A detailed interview with Boeing Defense chief: Ted Colbert - Broadsword by Ajai Shukla - Strategy. Economics. Defence.

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Saturday 22 October 2022

A detailed interview with Boeing Defense chief: Ted Colbert

Ted Colbert, executive vice-president, The Boeing Company
India was an important country for The Boeing Company, 
even before the ongoing Ukraine war. Ted Colbert, in an interview with Ajai Shukla, agrees that localisation would be one of the key drivers of Boeing’s global defence business. Edited excerpts:
Q. With the Russia-Ukraine war going on, is NATO realising that they haven’t been paying what they should have for their defence. With European companies on a buying spree, are you now focused on equipping NATO?
Obviously, the conflict is a high priority for everyone. And they are all investing more heavily into defence. So it will all depend on what they want to do, how they want to do it and how fast they want to move, and on our ability to support those needs.
Q.  Given the pre-occupation with Russia, is that diverting you from looking at countries like India?
I wouldn’t call it a diversion. I’d say that India was an important country as many others before the conflict. We’ve been investing in India for over 75 years. We’ve had partnerships in the MRO (maintenance, repair, and operations) world. We have really strong performing platforms like the Apache, Chinook helicopters and the P-8I aircraft. And I wouldn't say I've taken one ounce of focus off of any of those things.
Q.        Would you say that India is no longer a buyer’s market?
I always have to see it as a buyer’s market. We have to compete with every single deal on the table. And we compete on the basis of our ability to sell through the United States government and meet the requirements that come from the customer. This will always be a competitive run for us. And so even with the more intense focus on defence capability around the world, it’s still serious competition. Very, very serious.
Q.        So what will be the drivers of Boeing’s global defence business now? Are you seeing any specific themes emerge, such as localisation?
I think that one of the biggest themes that you just mentioned is localisation. Many parts of the world desire indigenous capability. It is our local defence industry and we play a part in that by, one, making sure they have the products and capabilities they need today, but also making sure that we’re building capacity and capability to go forward. And we're doing exactly that here with our partnerships, with our MRO. We have partnerships with the Tata (Tata Boeing Aerospace Limited) joint venture, where we are co-producing Apache, fuselages and commercial parts.
This is why for me it's a very interesting moment because the things that we have been doing are the things that we're being asked just to do more of. And I think we are very, very well situated to be able to grow indigenous capability for India to support. I think relative to our peers, big global industrial defence companies, I think we are in a very, very good position. The strongest, with more than 300 suppliers here, 4,000 employees and if the F/A-18 is selected, it'll create $3.6 billion worth of economic value for the country. I’m not sure you can say that's not a great place to be in.
And the other part I'd say, if I bring it back up the value from the product itself, building capability on the engineering side to develop products and capabilities for the next-generation platforms is part of what we intend to do and have been having early discussions with partners about in the country for next-generation helicopters, fighters that are indigenously engineered and produced here. So the theme is, you know, while the world has consumed platforms on an import basis for a very long time, the future will be about partnering and building up the defence industrial base within countries and partnering with companies like ours. And we want to be part of that and we want to be prepared for it. And that's where we are.
Q.        So is there any prospect or likelihood of a change in Boeing’s pattern of sourcing from India? Are you going to be sort of biased more in favour of smaller companies or are larger companies going to offer you, in your opinion, more benefits? Is there going to be any change?
I think we have partnerships with larger companies, obviously, as I had mentioned earlier Tata. We are talking to other companies. We have a handful of smaller relationships with emerging tech companies. We all have to accelerate partnerships with small, medium and large companies around the country because that is the way that will help build that indigenous capability and be a part of the future platforms. So I think it is not one or the other, it’s an end and it’s all in, it's faster, you know. And I think that's super important to us.
Q.        Salil Gupte (CEO, Boeing India): So and just to add, you know, Ted mentioned we have more than 300 partners, that are suppliers here in India, over 25 per cent of them are MSMEs. And the way we do that is that over the time that I've been here in the last three-and-a-half years, we have ramped up our supply chain capability that's based out of Bengaluru actually, and built up a team of people who predominantly go out and engage MSMEs perhaps in different spaces. So they might be in the automotive space or in the agri space, other industries, and they pull them into the aerospace field.
