#7 Human Resources and Leadership: What workforce trends is the industry experiencing?

In the Aerospace and Defense industry, each company is trying to sissify its customers' needs through innovation rapidly. For example, Boeing company is working on its new aircrafts "737 max" which will have a new, advanced engines. Boeing has secured more than 600 orders on its new aircrafts, but Boeing plans to deliver the first 737 MAX in 2017. On the other hand, Boeing's arch-rival Airbus has generated a competing model called A320neo that has garnered more than 1200 orders, the company plans to deliver the first order in 2015 which means two years earlier than Boeing's first order. Because of this difference in time between the two companies, Boeing is pushing the team to beat the date. In addition, Boeing announced that the new-engine variant will have 4% lower fuel burn than the competing A320neo's.

In my opinion, the Aerospace and Defense is very high competition industry. Boeing is investing heavily in engineering, and in its workforce to innovate more, and to finish its order as soon as possible, to reduce the time difference between them and Airbus's orders. Boeing has secured more than 600 commitments from airlines to buy the new 737 max, but they are trying to increase the number, and to beat its competitor Airbus. However, I don't think Airbus is just waiting for 2015, sure they are trying to avoid any future surprises, so they could doing the same thing as Boeing though, but with less pressure to increase their sales, and the orders' time difference which is Airbus's main achievement point.

By Saoud Sulaymani

• #7 Human Resources and Leadership: “How do companies in this industry tend to structure themselves? What functions represent the majority of their workforce? For example, 75% of the workforce might be hourly manufacturing labor while 25% is admin, sales/marketing, and executives.”

The Defense and Aerospace industry is a very diverse market place and consists of companies that range in size. As company sizes increase, they also tend to diversify their product in order to appeal to a larger customer base. Companies, such as Embraer, are world known and have great reputations within their field, however; they often do not have the capital or desire to diversify and expand.  Being a company focused on producing Aircrafts, a majority of the functions within are aimed towards assembling quality crafts. Boeing, the largest Defense and Aerospace in the world, produces products in a majority of fields within the industry, and needs to have an appropriate amount of their labor force working within each sector. Boeing’s largest subdivision is their production of aircrafts.

Dubai Emirates Airline recently purchased 50 widebody 777-300 aircrafts from Boeing for $18 billion. Dubai Emirates Airline also has an option to add an additional 20 crafts to their order increasing its size to $26 billion. The widebody 777-300 has a flight range of 14,685 kilometers, which aided Boeing in producing the most efficient jet for Emirate’s purposes. This deal was a cornerstone in Boeing’s prestigious history, being their largest order ever. Many countries feel that middle-eastern counties have an unfair advantage in the airline business, as they can often obtain fuel at cheaper prices. Such advantages cause rapid expansions to occur in companies such as Emirates and Qatar Airway. I feel as if every company should specialize in the product or products that suit them best and devote their workforce accordingly. Boeing, a superpower amongst the industry, must dedicate appropriate percentages of their workforce to each individual sector. 

#7 Human Resources and Leadership: What are some current events in your industry? What is the impact of these events on the industry?

Human resources is the term that can be coined as "HR" which refers to individuals who make up the workforce and responsible for implementing strategies. The department of defense is compromised of the human resource sector. Human resources is a dominant field in providing for general management to a wide variety of things such as, human matters, budgetary support, and strategies that need to be implemented. Some operations that the human resources is responsible for is the management of commercial travel for the department of defense. The human resources sector is also responsible for negotiating with workers in the department of defense about personal matters. For example, if a worker or trainee gets sexually harassed at work, human resources respond to these victims and provide counseling.

Some current events that have been surrounding human resources in the department of defense has been providing guidance to specific issues such as antiterrorism and force protectionism, equal employment opportunity, and other topics that workers in the department of defense look for guidance towards. The equal employment opportunity has been a hot topic that has been regarded towards human resources. The department of defense and its human resources “DHRA” has been committed to a discrimination free work environment, meaning that if workers encounter a problem while at work, they give their complaint to human resources and is negotiated and solved from there. In the aerospace industry, human resources works the same way in providing an environment that is committed to discrimination free work environment and where employment decisions are solely based on the merit. Both of these industries believe in human resources as a strong sector in protecting and providing strategies to the workplace.

#7 Human Resources and Leadership: Who have been some influential leaders in your industry for the past 20 years?

