Boeing Employee Information Hotline at 1-800-899-6431

This site will look much better in a browser that supports web standards, but it is accessible to any browser or Internet device.

Merchandise | Corporate Governance | Employee/Retiree/Emergency Information | Ethics | Suppliers
Login
 
2005 Speeches
Jim Albaugh

James F. Albaugh

"Embracing Risk: A Vision for Aerospace in the 21st Century "

Royal Aeronautical Society

Frank Whittle Lecture

Bill Boeing Lecture Theater, London, United Kingdom

January 19, 2005

In the late 1800s, the great Victorian physicist Lord Kelvin was invited to join the Royal Aeronautical Society. He declined, saying: "I have not the smallest molecule of faith in aerial navigation... other than ballooning... or of any expectation of good results from any of the trials we hear about."

Thankfully, for every pessimist like Lord Kelvin there were pioneers... like Frank Whittle... Frederick Handley Page... Sydney Camm... and so many others ... innovators who embodied the best of British ingenuity... and who launched the industry to which we have all dedicated our lives.

We are fortunate that for more than a century, the Royal Aeronautical Society has preserved this heritage. At the same time, the Society has promoted the free exchange of ideas that is so essential to the progress of aerospace.

An admirer once said that "a lecture by Frank Whittle was a refreshing cocktail of technical brilliance... laced with bubbly humor... and spiked with a quip or joke to avoid any sign of pomposity." While I cannot promise "technical brilliance" or "bubbly humor," I do approach the Whittle lecture with a deep sense of humility. It is in this spirit that I speak to you tonight.

Occasions such as this... are opportunities... to step back from the events of the day... to look at the trends and forces shaping our industry... and to ask fundamental questions:

Tribute to American-European Solidarity

Where are we today?

Allow me to share some headlines from the press:

Such dark assessments could be ripped from the pages of newspapers today. In fact, these headlines are from decades past -- some from the 1980s; others from the 1990s.

I share them because they reflect the tensions... political, military and economic... that are inherent in a transatlantic alliance that brings together so many different countries and cultures. Today, it is once again fashionable to decry the threats to transatlantic partnership. "Americans are from Mars," we are told, "Europeans are from Venus."

U.S.-European relations are said to be at "the point of crisis." The real "clash of civilizations"... it is argued... is not between East and West... but between Europe and America . One prominent American academic sees the Western world dividing into competing "American and European halves."

As Oxford's Timothy Garton Ash warns, Europeans and Americans must avoid sinking into - here he quotes Freud -- "a narcissism of minor differences."

Despite all of this... with some $400-billion in trade annually, the U.S. and the European Union remain the world's largest trading partners. Far from withering, NATO continues to expand with new members and new missions.

Americans and Europeans are standing and serving together in the Balkans, where the mission in Bosnia has been transitioned from NATO to the EU.

We stand together in Afghanistan... and in Iraq, where British soldiers continue to risk their lives... Soldiers we must keep in our thoughts and prayers tonight.

President Bush's first foreign trip after his inauguration tomorrow will be to Europe. That alone is a reminder that the transatlantic alliance remains the foundation of global security and prosperity.

Tribute to U.S.-U.K. Special Relationship

Back home, Americans are reading the best-seller Franklin and Winston: An Intimate Portrait of an Epic Friendship.

To be sure, the enduring ties between our nations are perhaps best embodied in the rather colorful friendships between our presidents and your prime ministers.

But even more, the true strength of the Anglo-American alliance is the friendship between our peoples and the values we share... freedom, democracy and economic opportunity... all of which the aerospace industry helps to sustain.

If I can take one moment of professional privilege. From the time we delivered the first B-17 Flying Fortress to the R-A-F during World War II... Boeing has been proud of our strong ties to the UK -- both in defense and commercial aviation.

So here in the Bill Boeing Theater... at the Royal Aeronautical Society... let me say that Boeing has always been proud of this lasting and vibrant partnership.

Vision of 21st Century Aerospace

What will that future look like?

Lord Kelvin's prophecies remind us of the hazards of trying to predict the future.

