Boeing CEO: Defense Industry Must Evolve

Shrinking Pentagon budgets are changing the makeup of the defense industrial base, and it’s up to contractors to look for innovative ways to develop cost-effective new technologies, said the head of Boeing’s defense business.

“We in industry are going to have to step up and solve this, not just ask you, our customer, for more funding,” Chris Chadwick, CEO of Boeing Defense, said during a Sept. 17 speech at the Air Force Association's Air and Space Conference at National Harbor, Maryland.

“You’re seeing commercial companies, commercial technologies start to impinge on areas where we’ve always been strong. Look at space. Look at cyber. Look at data analytics," he said. Defense contractors should take advantage of those technologies and infuse them into products for the military.

Boeing is increasingly partnering with its competitors, as it is doing with Sikorsky on the Army’s future vertical lift rotorcraft program and with Lockheed Martin on the Air Force’s long range strike bomber, Chadwick said.

“It has become the norm,” he said. In the bomber program, industry should leverage the investment that’s already been made by the U.S. government, he said. "Let’s not reinvent the future. Let’s leverage … [current] capability and provide a seamless, integrated approach that we hope positions us well as the competition goes forward.”

As defense spending falls, Boeing is monitoring its supply base, particularly third- and fourth-tier vendors, many of which are difficult to replace. Some believe that the cost of doing business with the U.S. government is prohibitively high and have decided to focus on the commercial market, Chadwick said.

“We’ve established new suppliers,” he said. “There’s often opportunities, especially in the small disadvantaged business arena, where we can team with entrepreneurs and new businesses to create new capability.”

Both industry and the military need to make smarter investments in research and development, Chadwick said. Companies must look at new technologies through the lens of customers. One example is the transportation company Uber, a smartphone based app that allows users to hire a taxi or privately-owned car. “The app leverages GPS, wireless communications and mobile payments, all embedded in something we carry every day,” but combines those existing technologies with a new business model, he said.

The defense industry should apply the same way of thinking to legacy defense equipment, Chadwick said. “Rather than just relying on innovation alone, what if we had another way to get new value out of existing platforms? What if we could bring new leaps in capability, not just by spending more, but by thinking differently?”   

Chadwick cited Boeing subsidiary Insitu’s ScanEagle unmanned aircraft, which evolved from an aircraft that helps fisherman track tuna. “Today, ScanEagles are catapulted from U.S. Navy ships and have flown 800,000 combat hours.”

Topics: Business Trends, Business Development, Defense Contracting