Boeing

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BA364 Company/Industry Research Project

Taiki Aramaki April 29,2013

The Boeing Company

Table of Contents I. Company Description and History ............................................................ 1

1. Business Summary .................................................................................................... 1 2. History ....................................................................................................................... 2

II. Company Facts ........................................................................................ 3 1. Company Stock Symbol and Current Price ............................................................. 3 2. Mission Statement .................................................................................................... 3 3. NAICS and SIC Codes ................................................................................................. 3 4. Top Officers and Attended Universities ................................................................. 4 5. Subsidiaries ............................................................................................................... 5 6. Company Rankings ................................................................................................... 5 7. The Latest Quarterly Financial Report .................................................................... 6

III. Industry Analysis ................................................................................... 9 1. Industry Survey ......................................................................................................... 9

Name of Industry ......................................................................................................... 9 Industry Definition ....................................................................................................... 9 Industry’s Main activities ............................................................................................. 9 Products and services segmentation .......................................................................... 9 Key statistics ................................................................................................................. 9

2. Company Profile ..................................................................................................... 10 Company Overview ..................................................................................................... 10

3. Company Market Share .......................................................................................... 10 4. Major Competitors .................................................................................................. 10 5. Ratio Information ................................................................................................... 10

IV. Literature Review .................................................................................. 11

V. Appendices .............................................................................................. 12 Appendix A: Financial Report Appendix B: Industry Survey Appendix C: Industry Ratios Appendix D: Literature Reviews Appendix E: Works Cited

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I. Company Description and History Boeing Co.

Address: 100 N. Riverside Plaza, Chicago, IL 60606-‐1596 United States Phone: 312 544-‐2000 Company Website: www.boeing.com Incorporated: 1916 , WA, United States Reincorporated: July 1934 , DE, United States Auditor: Deloitte & Touche LLP Country: United States Sector: Aerospace Number of Employees: 174,400 (Approximate Full-‐Time as of 12/31/2012) Number of Shareholders: 167,801 (record) (as of 02/01/2013) Market Cap: 69,548,287,270 Revenue: 81,208,000,000 Net Income: 4,083,000,000 Dividend: 1.805 Dividend Yield: 1.969 EPS Basic: 5.38 EPS Diluted: 5.33 PE Ratio: 17.1989

Source: Mergent Online 1. Business Summary Boeing, together with its subsidiaries, is an aerospace firm engaged in the design, development, manufacture, sale, service and support of commercial jetliners, military aircraft, satellites, missile defense, human space flight and launch systems and services. Co. provides assistance and services to facilitate aircraft operation to the operators of its commercial airplane models. These activities and services include flight and maintenance training, field service support, engineering services, and technical data and documents. While its main operations are in the U.S., Co. conducts operations in many countries and has a network of international partners, key suppliers and subcontractors.

Source: Mergent Online

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2. History 1917: Founder William Boeing incorporates Pacific Aero Products Company, involved in plane making, mail delivery, and pilot training. 1918: Company changes its name to Boeing Airplane Company. 1929: United Aircraft and Transportation Company is formed as a holding company for Boeing-‐controlled airlines and makers of airplanes, engines, and propellers. 1954: The Boeing 707 jet makes its first flight. 1961: Company changes its name to The Boeing Company 1966: Company launches first Lunar Orbiter, which sends photos of the moon back to Earth. 1968: Apollo 8, which takes the first astronauts around the moon, is launched in December boosted by a Saturn V rocket, for which Boeing had built the first stage. 1970: The 747, the first of the 'jumbo jets,' makes its first commercial flight. 1993: NASA names the company the prime contractor for the International Space Station. 1995: First 777-‐200 is delivered to United Airlines. 1997: McDonnell Douglas, number one in military aircraft and number three in commercial aircraft worldwide, is acquired, making Boeing the largest aerospace company in the world. 2006: Co. completed the transaction with Lockheed Martin Corporation to create a 50/50 joint venture named United Launch Alliance L.L.C. 2007, Co. announced an order for 15 Boeing 787 Dreamliners and purchase rights for 10 additional 787s.

