EADS Technical Assessment The Role of the CTO

Transcription

1 EADS Technical Assessment The Role of the CTO Dr. Jean J. Botti Chief Technical Officer Member of the Executive Committee Global Investor Forum 19 th & 20 th October Safe Harbor Statement Certain of the statements contained in this document are not historical facts but rather are statements of future expectations and other forward-looking statements that are based on management s beliefs. These statements reflect the Company s views and assumptions as of the date of the statements and involve known and unknown risk and uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied in such statements. When used in this document, words such as anticipate, believe, estimate, expect, may, intend, plan to and project are intended to identify forward-looking statements. Such forward-looking statements include, without limitation, projections for improvements in process and operations, new business opportunities, revenues and revenues growth, operating margin growth, cash flow, deliveries, launches, compliance with delivery schedules, performance against Company targets, new products, current and future markets for the Company products and other trend projections. This forward looking information is based upon a number of assumptions including without limitation: Assumption regarding demand Current and future markets for the Company s products and services Internal performance including the ability to successfully integrate EADS activities to control costs and maintain quality Customer financing Customer, supplier and subcontractor performance or contract negotiations Favourable outcomes of certain pending sales campaigns Forward looking statements are subject to uncertainty and actual future results and trends may differ materially depending on variety of factors including without limitation: General economic and labour conditions, including in particular economic conditions in Europe and North America, Legal, financial and governmental risk related to international transactions The Cyclical nature of some of the Company s businesses Volatility of the market for certain products and services Product performance risks Collective bargaining labour disputes Factors that result in significant and prolonged disruption to air travel world-wide The outcome of political and legal processes, including uncertainty regarding government funding of certain programs Consolidation among competitors in the aerospace industry The cost of developing, and the commercial success of new products Exchange rate and interest rate spread fluctuations between the Euro and the U.S. dollar and other currencies Legal proceeding and other economic, political and technological risk and uncertainties The Company disclaims any intention or obligation to update these forward-looking statements. Consequently the Company is not responsible for any consequences from using any of the below statements. Additional information regarding these factors is contained in the Company s registration document dated 26th April

2 Contents EADS Technical Assessment Approach Role of the Chief Technical Officer 3 Technical Assessment - Introduction A380 acknowledged as crisis by leadership EADS seeks new approach: most accurate assessment for shareholders of state of the programme Required outcome: technical, schedule, & financial status, & key metrics for future progress monitoring by leadership Exercise proved extremely successful rich findings, local acceptance, base for solutions Independent Technical Assessments: A new tool to anticipate and manage risk, to become standard operating procedure Source: Assessment team 4 2

3 Technical Assessment - Process Assessment Objectives: Identify root causes, don t stop at symptoms Assessment Team Assignments: External & internal experts ensure technical expertise & objective evaluation Pragmatic evaluation of the robustness of the programme planning through 2010 Extensive interviews in quick diagnostic phase Derive actionable recommendations to ensure/ improve the "rock- bottom scenario Key critical area work streams : i.e. certification, entry into service, serial rampup, & FAF/ Electrics Intensive, compressed approach; 6 to 10 weeks in duration Source: Assessment team Specific content deep dives for in-depth identification of root causes 5 Technical Assessment - Deliverables Deliver to Program Management: Real feedback from the teams engineering, manufacturing, industrial Recommendations on organization and operations Facts and data to support conclusions Deliver to EADS CEOs: All of the above plus: Root causes for existing issues Metrics to track recovery Examples for Feedback: Clear structure of accountabilities and authority Multi-program resource management Address work share and workflow Focus on product maturity Respect quality program gates Behavioral initiatives Integrated program planning and execution Supply chain management early in the program 6 3

4 Technical Assessment - Team Principles (1) Ingredients to Team Success Internal and external; emphasis on credible, relevant operational experience core team to lead sub-teams, develop relationships with program leadership, assess technical and process issues, identify root causes from findings Augment team with strategic, management, financial experts to manage the assessment, synthesize results, develop storyline, and assess broad implications Technique to find the real story Interview a broad and deep array of program personnel Perform site visits witness operations in detail Cross-check interview results to identify cultural, communication, and organizational issues as well as technical issues Source: Assessment team 7 Technical Assessment - Team Principles (2) Quick implementation of early findings Identify low-hanging fruit early and implement quick solutions (e.g., resource allocation, feedback loop management, etc) Frequent program leadership interaction with concrete recommendations in hand Synergy identification between Assessed Program and EADS counterparts Exploit team knowledge to understand differences and similarities with other EADS divisions and programs and find applicable synergies Source: Assessment team 8 4

