Boeing plans to bring to India a uniquely Indian solution

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Chris Chadwick, President, Boeing Military Aircraft 

Interview by Priyanka Verma

The Civil Aviation Ministry carries out procurement of commercial aircraft. The MOD handles military aircraft. Each ministry follows different procedures and policies. This may be posing problems to your management especially, since you have adopted the ‘one company-single enterprise model’. What practices have you adopted to harmonise functioning? Any suggestions on how the two ministries could co-ordinate?

 

First, I would suggest that the Boeing experience worldwide has given our company considerable experience in working with many different procurement procedures and adapting to them to the benefit of both our customer and our company.  It would not be for us to propose that the ministries adapt to us, but the other way around.  Boeing’s plan in India is to develop a long-term partnership to strengthen all aspects of India’s aerospace capabilities in the twenty first century-civilian and defence. Being the world’s largest aerospace company we are uniquely positioned to bring to bear the depth and breadth of human talent, technical expertise and a variety of aerospace and defence resources that will help India strengthen its self reliance and leadership in the fields of national security, civil aviation, defence, space technologies.  We will not only provide world class product offerings to help India grow, compete globally and strengthen its national security but also a strong infrastructure base to support, maintain and upgrade these offerings.  And we have the developed flexibility to bring to India a uniquely Indian solution.

Boeing Integrated Defence Systems has a wide portfolio of defence systems like fighter and maritime aircraft, heavy-lift helicopters, airborne early warning and control systems and other aerospace support systems. It would be reasonable to assume that you would like Boeing to be the ‘one stop shop’ for all these wares. From the customer’s point of view also such an arrangement makes eminent sense. Do you have a ‘road map’ drawn up to work this?

We have adopted, at the direction of our CEO and Chairman Jim McNerney, a One Enterprise business strategy in India.  And your question quite correctly illustrates the reason why.  As the world’s largest aerospace company, we can bring a lot more to the table, because Boeing is greater than just the sum of its parts.  The advantages and benefits we can offer the customer by pulling together all the talent, technology, capabilities and products from the commercial and defence sides of Boeing, is unmatched by any other company in the world.

The battle for the MRCA order has now begun to gather momentum. What is Boeing’s USP (Unique Selling Point) to win this deal? And how do you rate your chances?

We actually feel there are several USPs to the F/A-18E/F Super Hornet.  First, this multi-role combat fighter is proven – it has earned its spurs in some tough combat assignments. Second, the Super Hornet has the most advanced radar in the world today-the Raytheon APG-79 AESA.  Third, this fighter will be around in the US Navy well past 2030 with continuous US Navy funded technology insertions.  And fourthly, The F/A-18E/F meets India’s expressed need for low total ownership cost based on demonstrated high reliability, ease of maintenance, and minimal support infrastructure.  So, the Super Hornet offers India the most advanced see-all, do-all combat fighter in production today, capable of defending the nation from the Himalayas to the Indian Ocean with unmatched lethality, pilot safety and the promise of a combat fighter with a robust future.  We believe strongly in the capability of the Super Hornet and the benefits it can bring to India.   

The Indian defence industry has acquired considerable expertise in the design and engineering of Russian military hardware. Does Boeing visualise serious difficulties in the reorientation necessary to enable our industry to efficiently transit to the management of production and servicing of products developed according to US industry design philosophies?

There is no doubt-may be a period of adapting to new processes, procedures and new technology will be so requird.  But this will not be an insurmountable hurdle.  Keep in mind that the performance of India’s skilled and educated workforce is on display every day and is in great demand by western companies.  It will be our job in Boeing to help ensure that transition goes as smoothly and seamlessly as possible, and we look forward to working with companies, both public and private, in the Indian defence and aerospace sectors.  We are working with Indian companies today building aerospace products and are doing so with great success.

Whereas India possesses excellent IT skills, proficiency in engineering and manufacturing processes is still not sufficiently sophisticated. How do you propose to put your industrial partners through the paces that bring them to your standards?

One of the capabilities we bring to the table as a partner for Indian industry is proven experience and capability in aerospace manufacturing.  And it is our intention to share what we know with Indian companies, and hope they too, in turn, share their expertise with us.  This will be a two-way win-win partnership that will make us all better.  And if we win the MRCA contract for 126 new F/A-18 Super Hornets, we will be working with Hindustan Aeronautics Limited (HAL) to build 108 of them in India with Indian workers.  Not well-known is that HAL is in fact very familiar with our “LEAN-” processes designed to efficiently streamline manufacturing on the factory floor and drive out unneeded costs.  In addition, we have been working with HAL on best practices in Program Management and Supplier Management. We have for several years committed Boeing personnel to help HAL implement these valuable processes.  So, our journey with HAL towards increasing our joint aerospace manufacturing excellence is already underway.