And as the great American philosopher and baseball player, Yogi Berra, observed: "It's tough to make predictions -- especially about the future!"

Still, the great forces shaping our times:

These forces will define the 21st century and redefine aerospace... presenting our industry with both new opportunities... and new challenges.

In aviation, after enduring the worst downturn in our history, air travel has returned to the levels before the September 11th attacks. It's projected that global air travel will increase by more than five percent a year for the next 20 years.

While this will create new markets for manufacturers... and new opportunities for international point-to-point air travel... it will also put even greater strain on our aging air transportation systems.

The threat of terrorism will challenge governments and airlines to develop security policies that are effective and efficient. In other words... deterring terrorists without deterring travelers.

New technologies will bring high-speed Internet to the skies so that time on an airplane is time well spent... although some might call this a final assault on the last peaceful, digital-free zone in our hectic lives.

Turning to the outlook for the future in space...

Last week, Europe's Huygens space probe successfully landed on Saturn's moon -- Titan -- after a seven-year flight. China, with its first manned space flight in 2003, is planning its own lunar orbiter, as are India and Japan . There has now been a continual human presence aboard the International Space Station for more than four years. And President Bush has called for sending astronauts back to the moon and ultimately to Mars.

In October, Burt Rutan's SpaceShipOne captured the $10 million X-prize for being the first to achieve what many thought impossible -- sending a commercial craft to space twice in two weeks... and rekindling the dream of space tourism.

Richard Branson hopes to turn those dreams into reality -- for about $200,000 per ticket. Hopefully Sir Richard will have more luck than Pan Am, which... after man landed on the moon in 1969... offered reservations for future flights to the moon. The moon still beckons... Pan Am does not.

While commercial air travel is essential to the health of our industry, I spend most of my time thinking about the requirements of military and government customers.

While the nature of conflicts and the art of war may change throughout history... any military leader will tell you that beyond the skill and courage of soldiers... the essential needs to achieve victory remain the same:

Today, the revolution in information technology is fundamentally transforming how militaries achieve these enduring requirements... as we have seen in action in Iraq and Afghanistan .

And this is only the beginning. In the future...

A Global Information Grid under development will serve as a military Internet, giving forces an instant picture of their entire battlespace -- encompassing air, ground, sea and space itself... identifying friend and foe with certainty helping to avoid friendly fire incidents.

As one defense official explained, it will be possible for a warfighter in a Humvee... in a faraway land... in the middle of a rainstorm... to request imagery -- the fusion of multiple sensors -- and have it downloaded to their heads-up display... all within seconds. Rather than depending entirely on force structure based on the number of Bradleys or Strykers or Challengers... armies will rely on their ability to see first... understand first... act first... and act with lethality.

U.S. forces are rapidly moving toward this end-state... with the Army's Future Combat System... The same can be said for Britain with their Future Rapid Effects System of networked armored vehicles.

The systems and networks demanded by 21st century warfighters can only come from one place: a 21st century defense industrial base. Transformation of the battlefield and barracks must be matched by transformation in the labs, factories and on the design floor.

The old defense industry was about building things -- aircraft, missiles, bullets and bombs. The new defense industry will be about technology... and integrating large, complex systems. And just as our defense customers are focused on their transformation to address the conflicts of the future... there are changes that aerospace must make in order to remain vibrant, robust and relevant in this changing environment.

Change: Innovation and a Risk Culture

What do we need to do to ensure that future?

The first and foremost change of a transformed aerospace industry... I believe... is to move away from how we have done things for the past 40 years... where we have merely evolved what has made us successful in the past.

We must think in terms of revolutionizing how we do our business... from the development of technology to how we build our products... we must foster the innovation that comes from a risk culture. And here I am not talking about taking risks with human lives. I speak of the risk of new approaches.

The experience of Frank Whittle is instructive. The awards and recognition that Sir Frank received later in his life belie the ridicule he encountered as a young engineer.

