LYNNWOOD, Washington — Bill Cusick, president of Ran‐Tech Engineering, a manufacturer of metal aerospace parts employing 60 workers near Portland, credits a dramatic change in Boeing’s approach to suppliers with helping his company survive the Machinists strike last fall.

When the strike hit, 90% of Ran-Tech’s business was on hold as Boeing instructed suppliers to stop shipping parts.

But a few months before the strike, Cusick had been introduced to Ihssane Mounir, Boeing Commercial Airplanes senior vice president responsible for the global supply chain.

In a series of meetings convened by Boeing through the Pacific Northwest Aerospace Alliance trade group, the leaders of about 20 small suppliers got face time with Mounir and his team, and a pledge that Boeing would be a partner to work through any problems that arose.

With the 53-day strike, “it was the rubber meets the road,” said Cusick in an interview. “What he said in that meeting prior to the strike, he lived up to during the strike.”

When Cusick reached out to Mounir and told him Ran-Tech couldn’t keep the lights on if it had to halt all parts shipments, Boeing worked with him to identify some parts that it would need soon, “the bare bones to get us both by, so that we could survive through the strike.”

With parts delivery pared way down but not completely stopped, Ran-Tech made it through.

“We’ve got a relationship going now,” said Cusick. “I’m able to continue to meet schedule and 45 people out on the shop floor still have a job.”

This collaboration was in sharp contrast to a few years ago, when suppliers were bleeding money from a Boeing program called Partnership for Success. Contrary to the name, the program applied intense pressure on suppliers that transferred their profits to Boeing.

Justified by a promise of higher work volumes as production rates climbed, Boeing demanded that suppliers provide 15% price cuts on their parts every year. Boeing’s then-CEO Jim McNerney warned that any companies that didn’t step up would be dropped, or as he put it, added to a “no-fly list.”

That price squeeze, deeply resented, left many small suppliers on their knees and seriously weakened Boeing’s parts supply network. But brought to its own knees over the past six years, Boeing is a humbler company today.

“The Boeing mantra of ‘You do it my way or you’re done,’ I would say is almost gone,” said Cusick. “This past round has been great for collaboration.”

In a question-and-answer session after Mounir spoke last week at the annual local suppliers conference in Lynnwood, Shawn Hosford, a business development representative for a series of small companies including Ran-Tech, thanked him for saving that business from collapse.

“He’s making a big difference,” Hosford said of Mounir, who switched from heading jet sales to overseeing Boeing’s troubled supplier network in December 2022. “His way of doing business is very partner-oriented. It’s relationship gold.”

A switch away from ‘Shareholders First’

In his presentation at the conference, Mounir described how during the strike, though a general halt to parts shipments was ordered, “as many of you in this room know, we broke that rule time and time again when you guys brought forward cases where you told us, ‘We cannot do that.'”

Whether it was for reasons of financial distress or the likely permanent loss of workers if they were laid off, Boeing on a case-by-case basis offered support where it could.

“The conversations were difficult, but we got there,” Mounir said. He apologized that Boeing’s outreach might have missed some suppliers and urged: “If we missed you, please call, please reach out. You can call me direct and call my team direct.”

And if for some reason some new work has to be transferred to a supplier, always a potential risk point, he promised to send quality inspectors, manufacturing experts and engineers to offer support.

“I will be with you every step of the way,” Mounir promised. “We’re your partners. And we’re only as good as you are.”

This was a startling contrast in tone from when Boeing executives addressed suppliers from the same stage over the past decade. Then it was: Give us lower prices and make sure you meet schedule, or we’ll find another supplier.

Kevin Michaels, founder of consulting firm Aerodynamic Advisory and a supply chain expert, said in an interview on the sidelines of the PNAA conference that, with aerospace companies all damaged by the permanent loss of experienced workers who exited during the COVID pandemic, Boeing now “certainly has a more accommodating tone and recognizes that they need to help suppliers.”

He says this fresh attitude will have strong backing from Boeing’s new CEO Kelly Ortberg, whom Michaels worked under at Rockwell Collins in the 1990s.

“Kelly understands the importance of having healthy suppliers,” said Michaels. “He was a supplier himself. He was on the other side of Partnering for Success.”

That squeeze on suppliers was only one of Boeing’s strategies to improve the share price that ultimately proved damaging and that Ortberg must reverse.

Under McNerney and other CEOs, it also devalued its engineers as expendable; stomped on its unionized blue-collar employees; outsourced work central to the future; and slashed costs everywhere.

Presenting at the conference, Michaels said the entire aerospace industry “has gone through kind of a dark period called Shareholders First.”

