777X cockpit
Boeing’s wide-body 777X jet will have touchscreen controls on the flight deck. (Boeing Photo)

The Boeing Co. is creating an avionics unit that will build the kinds of electronics and aircraft control systems now being provided by outside suppliers.

The shift, unveiled in an internal statement sent to employees on Monday, runs counter to the historical trend of spreading out the work that goes into building the company’s multimillion-dollar jets.

But it’s consistent with Boeing’s decision to go after the market for servicing those jets after they’re sold. A similar motivation led to the creation of Boeing’s services unit last year.

The statement, obtained by GeekWire, said the newly created unit will develop “avionics systems such as those designed for navigation, flight controls, information systems and other core avionics.” The systems will be designed for the company’s commercial aircraft as well as for Boeing’s other divisions, including defense and space. Eventually, Boeing could sell systems to other plane makers as well.

The move is part of Boeing’s strategy “to build targeted vertical capability so that we can further drive cost down and value up for our customers, in all phases of a product’s life cycle,” Boeing CEO Dennis Muilenburg was quoted as saying.

In the past, Boeing has turned to outside suppliers such as Rockwell Collins, Honeywell International and United Technologies to provide the avionics for its jets. That earlier strategy was aimed at reducing the load on Boeing’s workforce during product development. But it’s become increasingly clear to Boeing that providing service and replacement parts can be a significant revenue source, outweighing the costs.

Boeing Commercial Airplanes CEO Kevin McAllister signaled in June that suppliers were getting a close look in the course of his company’s drive for greater economy. “We have to have the same accountability in the supply chain as we have in our business for productivity, for cost competitiveness,” he said.

The avionics unit is headed by Allan Brown, a veteran Boeing executive who most recently served as vice president and program director of the company’s missile defense national teams. He’ll report to Greg Hyslop, Boeing chief technology officer and senior vice president for engineering, test and technology.

Boeing’s statement said that there are currently 120 employees in the enterprise avionics organization. That workforce is due to rise to 900 by 2019, a time frame when Boeing is likely to be gearing up for the development of a new breed of commercial jet unofficially known as the 797.

For what it’s worth, Boeing’s stock registered a slight decline in the wake of Monday’s announcement. The share prices for Rockwell Collins, Honeywell and United Technologies suffered a hit but recovered somewhat today.

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