FARNBOROUGH: Interview with Boeing Defense’s Dennis Muilenburg

In spite of a challenging defence environment at home, Boeing Defense, Space, Security sees big opportunities to grow its business beyond the USA. The unit is involved in major competitions in a number of countries, and also hopes to sell more C-17 strategic transports in order to keep the Long Beach, California production line open beyond 2014. Dennis Muilenburg, president and chief executive of Boeing Defense, Space & Security talks about the key opportunities and challenges facing Boeing in the global defence market, with a particular focus on Asia.

How are things are going with Boeing's defence business?

Boeing

The overall global defence environment continues to be challenging. In the USA and European markets, defence cuts are well under way. This is not surprising, these are reductions we've been anticipating for some time and we've been planning to factor those into our plans. On the other hand, we see growth in defence budgets beyond the US and Europe, especially in Asia and the Middle East. We continue to make good progress serving our customers in those markets. Over the past five years the international segment of our defence business has grown from 7% of our revenue base to 24% last year. This represents a very significant increase in the international mix of our defence business, and we see this trend continuing to strengthen. In the long run, we expect 25-30% of our defence business to be outside the USA, and that this will be a sustained level.

We continue to invest in building industrial partnerships around the globe. Not only are we providing platforms and products that support our defence customers in the Asia Pacific region, we're also helping to build industrial capacity. Boeing's presence here is growing, but in addition to that our industrial partnerships are growing as well. This is an important part of the investment out here. From a Boeing perspective, this applies across the entire enterprise.

Even though it is a challenging time in the defence environment, we are pleased with the progress we've seen and are honoured to support our customers in the Asia pacific region.

Indonesia's ambassador to the US told the Jakarta Post in May that Boeing has agreed to give Indonesia offsets for Civil and military programmes. What offsets has Boeing agreed to?

AH-64D Apache Longbows

I can't comment on any specific offset agreements. The nature of the discussions we've been having is both on the commercial airplane and defence business. We have growing opportunities to support our Indonesian customers. Typically, as we grow our presence in product lines we'll have opportunities to build industrial partnerships.

Industrial partnerships come in many forms. Our global supply chain is extensive. We will work to build a supplier base around the world, and help this supplier base to be competitive in developing technologies and capabilities. There is also potential to build commercial supply bases. When defence products are delivered, we hope to build industrial capability to augment those defence products.

There are no specific arrangements or agreements with Indonesia, but there has been dialogue on building industrial capacity over the long run. I would view that as a strategic discussion at this point.

We've met nearly $40 billion in offset agreements over the last decade in more than 30 countries. This is an important part of how we do business.

What is your view on selling AH-64D Apache Longbows to Indonesia?

Indonesia has expressed interest in acquiring Apaches. These are government-to-government discussions, as such discussions typically are. Our role is to support those discussions. If Indonesia decided to procure Apaches, we will support this requirement.(Flightglobal)