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Aviation History
1994
1994 - 0028.PDF
SHORTS BROTHERS MILLSTONE TO MIRACLE Short Brothers starts 1994 as a profitable and growing company after the four years of heavy investment which followed its privatisation. Kevin O'Toole looks at how it got there. C4 f S overnment dumping Ulster m millstone". So ran the news- A "W" paper headline in mid-1988, ^^^.^ which announced the news that the UK Government was planning to privatise Short Brothers of Belfast. As the newspaper enthusiastically pointed out, the state-owned aircraft man ufacturer was in poor shape and heading for serious losses. It was a near-textbook example of a UK state-owned manufac turer in decline. Lack of investment had left the com pany with antiquated equipment and a creaking infrastructure. The average ma chine tool was 25 years old and stories still survive about occasions when the disgruntled workforce refused to work in the cold and leaking assembly hangars. Management was equally archaic, ad mits Shorts president Roy McNulty. Like those of the worst of the UK's nationalised industries, its corporate structure was bureaucratic and dictatorial, underpinned by a strong sense of hierarchy. One of McNulty's favourite illustrations is the fact that there were four "carefully segre gated" canteens for the various layers of management and workers. Five years on, the company has been transformed into one of the most progres sive in the UK. There are signs of new investment everywhere, the workforce is motivated and Shorts is making money. There is also only one canteen. Shorts has been making more positive headlines with a string of new contracts, mergers and alliances to strengthen its core aerostructures, nacelles and missile divisions. At the end of 1993, it created a stir by buying the AirWork aviation services business. McNulty, a softly spoken accountant, is himself one of a new generation of UK aerospace executives, stressing the core virtues of managing people and quality. Even before news of the Government's privatisation plans hit the company in 1988, the top management had begun to tackle these fundamentals. With sales "becalmed" at the £200 million mark and losses looming, Shorts had little choice, says McNulty. The first step was to create a vision of what Shorts could become if properly managed. The management set out to discover how other companies were suc ceeding and how Shorts measured up. Their investigations went beyond aero space, to companies such as Ford and ICL, which had undergone their own transformations in the automotive and computing businesses. McNulty is a fer vent champion of such benchmarking for every part of the business. The company also took a long hard look at its management and started to make radical changes — moving away from the old, functional structure to what McNulty calls a "more participatory style of management". The group has been split up into a series of separate businesses, each em ploying no more than 2,000 people. Each is run by its own on-site divisional manager virtually as a free-standing busi ness, says McNulty. "We wanted to turn people away from being industrial civil servants, to entrepreneurs," he says. The company began by instilling the new strategy into the minds of the top 250 managers, from where the word was rapidly spread. "We moved young manag- Roy McNulty "We wanted to turn people away from being industrial civil servants" ers ahead and used them to spearhead a lot of the change," says McNulty. At the same time, Shorts set out its strategy for the whole workforce in the first mission statement in the company's 80-year history. Early on, a total-quality programme was launched, which has now involved virtu ally the whole workforce. Spending on training has been totalling around 2-3% of turnover. The reward has come in the form of a flow of suggestions from the shopfloor on how to improve quality and efficiency. "There's a tremendous enthusiasm and commitment, compared with five years ago. The atmosphere's electric," says McNulty. The company also signed a pioneering single-union agreement three years ago. "It caused a revolution in industrial rela tions and much for the better," he says. Driving these programmes was McNulty's basic belief that it is people which will make the difference between success and failure in a heavily depressed aerospace market, not merely new equipment. BOMBARDIER BUYS IN While in the middle of this management soul-searching, and without prior war ning, the UK Government's thoughts on privatisation were leaked through the 1988 newspaper story. Within little more than a year, the company had been off-loaded by the state and placed in the hands of Bombardier, a fast-growing, al though little-known, Canadian group. McNulty confesses that the Shorts man agement had not even heard of the Canadian group until 1986, when it bought Canadair. Bombardier's subse quent acquisition of Learjet in 1990, and de Havilland in 1992, has left Shorts as the European arm of a £2 billion group with a world presence in aerospace. Work has flowed from the other group companies, though McNulty stresses that it would soon dry up if Shorts became uncompetitive. With the backing of Bombardier, the change at Shorts gathered momentum. "They were the perfect owner for Shorts," says McNulty, pointing to the group's strong ethic of growth and quality. Bom bardier has also allowed the companies within its family a free hand in taking business decisions. "The right decisions are now made quickly, rather than wrong decisions made slowly," he says, explain ing the difference that private ownership 26 FLIGHT INTERNATIONAL 5-11 January, 1994
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