The Case to Place

Why Boeing partners with firms from around the world to develop commercial airplanes

BY JANET BOGGS

Going global is good for business.

This is especially true in today's highly competitive marketplace in which access to the best in design and production technology means honing the keen edge of success.

"We can't be world-class at everything," said Hank Queen, retiring vice president of Commercial Airplanes Engineering and Manufacturing. "We focus on our strengths and reach out to the world for the best skills and technology to complement those strengths."

"Global work placement is a way to improve your business, not an end in itself," added Jim Morris, previously vice president of Commercial Airplanes Supplier Management. "By working with the best suppliers, we get the best value for our customers, which means we sell more airplanes. Selling airplanes is job security for everyone." Although global suppliers are important, Boeing itself produces 65 percent of the value created in the company's current product line in the United States. In addition, 22 percent of the value comes from U.S. suppliers, Morris said. That's based on the dollar value of the airframe, excluding engines.

Morris listed four main reasons for placing work outside Boeing:

"We always look at the business case first," said Morris, now BCA vice president of Engineering and Manufacturing. Does placing the work make good business sense in terms of excellent quality, cycle time, delivery requirements, and cost?

• Having a presence in a country can be important to building long-term relationships that can lead to sales.
• If a government owns the airline, Boeing often is required to place work in that country.
• Sometimes Commercial Airplanes can help the larger Boeing enterprise by placing the work.

In 2004, more than 90 percent of Commercial Airplanes' orders were from customers outside the United States, Queen noted. "The company applies certain criteria the company before placing it anywhere," Queen said. "Does the work provide a competitive advantage? Is it applicable to future products? Does it offer training opportunities? Does it help us retain up-to-date understanding of engineering and manufacturing processes?"

If the work meets these criteria, the company generally decides to keep it in house, he added.

The ability to tap around-the-clock expertise is another factor in deciding to place work externally. As workers in the United States go home, the company's international partners and suppliers are just beginning their day. As a result, work moves forward 24 hours a day, which helps compress schedules and cuts cost.

The Boeing Design Center in Moscow a competitive edge. "Russia has a large, well-trained pool of aerospace engineers and an outstanding knowledge of airplanes in general, especially in the area of monolithic structures, which will help us simplify our products," Queen said. "Through working with the Boeing Design Center, we take advantage of their expertise and improve our business overall."

Using the Boeing Design Center's skills helped Commercial Airplanes make the business case for going ahead on the 747 Special Freighter and for awarding the 787 work to Wichita, Kan., Queen said. In both instances, including the center's engineers as part of the design virtual team reduced costs and allowed the entire team to win.

Although there is no direct linkage to the Boeing Design Center, Queen added that Commercial Airplanes' relationship with the center smoothed the way for polar routes through Russian airspace for world airlines. It also helped with as the activation of alternate airfields to allow Boeing 777s to fly new extended-range twinengine operations flights connecting U.S., European and Asian destinations. In addition, it encouraged the placement of 19 used Boeing airplanes in that country.

"The long-term commitment of the company to the Boeing Design Center enhances access to future markets," Queen said.

Stabilizing the workforce is another reason for placing work. By engaging the research capacity of the Boeing Design Center during the development surge of a new product, and afterward employing its people on sustaining work, the company hopes to avoid the swings in employment that affect employees and their communities.

"The Russians know this is the case upfront, and that makes a difference," Queen said. By doing this, the company preserves highly skilled, high-tech jobs for its U.S. employees.

What does the company's global work placement strategy mean to the future of Boeing?

"Our industry is always changing because technology is always moving forward. We'll always need the leading edge in design tools. We'll always need to be training to maintain and increase our skills," Morris
said. "That's what Boeing is all about—innovating to give us the competitive advantage that will secure our future.

janet.h.boggs@boeing.com