TOP 100: Boeing uses diversity, tech investments to weather stormy market

The Boeing Co. relied on its successful commercial aircraft business to help the rest of the company make technology investments during an otherwise down market.

Flying into the winds of fiscal adversity and government turbulence, Boeing Corp. emerged from 2013 with a trio of records -- $86.6 billion in revenue, $7.9 billion in core operating earnings and $7.07 in core earnings per share.

“In 2012 we knew that it was our responsibility to plan for what was going to be a very tough year,” said Dewey Houck II, vice president and general manager of Electronic and Information Solutions, a division of Boeing Network and Space Systems.

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“That meant to try to extend programs that we currently had beyond the existing period of performance,” he said.

On the IT and systems integration side of the house, Boeing secured the No. 4 spot on the Top 100 with $4.1 billion in prime contracts.

Boeing’s strength in the market, Houck said, is its diversified and balanced portfolio between its defense sector business and its commercial airplane division.

“Because we’re both an airplanes company and a defense company – and the commercial airplanes company is doing very, very well – we have the great liberty of being able to invest at a level that we think is important from a market perspective, not just what’s affordable based on what you’re doing in your own sector of business,” he said.

For example, Boeing has invested in secure mobility products for small-screen devices. “We think it’s an important investment for the future,” he said, “because it’s a nice complement to the rest of our [defense] information business – high-end analytics, visualization, etc.,” which are especially relevant for Boeing’s C4ISR and Cyber customers who need to secure connectivity.

“Where we saw slowdowns associated with government spending and sequestration was generally in our products business, where customers were reticent to do product buys but they were willing to continue to buy services,” Houck said. “What we saw post-shutdown was that there was pent-up demand and the product business caught up rather nicely, rather quickly.”

A search of corporate news releases for 2013 is heavy on aircraft orders but lacking defense and IT contract wins because of the no-publicity clauses in them, he said. Also, the company does not release contract values for individual divisions such as Houck’s Electronic and Information Solutions (EIS).

Houck said one of Boeing’s biggest challenges ahead, especially for his division, is finding employees with the required expertise and proper security clearances. Also, unlike the aircraft division whose contracts are usually long-term deals, most defense contracts are short-term, which make it difficult to plan far ahead, he said.

“Our customers are expecting more for less and we need to give them more for less,” he said. “We need to make sure that we are making investments in the technology that they care about so when they ask for it, we’re ready to go. We don’t start from scratch. That’s going to be a big part of everybody’s business going forward.”

Houck said 2014 “looks great, but beyond that we’re going to have to plan effectively for whatever comes next with respect to budgeting and government shortfalls.”

So he views this year through the same lens he used for 2012. If sequestration returns after the current two-year budget deal ends, “then we’re back in the same boat that we were before.”

What Boeing must do to stay the course, he said, is to think strategically about what will be important in the marketplace. Resorting to a well-known ice hockey offensive strategy, he added, “You have to skate to where you think the puck will be.”