Face the facts with Tom Mepham

Three years ago Goodrich was facing the perfect storm. Now, customer services president Tom Mepham tells Brendan Gallagher, the systems giant is sailing smoothly on an up-cycle powered by Asia-Pacific growth

What are the reasons for your current strong growth in Asia-Pacific?
Three years ago we all thought we were in a perfect storm as a result of SARS and the Iraq war. But now we’re starting year three of an up-cycle, and a lot of that is being driven by Asia-Pacific growth beyond even our most optimistic expectations. It comes first and foremost from increases in gross domestic product, which underlie everything, but also by the tremendous numbers of aircraft going into China and India in particular.

Your customer services organisation was established comparatively recently – what prompted its creation?

The Goodrich Customer Services Organisation was set up about two years ago. The corporation had grown significantly through acquisitions and organic development, giving rise to an ambition to be the premier supplier of aircraft components nose-to-tail. At the same time the airlines were still struggling with the effects of 9/11, SARS and recession, and looking seriously for ways to drive costs out of their systems. They were very vocal in demanding a parts and systems supplier that would streamline the processes between itself and its customers. So we put the Customer Services Organisation together to present one face to the customer and to create a one-stop-shop capability for all Goodrich products and services. Everything was focused on making it easy for our customers to do business with us.

Where is the prime customer services location in Asia-Pacific?

We don’t have a single prime location. We have multiple facilities, in Singapore, India, China and Australia. There’s no such thing as a customer services HQ. Instead, we have a distributed, decentralised organisation designed to put us as close to the customers as possible.  

Which of your many product lines are most significant for you in Asia-Pacific?

It’s impossible to say – we’re focused on giving total support for all our products. It doesn’t matter if it’s a sensor, a nacelle or a landing gear – any one system can down an aircraft and our customers want to be sure they will always have what’s needed to dispatch their aircraft on time. If you don’t have a part that’s on the minimum equipment list, you have a problem. It’s our responsibility to ensure that customers get what they need, when they need it.

What implications is Asia-Pacific growth having for customer services?

India and China have been on our radar screens for a long time now - our Xiamen operation in China celebrated its tenth anniversary last year. Our strategy has been to get promptly into position in the high-growth areas, which has led to us having facilities in Singapore, Xiamen, Sydney, Bangalore and a few other places. We’ll continue working to ensure that we’re positioned properly.

Can you see Goodrich having a manufacturing facility in China, or indeed elsewhere in the region?

Under our strategic sourcing initiative we are putting more and more work into low-cost areas like China and India – electronic circuit cards, software engineering, engineering design, and other things. The number of Goodrich parts now produced in China and elsewhere runs to the hundreds. It’s all about keeping us as competitive as possible in terms of cost performance – we need to embrace low-cost solutions around the globe.

Singapore Airlines will be the lead operator of the Airbus A380. Can you see the A380 being a significant source of business for you in Asia-Pacific?

The A380 is going to be good for us, I’m sure. But when you look at numbers of aircraft, to be honest I’m even more interested in the narrowbodies and the existing widebodies in the Asia-Pacific fleet. It is those numbers that offer the really significant opportunities for maintenance, repair and overhaul (MRO) and ongoing support.

How do you see the corporation’s business in the region evolving over the next 10 years?

I expect that we will engage in further expansion in China and India in the short term, either through alliances or by establishing standalone facilities. At present the Xiamen operation is probably one of our fastest-growing MRO facilities anywhere, and we’re looking for that to continue. At the same time, it’s probably naive to think that one facility can serve the whole of China. So we’ll continue to look at the possibility of setting up in other areas of China as well. So I can foresee a number of support facilities throughout China, usually located close to the major airlines.

How do you expect the provision of parts and systems support to change in the coming years?

The real game-changer is the flight-hour agreement. More and more operators are showing interest in switching from initial spares provisioning contracts to arrangements for “support by the hour”. In North America, and increasingly on other parts of the world, airlines are looking for business models that put more risk on the supplier. So instead of us selling an initial provisioning of spares, we guarantee the availability of minimum equipment list parts. We own the spares pool and they pay a rate per flight hour. Low-cost carriers like JetBlue are driving this in North America and I think you’re going to see similar arrangements elsewhere in the world. One size doesn’t fit all, however. One airline might want to buy initial provisioning, another might want a flight-hour agreement, and a third might want a combination of the two. It depends on the airline’s own business model, and we need to be flexible in tailoring our solutions. In the end, it’s matter of helping our customers to balance high dispatchability against the cost of maintaining large inventories.

Source: Flight Daily News