Aerospace giants team on B2B Net marketplace

The joint marketplace venture, which includes Boeing, Lockheed Martin, Raytheon and British Aerospace, will aim to connect a massive number of suppliers and buyers in the industry, allowing them to buy and sell parts and conduct business over the Internet, people familiar with the agreement said. The people also said software provider Commerce One will help build and design the marketplace.

"We have nothing to announce at this point," said a Lockheed Martin spokesman. A Raytheon spokeswoman declined to comment. Boeing, British Aerospace (now known as BAE Systems) and Commerce One were not immediately available for comment.

Sources said an announcement for the new aerospace marketplace is slated for early next week.

In December, database software giant Oracle entered negotiations with Boeing to create an online parts supply network for the aircraft manufacturer, according to Bloomberg News. At the time, Oracle said it wanted to build an online aerospace marketplace to improve Boeing's supply chain process, track prices and availability for parts online, and give the aerospace giant's 31,000 suppliers the ability to bid for parts contracts over the Internet.

Boeing and Lockheed Martin initially devised the idea for a new aerospace marketplace after running into each other with similar plans, sources said. Lockheed Martin had been working with Commerce One on a marketplace for the defense industry.

This is not the first move by a group of companies to create an online marketplace dedicated to the aerospace industry, but it could potentially become the largest based on the sheer size of the marketplace founders. In recent weeks, similar online marketplaces for the industry have been popping up.

Last month, United Technologies, Honeywell and i2 Technologies announced plans to launch MyAircraft.com, an electronic marketplace for aerospace products and services in a trade that encompasses about 25,000 buyers and sellers. General Electric also recently launched a new online exchange that will allow major airlines to buy and sell parts over the Internet. GE is providing procurement services solely to its existing customers and partners, including Delta Airlines, Continental Airlines and Alitalia, Italy's main air carrier.

Business-to-business marketplaces have also been sprouting up in such fields as chemicals, automobile manufacturing, construction and pharmaceuticals as companies aim to move their supply chain online to reduce the paperwork and time involved in purchasing, manufacturing and inventory.

The market for business-to-business e-commerce is expected to explode in the coming years, a dangling carrot for a wide range of technology providers in recent months. Leading research firms have projected the market to reach between $2.7 trillion and $7.3 trillion by 2004, from about $131 billion last year.

General Motors, Ford, Dupont and Chevron are among the larger corporations that have recently announced plans to build or participate in electronic marketplaces, partnering with companies--Commerce One, Oracle, Ariba and SAP--that make software that lets users buy and sell everything from office equipment and maintenance supplies to services online.

But the rapid rise and popularity of the business-to-business sector has obscured the fact that the industry does face hurdles. Some have voiced concerns about the potential need for government regulation over new marketplaces that concentrate tremendous purchasing clout among a handful of large companies, opening up the possibility of collusion. Others have noted that despite the tremendous attention the sector is receiving from investors, there are several pitfalls that need to be surmounted, including security and standards issues.