Larry Lawson has just taken the helm as Spirit AeroSystems chief executive after holding the same position at Lockheed Martin's aeronautics division, where he was previously programme manager of the F-35 and also the F-22
During your third week on the job we heard Spirit AeroSystems was undergoing a sweeping strategic and financial review. Can you bring us up to date on where that stands, and do you have an idea of the kind of changes we'll see at the end of it?
It's really a comprehensive review. There were a lot of conversations about how to do the review and whether we would try to do a top-level assessment and finish that in-quarter or whether we would really do a deep dive on the business and make decisions that would affect business for the next five-plus years, in terms of our overall strategy. I came to the conclusion the better answer was to take the time we needed to really understand each of the components of the business, whether it was products themselves, programmes themselves or the sites where we build those products. And it comes from a global perspective really in the sense of what differentiates in the marketplace and what our customers need, and then figuring out how we align ourselves to those things. I would say it could be end of the year when we finish. I think that as we learn things or make a decision, we'll probably release that information incrementally. Right now, there is no conclusion I can share with you.
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Spirit AeroSystems |
The good news is the bulk of the revenue of the company is in the legacy businesses, so it's in the 737 and the 777 and the 747, 767, A320. Those have been our underpinning and they are pretty well-aligned to where the marketplace is going. The areas in which the company has challenges are not unique to Spirit - the development programmes. As you pointed out, we've had four programmes - the 787, the A350, the G280 and the G650 where we've had the struggles and challenges. Those assessments are ongoing and are in-depth. We're looking at every aspect of those programmes from the commodity cost of the material to where we build things and what we build.
Do you think there is still an appetite at Spirit AeroSystems to take on new development programmes outside the commercial aviation market?
Given my background in defence, I have a pretty good perspective on what Spirit would have to offer. I think Spirit actually has a unique value proposition in the defence market and we're already in defence as a provider of product on the P-8, and on the tanker and to Sikorsky. I think those are pretty successful models. We have incredibly good insight into how to manufacture low-cost structures. The design part is as important as the labour rate and we've got both of those factors working for us, so I think we should be attractive to a lot of folks who are working in defence and are looking for ways to address the new mandate and to reduce cost.
On the commercial side, there seems to be no bottom to the OEMs' thirst for cost improvement, especially down the supply chain, and recently Boeing announced the existence of this corporate no-fly list. From your perspective, how is something like that perceived in the supply chain and does it lead to any actions?
I think we have a responsibility to our customers to make sure we are responsible in terms of trying to drive cost reduction into our products. All I would say is it starts with the design of the product itself. What's important is that we collaborate with the primes on developing the most affordable product. That is always the first challenge. If the premise you're going to start with is you're going to build an all-titanium airplane, then you're going to have an all-titanium cost structure. The other part of this is, along with that design piece, you're not looking only in acquisition cost, but you're looking at cost per flying hour and lifecyle cost. So when you consider a design of a product, people take all three of those factors into account.
Boeing has also talked recently about the possibility of building more than 10 787s per month and, as a key player in that supply chain with the Section 41 and the wing components on the 787, what are the capital requirements you need to meet that demand?
That is probably something I left out of my prior answer because the capital cost associated with the tooling we use today to build these complex carbonfibre structures is pretty pricey. So we're constantly looking to amortise that capital over very few aircraft - say, 800 airplanes or 1,000 airplanes - it's not inconsequential. It's a substantial amount of the cost so when we think about these big investments, we're looking at how much shift work we do, we think about working three shifts round-the-clock, utilisation rates and if there is potentially another investment we might make to allow us to lay down carbonfibre at more pounds per hour? Are there inflection points that we need to change to allow us to be more efficient? So all of that goes into the arithmetic into making these assessments about going to a higher build rate.
How is the relationship with Airbus these days? I seem to recall only a few months ago your predecessor and Fabrice Brégier trading accusations over who was causing problems with the A350 section 15?
All I would say is whether you are developing an F-35 or a 787 or an A380, development is tough. So development is difficult for us and Airbus. It's been a new product, new customer and a new supplier. The breakthrough really has been to Airbus's credit and to our credit we have worked hard to put teams in place which handle this communication about how the policies work at Airbus and how we work, so it's more seamless and the important issues are addressed. They've got folks now who sit at our facility and help us communicate in a more seamless way, and I think that's really gone a long way to helping us work better together.
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Source: Flight Daily News
