Industry Restructuring and New Member States Consequences and Opportunities for SMEs in the Old Memb

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Industry Restructuring and New Member
StatesConsequences and Opportunities for SMEs
in the Old Member States

• Norbert Reich
• Head of Equipment and SME

NAG General Assembly Maastricht 04-06-08
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Table of Contents

• ASD organisation and working bodies
• Restructuring of the aerospace sector
• Global competition and New Member States
• Strategic considerations and conclusion?
• Contact

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Represents 32 Associations
AFDA
FIF-SAI
FSI
21 Countries
around 120 billion Turnover
FAD
APAI
SBAC - DIC
FAEI
over 2000 Companies
NAI-NIID
BDLI-BDI
ALV- AOP CR
GEBECOMA -BSDI
AAI- ADIG
LAI
over 640,900 Employees
CIDEF GIFAS
SAIG
BDIA
AIAD
Sa SaD
ATECMA-AFARMADE
FGI- HASDIG
AIP-DANOTEC
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As part of our operations, we

• Are based in Brussels
• Offer a single point of contact and expertise to
  our partners and stakeholders in the institutions
  and organizations in Brussels, Europe and
  worldwide
• Follow and analyze the legislation that
  influences the sector
• Generate common industry positions with
  particular emphasis upon the economic, political,
  legal, industrial, technical and structural
  aspects
• Influence the regulation of the sector
• Manage statistics and key figures

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ASD Council Companies

• Airbus
• Alenia Aeronautica S.p.A.
• BAE SYSTEMS plc
• Casa-EADS
• Cobham Plc
• Dassault Aviation
• Diehl Aerospace
• EADS
• Fincantieri CNI S.p.A
• Finmeccanica S.p.A.

• SAAB AB
• SAFRAN
• THALES
• Thales Aerospace
• Thales Alenia Space
• Rheinmetall AG
• Rolls-Royce plc

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ASD Key Data Aerospace and Defence
2005 2006 Change Turnover
112,9 bn 121,0 bn
7,17 Employment 614.000 640.900
4,38 Order Intake 217,1 bn 176,9 bn -
18,50 RD 12,6 bn 13,7 bn
8,73
bn billion
Due to the early release of data and not all ASD
companies reporting final results the figures
above include estimates and therefore may be
subject to statistical revisions later in the
year.
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ASD Member Companies
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General Assembly Joint Meeting of the Council and
Board
Organisation
Council Presidents of Major Companies
OFFICERS PRESIDENT A. Svensson PAST PRESIDENT
C. Edelstenne PRESIDENT ELECT A. Cook TREASURER
N.V. Barber
Board Officers and Presidents of National
Associations/Representatives

COORDINATION GROUP
François Gayet, Secretary General

Luigi Longoni, Deputy Secretary General, Director
External Affaires Commission, Equipment/SME
Commission
Gert Runde, Director Security Defence
Jean-Jacques Tortora, Director Space
Patrick de Prévaux, Director International
Programmes
Jean-Pierre Barthélemy, Director Air Transport,
R T Operations
SPACE COMMISSION
SECURITY COMMISSION
DEFENCE COMMISSION
EXTERNAL AFFAIRS COMMISSION
EQUIPMENT/ SMECOMMISSION
AIR TRANSPORT COMMISSION
RTCOMMISSION
OPERATIONSCOMMISSION
Committees -Defence RT -Security RT -Space
RT Group Industry Management Group
4 Initiatives -ACARE -ESRAB -Space
ETP Programmes Clean Sky SESAR

• Sectoral
• Groups
• -
• Committees
• Space Committee on Space Standards
• Electronic, Electromechanical Equipment
• Global Monitoring for Environment Security
• Legal Affairs
• Navigation
• RT
• Security Defence
• Space Industry Market

Committee IPPC
Sectoral Groups -Air -Land -Naval
-Rotorcraft Committees Export Control Economic
Legal RT Security GMES Project STACCATO Indepe
ndent partner EOS
Sectoral Groups -Air -Land -Naval -Rotorcraft Com
mittees -Export Control -Economic Legal -RT
Defence -Space Security Defence
Sectoral Groups - Committees -Data
Analysis -Economic Legal Group Industry
Mission Group 4
Sectoral Groups LCS MRO Committees -
Airworthiness - Customer Product Support -
SC3 Group EAQG Affiliated companies ASD
STAN ASD EASE ASD PRO ASD CERT
Sectoral Groups Equipment SME Project Aeroportal