As a cadet at Cranwell, he wrote his thesis claiming that airplanes could fly at speeds over 500 miles per hour. His evaluator replied, "Whittle, I couldn't quite follow everything you have written."

After Whittle received his first patent for a gas turbine engine, the Secretary of State for Air dismissed it, saying, "We do not consider that we should be justified in spending any time or money on it."

For years, neither industry nor investors were willing to embrace what they saw as Whittle's risky scheme. Industry was content to simply upgrade existing technology - the piston-engine. Investors, when they finally stepped up, were only willing to bet a few thousand pounds on Whittle's company, Power Jets Ltd. Of course, one spring morning in 1941 at a Cranwell airfield, Whittle proved them all wrong.

Like all great innovators, Frank Whittle was an unreasonable man. But imagine if he had refused to embrace risk. We could be living in a very different world.

From the Wright Brothers... to Frank Whittle... to Neil Armstrong's walk on the moon... our industry was the most innovative in the world. Leaders like the Short Brothers... De Havilland... Sopwith... McDonnell... Douglas... Northrop... Hughes... Kindleberger - they literally changed the world.

But I ask you, what is the state of our industry today?

Any honest assessment of aerospace will conclude that ours is a static industry. It took us only 66 years to go to the moon. By 2035, yet another 66 years will have passed. And where will we be then?

What is the next "giant leap for mankind?" Where is the innovation? What was the last real break-through technology that transformed aerospace? Where is the next one? Composite materials? Propulsion? Hydrogen? The Blended Wing Body? Who knows? Perhaps it is something some young university student at MIT or Sheffield is thinking about tonight.

Why aren't we forging ahead into high-risk, high-payoff research?

And where are the innovators of our time... I fear they are not working in our industry. They are taking their chances in the digital revolution and not revolutionizing aerospace:

They are transforming entire industries because they are willing to take the risk of embracing new technologies... new business models... and new approaches.

Now consider aerospace...

...And in time, stifle the very entrepreneurial character for which the companies were purchased.

In government, leaders are too often reluctant to fund high-risk R&D. Program managers and procurement officials largely operate in a culture that discourages risk and stifles innovation. Too often, requests-for proposals define the product rather than define the capability desired.

While other industries have been able to provide their customers with more capability at less cost... why will it cost uncounted billions more to send man back to the moon today than it did 35 years ago?

If we want to transform the aerospace industry, we can not be content with an evolutionary approach. We have to choose between being incrementalists, content to simply upgrade airplanes... or... becoming innovators... creating the next quantum leap that will mark the dawn of a whole new era in aerospace.

Change: Government-Industry Partnerships

Embracing risk is an inherent part of a second change needed in 21st century aerospace: new partnerships between industry and its customers... especially government.

Genuine partnerships mean that neither party can afford to look at one another as though enemies across a battlefield. We must have a shared vision of where we are going... an understanding of the difficulty in getting there... and the motivations of each party. Partnerships require openness... communication... and not only the sharing of information, but also of risk itself.

Industry needs from its customers...

At the same time, industry must not see government as simply a speed bump on the way to the bank.

Why not a more interactive, collaborative process between industry and government from the earliest stages of concept and development... For industry, that means we'll have to do more than simply respond to the needs of our customers. It means thinking ahead of our customers and anticipating their needs... and investing in appropriate technologies, capabilities and skills.

Commitment to Innovation

I like what IBM is saying about innovation: "Innovation occurs at the intersection of invention and insight: We innovate when a new thought, technology, business model or service actually changes society."

Innovations in aerospace defined the 20th Century by changing society...

Aerospace will redefine the 21st Century... if we transform the industry to inspire innovation. This transformation of our industry will be impossible without robust investment in research and technology.

At its peak during the Apollo program, NASA's allocation was some four percent of the federal budget. Back in those days. when engineers worked to bring back the crippled Apollo 13, Gene Kranz declared: "Failure is not an option."

With today's budget realities, that kind of funding is not an option.

So how do we achieve the high-risk breakthrough innovations of the future?

