AeroEngineeringSept2010

8/8/2019 AeroEngineeringSept2010

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Supply Chain Providers-What Is YourDifferentiationSeptember 2010


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Market

BusinessMix

CustomerBase

Sector

GKN Aerospace 2010


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GKN Aerospace Sector Split

Special ProductsPropulsion SystemsIntegrated Aerostructures

Focussed business sector groups

Coordinated Customer approaches

Common Technology plan

Based on 2009 Revenues

65% 25% 10%


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$400M UK Based

A400M Spars

AWIATOR II

EFFICOMP

Integrated Wing

VITAL

NGCW

ELF1

Acoustic

ELF2

NGCW

Automation

Microwave Curing

SAMULET

ALCAS

Investing In Technology,Collaboration,

and Partnerships

Civil Focus

$2.5Bn Global First Tier

Civil Military Balance

Build To Print Aerostructures Risk Sharing Design and Build PartnerAerostructure, Engines and Canopies

GKN Growing a Global Aerospace First Tier


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Drivers For Opportunity and Growth

Source - International Air Transport Association

79 % = Single Aisle

More Electric Aircraft Concept

Conventional Aircraft Power Sources


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A Global Environment With A Competitive Appetite

Snecma Morocco EngineServices

Matis Aerospace (J/V RoyalAir Maroc, Boeing andLabinal : manufacture ofelectrical cables)

Boeing established apartnership with AeroVodochody

Sikorsky is to outsource partof manufacturing activities inCzech Republic

Latecoere Group acquired LetovLetecka Yroba (LLY) will investEUR12.2 m investment over 5 years tomodernise productionEADS cooperating with LLY as well

Pratt & Whitney investment in

WSK Rzeszow (manufacturingengine parts) and has its ownsubsidiary Kalisz for production

Malaysia

Government objectiveto become globalsupplier for aerospaceby 2015

Initial focus on MROservices, compositesand avionics

Significant FDI fromwestern aerospaceindustry

Mechanical parts

Indonesia Strong government

support toreestablishIndonesian

Aerospace (formerlyIPTN) Partnerships with

CASA andEurocopter

Developing MROcapabilities

Mechanical partsMexicoLocations for manufacture andlow value-add engineeringservices established by: GKN Aerospace Goodrich Gulfstream Honeywell Labinal Parker Hannifin PCC Rockwell Collins

Engine repair and overhaulJV with Malaysia Airlinesand AirAsia

MRO facility for APUs

JV facility establishedfor componentmanufacture

Low cost countries with growing aerospace industries [examples]


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2010 Budget Spend (M)

M1 - Machining from supplier

Material

30%

C5 - Composites

10%

F5 - Forgings

6%

A7 - Aluminium5%

A2 - Aircraft Subassemblies

4%

F1 - Fabrications (inc. Rims)

4%

T1 - Titanium

4%

F3 - Fasteners

3%

Indirect

20%

Other

7%

G3 - Glass & Glazing

2%F6 - Forming - Metal

2%

S7 - Subcontract

3%

The Importance Of Suppliers to GKN Aerospace

Budgeted Spend in Excess of 800M Per Year


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The Journey to Intelligent Procurement

Phase 1

Global contracts

Preferred suppliers

Supplier BOM alignment

Supplier rationalisation

Future

Full partner engagement

Risk sharing D&B

Lead supplier cascades

Value stream integration

Historically

Leveraged pricing

Medium term contracts

Competitive selection

Earlier engagement

Phase 2

Partner relationships

Long term agreements

Lean development

Lean deployment

CommodityManagement

SupplierConsolidation

PartnerEnvironment

20132013

Integrated Supply

TacticalSupply

Tier 2 FullyOptimised

SupplyChain

Intelligent Procurement

20112011


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GKN Aerospace Supply Chain Development Launched AtFarnborough 2010

Extended Value Stream Maps

Diagnostic Tools

C.I. Plans

Recognition

RelationshipManagement

C.I. TechniquesTraining

CommodityManagement

CurrentCurrent Phase 1Phase 1

SupplierConsolidation

Partner Environment

Phase 3Phase 3

Integrated Supply

Phase 2Phase 2


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So What Are Our Supply Chain PartnershipExpectations

To work with strategic partners who :

Share our strategic vision

Invest alongside us

Become an extension of our Enterprise

Have common technology / capability plans

Work together to reduce cost

Share the benefits


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Summary

GKN Aerospace strategic focus has been to create a global First Tierprovider

GKN Aerospace has established a position as a technology andengineering innovator through investment and risk sharing

The future outlook is strong but the pressures will be greater

Customers continue to expect greater value and service.Consolidation continues to drive the need for single points of deliver

GKN is striving to reduce the transactions it has to undertake with itscustomers and supplier

The challenge we all face is innovation and differentiation

What can you do that meets these criteria


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AeroEngineeringSept2010

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