With a wave of consolidation expected to break over the aerospace supplier sector, Lucas Aerospace has mobilised its biggest ever presence at Farnborough with the aim of showcasing its broad range of capabilities and its readiness to be a player in the industry's rationalisation. As part of UK/US aerospace/automotive giant LucasVarity, the company is also bringing to bear the best of both industries, president Ken Maciver tells Graham Warwick

Q What is the theme of Lucas Aerospace's presence here at Farnborough?

A We are here to demonstrate our integrated capability over a wide range of technologies. We have never mounted such a concentrated effort at a show before. We are also here to make it clear that we intend to be a major player in the consolidation of the industry.

Q What is your business plan for Lucas Aerospace?

A Today, we are the number four aerospace equipment supplier, and our overall objective is to be in the top three. We see consolidation and globalisation reducing the number of fully capable suppliers, so that there are no more than two in each product area, and we aim to be number one or number two in our core businesses.

It's no secret that we want to grow, but we will not grow at any price. We will concentrate on high-technology, high-value businesses, preferably with a system involvement. The supplier industry remains surprisingly fragmented, and I predict there will be a reduction in players. As opportunities arise with our product areas, we will take advantage of them.

Q With all the consolidation taking place in the aerospace industry, what will it take for a supplier like Lucas to survive and prosper?

A I see the successful companies being those able to supply complete systems, rather than elements. We expect to see more delegation of responsibility by the prime contractors. In our cargo systems business we supply integrated systems to Boeing, for example, while we are one of the few companies able to supply fuel systems for engines. I think this will be the trend, and it requires a broad capability, substantial electronics capability, an understanding of control systems and a global presence. We qualify on all counts.

Q Is there a danger that consolidation of the European industry will be politically, rather than economically, motivated?

A Our parent company, LucasVarity is heavily oriented toward shareholder value and we hope economic sense will prevail. If rationalisation is distorted for political reasons, it will weaken the industry in the long term. We must ensure that we are globally competitive, and I don't know of any political interference that has improved competitiveness. I believe our view will prevail.

Q As a major supplier to both Airbus and Boeing, how has Lucas Aerospace coped with the rapid build-up in airliner production rates?

A It has not been easy to cope with the civil build-up, and we've had to work hard to keep pace. An added difficulty is that we recently acquired Boeing's cargo systems plant [in Macon, Georgia], and had to assimilate it at a time of rapidly climbing production, but we're on top of it now. We expect the current rates to continue into 2000 after which we expect our increasing market share, military work and aftermarket business to compensate for any downturn. It is a fact that aerospace is a long term growth industry.

If there is any serious meltdown in Asia, we would not pretend to be immune, but in the longer term we are confident that China will develop an industry and we have set out our stall to compete for business there. We will not be knocked off course by short-term factors.

Q LucasVarity has both aerospace and automotive businesses. You came to aerospace from the automotive sector. How do they compare?

A At first it was a culture shock, because the volumes are much lower in aerospace, while the values are much higher. In general, aerospace is la- gging behind the automotive industry in applying lean manufacturing principles, including "right first time" quality standards. But it is starting to happen in aerospace.

In the past, the company was not particularly good at reading experience across between divisions. Now Lucas Aerospace has a major change programme under way, and we are applying the basic principles adopted by the automotive sector. We are not simply copying them, as that would not make economic sense, but we are applying the same principles intelligently and we expect the level of cost reduction to be on a similar scale to that achieved by the automotive sector.

Source: Flight Daily News