The Boeing Company is known as one of the most prominent companies in the Aerospace and Defense Industry. Its highly respected status would not be the same today if it weren’t for the leaders that have carried this company for the past 20 years. Current CEO, president and chairman of the board, James McNerney Jr., supervises the overall strategic direction of The Boeing Company. He also puts a strong emphasis on ethical conduct for his employees in order to keep the gears on this successful business running. As time progresses, the difficulty of product development significantly increase because quicker changes must take place and customer needs continue to vary.

CEO of Boeing Commercial Airlines, James Albaugh, has done an especially superb job of gratifying the needs of Boeing’s target market. The present requires a strong understanding of the complications and inconsistencies in the economy. With the recent development of the 787 Dreamliner, Albaugh has been quite successful in meeting those requirements. The 787 Dreamliner is not only an innovative aircraft with a sleeker and cleaner appeal to it, but it is also environmentally friendly by being more fuel-efficient than Boeing’s previous models.

Another noteworthy figure that has been with Boeing is its Chief Financial Officer, who is retiring next year on April first, James Bell. Bell has been the CFO since 2003 and McNerney said, “As CFO he has created a world-class finance organization and culture of continuous improvement.” Without Bell’s meticulous financial analysis, Boeing’s success in revenue and profit would not be where it is today. In most recent news, Greg Smith will be taking over Bell’s CFO position. Smith and Bell will be collaborating until Bell’s retirement. Smith has more than 20 years of experience in the industry and before he was a corporate controller in 2010, he led the company’s financial planning and analysis and internal audit groups.

Boeing has had an extensive and intelligent group of leaders who have brought Boeing’s status to a high point. Its future looks bright because as one of the leaders step down, a younger, yet experienced, individual steps up to take the pressures and challenges.

#6 Entrepreneurship: How has the competitive landscape changed as a result of leading entrepreneurs in the industry?

The competitive landscape in the aerospace and defense industry occurs when any business provides a similar service or product in the same region. Basically, competition is essential in a market for a business to compete against competitors. For example, Boeing and Airbus have had competition in the market since the 1990’s, dominating the jet airliner market. The competition among both of these businesses have been in various ways such as competition through use of technology, and through outsourcing, The results of these various competitions produces advanced products from each company. For example, since these companies know that they are competing with each other, they want to perform higher in their products from differentiating from each other with different kind of advancements, like a fuel efficient engine.

A big difference between Airbus and Boeing is that Boeing’s production costs are mostly in U.S. dollars and Airbus’s production costs are mostly in euros. Since there are currency fluctuations, there are risks and benefits of the aircraft sold. Leading entrepreneurs in companies like these don’t necessarily exist, they are rather called CEO’s. However, competition landscape still does exist and effects the way competition is performed in this industry.
The airline industry is immensely competitive because of airport capacity, route structures, technology, and other large issues. These components all contribute to competition in these airline industries. New projects, such as the 787 airliner has been an undergoing project that has been in the process of production. Projects like these are part of the competitive landscape and leader entrepreneurs to develop new ideas and strategies to try to advance their future projects.

#6 Entrepreneurship: What are some current events in your industry? What is the impact of these events on the industry?

Boeing Chairman and Chief Executive Jim McNerney said " the company is benefiting from world-wide expansion of passenger air traffic, even as the global economy faces head winds such as the credit crisis in Europe" . Boeing, the largest leading aerospace company, and the top aircrafts' manufacture around the nations. Boeing reported a 31% increase in third-quarter profit, sharply exceeding Wall Street forecasts. Even as the unstable global economy in the world, and specially in Europe, the company estimates to sell of 25 to 30 of the new model airplanes.

I would say, Boeing company is not only challenging its competitors, Boeing challenging the whole world! As we can understand from Boeing's Chief Executive, Boeing's products are indispensable. No matter what's happening in the countries' economics, and politics crisis. Boeing's products will be sold whatever going on. I think this is a clear message to Boeing's competitors such as, Airbus which means that Boeing will be always on the top.

Related breaking news to same company, Boeing's Chief Financial Officer James Bell, the best African-American employee in the plane-maker's plans to retire in April, and he will be replaced by Greg Smith. (http://online.wsj.com/article/SB10001424052970204528204577011890129827730.html?mod=WSJ_qtoverview_wsjlatest)

By Saoud Sulaymani

#6 Entrepreneurship: In what areas of the industry are there opportunities for innovation?

