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Aviation History
1993
1993 - 1911.PDF
"ocT &c TOP 100 After some initial manoeuvring, the aerospace industry finally got down to its long-awaited restructuring in 1992. The evi dence suggests that this is only the start. The extent of the restructuring has already begun to show through in this year's Aerospace Top 100, a ranking of the world's leading groups compiled each year for Flight International by the strategy consultancy OC&C. The most visible change has come from the USA, as corporations reshuffle portfo lios in a bid either to gain mass or sell up. While Boeing, McDonnell Douglas and United Technologies continue to head the ranking, new challengers are rising fast. Martin Marietta's acquisition of the General Electric aerospace business has propelled the group into fourth place. Lockheed, too, is on course to appear among the top five — leapfrogging the major European groups — once its acqui sition of the General Dynamics Fort Worth F-16 fighter line is added into the group's result. At the same time, the industry world wide is struggling with the twin evils of falling defence budgets and crises in civil air-transport markets. Aerospace sales among the top 100 companies have fallen by around 3% over the past year. Turnover is likely to fall further as the industry feels the full force of recession in the airliner market. Until now, the mas sive order backlog built up in the late 1980s has acted as a buffer, but it is rapidly being consumed. The escalation of delivery deferrals and cancellations have not helped. Workforces have also fallen, alongside sales, as the drive to maintain productivity is stepped up. Total personnel numbers for the top 100 groups, including non- aerospace operations, fell in 1992 by 5.6%, to little over 4 million. To get a clearer picture of what is happening in aerospace, it is possible to strip out figures from those conglomerates which are predominantly non-aerospace. This, admittedly crude, analysis shows a modest growth in sales, but a sizeable 6.2% fall in employment. The net result is a much-needed 9% rise in productivity, to $157,000 worth of sales per employee. On this evidence, the industry is doing something more fundamental than just chasing the market down — a view supported by Ian Godden, who heads the aerospace and defence practice at OC&C. OC&C is a European-based international strategy consultancy, which is helping several international aerospace and de fence companies to transform their busi nesses through ensuring effective strategic reviews and operational effec tiveness programmes. THE BATTLE COMMENCES Restructuring and recession have made their impact on this year's Aerospace Top 100 ranking (P39), compiled hy the OC&C strategy consultancy. Kevin O'Toole looks at thejigures and where they may he headed, as companies fight for market leadership. He points out that industry leaders are no longer looking at incremental savings, but are aiming for cost cuts of 40-45%. "This is not simply downscaling of facto ries, but some pretty radical changes in the ways that aircraft and engines are manufactured," he says. Godden believes that the aerospace industry is in the middle of fundamental structural change, akin to that which has transformed the automotive industry over the past 15 years. Concepts of lean manufacturing, just- in-time production and simultaneous en gineering, already commonplace in the automotive industry, are filtering through into programmes ranging from Lockheed's military F-22 to Saab's turboprops. "There has already been an attack on large, complex factories, where the over heads have been too high, and the direct- labour force has been brought into line with demand," Godden says, adding that the next step is to question whether whole factories should be shut. As experience in industries such as automobile manufacturing has shown, it is possible to use new manufacturing techniques and technologies to cut factory workforces from thousands to hundreds. Tiers of management can also be cut as the large-scale factories are- dismantled and the overheads needed to" hold them together become unnecessary. The expectation is that the consolida tion will continue over the next three to five years, regardless of any recovery in the market. Godden adds that action among the leading manufacturers is likely to filter through into a wholesale restruc turing of the industry's supply chain. Even with the gains made in 1992, the 36 FLIGHT INTERNATIONAL 4 - 10 August, 1993
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