Make vs Buy, Vertical Integration and Contract Manufacturing

Every manufacturer decides, part by part and process by process, what to make itself and what to buy, and the answer is rarely permanent. The decade's clearest reversal is Boeing's: in June 2005 it sold its Wichita, Tulsa and McAlester aerostructures operations to the investment firm Onex for ~$1.2bn (about $900m in cash plus ~$300m of assumed debt, reported), creating Mid-Western Aircraft Systems, soon renamed Spirit AeroSystems; Onex's group, which had put in ~$375m, took ~$3.2bn out by the time it sold its last shares in August 2014 (reported). Twenty years after the sale, after the 737 MAX grounding, quality escapes on Spirit-built fuselages and the 5 Jan 2024 Alaska Airlines door-plug blowout, Boeing completed its reacquisition of Spirit on 8 Dec 2025 (company release; ~$8.3bn including Spirit's debt, reported), bringing ~15,000 employees at five sites back in-house while Airbus took the Airbus-related sites. At the other extreme, Tesla, SpaceX and China's BYD make far more of their products themselves than their industries' norms, while Apple designs its products and has them assembled by contract manufacturers such as Foxconn. In pharmaceuticals, Novo Holdings completed its ~$16.5bn (enterprise value) take-private of Catalent on 18 Dec 2024, at $63.50 a share in cash, and sold three fill-finish sites (Anagni, Italy; Bloomington, Indiana; Brussels, Belgium) to Novo Nordisk (company releases) — a drugmaker buying its contract manufacturer's capacity outright. This section covers the theory (transaction costs, core competence, modularity), the history of integration and outsourcing, Boeing's round trip, the integrators, contract manufacturing in electronics, vehicles, pharmaceuticals and chips, and what to do about a struggling key supplier. A companion file works through a stylized decision on whether to buy such a supplier, and a checklist lists the questions to ask before any make-or-buy change.