Facing R&D Cuts, Boeing Investing Selectively
Every account in the U.S. defense budget is facing cuts, but what worries many industry experts most is what could happen to the country’s technology advantage if research and development (R&D) spending suffers.
Boeing is heeding the call from U.S. Defense Department officials to commit more company funds to R&D, paying for both prototyping and development costs, company executives said.
“We are spending more money on prototyping and maturing technologies,” said Boeing Defense Systems (BDS) CEO Dennis Muilenburg. “You see that reflected in our unmanned strategy where just a few weeks ago we had the first flight of our phantom eye high altitude long endurance vehicle. That is a self-funded prototype vehicle.”
The company also sunk its own money into the development of its AH-6 light attack helicopter, as well as some of the technologies employed in the tanker program, company executives said.
Muilenburg said the R&D funding is facing disproportionate impacts from budget cutting. “We’re seeing pressure on the R&D accounts on the government side, even worse than we’re seeing on the production and support accounts,” he said. “The sheer number of new development programs is going down, that’s a concern because it plays into our ability to ramp up programs that attract talent to the defense market.”
Industry executives have voiced concern about the added expense that additional R&D, and particularly early stage R&D, which results in a lesser likelihood of a saleable product, might have on company bottom lines.
Muilenburg said that even with the risk, Boeing would still look to invest.
Chris Raymond, vice president of business and development strategy for BDS, said the company will be selective.
“When you make these investments you have to stare into the probability of that program moving forward and leaving development and going into production,” he said.