Supply Chain Providers-What Is Your

Differentiation
September 2010
 GKN Aerospace 2010

Market

Business
Mix

Sector

Customer
Base
 GKN Aerospace Sector Split

Integrated Aerostructures Propulsion Systems Special Products

65% 25% 10%

• Focussed business sector groups

• Coordinated Customer approaches

• Common Technology plan

•Based on 2009 Revenues

 GKN – Growing a Global Aerospace First Tier

$400M UK Based SAMULET

AWIATOR II $2.5Bn Global First Tier
VITAL Acoustic

EFFICOMP ELF1 ELF2

ALCAS NGCW

Integrated Wing Microwave Curing

A400M Spars
NGCWAutomation
Civil Focus Civil Military Balance

Investing In Technology,
Collaboration,
and Partnerships
Build To Print Aerostructures Risk Sharing Design and Build Partner
Aerostructure, Engines and Canopies
 Drivers For Opportunity and Growth
Conventional Aircraft Power Sources

More Electric Aircraft Concept

79 % = Single Aisle
Source - International Air Transport Association
 A Global Environment With A Competitive Appetite
Low cost countries with growing aerospace industries [examples]
Snecma Morocco Engine
Services
Matis Aerospace (J/V Royal
Air Maroc, Boeing and
Labinal : manufacture of
electrical cables)
Mexico
Locations for manufacture and
low value-add engineering
services established by:
• GKN Aerospace
• Goodrich
• Gulfstream
• Honeywell
• Labinal
• Parker Hannifin
• PCC
• Rockwell Collins
Pratt & Whitney investment in Malaysia
WSK Rzeszow (manufacturing • Government objective
engine parts) and has its own to become global
Engine repair and overhaul
subsidiary Kalisz for production supplier for aerospace
JV with Malaysia Airlines
and AirAsia by 2015
• Initial focus on MRO
services, composites
and avionics
• Significant FDI from
MRO facility for APUs
western aerospace
industry
Mechanical parts
Indonesia
Sikorsky is to outsource part • Strong government
of manufacturing activities in Mechanical parts support to
Czech Republic reestablish
Indonesian
Aerospace (formerly
Latecoere Group acquired Letov
Letecka Yroba (LLY) will invest JV facility established IPTN)
• Partnerships with
EUR12.2 m investment over 5 years to for component
CASA and
modernise production manufacture
Eurocopter
EADS cooperating with LLY as well Boeing established a • Developing MRO
partnership with Aero capabilities
Vodochody
 2010 Budget Spend (£M)

The Importance Of Suppliers to GKN Aerospace

Other
7%
Indirect
20%

G3 - Glass & Glazing M1 - Machining from supplier

2% Material
F6 - Forming - Metal 30%
2%

S7 - Subcontract
3%

C5 - Composites
F3 - Fasteners
10%
3%
T1 - Titanium F5 - Forgings
4% 6%
F1 - Fabrications (inc. Rims) A7 - Aluminium
4% 5%
A2 - Aircraft Subassemblies
4%

Budgeted Spend in Excess of £800M Per Year

 The Journey to Intelligent Procurement

Commodity Supplier Partner Integrated Supply

Management Consolidation Environment

Tier 2 Fully
Optimised
Tactical 2011 2013
Supply
Supply
Chain

Historically Phase 1 Phase 2 Future

•Leveraged pricing •Global contracts •Partner relationships • Full partner engagement
•Medium term contracts •Preferred suppliers •Long term agreements • Risk sharing D&B
•Competitive selection •Supplier BOM alignment •Lean development • Lead supplier cascades
•Earlier engagement •Supplier rationalisation •Lean deployment • Value stream integration
Intelligent Procurement
 GKN Aerospace Supply Chain Development Launched At
Farnborough 2010

Diagnostic Tools Relationship

Management
C.I. Plans

Extended Value Stream Maps C.I. Techniques

Recognition
Training
Commodity Supplier Partner Environment Integrated Supply
Management Consolidation

Current Phase 1 Phase 2 Phase 3

 So What Are Our Supply Chain Partnership
Expectations

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
 Summary
GKN Aerospace strategic focus has been to create a global First Tier
provider
GKN Aerospace has established a position as a technology and
engineering 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 its
customers and supplier
The challenge we all face is innovation and differentiation
What can you do that meets these criteria