In the Aerospace and Defense Industry, opportunities for innovation all rely on consumer needs and wants. Whatever becomes appealing to a companies eye will attract them into purchasing those innovative products. There are always opportunities for newer and better products to be made, and European commercial aircraft and jetliner manufacturer, Airbus, has undoubtedly taken advantage. With more and more airline companies buying the most recently developed A320, Airbus now has a new consumer whom which we should all be very familiar with: JetBlue. Except what was different about this deal was that rather than ordering the A320, JetBlue Airways Corporation stepped out of their way and came to a conclusion with Airbus by ordering 40 of the innovating medium-haul A320neo single-aisle aircrafts that come out in 2016.

With the opportunity to make a new aircraft, Airbus developed the A320neo, which is a re-engined and more fuel efficient model of the A320. JetBlue Airways has also switched their previous order of 30 A320’s to the more futuristic and larger A321 aircrafts. They invest much of their time and money into all of Airbus’ models by having a total of 92 of their models, including the A320, the A320neo and the A321.

In the Aerospace and Defense Industry, opportunities have to be taken advantage of years prior to the product’s actual availability to customers. Unlike the Food and Tobacco Industry, the Aerospace and Defense Industry deals with business-to-business companies. Since aircraft manufacturers are such a vital part in international businesses, thorough years of development have to be accounted for in order for a “near-perfect” product to be finalized.

# 6 Entrepreneurship: “Who are some emerging companies?”

            Space exploration Corp., commonly known as SpaceX, is a Southern California-based company that emerged 9 years ago. According to Chief Executive Elon Musk, the company’s goal is not to focus on profit, but “advance the cause for space”. Containing such initiatives, he personally invested $100 million into a $500 million commercial-space venture on Wednesday, October 26. Though a newer company, they house a wide array of products including private rockets, capsules, launchers, and spacecrafts, however; they rarely release excess information on product design, manufacturing, testing, facilities, and personnel. An indicator that the company is “thriving” is that the US government recently invested $300 million into SpaceX and they released that SpaceX is also a top contender for receiving additional financial support. This potentially may allow SpaceX to expand considering that the government is interested in investing $6 billion into similar programs over the next 5 years as long as related companies invest a sufficient amount of their own funds as well.

            A topic of discussion, between elite companies such as Boeing and the congress, is the aid that government programs will provide for commercial developers and producers of rockets. Companies wish for less liability along with lower insurance rates. Providing companies with this may affect taxes, which potentially could spark political debates. SpaceX is also competing with Russian companies as a manufacturer to NASA and has offered substantially lower prices than its competitors. Working with NASA, SpaceX also hopes to launch the newly developed Dragon Capsule to the international space station to deliver cargo and eventually make it a routine occurrence. With $3 billion in backlogs of launch contracts, and many other potential opportunities in the near future, I feel if they receive proper funding, SpaceX will soon experience a rapid expansion. The mission of innovation over profit provides them with an advantage many already existent companies do not contain and this may benefit them greatly. SpaceX is an emerging company that may one day be a major player in the Defense and Aerospace industry.

#5• How has the recession (2008-2009) affected companies’ balance sheets?

Here are the main three balance sheets of Boeing company, Eads NV, and stock-analysis. These sheets reflect the financial condition of the main three key players in Aerospace and Defense industry 2008-2009, respectively. Obviously, the recession during 2008-2009 does have an impact on Aerospace and Defense industry. But the specific influence of the two different companies is various. In 2008, the total asset of Boeing company, Eads NV, and United technologies corporation is $53,779,000,000, €76,153,000,000, $56,469,000,000 separately. While in 2009, the data changed to $62,053,000,000, 80,304,000,000, 55,762,000,000, separately. Boeing company's assets increased in 2009, Eads NV increased too. But, United technologies' assets increased in 2009.

However, the balance sheets of these companies are complex. It's very hard to assume what are the incoming rates or numbers for any company. I don't know if the financial experts are able to assume correctly or they are not. In general, I would assume that the Aerospace and Defense industry is growing in the next years because, as we can see Boeing which is the main key player in the industry, their stocks keep going up and in my point of view they will keep on increasing for the next few years. Besides Boeing's stocks, the population is one of the main drivers in the industry. Normally the population keeps on growing with every year which logically means the Aerospace and Defense markets' demand on them will keep growing yearly.

Boeing: http://www.stock-analysis-on.net/NYSE/Company/United-Technologies-Corp/Financial-Statement/Assets

Eads NV: www.eads.com/.../eads/.../Financial%20Statements%202009_en.pdf (Financial Statements 2009 - EADS)

United Technologies: http://www.stock-analysis-on.net/NYSE/Company/United-Technologies-Corp/Financial-Statement/Assets

By Saoud Sulaymani

#3 Marketing: What are some recent consumer behavior trends that are influencing the industry?

