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Boeing Defense Head: Partnerships the New Normal

Jun. 25, 2014 - 01:14PM   |  
By AARON MEHTA   |   Comments
Partnerships among defense companies for major programs will become more common, according to Chris Chadwick, president and CEO of Boeing Defense Systems.
Partnerships among defense companies for major programs will become more common, according to Chris Chadwick, president and CEO of Boeing Defense Systems. (David Martin/Boeing)
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ST. LOUIS — As budgets around the world continue to contract, expect partnerships on major programs to become the norm, the head of Boeing’s defense arm said.

“I think more and more, as we move forward you’re going to see these partnerships and you’re going to see the right joint ventures,” Chris Chadwick, president and CEO of Boeing Defense Systems, said Tuesday.

That is true for both big programs within the US and for those in other nations.

“I think you look at the demand of the customers both from a war-fighting capability, from a space and security capability and from an economic perspective, it’s the companies that get innovative in their partnerships that will be able to provide the most value to a country worldwide,” Chadwick said.

Chadwick was talking to a group of reporters at Boeing’s St. Louis offices. Defense News took part in the Boeing-funded trip as part of an international media contingent. The company paid for travel and accommodations.

Boeing has made strategic partnerships for a trio of major acquisitions programs inside the United States. On the Air Force’s Long Range Strike-Bomber (LRS-B) program, the company has teamed with historic rival Lockheed Martin, while on the service’s T-X trainer replacement program it is partnered with Saab to develop a “clean sheet” design. For the Army’s future vertical lift program, Boeing is working hand in hand with Sikorsky.

Those are some of the largest programs coming out of the Pentagon in the next several years and Boeing has teamed up with other major companies to give itself the best chance to win. And Chadwick indicated future partnerships may not be limited to the defense industry.

“Commercial technology is driving defense, space and security more than most people know,” Chadwick said. “It is best to figure out how to [partner] with those folks to really provide you with that competitive edge in the marketplace.”

Consolidation of the market may also be in play in the near future, according to the Boeing executive.

“It’s going to be very interesting to see how market dynamics play out over the next 10 years,” he said. “I think market pressures will dictate that a company that can get to provide more capability at less cost and adapt from an innovative perspective to bring capability onto current platforms in a very seamless way for the right price, will end up on top at the end of the day.”

While analysts have warned that the markets for the company’s F-15 and F/A-18 legacy fighters are shrinking, Chadwick said the market will still exist thanks to upgrades and modifications. He also said the company is “having discussions” on future sales of the Apache, Chinook and V-22.

The jewel of the company’s portfolio in terms of new products is the KC-46 tanker, procured by the US Air Force. Boeing is competing for the right to produce four tankers for South Korea and is eyeing a future need for three tankers from Japan; Chadwick said those sales could be worth up to $1.5 billion.

Overall, Boeing will rely more on its commercial side to provide a basis for new platforms that can be produced relatively cheaply, Chadwick added. ■


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