Roughly speaking, we were doing 40% of engineering and now we're doing 60%, so that's a 50% increase. The other thing we wanted was more in-house experience building the composite parts. That was one of the rationales for acquiring Vought.

Boeing and Embraer recently entered into a partnership, including cooperation on Embraer's KC-390 transport. Where is all this going?

We're further ahead on the defense side, and the KC-390 agreement is one example. There are two or three program areas where discussions are pretty specific. On the commercial side, it's a wide-ranging discussion that hasn't landed on something yet, but we hope it does. These are highly complementary organizations that get along culturally. I'm confident this will [lead to] in cooperation in two or three concrete areas.

The defense industry is heading into a very difficult climate. How do you balance the need for affordability with investments in new technologies to sustain your long-term competitiveness?

This downturn will be significant, and it will be sustained. The question is how deep, and that is caught up in politics right now. The first order of business is to remain affordable. So we're focused very heavily on Chinooks, Apaches, F/A-18s, F-15s, tankers and GMD [Ground-Based Midcourse Defense]—just keep them going, and then take a lot of cost out of our organization to remain affordable. We've been on a path in the last 18 months, and extended out another year or so, to get $2-3 billion out of the cost of the [defense] business on a permanent basis. But we also are preserving and even increasing our R&D budget. There are capabilities we don't want to stop investing in, such as unmanned and C4ISR [command, control, communications, computers, intelligence, surveillance and reconnaissance]. We're willing to go through some significant organizational pain to preserve our ability to invest in R&D.

It's vital to keep design teams intact, because once they disperse they will be very difficult to reconstitute.

There are fewer new programs in advanced work, and that's where we keep a lot of the design and functional talent. I feel exactly the same way you do. We've got to hold on to that seed corn as long as we can.

How about international growth?

There are a number of recent military sales we've had around the world—the U.K., United Arab Emirates, Australia, Canada—that will help sustain this business through the downturn. Our commercial footprint around the world is a distinct advantage. It gives us a far bigger international presence than most of our competitors on the defense side. We're able to establish company-to-country relationships that really help us drive sales.

What do you think of Elon Musk and SpaceX, and what is Boeing's future in the space business?