SEATTLE Aug 11 The head of Boeing Co's
defense, space and security business said on Monday that nearly
two-thirds of the $6 billion in cost cutting the unit is
undertaking will come from savings found in its network of
"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, General Dynamics Corp and Raytheon
Co, 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
(Reporting by Alwyn Scott; Editing by Jonathan Oatis)