Supplier Presentation M. Scott Crawford Vice-President Financial and IT, Engineered Materials, Esterline Co. Scott Crawford has been associated with the Engineered Materials Group and Kirkhill-TA since 2006. He has been a CFO in the aerospace and defense industry for over 20 years. The Engineered Materials Group designs, develops, and manufactures high performance elastomer products for the aerospace, defense, and industrial markets. Operations include eight facilities including Kirkhill, TA Aerospace, Haskon Aerospace, and CSE. Kirkhill is the first SEA Stage-One Certified supplier and also the first to re-qualify that certification. Mr. Crawford earned his B.S. in Finance from Brigham Young University and his MBA from Arizona State University. 47
In Memory of Steve Barton Friend, Colleague and Esteemed Leader 1946 - 2009
Kirkhill – TA Co. Kirkhill Elastomers Scott Crawford SEA Lean Enterprise System
Prime Empowered Prime Empowered .…… …….Supplier Led .Supplier Led .
Overview • A specialized manufacturing company principally serving Aerospace / Defense • NYSE listed since 1968 – “ESL” • Sales revenue $1.4B Commercial Aviation 40% 40% Space / Defense Industrial Applications 20%
Overview sourcing 2 plants Canada H.Q. + 4 plants WA 2500 people Sales & in Europe Mfg. partner Mfg, JV, & 9 CA plants Sourcing 2 plants Mexico Over 9400 Employees Worldwide
Engineered Materials Group Sealing & Clamping & Ducting Aerodynamic Seals Engine Build-Up Seals, Passenger Window Seals Clamps & Line Blocks Fuselage Clamps & Line Blocks Fuel Tank Seals Rear Stabilizer Seals Antenna Gaskets Grommet and Clamps Clamps & Line Blocks Pylon Seals Interior Cabin Pilot Window Seals Blade and Nozzle Seals Passenger Door Seals Hydraulic Systems Seals Main Landing Landing Gear Door Seals Nose Landing Engine and Nacelle Firewall Seals, Gear Dressing Gear Dressing Gaskets and Grommets Avionic Seals, (Crescent Blocks APU Seals, Clamps & Line Blocks Clamps & Line & Clamps) Lower Bifurcation Blocks Cargo Door Seals Fire Seal Wheel Well Seals & Engine Kiss Seals, Fastblock ECS System Clamps & Line Blocks Cargo Container Fastblock Ducts and Hoses Engine Clamps, Line Blocks on Wing-to-Fuselage Seals and Grommets Tubes and Wire Bundles
LEAN Journey– Big Undertaking Waste Elimination 6 Full Time Lean Specialists plus 25 People 6-Sigma Certi fi ed GB & BB
Historical Lean Timeline • Embarked on Lean with HLS February 2005 • Engaged with SEA October 2005 • SEA LES Training for Management April 2006 • SEA Roadmap Certifications (9 execs) 2006 - 2007 • SEA Managing Process Improvement August 2007 • SEA Audit Stage 1 October 9-11 2007 • SEA Certified Stage 1 Level 3 PMM October 12, 2007 • SEA Re-Certified Stage 1 Level 3 PMM January 2009 • TA Aerospace – Sister Company – SEA Certified January 2009
Kirkhill-TA Lean Journey FY2004 FY2008 54% Growth! • Sales Revenue $100M $154M 49 % Improvement! • Sales/ee $84K $125K 24% Improvement! • Inventory Turns 3.4 4.2 100+% Gain! • On time Delivery 39% 81% 30% Gain! • AR Days 59 49 62% Improvement! • Quality PPM’s 28,948 10,776 Needed Space !! • Floor Space Savings 33,600 Ft2 Greatly Improved !! • Financial Results
2009 KIRKHILL-TA FY05 FY06 FY07 FY08 FY09 FLIGHT PLAN Key Actions Actual Actual Actual Actual Plan 1. Mexico Startup ROI % Increase 2. Reduced inventory xxx xxx xxx xxx xxx 3. Reduce AR 1. Expand global market share PROFITABILITY 2. Improve dev. & launch processes Sales growth 3. Scrap reduction thru six sigma 19% 9% 13% 6% 2% Earnings xxx xxx xxx xxx Xxx growth 1. Implement TPS/HLS/PES LEAN 2. Lean enterprise company wide Inv Turns 3.8 4.0 4.0 4.2 4.6 3. Adopt SEA Phase I-II-III, PMM 3+ Sales per ee 99K 105K 110K 125K 125K 1. PC&L with level loading DELIVERY 2. Involve key suppliers in Lean VSM 3. Expand VSM’s to include Line Items 61% 68% 77% 85% 90% customers 1. Move inspection Resp. to Ops QUALITY 2. Expand use of 6-Sigma processes 22,100 21,350 16,800 10,776 <10,000 3. Continue equipment PPM’s modernization th State training grant 1. Obtain a 4 2. Revise and update safety EMPLOYEES ETP- ETP- ETP- ETP- 40-H programs Training Hrs 3. Increase training hours per ee 60% 60% 80% 80% 100-M 4. Maintain high communications Per EE 5.9% 5.9% 5.5% 5.4% <5.0 Safety IFR
