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Aviation History
2002
2002 - 0080.PDF
Cover story to be felt from the current economic cli mate. "It's very difficult to evaluate today. Nobody knows exactly how long this air line crisis will last. But we feel that all the business units and particularly those that are not directly affected by the downturn in civil aeronautics should still should be striving for that goal." "This company has a target of 10% - not 8% plus synergies," Stegkemper says. "This was a basic understanding and philosophy which we needed to convey. We were not saying, 'If you work with these people, it could bring you €10 million [$9.5 mil lion].' No. We were saying to them, 'You have to deliver €15 million. If you could do it together, perhaps you can get €10 million out of synergies and €5 million out of cost reductions. If you don't work well together, maybe you only get €5 million out of synergies, and you have to deliver The A380 will €10 million in cost reductions. So decide require one whether you want to work together.' That's of EADS' a bit of the leverage that was used to help largest people understand the process." development While the 10% profit margin target has efforts 'This company has a target of 10% - not 8% plus synergies" BERT STEGKEMPER, TOP MERGER INTEGRATION TEAM been set by the top management, the pro ject intended to deliver the profits have been "bottom-up" generated. Goals have been committed to and milestones set for each year. An example of a company-wide effort to garner value is taking place in Systems and Defence Electronics, which involves about 6% of EADS' total work force. A team is in place to identify where resources can be pooled; to then organise and plan their use, which will promote better use of research and technology funding; and increase involvement in international research. "We want to link as much as possible in order to get more per formance," says Andreas Loewenstein, the French member of the top MI team. A common rule for all projects is that results will be measured only where a profit and loss statement is given. "The consequence," Loewenstein says, "is we take into account only 'hard' EBIT effects with a proven causality link." There has been some benchmarking to gauge synergies within the company, but Loewenstein says that synergy for its own sake may have no real value. "For syner gies, you need two people, which means you have two responsible, which means you have nobody responsible. So we are not searching for the tools; we are search ing for the results. We are encouraging people to go and work together, but the fact that it might not work is not an excuse for the people to not deliver the value." EADS will use a new group-wide pur chasing strategy involving a lead buyer concept to cut its costs overall as well as streamline its companies' operations. This will be coupled with a group-wide partner ship frame for major suppliers (see The Supplier's View P29). Like Boeing and THE PARTNER'S VIEW A marriage made in heaven? BAE Systems chief operating officer Mike Turner says he's "very comfortable" with the rela tionship between his company and EADS as partners in the Airbus integrated company. Even as the civil aircraft manufacturing sector faces up to a dramatic economic down turn, Turner says the new process now works "far better than with the four different shareholders sitting around the table". However, he adds, both shareholders mostly leave Airbus's day-to-day activities up to chief executive Noel Forgeard's team. Only in two areas is Airbus dependent on shareholder approval: in launching new air craft (but after the A380, little is happening on that front), and in sales financing where clearly Airbus would be committing the balance sheets of both EADS and BAE Systems. "We're not going to allow that to happen without us being deeply involved," says Turner. "So we have a treasury committee that has to agree on every aircraft sales finance activity." He denies any suggestion that BAE, as the minority Airbus shareholder with 20%, wields less influence than 80% share holder EADS. "That is not our experience," says Turner. "I think it'd be very nice to have more of Airbus for BAE Systems; it's a great business. But I don't see that opportunity arising." Apart from Airbus, BAE also partners EADS in Astrium space activities, missile interest MBDA and Eurofighter. In terms of Eurofighter's future success, Turner believes that the empha sis must be on winning export orders and on developing the fighter's air-to-ground capability. He does not, however, envisage Eurofighter's reorganisation into an integrated company, as with Airbus. And he offers no defini tive answer on the future course of BAE's relationship with EADS, looking instead across the Atlantic. While BAE is a key EADS partner, neither party denies they are competitors as well - a point made by EADS' Rainer Hertrich recently when he described BAE as "our European-based competitor". Turner says: "The question is: Will we find ways of having a deeper relationship with EADS? What we have been doing is increasing our presence in the USA, the world's number one defence market - more impor tantly, the world's number one research and development 26 8-14 JANUARY 2002 FLIGHT INTERNATIONAL www.flightinternational.com
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