Inside our new Boeing Integrated Defense Systems
unit, execution is the hallmark of our military aircraft and
missiles business. In the stepped-up tempo of these extraordinary
times, the armed forces know they can be confident in a wide
array of Boeing products, including the C-17, Apache helicopter
and Joint Direct Attack Munitions, to name a few. This business
remains a model of reliability and excellence — in financial
performance as well as technical performance.
Execution in space and communications involves systems integration
at the highest level of knowledge and complexity. Consider the challenge of intercepting
a missile in space — and potentially saving the lives of millions of people.
In flight tests for the missile defense program, we demonstrated the ability
to “hit a bullet with a bullet” in space. In a similar fashion, we
integrated a complex array of ground and space assets as prime contractor for
the International Space Station.
When we don’t execute as planned, we always address the problem
forthrightly and aggressively. Our Delta IV rocket, powered by the first new
rocket engine since the early 1980s — the Boeing Rocketdyne-built RS-68 — encountered
technical difficulties in early development. We overcame those, and the Delta
IV performed flawlessly in its first flight on November 20. Similarly, we are
addressing cost and technical problems in Boeing Satellite Systems by aggressively
improving processes and implementing best practices on our commercial satellite
programs. In addition, we are right-sizing for the satellite market to improve
our performance and profitability while maintaining our technological leadership
to benefit when the market reemerges. |
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Markets We are in a dramatically
changed business environment. Our commercial markets remain
affected by the economy, by the financial markets and by the
prospect of military action in Iraq. The slow recovery of both
air travel and airline profitability continues to dampen demand
for new airplanes and related support. Trends vary among regions
and types of carriers. But overall the downturn is severe,
particularly with major U.S. carriers.
Our defense, intelligence and noncommercial space markets, however,
remain extremely strong. We are very well positioned in these markets as a leading
provider of both existing and emerging transformational systems. And our programs
are well supported.
To define the future, we are moving from market-driven to market
driving, or market shaping. That does not mean telling the customer what to do
or what to buy. Rather, it means two things: first, understanding and appreciating
where the customer — and the customer’s customers — want to
go; and second, blazing a trail, or paving the way, to help them get to that
future state.
We took this approach in our commercial airplane business when we
introduced the “market-fragmentation” concept in the mid-1990s — and
created a product line best suited for nonstop service between many city pairs.
Today, the market is moving in that direction. Average airplane size is decreasing,
and point-to-point routes are proliferating. That is plainly the case even in
today’s distressed market conditions. Despite a sharp downturn in air travel
and airline profitability, there are some growing and profitable carriers, like
Southwest and Ryanair. These examples of market segmentation using only Boeing
737s provide the two things many people want the most — low cost and convenience. |
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