Boeing to overhaul struggling defense business

Boeing announced today it is halving the number of divisions in the company's defense business unit as one of the nation's largest contractors struggles to regain its footing after a stretch of disappointing financial returns.

Boeing’s Defense, Space and Security business unit will reduce its eight divisions to four, consolidating programs under the categories of vertical lift; mobility, surveillance and bombers; air dominance; and space, intelligence and weapons systems, according to a company press release.

The move comes after another round of disappointing earnings during the company’s most recent investor report, which showed the defense business unit lost $2.8 billion in the third quarter. The losses were largely attributed to charges on fixed-price contracts -- particularly the VC-25B Air Force One replacement and KC-46A tanker -- that have been delayed by supply chain constraints and technical difficulties, though other programs like the MQ-25 drone and T-7A trainer also recorded losses.

Boeing says the shift aims to streamline leadership roles and responsibilities and increase efficiency. Mark Cherry will lead the vertical lift unit, Dan Gillian will helm the mobility division, Steve Nordlund will oversee air dominance platforms and Kay Sears will spearhead space systems, according to the release, which notes that all four will have the title of vice president and general manager.

Ted Colbert will remain as chief executive officer of the defense unit, though he will gain a new senior adviser in Jim Chilton, who currently heads Boeing’s space launch programs. Tim Peters and Cindy Gruensfelder, who respectively lead the existing mobility and surveillance and missile and weapon systems divisions, will retire following the transitions, the release adds.

Boeing Global Services also plans to integrate domestic and government services into a single organization that will be led by current BGS Vice President and General Manager Torbjorn Sjogren, according to the release.

For now, the reorganization will have a limited impact on the company’s labor force, with company spokeswoman Deborah VanNierop telling Inside Defense that Boeing is not expecting any layoffs.