Thales senior vice-president for aerospace – François Quentin tells Helen Massy-Beresford about the strategy for the group.

Q How is Thales’ multi-domestic strategy evolving?
It takes time to be regarded as local but we are very flexible. We are in the process of becoming American in USA – we think we have succeeded in becoming British in the UK - fewer than 50% of our employees are in France. Having a presence close to airframers is a key part of tier 1 suppliers.
We need to talk every day, share thoughts about technology changes, strategy.
We are yards away from Boeing. It is very critical that we live in the same environment so that we can exchange views, have informal meetings – it is extremely rewarding in terms of value-added. As a tier 1 proximity is key.

QuentinQ What are the most interesting emerging markets for Thales?
In China we are very limited for military business but we have a significant commercial business. The day we are allowed to do military business we will be in a good position. We are prepared for all options – whether the embargo stays in place or is lifted.
We believe that one day Russia could become one of our multi-domestic homes – within 10 years for sure, five years probably, subject to the regulatory environment.
We believe Russian industry, and OAK, will succeed – they have significant resources and they don’t waste them.
It is a huge market – nine time zones compared with three in the USA and because of the environment you can’t rely on trains – the only way to travel west to east is by air.

Q How will you manage the balance of your business between Airbus and Boeing as the launch of a single-aisle replacement draws closer?
We don’t see any reason not to have a balanced business between Boeing and Airbus. Our ambition is to serve both major airframers on the same basis.
This is not unachievable over the next few years. Part of our strategy is to be in that position by the time of the single aisle replacement.
We are still in the research stage – we are working on advanced technologies to minimise the risks when it is launched.
We are opening up every question, including existing sacred cows.
We have no preset target – that would be very arrogant. But we are open to sharing projects with both so they can integrate them into their designs at a system level.

Q What is your view of the potential of the UAV market?
It is primarily a military market these days. In the UK, we see a real interest in decisions and programmes proceeding very well. It has been addressed from a capability, not an air platform standpoint.
UAVs are resources, assets, which can conveniently be integrated into systems and provide good solutions for armies.
Moving forward into civil UAVs depends on the country and the application.
In the long-term I’m very optimistic. In the short- to medium-term I’m quite cautious. There are some obstacles that need to be overcome before it becomes a reliable and safe technology.

Q Do you think an unmanned airliner will ever become a reality?
One hundred years ago if you’d said there would be unmanned metro trains, people would have said you were crazy. Fifty years ago they would have said “not tomorrow” – today thousands of people a day travel on unmanned trains.

Q How is Thales facing up to the challenge of the weak US dollar?
This is not the first time it has happened but at today’s rate it’s not easy. Cost reductions are something we know how to manage.
We are well within our range of options. We are very much aligned with the value of the dollar. We are continuing to work on it and see no threat.
Some companies did not work hard enough, early enough because they were enjoying cosy hedging. We have hedging but we also agreed to adapt to the real world.

Q How does Thales help maintain the competitiveness of its supply chain?
We started a very competitive supply chain strategy a few years ago. 
We decided to reduce the number of suppliers by 10 or 12 times.
We can’t afford to manage the partnership relationship with thousands of suppliers. We also decided to increase transparency.
We believe that by the end of 2008 we will have achieved a supply chain structure quite close to what we wanted. We don’t want to disrupt the supply chain and we don’t want to kill them.
Either they can adapt or they can leave and we have also created a new department and supplier development programme to help them.
It was time to repay what Airbus and Boeing have done for Thales.
We coach them to acquire lean processes, new technologies, just-in-time techniques. We teach them to insert new technologies into their processes. These are long-term strategies.

Q What impact is the Airbus restructuring having on your business?
It’s a concern. We do not believe it’s good for us that one of the big airframers is struggling just to get profitable.
We believe they will get better but it will take time. The environment is not friendly to them.
We make constructive suggestions. We help to reduce their costs by providing solutions to bring costs down. Airbus has put a lot of pressure on the supply chain.
We have had to adapt. It is not beyond reach for Airbus within years. The solutions are well known – it is a matter of implementing them. It is in the interests of everybody to maintain two healthy competitors.

Q What has been the biggest surprise in the industry since the last Paris Air Show in 2005?
For the industry – the recovery has been confirmed. We wouldn’t have bet on a 100% recovery within two years in 2005. The second big change is sustainable development/the environment – the constraints explicitly being put on the aerospace industry that were not there two years ago. “It used to be visionary thinking; today it is mainstream,” he adds.

Source: Flight Daily News