Fortunately, we work with our customers to identify critical enabling technologies, and then they allow us to re-capture some of the costs of development in our rates on ongoing programs.

At the same time, government itself is focusing on essential future technology. The Pentagon's Defense Advanced Research Projects Agency (DARPA) -- birthplace of the Internet and stealth aviation -- is concentrating more on high-risk, high-pay-off research than ever before. The Aldridge Commission that reviewed U.S. space policy recommended a DARPA-like entity within NASA to foster high-risk innovations in aerospace.

These are positive steps... but they are still the exception, not the rule.

Change: Industry-Industry Teaming

But there's more that we need to do...

Just as 21st century aerospace will demand new partnerships between industry and government, it will require new partnerships within industry.

In this global economy, no company is an island unto itself. Companies that think they are... that is, that are vertically integrated... cannot be the best in the world at everything they do. Therefore, by definition that company cannot offer their customer the best solution possible. They will deliver a sub-optimal product.

Also, no single company will ever have a monopoly on the knowledge, talents or skills required to develop the complex systems demanded by our customers today.

We are global companies with global supply chains building complex large-scale systems for an increasingly global customer. Companies will be only as good as their ability to globally source and compete. Companies that seek only to offer their best?will fail.

Giving customers the best solutions means giving them the best of industry -- whether that comes from America, Europe, or Asia.

In the future, companies will increasingly focus on a few core competencies. As a result, they will become more dependent on partners...

A recent example: this fall, 27 aerospace and information technology companies - many in this room tonight -- unveiled the Network Centric Operations Industry Consortium (NCOIC)... to develop and share a common information and communications architecture that we will apply to all of our new programs... in order to make them interoperable. In doing so, it was recognized that while we may be competitors, the platforms and systems we build will have to operate together in a single global network.

Bringing together the best companies will not always mean the biggest companies. Often times, it will be smaller firms that offer the innovations our customers seek. We must be open to partnerships that bring together the innovation of start-ups with the integration capabilities of larger companies.

An example: two years ago, we matched a team with Insitu, a small firm in Washington State that was developing an unmanned aerial vehicle for maritime applications. Through a joint venture, we developed ScanEagle, a tactical UAV that troops can launch and recover on the battlefield. It is currently deployed with U.S. troops in Iraq - a far cry from scouting for tuna... the original application of this UAV.

Transatlantic Cooperation (ITAR)

Of course, the joint ventures critical to 21st century aerospace will be impossible without the free flow of information and technology between partners, especially our closest allies.

But today, transatlantic industrial cooperation is all but impossible. Impossible without an export control policy that both protects a country's national and economic security, and, at the same time, promotes international cooperation. Current U.S. export controls do neither.

Designed in the Cold War for the Industrial Age, the current export control regime cannot keep up with the break-neck pace of change in the Information Age. Designed for a world of bilateral defense projects, it is ill-suited to support the coalition forces of the future.

Although current U.S. export policy was crafted with the best intentions at the time... changing world realities now require us to rethink how it can work in a way that does not inhibit collaboration.

And I just have to say... When I hear about the U.S. not wanting to export high-speed computers because of their possible use to develop weapons of mass destruction, I just have to recall that the atomic bomb was developed with a slide rule!

Companies are unable to access the best talent and technology, putting them and their countries at a competitive disadvantage.

How can an entity... such as NATO... deploy and operate together without access to common systems... How can we fight in a coalition environment without the ability to communicate with each other... How can nations pursue global missile defense if we can't share vital information?

These are the considerations that must go into the redesign of U.S. export policy. If we can trust Britain to fight with us and shed blood together, then surely it can also trust Britain to protect critical defense information!

Level Playing Field

Transatlantic trade requires something else -- a level playing field. Free trade must be fair trade. I nternational trade rules and national tax systems should not put companies from different countries at a competitive disadvantage.

This fall, President Bush signed into law the repeal of the Foreign Sales Income tax policy to comply with the World Trade Organization.

And, of course, we know that discussions are now underway concerning the 1992 Large Civil Aircraft Agreement.