Sectoral Groups -Engine -General
Aviation -Rotorcraft Committees -Air Traffic
Management -Environment Programmes -Clean
Sky -SESAR Group Industry Mission Group 4
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General Assembly Joint Meeting of the Council and
Board
Organisation
Council Presidents of Major Companies
OFFICERS PRESIDENT A. Svensson PAST PRESIDENT
C. Edelstenne PRESIDENT ELECT A. Cook TREASURER
N.V. Barber
Board Officers and Presidents of National
Associations/Representatives

COORDINATION GROUP
François Gayet, Secretary General

Luigi Longoni, Deputy Secretary General, Director
External Affaires Commission, Equipment/SME
Commission
Gert Runde, Director Security Defence
Jean-Jacques Tortora, Director Space
Patrick de Prévaux, Director International
Programmes
Jean-Pierre Barthélemy, Director Air Transport,
R T Operations
SPACE COMMISSION
SECURITY COMMISSION
DEFENCE COMMISSION
EXTERNAL AFFAIRS COMMISSION
AIR TRANSPORT COMMISSION
RTCOMMISSION
OPERATIONSCOMMISSION
Committees -Defence RT -Security RT -Space
RT Group Industry Management Group
4 Initiatives -ACARE -ESRAB -Space
ETP Programmes Clean Sky SESAR

• Sectoral
• Groups
• -
• Committees
• Space Committee on Space Standards
• Electronic, Electromechanical Equipment
• Global Monitoring for Environment Security
• Legal Affairs
• Navigation
• RT
• Security Defence
• Space Industry Market

Committee IPPC
Sectoral Groups -Air -Land -Naval
-Rotorcraft Committees Export Control Economic
Legal RT Security GMES Project STACCATO Indepe
ndent partner EOS
Sectoral Groups -Air -Land -Naval -Rotorcraft Com
mittees -Export Control -Economic Legal -RT
Defence -Space Security Defence
Sectoral Groups - Committees -Data
Analysis -Economic Legal Group Industry
Mission Group 4
Sectoral Groups LCS MRO Committees -
Airworthiness - Customer Product Support -
SC3 Group EAQG Affiliated companies ASD
STAN ASD EASE ASD PRO ASD CERT
Sectoral Groups -Engine -General
Aviation -Rotorcraft Committees -Air Traffic
Management -Environment Programmes -Clean
Sky -SESAR Group Industry Mission Group 4
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ASD Equipment and SME Working Bodies
24 members (Equipment, SME) 1 Space
Cross-Representative ASD Representatives 3
Meetings per year plateform to debate and
coordinate actions on matters of common interest
(supply chain,..)
30 members(SMEs, Nat Assoc.) 4 Meetings per
year, one as Open SMEG at a major
airshow Forum and focal point for SME issues
Former Sectoral group representing pure Equipment
industry interests, pending since
re-organisation ASD
EC financed CSA providing support and information
for SMEs in 30 countries, (Brussels Workshop
L2Ps, FP 7 calls support, Webpage, Newsletter,
Helpdesk, SME servicing, Information link with
IMG4)
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Equipment SME Commission Members

• Equipment and SME representatives from ASD major
  countries
• Thales (chair) - F
• ASG (vice-chair) - Germany
• SIRA Groupe - France
• Safran - France
• Rellumix - France
• Diehl Aerospace - Germany
• DASELL Cabin Interior - Germany
• ESW - Germany
• Galileo Avionica - Italy
• Selex Comms. - Italy
• Secondo Mona - Italy
• Aerea - Italy
• Rolled Alloys - UK
• Meggitt - UK
• Darchem - UK
• Goodrich - UK

Representatives from NMS and other countries
(rotating) AAIG - Austria FN Herstal -
Belgium AMT - Ireland Aviation Institute -
Poland CESA - Spain MASA - Spain VibroMeter -
Switzerland
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Members ASD SME Group
Dr. R-J. Ahlers (Chairman) Dr. Roberto Mona
(Vice Chair) Norbert Reich (Secretary)
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Table of Contents

• ASD organisation and working bodies
• Restructuring of the aerospace sector
• Global competition and New Member States
• Strategic considerations and conclusion
• Contact

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Supply Chain Change
Since years the global/European aerospace sector
is in a state of unprecedented change just look
at some of the drivers of this change!

