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"Out of the $6 billion, probably 66 percent of
that will come out of the supply chain, maybe more," Chris
Chadwick, chief executive of Boeing Defense, Space and Security,
said in response to Reuters following a speech sponsored by the
Seattle Metropolitan Chamber of Commerce.
Boeing already has cut $4 billion in costs from the defense
unit, which has annual sales of $33 billion. The company has
said it plans to cut an additional $2 billion.
"There continues to be tremendous opportunity in the supply
chain for efficiency, cost reduction," Chadwick said. There are
also opportunities for growth with suppliers.
"What we've found is those supplier who lean forward from a cost
perspective, we do partner with them for the long term."
Boeing's defense business, like competitors such as Lockheed
Martin Corp <LMT.N>, General Dynamics Corp <GD.N> and Raytheon
Co <RTN.N>, has been under pressure to cut costs as U.S. defense
spending has fallen in recent years due to budget cutting.
Chadwick said the U.S. budget has fallen by about 24 percent due
to sequestration, or automatic spending cuts. Chadwick said
Boeing is not alone in expecting the budget to continue to
decline. And he said the company has an advantage over
competitors by using successful commercial airplane models to
produce military products, such as the P-8 Poseidon plane, based
on the 737, and the KC-46 aerial tanker, based on the 767.
Chadwick said among the opportunities in the U.S. defense
sector, where U.S. spending is equal to about the 10
next-largest national defense budgets combined, are military
customers still using equipment based on the Boeing 707
jetliner, that are old and will need to be replaced. Boeing is
investing in research and development to meet those needs, he
said.
(Reporting by Alwyn Scott; Editing by Jonathan Oatis)
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