Defense part of Boeing’s backbone

Published 5:33 pm Thursday, July 15, 2010

The Boeing Co. and the Puget Sound region have become synonymous with commercial jets.

That image was recently reinforced with the first flight of Boeing’s latest all-new aircraft, the 787 Dreamliner. But the nation once turned its attention to the region and to Boeing for defense projects, namely aircraft to fight wars. Today, despite the lack of headlines, the company’s Puget Sound defense work force produces between $2 billion and $3 billion in revenues annually.

The tie between the defense and commercial aircraft divisions remains a strong one.

“We rely on Boeing Commercial Airplanes as the basis for the offerings we make to our customers,” said Bob Feldmann, vice president/general manager, Boeing Airbourne Management.

Feldmann’s division has put warning and control systems on Boeing’s 737 and 767 commercial aircraft and turned Boeing’s single-aisle 737 into the submarinehunting P-8A Poseidon.

“We specialize in taking commercial aircraft and modifying them,” Feldmann said.

The use of commercial jets as the basis of military aircraft has been a longterm and successful strategy for Boeing. The company’s 377 Stratocruiser served as the basis for its KC-97 aerial refueling tanker. Its Dash80, which was later developed into the 707, served as the foundation for Boeing’s KC-135 tanker, which is still used today.

Perhaps the most prominent Puget Sound area defense project is one that Boeing doesn’t have yet. Earlier this month, Boeing submitted a bid to the U.S. Air Force for a $35 billion contract to provide aerial refueling tankers derived from its Everett-assembled 767 commercial jet. The Air Force will announce the tanker winner this November. The contract would mean job security for Boeing workers in Everett who work on the 767 commercial production line. Boeing says its tanker would support 11,000 jobs in Washington state.

Out of the 7,200 defense workers Boeing employs in the Puget Sound region, only about 800 of those are production workers, who build both Boeing commercial and defense aircraft. The majority of Boeing’s defense workers, though, are engineers and technical workers.

“This is a high-tech work force,” Feldmann said.

That high-tech work force was part of the draw for Boeing’s Unmanned Aerial Vehicle division.

Last year, Boeing named the Puget Sound region as its UAV headquarters. Boeing picked the Puget Sound region partially because of its proximity to Boeing’s subsidiary Insitu, said Vic Sweberg, who leads Boeing’s unmanned vehicle division. But the area’s capable work force played a key role in the decision.

Boeing’s move prompted some in Washington state’s aerospace circle to call for supplier incentives, tailored more closely to the unmanned vehicle sector. Lawmakers in Olympia could debate tax breaks for unmanned vehicle companies similar to those given to commercial aircraft builders and suppliers.

While the U.S. defense budget is in a down cycle, Boeing believes that several of the products it produces in the region still will see orders both nationally and internationally. Boeing CEO Jim McNerney has emphasized the international market for products like the P-8A Poseidon, which are being marketed to countries such as India that need to update their defense aircraft.

Boeing’s Sweberg sees the unmanned-vehicle market growing at a faster pace than any other Boeing business segment. Today, unmanned vehicles make up only about $300 million in annual sales for Boeing. Sweberg predicts that number will top $1 billion within a decade.

“In the latter part of next decade, unmanned (aircraft) will be a significant part” of Boeing’s defense division, Sweberg said.