They do any upskilling that might be required, materials, quality standards, you know, all of those things to become an aerospace grade supplier. And then they work with us. One of them (Rossell Techsys) actually won our Supplier of the Year award twice in five years, which is quite unprecedented.
Q. So is India going to remain a sort of billion-dollar market? What are your revenue projections, five years or 10 years down the line?
I don’t have specific figures. If you think about the base that we have today, we have very significant Apache, Chinook, P-8I fleets in the country, we have an MRO capability in the services business that supports all three of those and the C-17. I don't see those levelling off. I'm hoping that over time we continue to grow the fleets and in particular the P8I fleet.
The F/A-18 Super Hornet is right in front of us from a go-forward perspective. And we're waiting to hear on the Navy's decision there. So that would be another opportunity to grow. And then the future is about autonomy and tanking. I'm hoping that over time we are able to, you know, partner with the country to provide more capabilities on both those fronts as well. So I wouldn't quote a specific number or a percentage as much as my intention is for this to be a growth part of the world for us. And hopefully that stays in line with the investments that the country is making into the defence industry. So if we can move at that pace, that would be good.
Ajai Shukla The relationship that has evolved between the United States and India has the Navy playing a very important role, almost leading the relationship at a strategic level. But there is now the inevitable feedback what about the land border, where India is almost alone in facing China. Is there scope for Boeing to help India by providing platforms for the land border or do you don't do land borders? 
Ted Colbert I wouldn't say we don't do land borders. I think that our vertical lift capability is suitable to support land operations. I think our P8I, from a maritime surveillance perspective, has other capabilities in, in the unmanned space as well with drones and others, that I think fit into in to those challenges. But we are [providing] capabilities to support those efforts. And we have a good relationship with the Army. So I think we're  suited to support all our branches of the military here in our own unique ways, for sure. 
Salil Gupte The Indian Navy uses the Indian P8s in a far more flexible manner than really any other force in the world. They are known to use it over operations beyond just maritime. And that speaks to two things. One, it speaks to the flexibility of the asset and how it can be exploited. And it also speaks to the fact that the Indians are moving toward joint collaborative operations that allow you to increase the value of those assets. 
Ted Colbert There's a lot of discussion about the importance of the Chinook, the flexibility of Chinook and the types of really unique missions that it flies for the military here. So I think we're suited to support land operations. 
Ajai Shukla So you're satisfied with what you're doing on land and you believe that that the Indian side is happy with that? 
Ted Colbert  I believe that, both the products and in the sustainment space, we've gotten positive feedback [from the Indian military]. There's always more to do. We have some opportunities on one of our platforms to improve some of the capability to support some specific types of missions.  
In general, especially Apaches and Chinooks, they are workhorses, P8Is are workhorses, and have a utilization that is very high. 
Ajai Shukla There's sort of a lot of talk from the US side, that choosing the FA-18 for the for the Indian Navy would enhance interoperability and would give a much greater degree of combat togetherness, The same is true for the P81 as well. You think this is something that will be used to sell the aircraft? Or is there really a prospect of operations together.
Ted Colbert  I think that it's a real differentiator and a strong proof point of the platform. The ability to interoperate with our capabilities, with the American warfighter and the other products that we fielded here in the country and with our other allies, as I mentioned before, the multilateral relationships around the world. And I think it is a consideration, along with the ability of the platform to be carrier based, ready, and also the capable of having one or two seats on the carrier. So the Super Hornet can be a fighter and it can be a trainer all at the same time. If you have 26 F/A-18s, all 26 can be on the carrier and you don't have to leave some of them [the twin-seat version] behind like some of our competitors have to. 
If I was an operator, the twin-seat capability would be a formidable one that I would want to have in my hands. But we all know that that decision is more complex than that. And one of the reasons why I'm here is to make it simpler on the capability side to make that decision. Also make it simpler in the broader perspective, meaning re-emphasize and amplify the importance of our contributions to make in India that is, we have demonstrated that we support the company, the countries, you know, desires to build capability going forward. 