• The numbers of Primes and Tier 1 Suppliers are
  reducing through strategic mergers and
  acquisitions
• Strategic partnerships with a small number of
  tier 1 suppliers will be set up
• Prime contractors are reducing their first tier
  supplier bases by in excess of 90
• eBusiness is increasingly the communication
  medium
• Financial risk sharing is expected from all
  suppliers
• Schedule and design flexibility is expected to
  be absorbed at no cost by the supply chain
• Currency risks (weak US Dollar) are passed on to
  the suppliers
• Low cost economy suppliers are being developed
  by most large companies
• 100 quality and schedule adherence is expected
  and will soon be the global norm

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Global Consolidation - Two Decades of
Consolidation (1980 1999)

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Table of Contents

• ASD organisation and working bodies
• Restructuring of the aerospace sector
• Global competition and New Member States
• Strategic considerations and conclusion
• Contact

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Where is the competition coming from?
Worldwide
Since the opening of the markets new players
create additional pressure Competition today
exists on all levels, within one tier of a supply
chain, cross supply chains, between countries and
continents!
European
EU15 EU 27 Associates and Candidate Countries
US Russia China Japan India Korea
Brazil Canada etc.
Local/Regional
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The Global Competition and the European Aerospace
Industry
AeroSME 2007
Source Aero SME Study Aeronautics SMEs in FP6
Note Comparison of Rankings only!
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The Commissions view of Europes Aeronautics
Industry
Source A. Podsadowski, DG RTD Transport H 3
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The situation in the new member states

• Assets and trends
• Former large state owned companies were
  privatised new spirit developing
• Very good academia and research potential
• Selective and smart use of EU structural funds
  allowing state of the art infrastructure and
  facilities
• Low cost resources
• Growing number of SMEs
• Open for foreign investors
• In some countries favourable political
  environment (national strategic research agendas,
  tax incentives for foreign investors, support of
  aeronautics industry)
• Challenges
• Lack of sufficient program/project management
  skills
• Experiences with quality standards, procedures
  and certification to be further developed
• Language (English)
• Culture

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Table of Contents

• ASD organisation and working bodies
• Restructuring of the aerospace sector
• Global competition and New Member States
• Strategic considerations and conclusion
• Contact

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Strategic considerations from SME point of view
You cannot stop the process - but you can adapt
to it! In the following a list of pro-active
measures considered by some SMEs

• Diversification
• Use of companys know-how to deliver products and
  services in other sectors (automotive, medical,
  land-machines, etc.)
• A company in titan forming technology and alloys
  in aeronautics and space industry, decided to use
  their know-how as well in medicine technology
• Partnering
• strategic partnerships,
• reaching higher complexity levels in the value
  chain (from component to sub-system),
• securing the position in the supply chain tier,
• mutual access to foreign markets
• Clustering
• Improved visibility,
• Improved information exchange,
• Development of technology/capability poles
• Setting up facilities in low cost countries
• Following the main customer
• Joint venture of a German SME with a Chinese
  company as service provider for maintenance of
  aero-engines to China
• With Support to set up the facility close to the
  customer

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Strategic considerations from SME point of view

• A German SME at the ASD Open SMEG in Berlin says
  SMEs have to make their homework by
• Improving the companies cost structure
• Staying attractive through innovation and
  technology
• Becoming more international
• networking,
• participation to EU research programmes,
• membership and active involvement in
  international working groups, associations, etc
• Developing an adequate company strategy
• Discussion with EADS representatives showed the
  further developing the old member states assets
  can help to remain part of the suppliers base of
  your customer
• Quality
• Reliability (in time)
• Technology and Innovation
• Long lasting contacts

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Conclusion

• The Industry is restructuring world-wide
• New member states are only one element of the
  whole changing system
• SMEs have to adapt and identify new opportunities
  as part of their entrepreneurial responsibility
• New member states can offer opportunities in
  terms of labour cost, skilled workforce and
  favorable environment for investing
• The influence of the European Commission and its
  regulations will be more and more significant
• Use of existing organizations and supporting
  activities to improve networking and information
  access can be an asset
• Awareness of what is going on in Brussels should
  be seen as a strategic investment

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Contact details
Norbert Reich Head of Equipment and
SMEs AeroSpace and Defence Industries
Association of Europe 270, Av. de
Tervuren B-1150 Brussels (Belgium) Tel 32 2
775 81 39 Fax [phone] E-mail
norbert.reich_at_asd-europe.org Web site
www.asd-europe.org
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Thank you for your attention! Any questions?