-Caveat Lector- Network members: Boeing sees less emphasis on commercial jet sales, and more emphasis on military production and serves in its future. Boeing is already the world's largest builder of military aircraft (and civillian aircraft), but is second to Lockheed Martin in over-all military production. Steve **** http://biz.yahoo.com/rf/000723/l23414369.html Sunday July 23, 4:16 pm Eastern Time By Chris Stetkiewicz LONDON, July 23 (Reuters) - Boeing Co (NYSE:BA - news) will shift its business mix in coming years to include more revenue from military and service markets, easing its dependence on more volatile commercial jet sales, Chairman Phil Condit said on Sunday. ``We need some things like the services business which are not nearly as affected by the economic cycle. We also need some faster growing businesses,'' Condit told reporters on the eve of a major air show in Farnborough, England. Airliner sales have traditionally made up the bulk of Boeing's revenue base. In 1999, the aerospace giant's commercial jet unit pumped in $38 billion of its $58 billion in overall sales, or two-thirds. But jet sales rise and fall dramatically with economic cycles. For example, sales of lucrative widebody planes have just begun to pick up as Asia has rebounded from a 1997 financial crisis that slashed widebody demand. Condit said revenues from Boeing's military lines could equal revenues from civilian markets within five years. Such a shift would likely boost operating margins at Boeing, since the Seattle-based company tends to earn fatter profits selling aircraft and missiles to military customers than on sales of airliners to increasingly demanding airlines. Condit said last week that prices in the commercial jet market, in which it competes against hard-driving rival Airbus Industrie [ARBU.UL], had been and remained ``aggressive''. GREATER PRESENCE IN SERVICES A greater presence in the market for plane services -- ranging from maintenance and spare parts supply to finance and satellite-based communications -- could boost Boeing's growth rate, and offset cutbacks in other business units. Boeing to date has made only incremental steps into services, but has big plans for expansion through space programmes, leveraging the $3.75 billion purchase of Hughes Electronics Corp.'s (NYSE:GMH - news) satellite-building business it announced earlier this year. ``We are always looking for things that help us grow,'' Condit said. ``The services business promises 15 percent to maybe 20 percent (annual) growth.'' Condit has denied dubious but persistent rumours that Boeing would leave the commercial jet market altogether or merge with General Electric Co. (NYSE:GE - news), which boasts jet engine manufacturing and plane leasing in its vast financial and industrial empire. But Boeing officials have held up GE as an example of how much money can be made in the services sector -- GE earns more money servicing engines than it does selling them. Boeing also plans to sell off less profitable or money losing operations, including a St. Louis-based parts-making facility employing 1,700, and hopes to focus on high value-added processes like aircraft assembly or manufacture of specialised parts. ``We have begun one (asset sale). There will probably be others,'' Condit said. Boeing has also undertaken a broad cost-cutting campaign ranging from improvements in production efficiency to trimming its payroll from a 1998 peak of 238,600 to about 187,000 now and setting a target of about 180,000 by the end of 2000. Having got a late start on the downsizing trend that began sweeping through the U.S. industrial base in the 1980s, Boeing has plenty of room to continue boosting efficiency for years to come, analysts say. ``I don't think you ever stop trying to bring down costs,'' Condit said. *** ____________________________________________________________________ International Network on Disarmament and Globalization 405-825 Granville Street, Vancouver, British Columbia V6Z 1K9 CANADA tel: (604) 687-3223 fax: (604) 687-3277 [EMAIL PROTECTED] www.indg.org To subscribe to the e-mail list, send an e-mail to mailto:[EMAIL PROTECTED] SUBSCRIBE mil-corp <[EMAIL PROTECTED]> as the first and only line in the message body. -- ============================ -- CUT OUT THE MIDDLEMEN -- JUST VOTE FOR A CORPORATION ============================
