All for one, one for all

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This story is sourced from Flight International
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As an aerospace and defence manufacturer with a history dating to 1934, 12,000 employees on five continents and, as of March this year, a place in the FTSE 100 list of the London Stock Exchange's biggest companies after trebling revenue over the past decade to £1.19 billion ($2.1 billion) in 2007, Cobham does not exactly have a problem with name recognition in the industry.

But while customers know the name, they do not always know what it stands for. Or, as chief executive Allan Cook laments: "The number of times I hear, 'we didn't realise you did that'."

KEY CAPABILITIES

Hence Cobham is embarking on a rebranding programme that will see all of its businesses come to be known as Cobham and fit into four market-facing divisions: avionics and surveillance, defence systems, mission systems, and aviation services. Key capabilities are based on communications, life support (oxygen systems, avionics, etc) and platform capabilities (refuelling and weapons release systems, etc).

Gone will be names like Chelton Flight Systems, Micromill, Mission Equipment, NEC Aero, Remec Defence & Space, Team, TracStar, Wulfsberg Electronics, and the recently acquired MMI Research, Sparta and S-Tec.

Cook has several objectives in pulling all group activities under the single Cobham brand. He believes that customers, typically tier 1 suppliers or defence departments, can see the benefits of working with various Cobham capabilities, but would more readily work with the group if they understood the whole range of its capabilities.

The branding push is also aimed at investors, with the aim of achieving a more balanced shareholder community. As Cook notes, today half of group revenue comes from the USA, but only 10% of the investors are there.

Cobham's employees are also a key part of the branding plan. Cook wants them, too, to more fully appreciate the scope of the group and, particularly, their full range of routes to market - a prospect that animates Cook. Cobham products, he says, reach 0.5% of the US defence market today but to make full use of the group's capabilities to reach even 1% would be "game changing".

cobham 2007 group revenue by destination 

A more integrated group, he believes, would also make recruitment easier and make working conditions in Cobham companies and divisions more homogenous. The result, he hopes, will be to ease employee moves between operations and, hence, help Cobham make better use of its own people.

Over the coming six months, the group plans for each of its business units to make the transition to the Cobham brand. Units may, for example, take the opportunity to use trade fairs to present their new identity.

All of this has a strategic imperative, too. Cobham is in the midst of a more fundamental change as it seeks to expand its international markets and establish itself as a tier 2 supplier of subsystems rather than a tier 3 components provider. Its customers are tier 1s and prime contractors, the likes of BAE Systems, EADS, Lockheed Martin, Northrop Grumman, Rockwell Collins and Thales.

Cook is not excessively alarm­ed by the prospects of a civil aviation downturn, as big airframer backlogs should keep tier 2s busy through the peak of the current manufacturing cycle, in 2010.

In defence, Cobham's biggest area of business, the key drivers are all still on the way up. Cook expects US defence spending to continue growing, even under an Obama administration, while rising homeland security spending plays straight into Cobham's strong suit of defence electronics.

And, emerging defence markets - Cook's shorthand for the "friendly Middle East and India" along with South Korea - are also high growth areas.

The UK - Cobham's home market - and Europe, by contrast, are unlikely sources of new business. Of the UK, which represents less than 5% of Cobham's revenues, he says the budget is stretched "farther than I've seen", with less than 2% of GDP spent on defence, including operations in Iraq and Afghanistan, leaving little for R&D.

Shareholders, he notes, are looking for double-digit organic growth, and that will not come from France, Germany and the UK.