For years, Airbus always seemed to have a price advantage over Boeing in sales campaigns. But that European leverage now may be gone.
Paris, France — For years, Airbus always seemed to have a price advantage over Boeing in sales campaigns. But that European leverage now may be gone.
Boeing’s chief salesman Scott Carson comes to the Paris Air Show on a wave of success. What’s behind it?
Many things, Carson said in an interview Sunday, on the eve of the Show: a reorganized sales force with a mandate to make decisions; a long-term product strategy that has pitched the 787 perfectly at the market; and, yes, lower prices.
With the surge in orders for the 787, the 777 and the 737, both plane makers now expect Boeing to beat Airbus in sales this year for the first time since 2000. In a reversal of roles, Airbus has complained about aggressive pricing.
Carson said pricing is indeed an element in Boeing’s sales success — an advantage made possible by efficiency efforts and the moving assembly lines introduced at the company’s Renton and Everett plants.
“The economies we recognized there give us the ability to profitably offer customers a more attractive price,” Carson said.
Boeing’s team for the show is staying near the Arc de Triomphe. In a hotel meeting room with a picture window impressively framing the Eiffel Tower, Carson analyzed his sales team’s success.
In true salesman fashion, he even asserted there’s an advantage for Boeing in Airbus’ latest plan to develop a new airplane, rather than a derivative, to compete against the 787. But he spoke too about the heavy lifting still ahead.
Carson took over his current role only in December. He recalled that on a trip to India soon afterward, with then-chief executive Harry Stonecipher, he resisted his boss’s idea that he become “Boeing’s John Leahy”—referring to Carson’s famously brash and highly successful counterpart at Airbus, who is involved in almost all sales decisions.
Carson is not brash; he’s quiet. But he has a strong handshake and an air of authority. Concerned that Boeing’s sales process was too centralized and sclerotic, Carson told Stonecipher that he wanted to simplfy the sales structure, empowering his team of six regional sales heads to make John Leahy-style executive sales decisions on their own.
Carson said he “enhanced their ability to drive all the way through, to make adjustments on the spot and effect closure when there’s an opportunity.”
In addition, Boeing began using its top-level people—Stonecipher before his resignation, and subsequently chairman Lewis Platt, as well as Alan Mulally—early in sales campaigns to get access to the top decision makers and make sure the Boeing proposals were taken seriously.
That’s what Carson was doing with Stonecipher in India, wooing the national carrier Air india. But in the new sales process, it was his lieutenant Dinesh Keskar who later closed the deal.
Responding to a recent Seattle Times series on Boeing missteps in China, where the jet maker has seen its market share drop sharply precipitously, Carson insisted that his sales team for China enjoys good relationships there.
Airbus went from less than 20 percent of commercial jet deliveries in China in 1993 to more than two-thirds of deliveries last year. Carson attributed the market shift to “smart buying” by the Chinese government as it played off the two manufacturers for price advantage. He foresees a fairly equal balance between Boeing and Airbus emerging in China.
“I don’t think either of us will get to a dominant share,” he said. “That’s not in the interests of the Chinese.”
Carson said that the 787 sales success is evidence that Boeing’s long-drawn-out new airplane development program finally got “the right product.” The process began in the late 1990s and cycled through the super-fast Sonic Cruiser concept before arriving at the more conventional but highly economical 787.
“That airplane is successful because it was thoughtfully developed,” Carson said. Discussing the Airbus rival to the 787, the A350, Carson said the European decision to make the proposed plane an “all-new” jet, not a derivative of the A330, could work to his advantage. His reasoning: Common parts between the A350 and the A330 would have reduced the costs of a mixed fleet that used both, but now A330 operators will have less reason to stick with Airbus..
“By making it an all-new airplane, they’ve really opened up the marketplace for us,” Carson said. Still, sales ahead of delivering the first 787 are only the first step. Carson acknowledged that Boeing engineers back in Seattle and its partners worldwide now have a tough job in delivering the sales promises.
“This is hard work, bringing a new airplane with new manufacturing processes to the marketplace,” he said. “There’s a long way to go.”
The 787 is due to enter service in 2008. Analysts have expressed doubt about Boeing’s ability to deliver on that tight schedule. Airbus has recently had to announce a six-month delay in delivering its new superjumbo, the A380.
But Carson said that project management techniques “imported from some of our experiences on government contracts” had created a solid discipline in Boeing’s assessment of progress—and that all signs so far are that the 787 program is on track.