We have proof points on how we've done that in the past. We have ideas that we've shared with our customers about what we want to do going forward. And I believe that there is no other industrial aerospace company that can deliver to that commitment. You can listen to countries making promises all day long, but one should also listen to a company that's delivers on promises for a very long time. 
Ajai Shukla  You've spoken extensively about digital engineering. How do you see that play out in India, given that you've set up a design centre here in India. 
Ted Colbert  I think we are just scratching the surface on the opportunity with regard to digital. I believe that across the entire value stream of the engineering side, we have the ability to have a digital foundation for all of our products through model-based engineering. We've demonstrated here and we're going to continue to demonstrate capability around for size determinant assembly. Our team here will potentially lead the company in building up capability, and the capacity to support many of our future products by building indigenous capability from a design and engineering perspective on the sustainment side. 
I could go on and on about the use of data, the rich data coming off our customers platforms to support mission capability and readiness and operational efficiency and predictive maintenance. Predicting when a part will need to be replaced and getting ahead of that and making sure the right parts are on the plane during the mission. Getting ahead of things like doing the right flight planning that saves fuel, saves money, and leads to better mission efficiency. We have developed a suite of tools that we call Mission Accelerator. Mission Accelerator takes advantage of all this data, and it delivers predictive capability to the warfighter every single day. 
We've demonstrated on the C-17, which is an enduring platform that we're building the capability for our future platforms. It is going to be part of the way that our products are sustained going forward. I believe that if you pull the thread all the way back to building talent capability, this engineering centre is partially the home of that, but could be an even stronger home to develop software and analytics and artificial intelligence innovation at a rapid pace in support of the maintenance. It's a statement of all the products that we have here in India. I think we're just at the beginning of the innings, to use a cricket analogy. 
The future warfighter is going to be more digitally savvy, they would have all grown up with phones and apps and they want to see data at their fingertips. And I think we believe that India is a place to go build that capability and support it. 
Ajai Shukla  My last question should perhaps have been my first. You're the new head of Boeing Defense. What are your priorities? 
Ted Colbert  We have a lot of priorities. I'd say first, driving stability into everything that we do from a development and operations perspective. We have several concurrent firm, fixed price, development programs going on right now that are all very, very challenging. They're next generation capabilities, and it's important that we get through the development process with those programs and get into full production. 
I'd say the second thing is focusing on the supply chain and the challenges that have emerged through the COVID period. We have suppliers who have had changes in workforce just like we have and other issues that emerge because of COVID, such as cycles of working and not working, And we've got to stabilize our suppliers. We have to make sure that suppliers are consuming requirements in the right way and helping to improve first time quality and throughput in all their operations. 
So the supply chain is second top priority and then, it is vital to develop and acquire the next generation of talent. And then, it is vital to support some pretty significant campaigns and big wins that that are important to our business. So in India, as clear from the fact that I'm here, is one of those priorities: We totally believe that the F/A-18 is what India needs. We're waiting to hear officially about the Letter of Acceptance for the P8i. 
Salil Gupte I would argue that you can see India in every single one of those priorities as you think about achieving stability on those production programs. You'll see our India engineering and some of our manufacturing capability to support those very programs. Right. You know, as you think about, you know, the supply chain challenges that not just our industry but all industries are facing around the world. India is one of the foremost sites to find supply chain resiliency, given the performance of our supply chain here. We're certainly trending in that direction as well. So, you know, you see India in, you know, in in all of these priorities as a potential solution to help us achieve. 
Ted Colbert  And I'll tell you early in the job, one of the first calls I made was to our teammates in India to authorize more hiring to support some big engineering challenges that we have. So India is where we are sending whole work packages and really becoming very reliant on the workforce here, from on a go forward basis with regard to both engineering and manufacturing. 
Ajai Shukla I have no more questions. Anything you want to put forward. 
Ted Colbert  We just want to make sure it's clear where our head is with regard to supporting, make in India and a self-reliant India. And in the sort of long play, and in the medium play, we want to make sure that we are ready to deliver some more F/A-18s and P8s to India. We also want to emphasize the importance of the talent base that we've been developing and recruiting for a very long time. And we look forward to being a part of the future. 
Ajai Shukla Thank you very much.  

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