Source: Funding Universe, Mergent Online

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II. Company Facts 1. Company Stock Symbol and Current Price NYSE:BA Current Stock Price

Source: CNN Money

2. Mission Statement The mission of the Boeing aerospace company is a combination of vision, values, and business imperatives that the company believes will help them maintain the Boeing tradition of innovation, imagination, and aspiration into the future.

Source: About.com 3. NAICS and SIC Codes NAICS 336411-‐Aircraft Manufacturing This U.S. industry comprises establishments primarily engaged in one or more of the following: (1) manufacturing or assembling complete aircraft; (2) developing and making aircraft prototypes; (3) aircraft conversion (i.e., major modifications to systems); and (4) complete aircraft overhaul and rebuilding (i.e., periodic restoration of aircraft to original design specifications).

Source: U.S. Census Bureau SIC: 3721-‐Aircraft Establishments primarily engaged in manufacturing or assembling complete aircraft. This industry also includes establishments owned by aircraft manufacturers and primarily engaged in research and development on aircraft, whether from enterprise funds or on a contract or fee basis. Also included are establishments engaged in repairing and rebuilding aircraft on a factory basis. Establishments primarily engaged in manufacturing engines and other aircraft parts and auxiliary equipment are classified in Industries 3724 and 3728; and those manufacturing guided missiles and space vehicles and parts are classified in Industry Group 376. Establishments primarily engaged in the repair of aircraft, except on a factory basis, are classified in Transportation, Industry 4581; and research and development on aircraft by establishments not owned by aircraft manufacturers are classified in Services, Industry 8731.

Source: U.S. Department of Labor

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4. Top Officers and Attended Universities

Jim McNermey Chairman, President, CEO Yale University -‐A Bachelor Harvard University -‐MBA

Wanda Denson-‐Low Senior Vice President, Office of Internal Governance Rensselaer Polytechnic Institute -‐Bachelor in Chemistry Brooklyn Law School -‐Juris Doctor

Ray Conner President and CEO, Commercial Airplanes Executive Vice President Central Washington University -‐A Bachelor The University of Puget Sound -‐MBA

Michael Luttig Executive Vice President, General Counsel Washington and Lee University -‐A Bachelor in 1976 the University of Virginia -‐ A Juris Doctor in 1981

Source: Boeing Website

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5. Subsidiaries Name: Country: Argon ST, Inc. United States Astro Limited Bermuda Aviall Services, Inc. United States Aviall UK, Inc. United States Aviall, Inc. United States BCC Cove Corporation United States BCC Equipment Leasing Corporation United States Boeing Aerospace Operations, Inc. United States Boeing Aerostructures Australia Pty Ltd. Australia Boeing Airborne Surveillance Enterprises, Inc. United States Boeing Aircraft Holding Company 100% United States Boeing Australia Holdings Proprietary Limited Australia Boeing Canada Operations Ltd. Canada Boeing Capital Corporation United States Boeing Capital Loan Corporation United States Boeing CAS Holding GmbH Germany Boeing Commercial Space Company United States Boeing Defence Australia Ltd Australia Boeing Defence UK Limited United Kingdom Boeing Intellectual Property Licensing Company United States Boeing International B.V. & Co. Holding KGaA Germany Boeing International Logistics Spares, Inc. United States Boeing Logistics Spares, Inc. United States Boeing North American Space Alliance Company United States Boeing Operations International, Incorporated United States Insitu, Inc. United States Jeppesen GmbH Germany Jeppesen Sanderson, Inc. United States Narus, Inc. United States

Source: Mergent Online 6. Company Rankings Sales Volume: $64,306,000,000 The Number of Employees: 157,100 The Number of Employees within Illinoi State: 1,230

Source: Business Ranking Annual 2012

United States Industry I l l inoi State

Sales Volume 27 3 3

Employee

Size 57 6 128

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7. The Latest Quarterly Financial Report Balance Sheet

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Income Statement

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Cash Flow

See Appendix A for full report

Source: Boeing Website

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III. Industry Analysis 1. Industry Survey Name of Industry

Aircraft, Engine & Parts Manufacturing in the US

Industry Definition Companies in this industry manufacture and overhaul complete aircraft, develop prototypes and convert aircraft. The industry also includes aircraft engine and propulsion system manufacture, conversion and overhaul. Additionally, the industry makes related parts and auxiliary equipment.

