Wednesday, Sept 27, 2006 - Museum of Flight
Good afternoon everyone.
I know that a few things have changed since the planning for this Wings Club luncheon began some months ago. Timing, as they say, is everything.
On behalf of the men and women of Boeing Commercial Airplanes, we welcome you to our beautiful home in Puget Sound. I am so glad you are here with us today.
What a great opportunity to re-connect with old friends and meet new ones as well.
Thank you Joe, for your leadership and vision in taking the Wings Club out on the road. I think that's great.
So here's my plan for the next few minutes. I am going to say a few words about our industry, our team, and a little bit about me and my management model
And I'm going to be sure to leave plenty of time for the best part - your questions. I find that to be the most fun.
It is fitting for us to be here, at this great museum, near Boeing Field. Many years ago, I started at Boeing as a flight test mechanic here.
As Joe would attest, flight test is a great place to get a start at Boeing - you learn many things that you carry with you through the rest of your career.
My Dad was a flight test pilot at Boeing, and his love of aviation runs through my veins as well. It is more than an occupation, more than a hobby.
Aviation is truly a part of me. And I can't think of a better way to live my life than to be a part of this great industry, this great company, and the people who make up our team.
For 34 years, I have thought I have the best job in the world here at Boeing.
And now, what can I say - this job is a dream come true. A challenging job, but a really fun job - and I'm energized and excited about the opportunity and our future.
And what an exciting time it is for OUR aviation industry.
We continue to enjoy a period of healthy, robust growth
And as Vice President of Sales, it was particularly gratifying to see our airline customers moving forward with their growth plans as the industry recovered from the post 9/11 downturn.
Yields, revenues and productivity are rising, and more airlines are turning profitable, despite high fuel costs
Traffic growth continues to out-pace capacity growth
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Load factors and utilization rates continue to rise |
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Airlines are pushing their aircraft hard to meet demand |
Liberalization around world is also driving industry growth
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Liberalization allows competition to flourish |
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Gives passengers more choices in routes and frequencies - which drives our point-to-point strategy |
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And leads to new technologies and new service offerings |
We see global GDP and international trade continuing to grow in our market forecast for the next 20 years
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And we see that growth taking place in every region, although some markets will grow faster than others. |
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And we see new business models serving their markets in new and innovative ways |
As a result of these and other factors, our latest Current Market Outlook estimates more than 27,000 airplanes will enter the market over the next 20 years. With 65 percent of them for growth, and 35 percent for aircraft replacement.
It is an exciting time, and I am thrilled that we are all a part of the energy and excitement
Do we have our challenges? Of course.
Our industry, and government agencies must work together to solve issues that to ensure a safe and efficient air transportation system
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Such as innovation in air traffic control; |
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Rational approaches to airplane and airport security; |
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Continued liberalization of our industry |
We also need to carefully manage our growth
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Both manufacturers and operators can work together |
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To make sure that the demand and supply of new airplanes are matched |
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To ensure stable pricing and preserve the long-term value of airline assets |
Yes, we have challenges. But if you spend much time around me, you will know I find inspiration in the aviation industry in so many ways
And it inspires me that people around the world want to fly.
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We have been through a lot -- terrorism, war, SARS, dot-com busts, oil crises and economic downturns |
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Through it all, people want to fly - to do business, to visit loved ones, to get away from it all - or to get back in touch. |
We in the aviation industry bring the world together - and that, my friends, is inspirational.
I am also inspired by the strategy that Boeing Commercial Airplanes has built over the past few years. We have stuck with it, and it is gratifying to see our plan validated in the market place
Going back to our production problems of the late 90s, through the 9/11 downturn, we have made the tough decisions required to stay viable as a business.
We drastically reduced production and cut our employment, and we put our focus on helping our customers get through the worst downturn in our history.
But we kept investing in our product strategy, based on what the market and our customers were telling us.
It wasn't easy. Many even questioned if Boeing was still committed to the commercial aviation business.
But we hung in there. And we transformed Boeing Commercial Airplanes - in three major ways
We transformed our product line and entered the super-heated markets of 2005 with the most modern family of aircraft in the history of our industry. And the momentum has continued in 2006, powered by a great lineup:
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The 737 flies to more cities, carries more people and produces more airline profit than any airplane on the planet. |
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Last year we sold a record 569 of them, and nearly 500 so far this year. |
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It is the most efficient single-aisle airplane to operate, maintain and support in the world - what a work horse |
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The 747 continues to exceed our expectations and is more than a famous icon |
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We are closing in on our 1,500th delivery, and we are seeing a wonderful future with the 747-8. |
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The 747-8 is our first example of using 787 technology in a great new application - bringing 787 fuel-efficiency to the very large aircraft segment |
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And the popularity of the 747-8 Freighter is clearly demonstrated by its success so far in the marketplace |
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We are still working toward our first order for the passenger version. We see opportunity as older aircraft in this segment are replaced. We are patient, and it is certainly a market we feel good about. |
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The 767 continues to be in demand in a number of markets and the vehicle of choice for many customers. |
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Naturally, we had envisioned the 767 to be replaced by the 787, and that will happen. |
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But we have not set a time table to close the production line, and the market is keeping it open. |
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The demand for used 767s in the market remains strong, and this great airplane continues to play a key role of interim lift until the 787 comes on board later this decade. |
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Of course, the 767 brought twin-engine flight to the North Atlantic, and the 777 has carried our vision of twin-engine, point-to-point travel to Asia and around the world |
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The 777 is truly the world class jetliner in its segment. |
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It is the most passenger-friendly airplane in its class |
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It flies farther, faster and carries more payload at less cost and with less fuel than any competing product |
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Without a doubt, the 777 takes passengers where they want to go, when they want to go - the essence of our point-to-point strategy. |
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With the 777 Freighter in development, we have a complete 777 family of fuel-efficient, high technology airplanes that deliver high value to our customers. |
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And we will continue to invest in this wonderful airplane to ensure its market-leading position for years to come. |
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And the story only gets better. The 787 carries our product-line strategy to the next exciting level |
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Of course the 787 story is all about the breakthroughs in efficiency and passenger comfort that come from the increased use of composites and the latest in engine technology |
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Simply put, the 787 brings unmatched fuel efficiency, better economics, lower maintenance costs, and incredible cabin comfort - and it's a great complement to the 777 for long-range operations. |
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The 787 will be a game changer in the marketplace, and all of us are looking forward to its first flight next year and entry into service in 2008. |
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Add up this product line, and it is a lineup that any sales director would love to take into the marketplace. I said that when I was in my old job, and I believe it even more in my new job. |
But that is only part of the transformation story
We have also transformed our production system to drive cost out and bring more value to our customers
We have a moving line here in Renton where we assemble the 737 - it is a real success story
We are implementing the moving line concept in Everett on the 777, using best practices from Renton and applying them on the big airplanes
And our team realizes that driving lean throughout our enterprise is not a 'some-time thing'.