SEA Roadmap 3 Tracks plus Business Results - L&C, WFD, OE Stage 1 - 23 Key Business Processes to PMM Level 3
Lean Transformation 5-Year Plan •Supply-Chain Integration Initiatives Phase III – Stage 3 •Production leveling and adherence scheduling plan. Supply Value Chain: •Purchased Parts Supermarkets. Order To Delivery •JIT Internal Supplier linkage. •FG Supermarket Strategy. •Black-Belt Six-Sigma Statistical Problem Solving Techniques. Phase II – Stage 2 •Green-Belt Problem Solving Techniques (DMAIC). •Machinery set-up reduction and SMED Techniques. Operational Kaizen: •Reduce process variation and standardize operation procedures Improve Process Capability •Problem Solving (PDCA). •Kaizen Leaders Training •Balanced Standard Work. Phase I – Stage 1 •TAKT image attainment and Process Cycle-Time Balance. Waste Elimination: •Pull Systems (Kanban, Visual Replenishment, Two-Bins). Create Flow & Improve •Cross-Training and Flexible Manpower Cells. Productivity •PFEP, POUT, and Delivery Material Routings. •Kaizen Methodologies: 3-5 day Events, Spot Activities, Kaizen Newspaper Problem Resolution. Timeline •Process Linkage and Flow Sequence. •Value Stream Mapping & 90-Day Improvement Plan •6”S” & Visual Factory deployment and sustaining program.
Lean 5 Year Plan
Process Maturity Matrix The Process Maturity Model The Process Maturity Model Process shows positive trends 5 Process measured, KE Process Maturity Goal: analyzed, and improved 4 SEA Roadmap Stage 2 Process standardized Processes at Level 3 3 Process documented by April 2009 Process identified 2 and process owner assigned 1 Process Master PMM PMM Lean Enterprise System 5.2.0 Managed Processes Owner Trainer 2008 2009 5.2.1 Aircraft 5.2.1.1 Stock Prep Central F. Serna F. Serna 0.0 1.5 5.2.1.2 AC Long Seal area F. Serna F. Serna 0.0 2.0 5.2.1.3 Duct Department #101 J. De La TrinF. Serna 0.0 2.0 5.2.2 IC / NPI Cells 5.2.2.1 IC Model Cell #226 M. Ibarra S. Menold 0.0 2.5 5.2.2.2 Sonaca Model cell L. Kapahua S. Menold 0.0 2.5
SEA Roadmap Stage 2 Leadership & Culture Stabilization Champion : President & CEO Process Master PMM PMM Process Owner Trainer 2008 2009 1.2.1 Goals Deployment & Review 3 3 VP Finance VP Finance Process 1.2.2 Values Deployment Process 2 3 COO VP HR 1.2.3 Supply Chain Integration 2 3 Dir Purch Dir Purch Six Executives SEA Certi fi ed in Lean Leadership
Building a Culture of Improvement - Leadership & Culture Strategic Organizational Improvement Business Expectations Flight Plans Performance Opportunities Statement Feedback We set our We determine We de fi ne We develop We monitor goals what it will metrics and action plans our progress take to get visual and adjust there indicators
Building a Culture of Improvement Organizational Strategic Business Improvement Expectations Flight Plans Performance Statement Opportunities Feedback We set our We determine We de fi ne We develop We monitor our goals what it will take metrics and action plans progress and to get there visual indicators adjust Monthly staff meetings Esterline Code of Ethics Quarterly plant-wide meetings Incorporates EMG quality policy Semi-annual business reviews -Business Forecast KTA vision, mission statements Departmental meetings -Company Flight Plan KTA philosophy General fl oor walks -Critical issues KTA intranet Glass Walls -Company objectives, FY1-5 Company fl ight plan Executive lean audits -Technology Roadmap Department fl ight plans Lean walks Generated through: New employee orientation Supplier meetings -Competitive Analysis Performance appraisals Lean training for suppliers -SWOT Analysis Anniversary luncheons “Supplier of the Year” awards -Talent Review Bi-annual employee satisfaction survey
Organizational Performance Review System - Sustainment Strategic Develop Deploy Organizational Business Departmental Improvement Performance Statement Goals & Objectives Plans Review (SBS)
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