Story ID: 030March17
Boeing Remains Bullish on U.S.-China Trade Relations
By: Gregory Polek
Caption: CEO Muilenburg applauds calls for tax and regulatory reform
Word Count: 588
In late January Boeing declared itself encouraged by what it sees as pro-business signals sent by the U.S. administration of President Trump, apparently ignoring repeated rhetoric from the new leader about his plans to counter what he has characterized as unfair Chinese trade policies. Speaking during the company’s fourth-quarter earnings call, Boeing CEO Dennis Muilenburg stressed the importance of a healthy trade relationship between the U.S. and China, while avoiding questions about concerns that the Chinese government might retaliate for Trump's threat to declare the country a currency manipulator by cancelling orders for Boeing aircraft from state-controlled carriers.

“I’m confident that the incoming administration understands [the importance of a strong U.S.-China trade relationship],” said Muilenburg. “President Trump is engaged with business. We’ve had the privilege of having an open dialogue with him on business issues and all of the actions that are being taken around things such as tax reform, regulatory reform, focus on trade policy; those are all things that are going to allow us to grow economically and add manufacturing capacity in the U.S.”

Calling the aerospace environment highly competitive, the Boeing CEO characterized as positive any policies that ensure U.S. companies get fair access to markets in China and elsewhere. Citing projections that China will account for 6,800 airplanes out of a 20-year global demand for 39,000, Muilenburg sounded encouraged that the administration’s actions would help ensure Boeing wins a fair portion of those orders.

Muilenburg was specifically asked to respond to Trump's critical comments about Boeing’s plans for a 737 completions center in Zhoushan, near Shanghai. “Actions being taken to ensure U.S. competitiveness are positive actions, and we support those,” he said. “Regarding our China finishing center, that’s an important part of the partnership equation here. That finishing center is in a location where we’ll be able to add value in China, and every airplane that goes to that center is being built here in the U.S.”

In Muilenburg’s view, more business with China resulting from partnerships such as the 737 completions center means more U.S. manufacturing jobs. In fact, while 90 percent of Boeing’s employment resides in the U.S., 75 percent of its product gets delivered outside the country, helping create a positive trade balance for the U.S. aerospace industry as a whole.

“If you look at global trade, aerospace continues to be the strongest sector in the United States in terms of trade balance, with a positive trade balance of $80 billion per year. Boeing is a big part of that,” he noted. “We’re the U.S.’s biggest exporter and within that we and our supply chain have 13,000 companies in the United States [that] create and sustain one and a half million aerospace jobs.” 

The Boeing Group's total revenue for 2016 dipped by 2 percent to $94.6 billion. However, the company's combined divisions achieved record levels of operating cash flow of $10.5 billion, which was 12 percent up on 2015. Overall sales backlog totaled $473 billion, a figure dominated by 5,700 commercial airliners valued at $416 billion.

During the fourth quarter of 2016, Boeing Commercial Airplanes delivered three more aircraft than planned (185 units), raising revenue to $16.2 billion. For the full year, the 748 aircraft delivered represented a 2-percent decline on the 2015 total of 762. However, a changed mix of aircraft types delivered, plus lower research and development costs and improved performance, boosted the division's fourth-quarter profit margin to 9.1 percent.

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