Boeing CEO To Suppliers: Share The Pain

By Joseph C. Anselmo , Guy Norris
Source: Aviation Week & Space Technology

You have talked about putting underperforming suppliers on a 'no-fly list.' What does that mean?

We are trying to come up with the strongest set of partnerships we can with the people that supply our major systems and structures. In defense, we are trying to respond to the pressures of governments buying fewer things at lower prices, with less favorable contract terms. And that pressure cannot just stop at Boeing. We have to find willing partners [to share the burden]. And on the commercial side, low-cost carriers and a very flattish global economy leads you to the same conclusion. So the 'no-fly list' is people who don't want to play ball, who only want to hide behind the contractual language of their current programs. We're going to give those who do want to work with us more business—or we'll move some things in-house. This is not a rape, pillage and plunder exercise. This is the reality we all face. The majority of [suppliers] are beginning to have productive discussions with us. We have some holdouts, people who take the position that the pressure should only be absorbed by Boeing, notwithstanding the fact that 65 percent of most of our airplanes are built by [suppliers].

And the revised equation would entail them assuming more risk?

It is even simpler than that. We both have to demand lots of productivity [improvements] to offset price pressure. Those that work with us in that way will find more volume. We are the biggest player. My message is, 'Don't bet against us.'

Tell us about 'One Boeing.'

'One Boeing' is about leveraging strengths in one part of the company to benefit another. For example, a lot of the lithium-ion experts in this company are on the defense and space side—the technology is on satellites and the International Space Station. They worked with the [787 team] in Seattle. The benefit washes the other way in composite structures. And Boeing International is an example of where we've leveraged our commercial footprint, using company-to-company relationships, to benefit the defense, space and security side.

Boeing's board recently gave you authority to offer the next-generation 777X, but some people felt it took longer than it should have to move forward with the program.

We wanted to be very sure-footed about this, that we understood the transposition of [composite] technologies to the wing and that [General Electric] understood some of the [engine] improvements they wanted to make. We also wanted to have in-depth discussions with our customers. Everybody had a slightly different version of exactly what they wanted us to do. So it was more about thoroughness than any delay in management process. I think you're going to see this airplane launch this year.

Do you see Boeing locating more operations outside of Washington?

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