While this has been a mainstay strategy throughout corporate America since the days of former GE chief executive Jack Welch, Michaels said the constant near-term focus on quarterly earnings figures has been especially damaging to aerospace.

“Shareholders First is not unique to this industry. It’s everywhere,” he said. “However, we’re in a long-cycle business that requires ongoing investment that may not pay off for 10 or 15 years.”

Referring to a column he recently wrote for trade magazine Aviation Week, he cited Honeywell as a prime example of a company ruined by this management approach.

Once “an absolute force to be reckoned with,” a prime avionics supplier on the 777 and 737NG and an inventor of critical aviation safety systems, Honeywell stopped investing in the future and slashed costs to boost profits and the share price.

A shadow of its former glory, having alienated both employees and customers, Honeywell announced Thursday it will break up into three separate companies.

Michaels said that though “Boeing went down this path,” he’s optimistic that it will recover.

“I’m very bullish on Boeing,” he said. “Boeing has a leader with the right values. I think Kelly’s going to turn this company around.”

How Boeing can prune back and focus

At the conference, Michaels warned that the aerospace supply network remains very weak at the level of smaller suppliers, where the prime manufacturers, Airbus and Boeing, have much less visibility.

Because many smaller suppliers in Europe are “in extreme financial distress,” he doesn’t believe Airbus will achieve its ambitious goal of producing 75 single-aisle A320neo family jets by 2027.

“It’ll be Whac-A-Mole for Airbus as it ramps up,” he said, anticipating multiple parts shortages, especially in cabin interiors and aerostructures.

Any recovery for Airbus or Boeing will require intense focus on supporting their suppliers.

To sharpen that focus, Ortberg plans to prune back parts of Boeing not core to its central military and commercial airplane businesses.

Offering advice on that, Michaels said Boeing should sell off large chunks of its Global Services division, formed in 2017 and headquartered in Plano, Texas.

To expand beyond supplying only Boeing spare parts, it acquired a giant distribution company supplying parts to airlines from many aerospace companies. And it bought another parts logistics business that delivers small parts to production lines of multiple manufacturers.

Boeing’s then-CEO Dennis Muilenburg announced the goal of growing this aftermarket unit into a $50 billion business — a goal long since abandoned.

Elements of this organization have proved unwieldy.

When an airline needs a part, it must contact Boeing Global Services. If it needs technical support to install the part, it must contact Boeing Commercial Airplanes.

“This doesn’t make any sense,” said Michaels. “You can get rid of all that overhead.”

He recommends retaining control of the Boeing proprietary parts, sending those back into the Commercial or Defense units as appropriate, but getting rid of the third-party distribution businesses.

Longtime aviation analyst Richard Aboulafia, a partner of Michaels at Aerodynamic Advisory and in recent years a severe critic of Boeing management, spoke optimistically at the conference of a turnaround in its fortunes.

“I like what I’m hearing out of Boeing and I’m kind of a believer in their recovery plan,” Aboulafia declared.

He did, however, reiterate his belief that Boeing needs to launch a new airplane soon to avoid further ceding the single-aisle jet market to rival Airbus.

He insisted Boeing mustn’t move so late that a new jet would enter service in the late 2030s. A successful airplane could be launched much sooner and prevent further loss of market share, he said.

In addition to the ongoing challenges of part shortages due to weakened suppliers, Aboulafia, Michaels and other analysts at the conference spoke of the challenge posed by the unpredictability of the Trump administration.

Michaels said tariffs on imports from Canada and Mexico alone, if reinstated without aerospace exceptions, would amount to “about a $4.5 billion tax on our industry.”

Aboulafia on a discussion panel explained more broadly why tariffs could prove damaging.

In the former Soviet Union, he said, a closed aerospace industry produced airplanes that were not commercially viable; and he noted that modern China also seeks to create a homegrown industry that can build everything itself.

He contrasted this with the open Western model.

“If you look at what makes this business great, it’s people, capital, technologies, industrial capacity and ideas crossing borders,” Aboulafia said. “This takes a world of people contributing their ideas, their innovation, their capital, their technologies.

“If you start screwing around with these tariffs, you’re sending a message that in fact that one-nation model is better.”

The world’s enormous demand for new jets, which neither Airbus nor Boeing can fill right now, provides a clearly profitable future for the industry if the near-term challenges can be overcome and jet production ramped up.

Boeing’s production rate is so low right now that parts shortages are not a critical problem.

But smaller aerospace companies, where pay is relatively low, continue to struggle to recruit and retain workers. The strength of Boeing’s supply chain and the support Mounir’s team provides will really be tested as 737 MAX production accelerates.

Mounir expressed guarded optimism.

“By and large, we’re seeing these supply chains starting to stabilize,” he said. “But there’s still work to be done.”

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