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Thursday, June 26, 2014

Boeing’s CEO Chadwick Holistic View of Defense Evolution

By Andrew Drwiega, International Bureau Chief

From Boeing’s facility in St. Louis—“Customers need innovation, ideas and affordability. They want more capability at the right time and the right price,” said Chris Chadwick, President and CEO of Boeing Defense, Space and Security, speaking as Boeing was preparing to attend the Farnborough airshow in July. He stated that the company’s general attitude was now to take a holistic view of the international defense market, but that overall the company had improved its international sales position: “The backlog in international sales was 12-15 percent range previously; it is now in 25-percent-plus range and has retained a top line revenue position.” Currently Boeing Defense, Space and Security is roughly at 35 percent backlog being non-U.S. and around 28 percent of revenue.

 

Chris Chadwick. Photo courtesy Boeing

Keeping the Boeing helicopter portfolio current and continually attractive to international buyers is one of the challenges that Boeing is facing with aircraft that were originally de-signed in the last century.

Chadwick emphasized that the demand for rotorcraft worldwide was still high and that Boeing’s V-22, AH-64 and CH-47 were all modernized and competing well in the international sales arena: “The challenge for Boeing’s rotorcraft is to keep building capability into its products. More capability for less cost is what the market now wants in the current fiscally challenging environment,” he said.

“Most non-recurring costs are behind us on the rotorcraft platforms,” added Chadwick, indicating that the continuing sales of the recent upgrades [AH-64E and CH-47F] at a steady rate meant that the company’s rotorcraft business had remained “strong and successful: “Look at Chinook and the great opportunity [we have had] to keep evolving the CH-47’s technology.”

The simple fact is that heavy FVL is out there quite a way, he noted. “A lot can happen be-tween now and then. Keep existing product line healthy and growing the capability. We have become world class in giving more capability in this more-for-less world where they can’t afford the risk on new starts.”

He also indicated that sales into regions that previously only had little or no experience of Boeing’s aircraft was having an effect on countries around them. “Saudi [Arabia’s] procurement of F-15 and Apache woke up a lot of people in the region because they bring a lot of capability,” he said.

Regarding Boeing’s commitment to R&D projects, Chadwick said that three or four years ago, it became obvious that pressure was rising on U.S. defense budgets. What had resulted now, he said, was a need for “top line stability, bottom line affordability.” Within Boeing, the way to respond had been to make the whole organization more efficient and productive. “We have taken out $4 billion of costs, with a challenge of taking out another couple of billion going forward.”

 

Boeing Chinook CH-47. Photo courtesy Boeing

Talking of his company’s partnership with Sikorsky in a compound coaxial design [SB>1 Defiant] over the Joint Multi-Role Technology Demonstrator (JMR TD), which will compete with Bell Helicopter’s V-280 Valor tiltrotor, he reemphasized that the V-22 was still a solid investment in capability, particularly for the U.S. Marine Corps and international customers considering it. 

But in the search for a potential model for a Future Vertical Lift (medium) design, he said that the decision to partner with Sikorsky was a longer-term commitment “to move beyond today's platforms.” And that would be a different mission to today’s V-22 mission profile, he added. 

Regarding Boeing’s attendance at Farnborough next month, Chadwick said that it was important to keep the dialogue with international customers fresh and to understand how they were evolving and even rebalancing in line with the world’s changing social as well as defense/security needs. He revealed that the commercial side of Boeing was playing an important part in helping the defense side of the business get access to customers. 

Related: Military/Defense News

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