“Individual commitment to a group effort—that is what makes a team work, a company work, a society work, a civilization work” Vince Lombardi “Greatness is not a function of circumstance. Greatness, it turns out, is largely a matter of conscious choice.” Good to Great 1
“A A Form ormula f for or Su Succe ccess: s: Man anagi ging ou our l limited (aeros ospace ace) resou ource ces i in the next d decad ade” Presented by: Greg Raczynski – Director of Operations & Supply Chain Cadence Aerospace, LLC – Aerodesign Manufacturing – Phoenix, AZ May 11, 2017 2
Outl tlin ine • Decades in the Making • Current State • Future State • Areas we focused on • Are we there yet? • Questions? • Appendix 3
Decades i s in the Maki aking CHICAGO SPORTS CHAMPIONSHIPS and THE AEROSPACE & DEFENSE INDUSTRY 4
Decades i s in the maki aking • Cadence Aerospace & Chicago Sports Teams – they are Analogous • Chicago Sports – 1980 through 2016 • Cadence Aerospace – 1966 through 2016 • What did these teams / industries have in common? • Leadership • Direct Labor • Indirect Labor • Information Technology “Faith in the endgame helps you live through the months or • Sustainability ??? years of buildup.” 5
Decades i s in the maki aking Cadence Aerospace Chicago Sports Teams • 1980 – 2016 • 1966 – 2017 • Bears, Bulls, Sox, Blackhawks & Cubs • AeroDesign to PRV, now Cadence • McCaskey, Reinsdorf, Wirtz Corp., Ricketts • 100% Increase in sales 2010-2016 • Championships • Leadership – Stable • Leadership – Stable • Teamwork – Stable • Teamwork – Stable • Technology (IT) – Challenged • Technology – Challenged • Customer base – Above average • Customer base – good • Profitable – Yes • Profitable – Yes • Sustainability – On & Off • Sustainability – Right direction! 6
Team ams / Industry Com y Commonal ality Chicago Sports Teams Cadence Aerospace • Good ownership • Variety of ownership • Good leadership • Varying degrees of good • Good Support leadership & support • Good direct labor • Varying degrees of information • Good indirect Labor technology and recruiting (scouting) • Ok information technology 7
Anal alog ogou ous t to Aeros ospac ace R Resou ource ces “Letting the wrong people hang • Good ownership around is unfair to all the right people, as they inevitably find • Good leadership themselves compensating for the inadequacies of the wrong people. • Good direct labor Worse, it can drive away the • Good information technology best people. Strong performers are intrinsically motivated by performance, and when they see their efforts impeded by carrying extra weight, they eventually become frustrated.” 8
Cu Curr rrent St t State THE AEROSPACE & DEFENSE INDUSTRY OUTLOOK “The achievements of an organization are the results of the combined effort of each individual” Vince Lombardi 9
De Deloi oitte – 2010 2010 Gl Global al Aeros ospac ace an and Defense se Industr try O y Outloo ook • The global industry is truly at an inflection point and we see it continuing to move rapidly east — toward China, India, and the Middle East. These countries are expected to be large markets for A&D industry products and services, as well as participants in the supply chain. • In Japan, the commercial aircraft business has been the engine for industry growth for the last three decades, but has slowed down in 2009 with the global economic downturn. • 2010 is also expected to be flat with only a modest rise in commercial aircraft parts production and no significant increases in defense budgets. 10
De Deloi oitte – 2011 2011 Gl Global al Aeros ospac ace an and Defense se Industr try O y Outloo ook • Widening gap between commercial versus defense • Signs of growth due to the commercial aerospace rebound — Global aerospace and defense (A&D) Industry revenues grew overall by 2.3 percent in 2011 , driven largely by increased production levels of large commercial aircraft. • Defense is shrinking overall, with selected regional increases — Global defense revenues decreased by 3.3 percent in 2015, primarily due to affordability, competing domestic priorities, weak economies in the western world, and the drawdown of forces in Iraq and Afghanistan • Industry financial performance generally fell in 2011 — Even with the increasing fortunes in the commercial aircraft segment, many financial performance metrics for the global Industry as a whole generally decreased in 2011, likely because of the predominant weighting of the defense sub-segment. 11
