Boeing’s defense unit has struggled for years to turn a profit, and this year is no different. The company reported a $924 million loss in its defense business in the third quarter of 2023, due in part to higher manufacturing and supply chain costs, as well as technical challenges.
Boeing is facing a number of challenges in its defense business, including:
Fixed-price contracts: Boeing has a number of fixed-price contracts with the Pentagon, which means that it is locked into a price for the development and production of a weapon system. If costs go up, Boeing has to absorb the difference. This has been a major problem for Boeing on a number of programs, including the KC-46 tanker and the T-7A Red Hawk training jet.
Supply chain disruptions: The global supply chain has been disrupted by the COVID-19 pandemic, the war in Ukraine, and other factors. This has made it difficult and expensive for Boeing to obtain the parts and materials it needs to produce its aircraft and other weapons systems.
Technical challenges: Boeing has also been facing technical challenges on a number of programs. For example, the company has had to delay deliveries of the KC-46 tanker due to problems with the refueling system.
Boeing is taking a number of steps to address the challenges facing its defense business. The company is working to renegotiate some of its fixed-price contracts and is streamlining its operations. Boeing is also investing in new technologies and manufacturing processes.
However, it will take some time for these changes to have an impact. In the meantime, Boeing’s defense business is likely to continue to struggle.
Here are some specific examples of the challenges that Boeing is facing in its defense business:
The KC-46 tanker program: The KC-46 tanker program has been plagued by delays and cost overruns. Boeing has had to rework the refueling system on the aircraft a number of times, and the company has also had problems with the aircraft’s software.
The T-7A Red Hawk training jet program: The T-7A Red Hawk training jet program is also behind schedule and over budget. Boeing has had problems with the aircraft’s engine and with its manufacturing process.
The MQ-25 Stingray refueling drone program: The MQ-25 Stingray refueling drone program is another program that Boeing is struggling with. The company has had problems with the drone’s software and with its ability to operate in harsh weather conditions.
Boeing is a major player in the global defense industry, and its struggles are having a ripple effect throughout the supply chain. Boeing’s suppliers are also facing challenges, such as higher costs and supply chain disruptions. This is making it more difficult and expensive for Boeing to produce its aircraft and other weapons systems.
It remains to be seen when Boeing will be able to turn its defense business around. However, it is clear that the company is facing a number of significant challenges.