now employs about 56,000 companywide, down from more than 72,000 five years ago.
Buoyed by work on the P-8 and the tanker, some 5,200 Boeing defense-side employees remain in the Puget Sound region, down from about 7,000 just five years ago.
Dominic Gates: 206-464-2963 or email@example.com