Boeing 2010 Annual Report Download - page 16

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Competition
The commercial jet aircraft market and the airline industry remain extremely competitive. We face
aggressive international competitors who are intent on increasing their market share, such as Airbus,
Embraer and Bombardier, and other entrants from Russia, China and Japan. We are focused on
improving our processes and continuing cost reduction efforts. We intend to continue to compete with
other airplane manufacturers by providing customers with greater value products, services, and
support. We continue to leverage our extensive customer support services network which includes
aviation support, spares, training, maintenance documents and technical advice for airlines throughout
the world to provide a higher level of customer satisfaction and productivity.
BDS faces strong competition in all market segments, primarily from Lockheed Martin Corporation,
Northrop Grumman Corporation, Raytheon Company and General Dynamics Corporation. Non-U.S.
companies such as BAE Systems and European Aeronautic Defence and Space Company (EADS),
the parent of Airbus, continue to build a strategic presence in the U.S. market by strengthening their
North American operations and partnering with U.S. defense companies. In addition, certain of our
competitors have occasionally formed teams with other competitors to address specific customer
requirements. BDS expects the trend of strong competition to continue into 2011 with many
international firms pursuing announced intentions of increasing their U.S. presence.
Regulatory Matters
Our businesses are heavily regulated in most of our markets. We deal with numerous U.S. government
agencies and entities, including but not limited to all of the branches of the U.S. military, NASA and the
Department of Homeland Security. Similar government authorities exist in our international markets.
U.S. Government Contracts. The U.S. government, and other governments, may terminate any of our
government contracts at their convenience, as well as for default, based on our failure to meet
specified performance measurements. If any of our government contracts were to be terminated for
convenience, we generally would be entitled to receive payment for work completed and allowable
termination or cancellation costs. If any of our government contracts were to be terminated for default,
generally the U.S. government would pay only for the work that has been accepted and can require us
to pay the difference between the original contract price and the cost to re-procure the contract items,
net of the work accepted from the original contract. The U.S. government can also hold us liable for
damages resulting from the default.
Commercial Aircraft. In the United States, our commercial aircraft products are required to comply with
Federal Aviation Administration regulations governing production and quality systems, airworthiness
and installation approvals, repair procedures and continuing operational safety. Internationally, similar
requirements exist for airworthiness, installation and operational approvals. These requirements are
generally administered by the national aviation authorities of each country and, in the case of Europe,
coordinated by the European Joint Aviation Authorities.
Environmental. We are subject to various federal, state, local and non-U.S. laws and regulations
relating to environmental protection, including the discharge, treatment, storage, disposal and
remediation of hazardous substances and wastes. We continually assess our compliance status and
management of environmental matters to ensure our operations are in substantial compliance with all
applicable environmental laws and regulations. Operating and maintenance costs associated with
environmental compliance and management of sites are a normal, recurring part of our operations.
These costs often are allowable costs under our contracts with the U.S. government. It is reasonably
possible that continued environmental compliance could have a material impact on our results of
operations, financial condition or cash flows if more stringent clean-up standards are imposed,
additional contamination is discovered and/or clean-up costs are higher than estimated.
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