By Allison Lampert
SEATTLE (Reuters) - Boeing (NYSE:BA)'s defense, space and security suppliers improved their on-time deliveries in 2023, but still fell below a measurement for satisfactory performance, according to metrics and a presentation from the company seen by Reuters.
Defense suppliers delivered 80% on-time in 2023, up from 75% a year earlier, with near-perfect quality, according to a spokesperson and a division executive's online presentation during a March gathering of Boeing suppliers in Seattle.
The findings are another indication that planemakers and large suppliers for defense and commercial aerospace companies continue to wrestle with late shipments, as supply chains are strained by rising costs, parts shortages and a scarcity of skilled labor in the wake of the pandemic.
Boeing would not disclose figures about supplier delivery performance for the company as a whole, or for its commercial airplanes division, since that information is not generally made public.
The company's commercial division is facing regulatory curbs on its output and increased scrutiny following a cabin panel blowout in mid-air on a Boeing 737 MAX 9 in January.
"We see this as a continuation of the current supply-chain issues affecting all of industry," said a Boeing defense spokesperson, in response to the figures.
Delivering below 85% on time for 12 months would be considered unsatisfactory for an individual Boeing supplier, according to a company rating, although suppliers are evaluated by other measurements like quality. For the defense division, that bar is 90%, two suppliers told Reuters.
Escalating tensions between China and the Philippines, the Russia-Ukraine war and conflicts in the Middle East have boosted orders for U.S. defense firms such as General Dynamics (NYSE:GD), Lockheed Martin (NYSE:LMT) and RTX's defense arm, Raytheon (NYSE:RTN).
While several aerospace executives see improvements, others say the supply chain will have to be remade before it can recover fully, which could take years.
The two Boeing suppliers said the company's defense division is strict about punctuality.
"They are always asking for parts early," said one supplier who spoke on condition of anonymity on the sidelines of the Aerospace & Defense Supplier Summit (ADSS), a collection of meetings closed to media in Seattle last week.
"They continue to raise the bar," added the second supplier. "They want suppliers to deliver on time, so that's forcing suppliers to be more creative. I think it's a good thing to push the supply base to not sit around."
Boeing's defense spokesperson added the company continues "to work to strengthen our relationships with our suppliers by providing frequent open and candid conversations and ensuring greater transparency."