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On the record with
KEN MACIVER, MANAGING DIRECTOR, LUCAS AEROSPACE,
LUCASVARITY PLC
In a Tough World, Lucas Gets Tougher
The importance of winning is greater today then ever before as the aerospace industry will tolerate fewer suppliers. The survivors will be the most capable, excelling not just in components but in design of complete systems, on a global basis. That's the belief of Ken Maciver, managing director of LucasVarity's Lucas Aerospace division.
"We are probably Number One or Number Two in everything we do, but we must keep winning. We cannot stand still," he told Show News.
Lucas Aerospace comes to Farnborough as a company on the move. It has made substantial progress towards its goals, but Maciver is driving it further still. "We will be a lot better in the future," he said.
Maciver is telling the world that Lucas Aerospace has changed. In the past it was a conglomeration of different businesses; now it is an integrated aerospace equipment supplier with a wide range of integrated technologies. What that means is that Maciver has made a concerted effort to pull the businesses together and apply their technological expertise across the board to meet specific goals. For example, instead of supplying components, it is the complete electrical power and power management systems contractor on Bombardier's Global Express ultra-long range, high-speed business jet. And on Rolls-Royce Trent it treats its participation as an integrated team effort under one project manager.
The $3.3 billion contract with Rolls-Royce-the biggest ever won by Lucas Aerospace-is a risk and revenue sharing agreement to provide the control systems on the latest Trent engines. Lucas Aerospace will provide complete systems including electronic engine controls, fuel metering units and actuation equipment for the Trent 8104 and fuel pumps for the Trent 500 and 600. Lucas will invest about $110 million over the next four years and will take between three and five percent share of total revenue from the three engine programs.
"We have reorganized the way we do business to leverage our technology in the most constructive way," Maciver said.
Among its ambitious goals, Lucas Aerospace intends to:
Double sales by 2005 to nearly $2 billion through expansion in its existing products and services, especially in North America, and through acquisitions. Among its specialties: variable frequency power generation, electric aircraft systems using distributed intelligence; flight and propulsion control systems; and cargo systems technology.
Grow its business to account for 25% of LucasVarity's profits in order to underscore its importance to the group and win the necessary investment for its expansion plans.
Become the overall Number Three equipment supplier of high integrity systems to industry primes. Lucas Aerospace is currently Number Five behind United Technologies, AlliedSignal, Snecma and BFGoodrich. "Growth is our over-riding ambition," Maciver said. "The aerospace equipment industry-worth some $110 billion annually-is fragmented and offers excellent opportunities to grow by acquisition."
Become truly one business operating globally. "The industry is consolidating rapidly, and only the truly global players will prosper."
Helping drive corporate change is the adoption of EVA-the economic value added concept developed by consultants Stern Stewart & Co. to measure the true worth of every business activity and its contribution to the whole. A company using this system often finds it must re-engineer itself to eliminate wasteful processes and deliver maximum value to customers.
"We have a very major program to rationalize production and reorganize
on the philosophy of lean manufacturing, including a restructuring of our
suppliers," Maciver said. "A number of us have already had exposure
to this in Lucas Automotive, which went through this dramatic change in
the past. At Lucas Aerospace we are about one third or one half of the way
through.
"We will come out a very much leaner and more capable company, with
a globally integrated strategic vision," he said.
This doesn't necessarily mean cutbacks. For example, Lucas Aerospace is
increasing its expenditures on engineering. "We're not in the business
of quick gains by cutting," Maciver said.
He views all these goals as realistic. "It is simply a matter of looking
at the way industry and the market will develop, and setting out what we
must be and what we must do to get there," he said in his matter-of-fact
way. By John Morris
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