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Boeing defense chief preparing for 'worst-case budget scenario'

November 10, 2011 |  4:24 pm

C17

The chief executive of Boeing Co.’s defense, space and security sector spoke to investors at a defense forum in New York about how the company was positioning itself in the coming years with constrained federal budgets.

At the Bank of America Merrill Lynch Defense Outlook Forum on Thursday, Dennis Muilenburg described bracing for what he expects to be a “tough defense environment.”

"We do a lot of scenario planning about how it might impact individual programs, which would get into individual facilities and infrastructure," he said. "But we are preparing ourselves and had been preparing ourselves for that worst-case budget scenario."

Boeing has extensive defense, space and security facilities across the Southland including in El Segundo, Anaheim, Long Beach and Huntington Beach. In all, the company employs 21,347 people in the state.

“We are anticipating already seeing at least $500-billion reduction in the U.S. defense budget over the next 10 years that could be as high as $1 trillion dollars,” he said.

The Chicago company, which also makes commercial jets, has already begun to slash defense jobs in preparation of a shrinking Pentagon budget.

Earlier this year it relocated two key defense programs and 800 jobs from Long Beach. The company also cut 900 jobs at its nearby sprawling complex where it makes C-17 cargo planes, citing declining orders.

“Certainly, it’s a challenging defense environment and we’ve been very realistic about it, we’ve anticipated it, we’ve expected it,” Muilenburg said. “Clearly we’re in a down dense cycle budget-wise in the U.S., while we see some opportunities on the international front.”

Boeing has had success selling its products overseas, which has benefited the Southland.

Muilenburg also said the satellite business, based in El Segundo, is a potential growth area.

“We see strength in the satellite business, especially when we look across the commercial sector and the demand for communications bandwidth,” he said.

Boeing shares rose 28 cents, or 0.4%, to $64.83 on Thursday.

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-- W.J. Hennigan

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Photo: Royal Australian Air Force Squadron 36 air crew waits for the delivery of their new Boeing C-17 Globemaster lll aircraft in September at the company's Long Beach plant. Credit: Mark Boster / Los Angeles Times

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