Why would Boeing outsource its electronics production and then brings its manufacture back in-house?

Source: The Boeing Company

In the early 2000s, The Boeing Company (NYSE: BA) outsourced key portions of its aircraft manufacturing and design operations, including electronics and central computers. Beginning in 2007, Boeing’s 787 Dreamliner (a new model for Boeing) was assembled in the U.S., with global subcontractors assigned the work of assembling key sections of the 787. Subcontractors also worked on various software systems and electronics components for the 787.

Due to many software and electronics issues, the 787 Dreamliner delivery was delayed. When it did start flying, there were defects found in its software systems, electronic components, and other parts.

Boeing is now starting to bring the design and manufacture of its aircraft electronics back in-house. In addition to supplying its own aircraft with these in-house electronics, Boeing is looking to supply the parts to airlines and military operations around the world.

Fun Fact: Boeing is the largest exporter of U.S. goods, as measured by total dollar sales.

Discussion Questions

1. List several benefits, both qualitative and quantitative, that Boeing could realize from bringing the design and manufacture of its aircraft electronics back in-house.
2. What are some potential disadvantages for Boeing caused by designing and manufacturing its aircraft electronics in-house?

Instructor Resources

These resources are provided to give the instructor flexibility for use of Accounting in the Headlines articles in the classroom. The blog posting itself can be assigned via a link to this site OR by distributing the student handout below. Alternatively, the PowerPoint file below contains a bullet point overview of the article and the discussion questions.

• Student handout (pdf) (word) (contains entire blog posting + discussion questions)
• PowerPoint file (brief article overview + discussion questions)

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