Rockwell Collins last week announced Paris would be the hub of its Europe, Middle East and Africa operations. It also opened an office in New Delhi, and opened shop in Shanghai in January. All that comes little more than a year after the Cedar Rapids, Iowa-headquartered avionics and communications systems maker reorganised around three global regions: the Americas, EMEA and Asia Pacific.
None of these moves come as a surprise from a company with 20,000 employees, $4.7 billion sales and global reach, with products featuring on the flight decks most transport aircraft types.
EUROPE IS KEY
Chief executive Clay Jones, who toured European markets last week, says the Paris headquarters is a significant feature of Collins' efforts to stay ahead of what he calls a "new world order" characterised by the growth of emerging countries, with a strong presence on the ground being key to anticipating customer needs rather than reacting to them. And, clearly, in the coming decade it is Europe which Collins expects to be the driver of non-US growth. The proportion of revenue coming from abroad was nearly 30% last year, including 18% in Europe, but should reach 40% by 2020, as European sales and headcount triple, to $3 billion and 6,000.
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Growth will principally be organic. Some acquisitions have been important - the $125 million 2009 purchase of Datapath in Sweden bought Collins a presence in Scandinavia and got it into satellite communications - but the company takes a cautious approach to acquisitions.
Broadly, Jones outlines three key trends Collins hopes to ride. One is booming demand for mobile connectivity. For Collins, much of this demand will come from the military where allied soldiers in Iraq or Afghanistan have less capability than a person on the street back home - or even than local enemies, who use smartphones to reap the benefits of real-time information.
Helping our side see, securely, through this "new fog of war" will be a focus for Collins, Jones adds. As for airliner cabins, Jones is not expecting Collins to jump on the connectivity bandwagon. His reasoning is that historical experience does not augur well for success in getting passengers to pay for connectivity. However, Collins is driving ahead to provide better connectivity to the flightdeck and such systems could be extended to the cabin.
Efforts to boost flightdeck connectivity play into Jones's second great industry trend, the upcoming "revolution" in air traffic management systems. Collins is strong both in the air and on the ground, though Jones is not optimistic the US will muster the political will or financial resources in the near future to implement its NextGen ATM concept.
The third trend is the integration of military and civil applications, where Collins sees itself as a leader, with 2010 sales split roughly 60-40 between military and civil applications but likely to move toward 50-50 as tight military budgets are countered by civil market recovery.
Collins, he stresses, is structured for balance. Efforts going back to 1997 to develop its CAAS - common avionics architecture system - have increasingly meant military and civil systems, and fixed-wing and rotary systems, share basic building blocks. Open architecture also lets Collins skirt US restrictions on sales abroad of sensitive military technology by adapting a civil system.
Collins is hardly the first blue-chip American corporation to identify non-US markets as the key to future growth. And, it may be as much accident as foresight that it has avoided the hazards of diversification from its core competence in electronics. However, given its scale and assuming it can execute its plan to get closer to global markets, Jones is probably safe in saying: "This new world order brings opportunities to accelerate this growth."
Source: Flight International
