GKN Aerospace chief executive Kevin Cummings has the luxury of talking about both continuity and change. Continuity in the sense that the business he heads can look forward to years of solid revenues as the aviation industry works its way through its record order backlog. Change in the sense that GKN will soon be completing a management transition, with the challenges and opportunities that entail.
Speaking at the Royal Aeronautical Society’s London headquarters in the run-up to the 2015 Paris air show, Cummings – who headed up GKN Aerospace in North America before crossing the pond a year ago to step in for Marcus Bryson, who had been given added responsibility for GKN’s land systems business and has now retired – says that his two priorities are programme execution and growth. On the execution front, GKN, he says, has 20 major customers and delivers 10,000 items for 40 platforms.
Half of those platforms – and they include just about every major aircraft type along with newcomers like Hondajet – are either in growth mode or ramp-up, he says: “Our future is looking exceptionally well.” Indeed, he adds, for the next four or five years GKN’s peers and suppliers can say the same; with ramp-ups underway on major programmes like the Airbus A350: “The industry is in good shape.”
Cummings’ confidence mirrors that of Bryson. When pressed about prospects, Bryson would always say that in his career he’d seen enough aerospace business cycles to know better than to project growth too far into the future – but he had come to see the current, long-running upswing as both unprecedented and durable.
Hence another aspect of continuity can be seen in that second priority, growth. Here, much of Cummings’ plan is essentially bequeathed by Bryson. First, GKN will continue to exploit its strength in applied technology. As Russ Dunn – who joined GKN from Airbus in 2013 and at the end of last year took over the engineering and technology brief from Rich Oldfield, who now heads GKN’s advanced metallic technologies efforts – puts it, GKN is working far enough in the future to offer its customers solutions they haven’t even thought of.
That facility in advanced technologies lubricates the second engine in GKN’s growth strategy: customer partnerships. GKN is, for example, a major supplier to Rolls-Royce; it is also a key R-R partner in developing the advanced technologies that could define the next generation of jet engines, and improve powerplants currently in service.
Third – and this is another growth strategy familiar from the Bryson era – GKN intends to expand its geographic footprint, which now stands at 38 sites in nine countries, including of course its UK home base. “Asia in a big way,” says Cummings, who also shares Bryson’s enthusiasm for Mexico, where GKN doubled its business during 2014 and expects to add another 30-40% in 2015.
Other recent expansions have come in the USA, to be near to some of its key customers. In Sumner, Washington, GKN is preparing to do paint and final assembly of the winglets it will supply to Boeing’s 737 Max final assembly line. In Orangeburg, South Carolina, GKN is doing sub-assembly of those 737 Max winglets, and also final assembly of the fuselage it is supplying to Hondajet. And, in Phoenix, Arizona, it has set up shop on Honeywell’s HTF7000 engine campus; GKN makes the nacelles for these engines, which power Bombardier Challenger 350, Gulfstream G280 and Embraer Legacy 450 and 550 business jets.
The fourth thrust in Cummings’ growth strategy is another one that was well-deployed by Bryson: acquisitions. “We are always active,” he says. “We are an acquisitional company.”
NEW IDEAS
But what looks set to define the Cummings era at GKN is change. What had long been a smaller sibling in a group dominated by its automotive business, GKN Aerospace under Bryson grew dramatically, by acquisition and organically, to contribute, in 2014, revenue of £2.27 billion ($3.5 billion) – some 30% of the group. Along the way, aerospace became GKN’s top division for profits.
Two landmark moments stand out in that transformation. One was the £136 million deal of January 2009 that saw GKN take formal ownership and operational control of the wing components manufacturing operations at Airbus's Filton engineering complex. At the time, Bryson quite reasonably billed the deal as propelling GKN solidly into the top ranks of tier-one suppliers, rivalling leaders such as Spirit AeroSystems.
Since then, GKN has invested heavily in the facility and in critical related technologies; much cash and effort, for example, has gone into automating carbon fibre lay-up, without which high-rate production of components like wing spars would be impossible.
The second was GKN’s £633 million acquisition of Volvo Aero in 2012. Bryson described – again, reasonably – that deal as transformational; at a stroke, it made the company one of the largest players in the market for jet engine components. Indeed, by turning its relatively small engine components business into a global player, GKN came to rival industry leaders like MTU Aero Engines and Italy's Avio – which has since been acquired by GE. Today, GKN is a risk and revenue sharing partner on 25 engine programmes.
Kevin Cummings
GKN
Cummings naturally steers clear of giving any indication as to where or when GKN might make a next move. But the company has the financial firepower and the appetite to be a driving player in a round of industry consolidation he regards as natural, even inevitable.
As Cummings sees the industry landscape, the OEMs used to be the only players capable of creating global supply chains while driving aircraft sales into emerging markets. But now, he says, the OEMs are turning their focus back to their core business of designing and building aircraft – a shift which has followed a realisation that they probably aren’t best-suited to marshalling inputs, at least from a cost perspective.
The big tier-ones, though, are today the natural route to harnessing global resources, so Cummings sees an opportunity to expand as GKN’s OEM customers look to pull back; a company like GKN should be more efficient than an OEM, because its investments are spread across many customers rather than merely geared to supplying itself.
Moreover, he adds, the big tier-ones are, today, big enough to be risk sharing partners. If Cummings is right, he and his peers at the biggest suppliers may be poised to take another transformative step in shaping the aerospace industry, including defining a new relationship between the big airframers and their tier-one suppliers.
If such an overhaul of the industry is indeed impending, even a change-driver like GKN will have to adapt. Here, Cummings is not shy about underscoring the benefits of what he calls a management “refresh”. In addition to his own appointment last year, and Dunn’s as head of technology, GKN in December 2014 took on David Brantner as aerospace division president. Brantner joined after 21 years at Pratt & Whitney, where he most recently president of commercial engines, and is focused on GKN’s customers.
And, after the Paris air show, there will be another new face at the top table with the retirement of Charles Paterson. Well-known in aerospace – he worked for years for BAE Systems, ultimately at Filton, before moving to Airbus and then joining GKN with its acquisition of the Filton wings operation – he has, since 2012, been senior vice-president for business development and strategy, a role he took on with the retirement of Frank Bamford, who was a key player during much of Bryson’s time in charge.
Describing management change as “natural”, Cummings notes that the “world changes”, the company is getting bigger and, eventually, new people become a route to new ideas. But he also welcomes Bryson’s role as a consultant, and adds that Oldfield’s new GKN brief includes acting as an in-house consultant to himself and to Russ Dunn: “He’s challenging everything we do.”
So while Cummings looks to the future with confidence, he is keenly aware of expectations. Of Bryson’s eight years in charge, he says: “You can only look back and think, ‘What a great job!’”
Source: Flight Daily News