Industry’s Main activities

Manufacturing and rebuilding aircraft Manufacturing aircraft engines and engine parts Manufacturing aircraft auxiliary parts

Products and services segmentation

Key statistics Revenue: $186.3bn Annual Growth 08-‐13: 2.1% Annual Growth 13-‐18: 1.8% Profit: $48.1bn Exports: $102.0bn Businesses: 1,374

See Appendix B for more information Source: IBIS World

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2. Company Profile Company Overview

The Boeing Co. designs, develops, manufactures, sells, and supports commercial jetliners, military aircraft, satellites, missile defense, human space flight, and launch systems and services worldwide. It operates in five segments: Commercial Airplanes, Boeing Military Aircraft (BMA), Network & Space Systems (N&SS), Global Services & Support (GS&S), and Boeing Capital Corporation (BCC). The Commercial Airplanes segment develops, produces, and markets commercial jet aircraft, as well as provides related support services to the commercial airline industry. This segment also offers aviation services support, aircraft modifications, spares, training, maintenance documents, and technical advice to commercial and government customers. The BMA segment engages in the research, development, production, and modification of military aircraft and precision engagement, and mobility products and services. The N&SS segment involves in the research, development, production, and modification of products and services to assist customers in transforming their operations through network integration, intelligence and surveillance systems, communications, architectures, and space exploration. The GS&S segment provides logistics support functions for military platforms and operations. The BCC segment facilitates, arranges, structures, and provides financing solutions for its commercial airplanes customers. Its financing portfolio consists of equipment under operating leases, finance leases, notes and other receivables, assets held for sale or re-‐lease, and investments. The company also engages in engineering, operations, and technology activities.

Source: Business Insight: Essentials

3. Company Market Share

Source: IBIS World

4. Major Competitors Name: United Technologies Corp. Lockheed Martin Corp. General Dynamics Corp. Northrop Grumman Corp.

Revenue: $57,708,000,000 $47,182,000,000 $31,513,000,000 $25,218,000,000

Source: Mergent Online 5. Ratio Information Financial ratios and numbers of the industry See Appendix C

Source: RMA Annual Statement Studies, Industry Norms & Key Business Ratios

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IV. Literature Review Reviewed Article 1. Greene, Katherine. "Fling Into The Future With Boeing: What Should Happen When Legitimate Business Decisions Collide With Union Discrimination." University Of Toledo Law Review 44.1 (2012) 2.Stackpole, Beth. "Boeing's Brave New World Of Product Development." Design News 62.8 (2007) 3. "Going For Lean." Manufacturing Engineer 84.4 (2005) 1. Flying into the Future with Boeing Because of unnoticed decision of Boeing to build a new factory in South Carolina, not nearby existing factories in Washington, the conflict with International Association of Machinists and Aerospace Engineers (IAM), which has strong influence in Washington, occurred. To address the situation, the National Labor Relations Board (NLRB) interposed. NLRB took middle-‐ground approach to maximize benefit of employers and employees. This case shows the difficulties of solving problem between huge entities. 2. Boeing's Brave New World of Product Development Boeing 787 “Dreamliner” is the latest civil aircraft of Boeing. The 787 is the most advanced aircraft in the world not only in terms of its material but also in terms of production process. Since production of the 787 has been done by across the world, it is crucial that close linkage between manufactures. In order to address this situation, Boeing made up a virtual production system, which can simulate production sequence in virtual world. Thanks to this interactive and real-‐time system, cost and accuracy of production has been reduced. 3. Going for Lean In 1990s, Boeing needed to be more efficient because of competition with Airbus. Boeing adopted several improvement activities such as Total Quality Management and Toyota Production System as well known as Kaizen. Even though improvement was needed, a plan was not welcomed and there was denial. However, by involving employees subjectively and thanks to consultants, a improvement plan have been adopted. Boeing’s productivity have been improved, they should keep it to resist against competition with Airbus.

See Appendix D for full texts

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V. Appendices