Boeing announced Tuesday that it was flattening the organization of its defense and space unit to save money, in the process wiping out an entire layer of management. The move is part of a broader corporate transformation launched by Chairman & CEO Dennis Muilenburg that will see the company reduce cyclicality in its revenues and returns while grabbing a much bigger share of the global market for aerospace services. Muilenburg figures that market could be worth $2.5 trillion over the next ten years, and he wants Boeing to have a services presence commensurate with its role as original equipment manufacturer for about half of all the planes flying. If he succeeds, services could become as a big a revenue generator for Boeing as its huge commercial and military hardware units already are. I have written a commentary for Forbes here.
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