Change: High-Skilled 21st Century Workforce

None of the changes I have discussed so far...

...will be possible without addressing a final issue: the need for a talented, highly-skilled aerospace workforce.

Looking ahead, we face a triple threat. The first and most imminent threat is the aging of our industry workforce. The average age of an aerospace engineer today is 54 years old.

And that leads directly into the second threat: We are simply not producing enough of the scientists and engineers of the future.

Twenty years ago, the U.S. was producing some 75,000 science and engineering graduates every year. This year, we will graduate about 50,000. Meanwhile, India will graduate about 300,000! China... About 700,000 -- every year!

Where are the Frank Whittles of tomorrow? They're studying applied sciences in Bangalore and Shanghai.

There was a time when aerospace was the place to be. It was majestic. Today in the U.S., only two percent of engineering students enter aerospace.

In one survey, 80 percent of American aerospace workers said they would not recommend their profession to their own children -- 80 percent!

That's an indictment of us.

In short, in coming decades we will have too few workers... with too few skills... with too little interest in aerospace.

How can science and engineering. . . that is, how can aerospace. . . prevent this "intellectual disarmament?" How can aerospace attract the best and brightest?

As an industry, we can start by becoming more attractive to younger workers. And at the same time, we need to keep the inspiration alive for the young men and women who enter aerospace.

We lose far too many good engineers to other industries after the first three or four years. Part of it is because it can take years for a young aerospace engineer to reach a level of real responsibility. To be promoted, one has to have gray hair.

As executives and managers, we have to ask:

Only by doing so can we keep the best and brightest.

But industry cannot solve this challenge alone. With airframes like the B-52 and the F-4 enjoying life-spans decades longer than originally intended, there are simply fewer new design programs with which to engage our workforce. A government commitment to prototyping could help us retain our aerospace workers by keeping them challenged with cutting-edge projects.

Which brings me to the final and long-term threat: the education of our children.

A pair of surveys published last year remind us that American and British students continue to lag behind their international peers in basic math and science skills.

The next generation of scientists and engineers are today's high school students. But it's important to remember that their primary thinking about going into science and engineering has been shaped since early childhood. We want children to know that being an engineer is exciting. That it's a great thing to become what Disney calls "Imagineers"... people that can truly invent the future.

There's a great example of this kind of inspiration for children today at London 's Science Museum -- where the Einstein Year has just been launched.

More broadly, our children deserve schools and curricula designed for the Information Age, not the Industrial Age.

Aerospace gives generously to philanthropic initiatives, with education as a priority. But a nation's success in the Knowledge Economy will depend on a national commitment to math and science.

This new commitment to education must be serious and it must be sustained. We cannot wait around for another Sputnik to galvanize government into action.

Ultimately, perhaps the best way to attract future generations to aerospace is to dare our children to dream again -- with great goals that challenge us to explore new frontiers.

For my generation, it was the space race with the Soviets... and President Kennedy's challenge to send a man to the moon... that captured our imagination... and infused us with a passion that still stirs our hearts today.

Let us hope that the images Huygens is sending back from Titan... or the mission to return astronauts to the moon, Mars and beyond... will capture the imagination of a young boy or girl today and inspire them to become tomorrow's scientists and engineers.

Conclusion: "Into the Unknown"

In his famous trilogy of "The Discoverers," "The Creators" and "The Seekers," the late historian Daniel Boorstin chronicled the great pioneers whose ideas and achievements shaped the modern world.

Boorstin said that, "the most promising words ever written on the maps of human knowledge are terra incognita -- unknown territory." He spoke of "mankind's need to know".

He said that this need has always driven explorers in "the quest for what they knew was out there... into an enthusiastic reaching... into the unknown."

Like all great eras in history, man's journey into the skies and beyond began with dreamers moving forward into unknown territory...

Just as the 20th century was theirs to shape, the 21st will be ours to define.

The second century of manned, powered flight will not only be worthy of the first; it will exceed our imaginations...

And it is that spirit, perhaps more than anything else, which will ensure a vibrant, robust aerospace industry for the century to come.