British Aerospace and Marconi Electronic Systems (MES)have unveiled a radical programmes-led management restructuring as they prepare to merge by the end of this month.
The overhaul will see BAe's Aerostructures and Military Aircraft divisions replaced by 11 programme-specific units, each with its own managing director.
The aim is to deliver the promised annual cost savings of £275 million within three years, and meet regulatory requirements for government approval of the merger. It is also designed to encourage "cultural migration" across the company and a better focus on customer requirements.
"It reflects the predicted defence business growth in systems, systems integration, service and service-related areas," says BAe.
The strong programme focus is a radical departure from the merger integration style of chief competitors Boeing, Lockheed Martin and Raytheon of the USA, which have faced serious financial consequences from their "bolt-on" approach, BAe believes.
"They were too focused on the integration of the companies and not the programmes," says a BAe source. "They weren't focused on what brings in the money."
The new company's strategy is a major shift from BAe's traditional role as a developer of military aircraft platforms - work which will account for a shrinking portion of the business. It is also an acknowledgement that commercial aircraft technology and practices are increasingly leading military developments.
The programme units will be managed by former GEC executive Peter Gershon, who becomes one of the new company's chief operating officers. The units include Eurofighter, Hawk, Nimrod, Tornado and Harrier, the Future Offensive Air System, Gripen/ South Africa plus several other armaments, communications and naval projects. Robin Southwell is to head a new customer support unit, to manage growth in defence servicing contracting.
A separate group of business units encompassing activities such as avionics, international partnerships, Airbus, regional aircraft and aviation services will be overseen by BAe's Mike Turner, who also becomes chief operating officer.
The name of the new company is to be announced on 30 November - the target date for merger completion - after which the management re-organisation is expected to take two to three months. Sir Richard Evans and John Weston retain the roles of chairman and chief executive, respectively.
Merger completion depends on US and shareholder approvals.
The proposed structure should enable the new company to meet regulatory requirements. BAe's work on Lockheed Martin's Joint Strike Fighter (JSF) bid will be incorporated in the Tornado, Harrier and US aircraft projects programme unit. MES' participation in the avionics work for Boeing's competing JSF bid, meanwhile, will be within the avionics business unit.
Potential problems from the participation of BAe and MES in the rival Lancer and Sika bids for the transatlantic Tracer vehicle programme have been addressed. An aerostructures "manufacturing service" will be provided to the programme units by group managing director, operations Rod Leggetter. One surprise is Eurofighter managing director Brian Phillipson's departure from the consortium to run the BAe/MES Type 45 frigate programme.
Source: Flight International
