But on the sidelines of the Lynnwood conference where the suppliers gathered this week, some later voiced concern that Boeing is constantly pressuring them to lower prices even as they improve quality and increase production rates.
“We’ve given our pound of flesh,” said Peter Swift, an aviation executive and consultant working for German supplier ESW. “We can’t give any more.”
One sales vice president, who asked not to be identified and whose previous company sold avionics parts to Boeing, said price squeezing is common throughout the supply chain.
“Our contracts with Boeing were very stressful,” he said.
As Boeing ramps up production, he said, “your mouth has to water at the big numbers. Business is going to grow. At the same time, you’ve got to be very nervous about how you’ll do it.”
John Byrne, Boeing vice president for aircraft materials and structures, on Tuesday told suppliers at the annual conference of the Pacific Northwest Aerospace Alliance that the plan to increase 737 output in Renton to 42 airplanes a month is “uncharted territory.”
He said local suppliers will need to steadily raise the quality of their manufacturing processes to meet Boeing’s targets and to avoid the need for rework.
Analysts speaking at the conference were unanimous that the biggest challenge for Boeing’s ramp-up plan is whether suppliers can keep pace.
Boeing is checking whether subcontractors two or three steps down the supply chain can make the required parts at the required rates, demanding to see performance data and applying scrutiny “far surpassing anything we’ve done in the past,” Byrne said.
A manager with an engineering company, who also asked not to be identified, said firms supplying engineering services and technology to Boeing have a different experience.
Boeing is throwing money at companies that can provide technology or research and development that will increase productivity, he said
The former avionics executive said Boeing’s squeeze on pricing, difficult as it may be, is now an inevitable part of the business and the flip side of the growth opportunity ahead.
“It’s the capitalist way. Business is tough. Boeing is doing what it needs to do.”