Improving productivity is something we must focus on every day, every week, every month, every year, forever. It is the price of admission into our industry.
By the way, I want to recognize many of you here today are part of our lean global enterprise as supplier partners.
We have an outstanding global network of suppliers who loyal, reliable and indispensable to our enterprise. We thank you for your efforts, and we are counting on you to continue with us on our shared journey to drive quality and productivity.
Most importantly we are counting on you to share our journey of meeting our commitments to our customers. You play a big role in our efficient, transformed production system that is making a difference
This combination of better products and more efficient production has allowed us to address the needs of our customers, as the industry as shown signs of recovery
And this leads to the final piece of our transformation strategy - transforming our relationships with our customers
We have renewed our commitment to building these relationships
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We are listening better, with the objective of helping our customers keep their airplanes flying and operate their businesses more efficiently |
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As many of our airline customers look at their business models, we are responding by offering more services around the airplane |
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We working with our customers to find innovative ways to improve their operations through areas including fleet support, localized training, market-analysis studies and other areas |
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Lou Mancini and his Commercial Aviation Services team are doing a great job bundling services into integrated solutions for our customers |
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They have a growth strategy based on staying close to our customers, to deliver better value by applying our knowledge base and global footprint to improve their profitability. |
You add it all up, and it's clear that we have a great strategy. And as I said when I took this job, there is no need to change it.
Our focus will be on executing our strategy, and on leadership development.
Because we have a very full agenda, and it is our people who will make the strategy happen.
Many of you know Jim Jamieson, and I am thrilled that he has joined our team as Chief Operating Officer.
Jim makes an already strong leadership team even stronger and will contribute great leadership as we execute our plan.
Our bottom line is that we must produce what we develop, and we must deliver what we sell. Promises made, promises kept.
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We need to bring in the new airplane - the 787 flies next year and will center service in 2008. It will be an exciting time, but also time to deliver |
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We also need to prudently manage our production - I cannot go into production rates because we are in Quiet Period, but we must meet our commitments to our customers. That is an imperative. |
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We also have other development programs on tap, such as the 747-8 family and the 777 Freighter |
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And we also need to keep our momentum in the marketplace |
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It has been a great year so far in terms of orders - better than what many had anticipated, and we need to close out the year in strong fashion |
So there you have it
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Stay focused on executing our strategy |
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Stay humble in the marketplace because there is no room for arrogance in aviation |
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Stay close to the customer |
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And meet our commitments |
That should keep us all pretty busy. But we have a proven management model that will help us execute our plan - our Working Together Principles and Practices.
They are the culture at Boeing Commercial Airplanes, and they have served us well -- it is a leadership model that gets the most out of a team, and they can work for any organization or business.
These are not so much words on a piece of paper -- although of course they are that -- as they are a manifesto for how we are going to behave as an organization.
These Working Together principles have been demonstrated inside our organization to be important components in building and sustaining a culture that enable people to perform at levels beyond what would normally be expected.
They are not a magic formula, but they are certainly critical ingredients. When married to an effective strategy and supported by courageous leadership, they create the opportunity for success.
In closing, I would like to share one more thought about our future.
As many of you may know, I am passionate about education, and about giving our new graduates the tools they need to get their careers off to a good start.
I can think of no higher calling than to contribute to the development of those who come after us - to share with them what we know to help them grow.
Ours is a wonderful industry, and our legacy will only be as good as the quality of the people who replace us.
We must continue to make the education of our young people a priority for our industry - we need the best talent to come to aviation.
I thank the Wings Club and its members for their commitment to the encouragement and development of our young people, through their scholarship and sponsorship programs.
And that is why it is my great privilege to announce that Boeing is contributing five thousand dollars to the Wings Club for its great scholarship program.
And I ask that everyone here today re-affirm our commitment to those who follow in our footsteps.
What a wonderful legacy we can leave.
Again, I thank the Wings Club for 64 years of leadership and support
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And once again I thank everyone for visiting our beautiful home and giving us the opportunity to spend some time together. |
Thank you, and I'd love to take some questions. |