There is a view widely held that the current defence acquisition regime is loaded in favour of the public sector. You have, however, signed agreements both with the public and the private sectors. Are you hedging your bets or do you believe synergy between the two will eventually emerge?

I think it’s only natural at this stage that the Indian government is looking preponderantly toward the public sector for support of autonomous capability on large defence procurements.   However, there is a significant role emerging for the private sector, as the country moves toward a truly indigenous Indian defence aerospace industry.  HAL has been its lifeblood and holds most of the experience and expertise.  That said, I believe the government understands that for real growth to take place, the private sector will need to play a significant role.  Private Indian companies are responsible for much of the tremendous economic growth India has seen in technology and the automotive industry.  The same will happen in aerospace, though with a mixture of both private and public companies.  With that in mind, IDS CEO Jim Albaugh came to India last December to sign an agreement with HAL on the public side to bring $1 billion in aerospace work to India.  In February of this year, Boeing cemented a multi-million dollar agreement with Tata to produce defence-related aerospace component work in India for export to Boeing and its international customers. Also on the private side, we have an agreement with L&T for joint exploration of business opportunities in the Indian military and defence markets.  Each of these accords demonstrates our commitment to contribute where we can to a world class Indian aerospace industry.

Our defence-offset policy has just begun to evolve. Do you have any models to suggest? Also would you like to comment or offer observations on the offset policy that stands enunciated?

The defence-offset policy should serve as a vehicle to support national industrial objectives. As each country’s industrial objectives differ, it follows that there is no ‘model’ offset policy that is a best fit for a particular country.  Governments have the responsibility to administer successful offset programmes and it is the responsibility of the OEM to design and execute a programme that exceeds the expectations of our customer. A successful offset programme is one where the relationship between the OEM and the offset partners makes good business sense and is of mutual benefit to both parties. The OEM can attain productivity gains (cost reduction, cycle time reduction, and access to market leading technologies) while the offset partners can expand their portfolio of export orders, infuse needed technology and meet growth objectives. As a result, the Government has helped facilitate job creation along with an increase in the indigenous defence manufacturing capabilities. This dynamic creates a Win Win Win scenario for the three major stakeholders in the offset programme-Government, the OEM, and local industry. I also believe that a successful approach to defence-offset policy is one that evolves over time to incorporate best practices and lessons learned. It appears the Government is taking this approach. DPP-2005 was the first release of defence-offset policy in India. DPP-2006 revised the approach on offset and it is anticipated the offset guidelines will be further revised with DPP-2008.

There is considerable wariness among defence companies over the Indian defence industry’s capacity to absorb offsets worth billions of dollars. What is Boeing’s position on this subject?

Boeing is confident that Indian industry has the capability and expertise to absorb significant amounts of new aerospace work which will materialise over the next few years.   It may take some time as Indian companies adapt and grow into their new role and responsibilities, and we will work with them.  But the combination of the established and experienced state owned defence companies, along with the emerging private sector companies (both large and small), should provide a strong foundation for a successful industry base for this significant increase in defence production.  We are already working to establish the groundwork that we believe will lead us to success in this large undertaking by early engagement of Indian industry, both public and private.  We have, and will continue to contribute to helping India meet its goal by entering into partnerships that are mutually beneficial to India and to Boeing.

Many Indian experts are wary of the US laws, which can override contractual obligations. The other issue of concern is the operation of the US-End Use Monitoring regime. How do you plan to reassure the Indian Government on these two counts?

Boeing is not in a position to be able to disclose the nature of any discussions that are currently taking place between the US Government and the Government of India on the subject of end-use conditions.

And finally Sir! What is your assessment of the Indian Defense industry? From a global standpoint where is it now and where do you see it going?

With a talented and educated workforce, and a national mission defined in the highest ranks of the government, I believe India’s defence industry has embarked on a journey that can achieve the goals set out for it:  to become a world class indigenous manufacturer of defence products that will, in partnership with companies like Boeing, meet Indian’s current and long-term defence needs.