Two-thirds of Boeing’s $6 Billion Cost Cutting Will Come from Its Supply Chain
The head of Boeing’s Defense, Chris Chadwick, spoke on Monday that nearly two-thirds of its $6 Billion in cost cutting will come from savings found in its network of suppliers.
“There continues to be tremendous opportunity in the supply chain for efficiency, cost reduction” said Chadwick. Boeing has already cut $4 Billion and plan to cut extra $2 Billion from its defense unit, which has annual sales of # 33 Billion. Chadwick continued to explain that “we (Boeing) have found (that it) is those suppliers who lean forward from a cost perspective, we do partner with them for the long term.”
Boeing’s competitors such as Lockheed Martin Corporation, General Dynamics Corporation, and Raytheon Co. have been under pressure to cut costs as U.S. defense spending has fallen in recent years due to budget cutting. U.S. budget has fallen by 24% due to sequestration or automatic spending cuts. Chadwick said that Boeing does have an advantage compared to its competitors by using successful commercial airplane models to produce military products. Among the opportunities in the U.S. defense sector Chadwick mentioned is that Boeing is investing in research and development to meet the needs of military customers still using equipment based on the Boeing 707 jetliner that are old and will soon need to be replaced.