Aerospace & Defense Forum Ducommun "Creating Competitive Advantage through your Supply Chain” Sept. 10, 2015
Ducommun The Aerospace & Defense Forum Sept 10, 2015 Agenda • Introduction Joel Benkie • Company Overview “ • Strategic Growth Focus “ • Ducommun’s Operational Excellence Strategy Jerry Redondo – Creating a Competitive Advantage through the Supply Chain Management Process • Questions / Discussion 2
Ducommun The Aerospace & Defense Forum Sept 10, 2015 Ducommun Overview & Strategic Growth Focus Joel Benkie Ducommun President & COO 3
Ducommun The Aerospace & Defense Forum Sept 10, 2015 Our Rich History… • 1849: Founded in Los Angeles by Charles Louis Ducommun as a watch business, then general store, during the Gold Rush • 1920s: Assists in birth of the aerospace industry in Southern California; provides aircraft aluminum to early aerospace pioneers Lindbergh, Douglas and Lockheed • 1950s: Becomes largest metals materials supplier to the aerospace industry in SoCal • 1960s: Diversifies into distribution of electronic components to the aerospace industry • 1999 – 2000s: Expands capabilities through small acquisitions • 2011: Acquires electronics manufacturing services leader LaBarge, Inc. in a transformational acquisition 4
Ducommun The Aerospace & Defense Forum Sept 10, 2015 Our Rich History… • Today, Ducommun is a global leader in manufacturing sophisticated solutions for the aerospace, defense, industrial and natural resources markets • $740 million in annual sales • 22 manufacturing and engineering operations in 13 states, Mexico and Thailand • 3,100 employees companywide 5
Ducommun The Aerospace & Defense Forum Sept 10, 2015 Company Highlights • Customer focused leading global provider of engineering and manufacturing services to aerospace, defense and diverse technology-driven markets • Focused, niche approach capitalizes on growing market demand • Well positioned to benefit from increasing demand for advanced integrated systems • Grow strategic relationships with blue chip customers 6
Ducommun’s End Markets Offer Growth Opportunities Medical & Other Industrial Natural Resources Defense Technologies Commercial (6% of Sales) (6% of Sales) (6% of Sales) (32% of Sales) Aerospace Defense Structures (36% of Sales) (14% of Sales) • Missile systems • Flight control • Glass container • Oilfield services • Surgical systems assemblies electronic equipment • Radar systems • Patient monitoring and • Mine automation manufacturing systems • Rotor blade assemblies therapy devices • Engine ducts • Electronic test systems • Fuselage assemblies • Respiratory care • Shipboard systems equipment • Agricultural control devices • Leading edges • Semiconductor capital systems • Rotor blade assemblies • Biodecontamination equipment • Composite winglets equipment 7
Strategic Business Unit Structure Aligns Capabilities & Creates Synergies Ducommun LaBarge Ducommun Technologies AeroStructures (Electronic Solution) (Structural Solutions) 58% of LTM Q2 2015 Sales 42% of LTM Q2 2015 Sales Electronic Advanced Structural Systems Group Systems Group Systems Group 8
Innovative Electronic Solutions Ducommun LaBarge Technologies (58% of Sales) Designs, engineers and manufactures high-reliability products used in worldwide technology-driven markets, including aerospace and defense, natural resources, industrial, and medical. Core Capabilities From prototype development to complex assemblies: Turnkey design, engineering, assembly and test Cable assemblies, wire harnesses and Interconnect Systems interconnect systems Design, Engineering and Test PCB assemblies and microelectronics/hybrid circuits Box-build, electromechanical and mechanical systems Printed Circuit Illuminated panels, microwave switches, Board Assemblies and motors and resolvers Systems integration Logistics Integrated After-market support Mechanical Complete System Integrated Electronic Assemblies Assemblies Builds 9
Innovative Structural Solutions Ducommun AeroStructures (42% of Sales) Designs, engineers and manufactures large, complex contoured structural components/assemblies, and composite and metal bonded structures/assemblies for aerospace and defense. Core Capabilities Commercial Aircraft • Fuselage skin panels & assemblies • Flight control surface assemblies Composite Winglets • Leading edges Military Fixed Wing Aircraft • Fuselage skin panels & assemblies • Flight control surface assemblies • Various door panels • Leading edges Rotor Blade Fuselage Skins Assemblies and Assemblies • Engine ducts Military and Commercial Rotary Wing Aircraft • Main & tail rotor blade assemblies • Leading edges • Firewall exhaust assemblies Flight Control Surface Exhaust Systems Assemblies and Engine Ducts • Sub-assemblies 10
Our Strategy for Growth • Establishing Ducommun as an innovative solutions provider – Delivering a compelling value proposition to our customers – Expanding capabilities to provide more advanced integrated systems • Leveraging our portfolio of broad, complementary capabilities – Electronic, engineered and structural solutions – High-performance products and high-cost-of- failure applications – Reorganized into strategic business units to align capabilities and create synergies 11
Ducommun’s Facilities Locations Ducommun AeroStructures (DAS) Ducommun LaBarge Technologies (DLT) Miltec Ducommun Headquarters Thailand Primarily U.S.-based with access to low-cost domiciles 12
The “One Ducommun Platform” Forms the Basis for Achieving Sustainable Profitable Growth 13
Ducommun The Aerospace & Defense Forum Sept 10, 2015 • In recent years, the aerospace markets for both commercial and military products have become more and more competitive. • Most companies have reacted to these challenges by initiating continuous improvement activities focused largely on leaning out production operations and reducing direct labor product content. • Businesses who have embraced lean initiative for many years are finding diminishing returns from this approach. • Given this situation, many companies have realized they must redirect their attention to creating value through enhanced supply chain efficiencies. 14
Ducommun The Aerospace & Defense Forum Sept 10, 2015 "Creating Competitive Advantage through your Supply Chain” Jerry Redondo VP of Operational Excellence 15
One Ducommun "Creating Competitive Advantage through your Supply Chain” Our Vision is to be our customers’ #1 provider of innovative electronics and structures solutions Company Confidential 16
One Ducommun "Creating Competitive Advantage through your Supply Chain” Strategy Priorities, Deliverables & Accountabilities • Develop & implement a DCO Supply Chain commodity focused process that delivers improved material cost, quality, delivery and efficiency. • Capture “One Ducommun” standard work, controls and process synergy opportunities • Implement centralized DCO commodity process & optimized organizational structure • Consolidate supplier base through aggregation of commodities and sources to improve level of performance management, risk mitigation and controls • Execute aligned S&OP, standard work materials, order management and controls • Link program management & supply chain to ensure flawless new program launches and best customer service • Integrate supply chain standard work into strategic pricing NPI phase gate process 17
One Ducommun "Creating Competitive Advantage through your Supply Chain” Supply Chain Strategy, Direction & Methodology Materials & Purchasing DCO Supply Chain Management • Organizational Design directed at implementation of standard work across strategic business units & all functional process elements 18
One Ducommun "Creating Competitive Advantage through your Supply Chain” Supply Chain Strategy, Direction & Methodology 19
One Ducommun "Creating Competitive Advantage through your Supply Chain” Strategy, Direction & Methodology 20
One Ducommun "Creating Competitive Advantage through your Supply Chain” Office of Operational Excellence OOE Vice President DCO Supply Chain Management DCO Program Management ESG Operational Excellence SSG Operational Excellence Product Integrity Engineering
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