Boeing Remains Upbeat despite Gloomy U.S. Outlook, Looks to Alternative Markets
Steep budget cuts approved and set to be implemented by the U.S. government over the next 10 years have rattled global firms currently engaged in contracts with the world's wealthiest nation.
Yet while enjoying its status, America has adopted measures that hopefully would insulate it from possible recession following the credit downgrade that the country was slapped with earlier this year.
As U.S. officials scramble to muster necessary funds for the smooth operation of the federal government, the Obama administration pushed for significant shaving offs of defence spending that experts said could easily run to hundreds of billions.
Boeing, manufacturer of both commercial and combat planes, had admitted that it will be one of the companies poised to be affected by major budget cutbacks set to be implemented by the U.S government over the next decade.
The overall target, Reuters has reported, is to save some $1.2 trillion that in turn would allow America to increase its debt ceiling, the immediate effect of which is less money available for the U.S. Defence Department to spend on acquiring new military equipments.
This early, Dennis Muilenburg, Boeing chief executive for Defence Space and Security business, has indicated that his company made preparations to absorb possible losses and even entertained the likelihood of 'worst case scenario'.
"From an operational standpoint, productivity standpoint, we are assuming that worst case scenario ... and we are designing our cost structure to accommodate a trillion-dollar budget reduction," Muilenburg was reported by Reuters as saying during a webcast forum on Thursday.
The provisions, he noted, are realistic reconfiguring of Boeing's budget prospect for the near term in light of significant adjustments that will be rolled out by one of its major clients, the U.S. government.
Muilenburg added that other players in the defence industry have started implementing mitigating measures that would cushion the impact of softer spending by the U.S. government, chief of them are axing workers and closing down expendable facilities.
Boeing, however, remains optimistic that the company will generally come out of the episode mostly unscathed as Muilenburg pointed to some $60 billion worth of defence contracts that the aircraft manufacturer already has on its pipeline.
The Boeing official added that as a viable alternative, the global markets offer sufficient growth prospects for the company while noting too that newly prosperous countries in the Asia Pacific and Middle East regions could prove fantastic prospects for Boeing's services and products.