De Deloi oitte – 2015 2015 Gl Global al Aeros ospac ace an and Defense se Industr try O y Outloo ook • Commercial aerospace industry slowing down, but record backlogs continue. • Global aerospace and defense companies added US $12.7 billion in revenues in 2014 according to a Deloitte Touche Tohmatsu Limited Global Manufacturing Industry group (Deloitte Global) study of the top 100 global aerospace and defense companies. • In terms of the outlook for 2015, Captain expects global aerospace and defense industry revenues to grow by 1.5 percent, a slowdown from 1.9 percent global industry growth in 2014. 12
Ar Areas W s We Focu ocuse sed O On 13
“The good-to-great companies made a habit of putting their best people on their best opportunities, not their biggest problems. Lead adership GOING FORWARD 14
Lead adership “The moment a leader allows himself to become the primary reality people worry about, rather than reality being the primary • Problem(s) reality, you have a recipe for • Leadership (all levels) lacking the mediocrity, or worse. necessary skills needed for taking This is one of the key reasons why the business to the next level. less charismatic leaders often produce better long-term results • Action than their more charismatic counterparts.” • Good to Great! • Expected Result • The right people in the right seats on the bus. 15
“Effort without talent is a depressing situation... but talent without effort is a tragedy” Mike Ditka Infor ormation on T Technol olog ogy CURRENT STATE 16
Infor ormation on Technol olog ogy y – IT T • An MRP system is intended to simultaneously meet three objectives: • Ensure materials and products are available for production and delivery to customers • Maintain the lowest possible level of inventory • Plan manufacturing activities, delivery schedules and purchasing activities 17
Infor ormation on T Technol olog ogy y – IT T • Problem • Our ability to both retrieve information from our MRP System & our ability to retain good information technology resources (report writers and support) • Action • Recruit the right person(s) for the support of the network & to extract data from our MRP System. • Expected Result • Plan for future growth, support customer(s) needs, both internal & external. 18
Infor ormation on T Technol olog ogy y – How ? ow ? FUTURE STATE • How • Home Grown • Contracting • Consulting • Recruiting Continuously – Finding the right … “You can accomplish anything in life, provided that you do not mind who gets the credit. —HARRY S. TRUMAN1” 19
“A company should limit its growth based on its ability to attract enough of the right people.” Indirect L t Lab abor CURRENT STATE 20
“The moment you feel the need to tightly manage someone, Indirect L t Lab abor you’ve made a hiring mistake.” • Problem • Customer(s) demanding more from suppliers • Outsourcing – both product and product control • Entry level indirect labor not interested in manufacturing • Action • Develop, acquire and keep good indirect labor • Expected Result • Job and product knowledge to support growth 21
Indirect t Lab abor r – How ? ow ? FUTURE STATE • How? • Retention – Challenging work without burning out • Employer of choice • Above average wages • Benefits • Working conditions • Quality of life “Great vision without great people is irrelevant.” 22
“Good is the enemy of great. And that is one of the key reasons why we have so little that becomes great. We don't have great schools, principally because we have good schools. We don't have great government, principally because we have good government. Few people attain great lives, in large part because it is just so easy to settle for a good life.” Di Direct L Labor or CURRENT STATE 23
Di Direct L Labor or • Problem(s) • Acquiring and retaining machinists in the valley and throughout the United States – less potential resources entering the trade. • Current resources are aging – average age 51. • Action • Three prong approach to help ourselves and our local industry • Expected Result • Long term, sustainable supply of trade worthy resources 24
Direct L ct Lab abor r – How ? ow ? FUTURE STATE • How? • Survival mode – retention • Home grown apprenticing • Interview with “our apprentice” • Recruiting – HR & Recruiters • Support from out of company resourcing* “Greatness is not a function of circumstance. Greatness, it turns out, is largely a matter of conscious choice, and discipline.” 25
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