After Boeing's long struggle to win additional sales of its C-17 transport aircraft, that program had its wings clipped. The formerly $200 billion Future Combat Systems program got gutted, its budget slashed by more than 40%. And while the Pentagon is happy to let work on the prototype Airborne Laser proceed, it canceled plans to buy a second ABL plane -- and with it, Boeing's chance to land a second sale. Miserable news all around.
Second verse, same as the first
Not that last year was any stroll down the tarmac, either. First, Boeing lost the KC-X tanker contract to Northrop Grumman
In short, Boeing's had a tough couple of years. But bruised and battered though it may be, the company's still a contender. Here are a few thoughts for how it can get back in the game and revive its flagging fortunes.
Roll with the punches
First, Boeing needs to realize that there's a new sheriff in town. The Bush Administration is history, and with it, money for what The Daily Show's Wyatt Cenac terms "RFC" weapons (short for "Really [Bleeping] Cool") will be tight.
Under the new regime, $140 million-a-pop stealth aircraft, high-tech tanks, and next-gen Navy cruisers are out. Common-platform fighter jets, unmanned aerial vehicles, and "boots on the ground" are in. It's time Boeing got with the program and figured out how it can fulfill the new administration's priorities, rather than assuming things will work the other way around.
Step 1: Buy Textron
Buy the one aerospace company that's even more screwed-up than Boeing? Why? Because word has it that a group of companies from the United Arab Emirates and a Kuwaiti firm will soon offer to buy Textron themselves -- and you know how that idea's going to fly in Congress.
The prospect of giving foreign investors control over Cessna business jets and Bell helicopters, and Osprey -- um, I'm still not entirely clear on what an Osprey is -- will give our politicians an extreme case of the willies. If this deal's going to happen at all, it will need to include a spinoff of the firm's defense businesses to another U.S. company. That company's name should be "Boeing."
If you listened carefully to Secretary Gates's proposed budget, Textron's where the money is. 2,800 new special forces troops, and perhaps 20,000 additional troops headed to Afghanistan, mean the U.S. military is continuing to refocus on small wars, on putting "boots on the ground."
Alas, Afghan ground isn't particularly smooth. It's the kind of terrain -- and the kind of war -- that emphasizes helicopters over air superiority fighter jets. In preparing to support this kind of conflict, Boeing should focus beefing up its helicopter business, by adding Textron's Bell Helicopter (maker of the Cobra) to its own stable of Apache attack helicopters. (And if, somewhere down the line, a combined Boeing/Bell can work up a reasonable alternative to United Tech's Blackhawk, all the better.)
Pilots? We don't need no stinkin' pilots!
Also topping Gates's wish list last week, you will recall, were unmanned aerial vehicles -- a category of flying aircraft where Boeing has historically been weak. Buying Textron could put extra oomph in Boeing's UAV business, though, because Textron itself owns the highly successful Shadow line of UAVs. Get 'em while they're hot.
Easy-peasy. Any other bright ideas?
Actually, yes: Finish what you started. Beyond reexamining its role under the new defense budget, Boeing simply must clean up the mess it has made of its civilian airplane business.
I'm speaking primarily of the 787 "Dreamliner" fiasco, of course. But Boeing's civil air problems don't end there. A recent Wall Street Journal article quotes several key Boeing customers calling the company’s production plans "out of step with a rapidly changing industry." AIG
The time to make hard choices, reduce aircraft supply, and shore up profit margins is now.
Sound off on Boeing's future: Go to Motley Fool CAPS now.
Fool contributor Rich Smith owns shares of Boeing. FedEx is a Motley Fool Stock Advisor pick. Try any of our Foolish newsletters today, free for 30 days. The Motley Fool's disclosure policy is constructed entirely from carbon composites and other space-age materials (namely, styrofoam and Tang).