SEATTLE (Reuters) - Boeing Co’s (BA.N) commercial airplanes division is “not competitive” under current U.S. tax rules and the company is using its access to the Trump administration to press for changes, Chief Financial Officer Greg Smith said on Thursday.
Tax reform is “going to drive growth, it’s going to drive our U.S. economy, it’s going to create jobs, it’s going to allow us to make more investments in our people, in our factories, in our products,” Smith said at an investor conference organised by Barclays.
“We’re not competitive today ... and we’re thankful to have the opportunity to have the podium and talk about it and, hopefully, help the administration think that through as they’re deciding on where they want to go with this.”
Smith made his comments as the Trump administration focuses on tax changes it says would boost corporate competitiveness and create U.S. jobs. U.S. Treasury Secretary Steven Mnuchin said on Thursday that the administration aims to enact tax changes by August.
In a wide-ranging interview, Smith also said Boeing will decide this year whether to increase 787 jetliner production to 14 a month from 12 currently, putting the first firm endpoint on the decision.
The decision affects thousands of suppliers, from small machine shops to big manufacturers such as Japan’s Mitsubishi Heavy Industries Ltd (7011.T), Kawasaki Heavy Industries Ltd (7012.T) and Fuji Heavy Industries Ltd (7270.T), which make 787 wings and fuselage sections.
Boeing has held off announcing a 787 rate increase as it assesses a slowdown in demand for twin-aisle planes such as the 787 and 777. Boeing Chief Executive Officer Dennis Muilenburg said last month that the company would “make a disciplined decision on (raising production to) 14 a month toward the end of the decade.” He added that “we still have more work to do” in selling 787s to justify the higher rate, though Boeing had factored the higher rate into the range of forecasts it gave for 2017 results.
During the interview on Thursday, Smith said Boeing sees scope for acquisitions in its new global services division. He did not provide specifics, but said, “there’s going to be some M&A that I think is going to be required in there, bolt-on.”
Boeing stock was up 0.5 percent at $176.25 in Thursday afternoon trading on the New York Stock Exchange.
Reporting by Alwyn Scott; editing by Jonathan Oatis