Consumer behavior that has been influencing the defense and aerospace industry have been effected by today’s economy. The main contributors that are influencing the aerospace and defense industry have been the recession (budget crisis) and the recent statement by President Barack Obama stating the deployment of all military forces from Iraq by the end of 2011. These two trends, mainly, have been hitting the industry with different outcomes.

The recession has caused more consumers to stop traveling as much from before because the economy has been declining. Major suppliers such as the Boeing Company and Airbus have been the big suppliers for the aerospace industry in producing engines, jet parts, aircrafts, and other products to provide for the economy. Although profits being made by Boeing have been declining because of the lack of consumers wanting to travel, new projects are still being produced and are in high demand. The Boeing Company’s increase in production of the newest 737 Dreamliner model has been in high demand because of the improved fuel eficency. The fuel efficiency feature has been a trend in attracting many consumers because consumers are in a recession and fuel efficiency is cheaper and therefore more affordable.

As for the defense industry, after a long 10 years of the war in Iraq and Afghanistan, sales for military weapons and aircrafts will soon start to drop. For example, the department of defense is the provider that deals with contracts for military use. Lockheed Martin and BAE Systems are companies that majorly deal with making contracts with the government and getting funds to release those contracts worth millions of dollars. Because of the closing to the war in the Middle East, contractors and big companies like BAE Systems will be declining in business. Not only will employers for contracting will start to be out of jobs, but also soldiers. In my opinion, consumer behaviors are based on what is happening mainly on global affairs (i.e. a war, etc) and the outcomes that it can take a toll on this industry.

#5 Accounting: "What are some current events in your industry? How do these events impact the industry?"

With an increase in technological advancements, Boeing Company is continuing to increase production and improvements to its newest 737 Dreamliner model. The 737’s new interior features and improved fuel efficiency has been attracting more consumers in the industry each month. This has eventually directed the consumer market to an increase in the demand curve, which makes a significant shift in the quantity supplied by Boeing. Currently, there are approximately 31.5 planes produced a month, but because of demand, Boeing is looking to increase the planes produced by 3.5 planes (35 planes a month), so they can meet the constant developing worldwide demand. From there the production rate will only rise. Boeing projects a production of 38 airplanes in each of the last three months of 2013 and a production of 42 airplanes each month for the first six months in the year after.

The Boeing Company is on its way of making aviation history by attracting more and more consumers and knocking out some of the key players in the Defense and Aerospace Industry. Although the newest version of the 737 jet is behind Airbus’s A320, they are both finding ways to increase fuel-efficiency. Boeing is looking to advance by investing in new capital such as a newer and more durable wing system installation line and moving some production regions while extending others and tossing its old equipment. Boeing is one of the biggest companies in the Defense and Aerospace Industries. The demand is constantly increasing at a rate where production of newer models will lead to big bucks for Boeing. They are on their way to the being the most popular manufacturer among its target consumer demands.

#3 Marketing: What are some current events in your industry? What is the impact of these events on the industry?

The department of defense and aerospace are industries that are both active in current events daily. The department of defense’s website displays the contracts made and other activities that have occurred every day for the nation. A top headline that was announced on October 21st, 2011, by President Barack Obama, was to take out all U.S. troops out of Iraq by the end of this year. As a result of deploying all U.S. service members, the number of weapons and machinery will be reduced by a large amount. This means that large companies such as Boeing won’t need to produce as much weaponry than before. The Obama administration will have more of a focus on the economy and getting those who are deployed back into the workforce. In my opinion, I think that’s it beneficial that we will be cutting down large contracts that rely on millions or billions of dollars for weaponry utilized overseas for the war.

However, Boeing still is an excelling company that stands in producing many products that provides for both military and aerospace use. Boeing is coming up with its next-generation 737 model to 35 airplanes a month in order to meet growing worldwide demand. This project will take a long period of time to demonstrate progress, but Boeing is doing all it can to meet customer demand. Boeing is kept busy while working with other improvement teams to make the production of this new project more efficient and increasing capital investments. The impact that this project can potentially have on Boeing creates a good reputation for Boeing because Boeing is producing the new 737 model in order to meet the high demand. The defense and aerospace industries are a big part of global affairs since they are the producers of products needed to conduct air force and used for war overseas.

#5 Accounting: “What are some current events in your industry? What is the impact of these events on the industry?”

