The Memorandum of Understanding or MOU was signed in New Delhi by Jim Albaugh, President and CEO of Boeing Integrated Defense Systems, which is a unit of Boeing, and Ashok Baweja, chairman of HAL. The deal includes sharing key Boeing business and manufacturing tools with HAL.
Under the deal, Boeing and state-owned Hindustan Aeronautics Ltd. or "HAL" will explore business opportunities aimed at transferring work packages to India with an initial value of $10-20 million annually, which will increase in size and complexity as business opportunities develop. Boeing will support the training and transfer of Boeing best practices for Lean principles as well as Supplier and Program Management to the extent allowed by the U.S. government and company's corporate policy. The company said that initial training in Lean began in 2006 and will continue through 2008.
Commenting on the agreement, Albaugh said, "I am extremely pleased that Boeing and HAL have agreed to work together for the mutual benefit of their companies and countries. The agreement represents an important step in our efforts to build solid long-term partnerships in India to make Boeing products more globally competitive, while allowing HAL to grow and expand its potential market around the world." Baweja, chairman of HAL said, "This is a significant step by two aerospace leaders that opens up new avenues and areas of co-operations. HAL and Indian industry gain from this long-term business arrangement in terms of technology upgrade, while Boeing can look forward to a reliable source for its product requirements." Chicago, Illinois-based Boeing noted that HAL has agreed to offer competitive pricing, invest in the required manufacturing infrastructure and to join the company in seeking recognition by the government of India for the value of the work packages and technology transfers in support of credits against existing or future offset obligations. The company said that its efforts on the project would be led and managed through its Integrated Defense Systems business unit.
Boeing will reportedly submit its bid for the Indian government's plan to purchase 126 fighter jets for its airforce. In India, the company expects a $15 billion market for its military products over the next fifteen years and another $80 billion for its commercial products over the next fifteen to twenty years.
In December 2003, Boeing established its wholly owned subsidiary, Boeing International Corporation India Private Limited or BICIPL, to support the growing demands of India's aviation, aerospace and defense industries.
St. Louis-based Boeing Integrated Defense Systems is a $32.4 billion business with 72,000 employees worldwide and is the second largest space and defense business in the world. The unit combines weapons and aircraft capabilities, intelligence and surveillance systems, communications architectures and extensive large-scale integration expertise.
HAL is a company under India's Ministry of Defence and is headquartered in Bangalore. The company has eighteen production units as well as nine research and design centers in India with 32,000 employees. The company is involved in the design, fabrication and assembly of aircraft, jet engines, helicopters and their components.
Aircraft manufacturers are increasingly turning towards low-cost manufacturing countries like India for manufacture of components, which would enable the companies to reduce manufacturing costs. HAL currently makes aircraft doors for Airbus, part of European aerospace company EADS N.V (EADSF.PK), while Britain's BAE Systems Plc (BAESF.PK) has a software joint venture with HAL.
In 1988, HAL was selected to build passenger doors for the A320 and has made parts for the A320 nose undercarriage. In September last year, HAL and Eurocopter parent EADS signed a memorandum of understanding to further develop long-term cooperation and define joint strategies on different market segments. Eurocopter subcontracts airframe production for all Ecureuil type versions to HAL.
BA closed Wednesday's regular trading session at $86.62, down $0.55 on a volume of 8.62 million shares. In the 52-week period, the stock has been trading in a range of $84.60-$107.83.
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