5 Technical Assessment - Sample Product Outstanding work in FAF (electrical and mechanical) - in folio hours MSN003 Modification origination Engineering Production engineering Work preparation Installation at aircraft Backflow Inflowing forward changes: (10%) Flight tests Structure/fatigue test cells Customer changes Updated first-time design & customization Backward changes requiring engineering solution: (14%) 1 Design bottleneck Inflowing rework: (26%) [ 2 Work preparation bottleneck ** Only installed upon recommendation of the Assessment team, significantly improved forecast of OSW Source: Assessment team, FAF interview 5 Sourcing & supplier capability 4 Onsite right decisions (MAP, Eng.) Fast loop** OSW from planned installation: (51%) 3 Quality bottleneck Installed Not workable New problem 9 Technical Assessment - Keys to Success An assessment not an audit : blame-free exercise Personnel very welcoming: throughout hierarchy, open and forthright Frequent interaction with program leadership coming with short-term and final findings/concl. Visible added-value: Some proposals immediately adopted Program pull : Team asked to return for further analysis Pragmatic estimate of remaining timeline for EIS and Ramp-up enabled a credible financial impact determination 10 5

6 Technical Assessment - Process Installed Internal yet independent approach, enabled EADS to make a realistic assessment of the program status. EADS will thus institutionalize the process to evaluate many programs, across divisions, and in varying maturity states. Assessments provide deep understanding about Group operations, facilitating synergies and opportunities for improvement Given potential impact of A380 on A400M, an assessment has been initiated on this unique military aircraft program 11 Technical Assessment A400M Objectives Provide pragmatic evaluation of program planning robustness through 2010: timelines, budgets, cost to completion, contingencies, financial status Identify challenges for A400M, understand root causes, establish recommendations and map key areas for improvement action plans Preliminary Findings Development phase progress under Airbus management on time with respect to contractual schedule. Final Report will be due next month Aircraft design and performances versus contractual guarantees are apparently met, but further scrutiny on margins and contingencies. Transition from Development phase to serial Production Phase is in progress with Airbus industrial engineering involvement: opportunity to tune program management structure. Prelim. Assessment Report delivered to customer OCCAR 12 6

7 Contents EADS Technical Assessment Approach The Role of the Chief Technical Officer 13 The CTO Member of the EADS Executive Committee Finance Hans Peter Ring Marketing, Strategy & Global Development Jean-Paul Gut Chief Technical Officer Jean J. Botti EADS North America Ralph D. Crosby Jr. Human Resources Jussi Itävuori Manfred Bischoff - Arnaud Lagardère Chairmen of the Board of Directors Tom Enders - Louis Gallois Chief Executive Officers Airbus Louis Gallois Military Transport Aircraft Eurocopter Space Defence & Security Systems Francisco Fernández-Sáinz Fabrice Brégier François Auque Stefan Zoller 14 7

8 Chief Technical Officer - Accountabilities The EADS R&T Strategy including Divisions, Internal Disciplines and Integration of Academic or Industrial Partner R&T issues The EADS R&T Operative Plan including Operative Plans of Divisions, the CRC and External Contracted Laboratories The EADS R&T annual budget including Division, Corporate and External funding The EADS Information Management and Information Technology function including people, processes and tools Deliver Shareholder Value Maximize Customer Excitement Address Societal Responsibility 15 Role of EADS CTO Organization TRL Technology Readiness Level R T D R&T is CTO core business In D CTO is advisor only Academia Corporate Technical Capabilities incl. Corporate Research Centre Role of GINs* R&T in BUs / Divisions Development in BU s only Industrial Products Source: EADS CTO Office * GIN : Global Innovation Network Executives 16 8

9 EADS Research & Technology Positioning Innovation in EADS through Research & Technology: One core of the company s sustainable growth of value is the innovation potential in our Business Units and the Corporate Research Centre Supported by a balanced system of decentralized and centralized R&T and R&D resources, coordinated/operated by EADS ION (Innovation Operations and Networks) Based on a high degree of cooperation and integration with public and private research organizations and institutions CRC Business Units EADS - ION Proven by numerous first-time technology breakthroughs and international awards given to EADS researchers EADS R&T 17 EADS Research & Technology Alignment Technology Strategy starts with Business Strategy Connection of the business to technology Business Pyramid R&T Pyramid Airbus Space DS MTA EC EADS in 2005: - Revenues = 34B - R&D = 2,1 B Identify growth potentials Execute via corporate and business unit resources Identify & evaluate relevant Recognize when to exit technologies Define business cases 18 9

10 EADS R&T: Keys to Future Competitiveness The R&T Portfolio Pipeline Bottom-up ideas collection Technology Orientation linked to Strategic Goal & Priorities Portfolio dynamics and critical milestones Review Review Review Review Gate Gate Gate Gate TRL 3 TRL 4 TRL 5 TRL 6 TRL : Technology Readiness Level TRL Technology Programs GO 100 Demonstrators Projects 10 GO Key Developments A set of new products to generate growth 19 10