            Honeywell International Inc., a company that is an active participant in many industries including Defense and Aerospace, recently reported improvements in third quarter sales and earnings. Earnings for the company as a whole rose 44% as revenue increased 14% reaching $9.3 billion.  Honeywell International Inc. expects to see an even more dramatic increase in earnings in the year to follow, hopefully elevating revenue to over $10 billion. A positive outlook and attitude exists within the company as stock prices rise, and full year sales are being estimated to be between $36.5 billion and $36.7 billion, higher than the initial forecast. Chief Executive David Cote stated, “While we’re not denying the potential for another recession, we think the high probability outcome is a slow-growth economic environment”. Such statement in addition to the positive trend in the company provides a comfort that Honeywell International Inc may flourish in the near future.

            The aerospace sector of the company reported an 8% increase in sales resulting in profit margins increasing 18.2%. This sector consists of original and after market products. Though the aerospace region of the company is currently profiting, the defense industry is has not experienced gains. It is my opinion that we are approaching a new era in the Defense and Aerospace industry.  As new technologies are created and existing technologies improve, currently used products become are becoming outdated at rates not previously experienced and the need for new products become relevant. As this occurs, major players within the industry will be forced to expand and produce more products than ever before. As long as government spending to the industry does not drastically decrease, the industry should expand.

 

#4 International Business:Which company(ies) in your industry are most global? What has been the key to their success in other countries?

Without a doubt, in the defense and aerospace industry, Boeing is the world leading company. This large company, is supporting several other airlines, and allied government customers in 150 countries. Boeing has several products such as, commercial and military aircraft, satellites, weapons, electronic and defense systems, launch systems, advanced information and communication systems. Boeing has created and diversify its products largely to provide the wishes of the customers and satisfy their needs. This diverse company has employs more than 165,000 employees (Boeing.com) across the United States and in 70 countries. In addition, Boeing Capital Corporation is global provider of financing solutions. In short, Boeing used more than one key to success globally.

As in this success journey, Boeing main key is everything! The company cares about its customers by providing them with their needs. Boeing has the most talented, well educated and innovative workers, which makes the diverse environment much smoother than any other company. The most interesting thing for me, Boeing thought globally by helping several other airlines, which seems weird for many people, but it's actually an extremely smart plan. In someday, these small airlines will rise, and they could be competitors, so Boeing providing them now which will make everything under control in the future by these strong relations, and they could help them globally by advertising or many different ways.

#4 International Business: What non-US companies are key players in the industry?

The Defense and Aerospace industry specializes in international involvement and foreign exchanges. Although Boeing is one of the industry’s primary aircraft and jetliner companies, its foreign competitors are continuously rising. Right behind Boeing is the prestigious Airbus, which is located east of the United States in Europe (Blagnac, France). Airbus and Boeing are constantly in competition with each other, developing new innovations for airline companies all over the world. Two days ago on October 14^th, China has recently ordered five of Airbus’s A380’s for its major cities Beijing, Shanghai, and Guangzhou. The fifth plane ordered was Airbus’s 58^th A380 sold within the past four years. With 350,000 hours flown and over 15 million passengers transported, the A380’s unremitting usage from companies like China Southern Airlines is expanding. China’s increasing urbanization and affluence is demanding over 200 aircrafts from Airbus by 2030. As time progresses, countries will grow in population and the rate of passenger travel will increase. Airbus (Europe) is not far behind Boeing (U.S.), and with future advances in technology, their aircraft models will be of higher demand, which will eventually make Airbus of higher status as a European manufacturer.

The BAE Systems is a global defense and security company with approximately 100,000 employees worldwide. The company distributes wide variety and range of products and services for land, air, and naval forces. It also supplies electronics, security, support provision, and information technology solutions. The BAE Systems are very prominent especially in the United Kingdom. It is the largest defense and security company in the UK by having 39,000 employees and approximately 9,000 businesses in its supply chain. BAE Systems is also the UK’s largest manufacturing based employer and engineering company. It contributes about £3.3 billion to the United Kingdom’s GDP, exports about £4.9 billion on average every year, and expenditures of about £4 billion for every 9,000 workers. All the BAE Systems around the world work off of each other in order to bring in revenue. The United Kingdom strongly relies on this company, and similar to Airbus, further improvements will only increase these two companies globally.

http://www.airbus.com/newsevents/news-events-single/detail/china-southern-airlines-receives-its-first-pearl-of-the-sky-a380-jetliner/

http://www.baesystems.com/WorldwideLocations/UK/KeyFacts/index.htm