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Boeing (BA) Adds Production Facility for Defense Aircraft

The Boeing Company’s BA business unit, Defense, Space & Security, revealed that it has completed the construction of its new facility, Advanced Composite Fabrication Center (“ACFC”), in Mesa, AZ. Through the new facility, Boeing intends to boost its capability to manufacture digitally advanced composite components for future combat aircraft.

Details of the Facility

ACFC is spread across an area of 155,000 square feet and is projected to begin its operations this fall. ACFC boasts technologically advanced capabilities needed to design, build and field state-of-the-art combat aircraft.

Moreover, ACFC will augment Boeing’s efficiency in scaling up its production capabilities across all BDS programs and also stimulate Boeing’s competence in producing defense products faster and at a relatively lower cost.

Such an expansion strategy by Boeing will enable the company to effectively meet the intensified demand for defense combat aircraft worldwide amid rising geopolitical tensions.

Growth Prospects

The demand for defense products is increasing manifold due to the rising threat environment. With the changing dynamics of the defense industry, the demand for next-generation defense products that can meet the challenges of military missions is also on the rise.

In such a scenario, defense companies are investing immensely to ramp up their production capacity or upgrade to digitally and technologically advanced methods of manufacturing products. Boeing’s recent initiative to add a new line of facilities for combat vehicles aligns with the current demand environment for advanced products.

Additionally, the company has more new facilities lined up over the next few years in the St. Louis region. The new array of facilities will support the different phases of producing combat vehicles.

Such capacity additions by the company are aimed at supporting various military missions and are poised to witness strong demand for products manufactured in the days ahead. This production ramp-up strategy will boost Boeing’s future growth prospects and bolster its overall revenue generation.

Other defense companies that have invested in building a new facility or upgrading infrastructure or technology to meet the ramped-up demand for advanced defense products are as follows:

In September 2021, Raytheon Technologies’ RTX Raytheon Intelligence & Space (RI&S) opened a 178,000-square-foot Advanced Integration and Manufacturing Center in McKinney, TX.

The company also plans to build a 400,000-square-foot factory, lab and office space at its McKinney campus to open by 2025. RI&S will also open a new 250,000-square-foot leased facility in North Texas to house technology programs.

Raytheon’s long-term earnings growth rate is pegged at 10.4%. The Zacks Consensus Estimate for RTX’s 2022 earnings suggests a growth rate of 6.1% from the prior-year reported figure.

In May 2022, BAE SystemsPlc BAESY opened its new 200,000-square-foot Manchester facility. This provided the company with additional capacity to support the design and development of electronic warfare systems for the United States and its allies.

BAE Systems boasts a long-term earnings growth rate of 9.3%. The Zacks Consensus Estimate for BAESY’s 2022 earnings suggests a growth rate of 12.9% from the prior-year reported figure.

In August 2022, Aerojet Rocketdyne AJRD opened its Center of Excellence for Undersea Propulsion to support the U.S. Navy’s next-generation torpedoes. The facility will be used to produce the innovative undersea propulsion known as the Stored Chemical Energy Propulsion System and the entire torpedo afterbody.

The Zacks Consensus Estimate for Aerojet’s 2022 sales suggests a growth rate of 1.6% from the prior-year reported figure. The Zacks Consensus Estimate for Aerojet’s 2023 earnings implies a growth rate of 18.7% over last year’s reported figure.

Price Performance

Shares of Boeing have risen 5.4% in the past three months compared with the industry’s growth of 5%.

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Zacks Rank

BA carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.


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