French aerospace conglomerate Safran (Booth No. 4287) said it is reorganizing to meet the challenges presented by the growing role of electronics in aircraft systems and subsystems design.
Safran Group CEO Jean-Paul Herteman said the move, which goes into effect early next year, “takes on critical importance” in the quest to develop a generation of “more-electric” aircraft, particularly in the coming decade with the replacement of the popular CMF56 engines–manufactured by Safran subsidiary Snecma in partnership with General Electric–and equipment for new 100- to 200-passenger, short/medium-haul jetliners.
Meanwhile, if the dollar continues to fall in value against the euro, Safran will likely accelerate the shift of production to locations outside Europe, Herteman said. “Before developing a strategy, you need to have a profitable organization, so the question of the weak dollar must be tackled because the growth in global aviation will be affected by the oil and financial crises,” he said. “This is Safran’s main challenge.”
Herteman added that in the last 30 to 40 years, despite two major oil crises, air traffic has doubled and, compared to the world economy, the aerospace industry has thrived. This alone is a “very strong reason to put engines on the market that will save up to 20 percent fuel burn,” he said. Herteman added that 48 percent of the global CFM fleet and 60 percent of the latest models have yet to make a shop visit.
“We have a huge, young fleet and will lean upon our potential growth in business and services,” he said. “Most growth is in front of us.”
Herteman said a new Safran Power operational unit will be tasked with developing subsidiary Hispano-Suiza’s power electronics business. The unit has the goal of establishing a position as world leader in all-electric technologies. As part of the strategy, engine controls systems will be transferred from Hispano-Suiza to Snecma, which is merging with Snecma Services to offer integrated engine sales and services packages. The group’s 1,500 electronics specialists will combine within another new entity, Safran Electronics, as the group works to establish business development and materials and processes divisions.
Further improving its supplier positions aboard short- to medium-range business and regional jets will be Safran’s main focus in the next five years. The company is investing heavily in engines, braking systems and other components. Herteman pointed to the technology applied in the company’s developmental Silvercrest engine as an example of the strategy. Despite failing to win the contact for Dassault’s new super-midsize business jet, there is a customer base for the powerplant, which is “different from other engines,” he insisted.
Meanwhile, Bombardier has selected Safran subsidiaries Messier-Bugatti and Aircelle to supply equipment for its new all-composite midsize Learjet 85, accounting for 11 percent of that airplane’s supplier contracts.
Half of Safran’s advanced technology is produced in France and half outside Europe. Herteman said about 55 percent of Safran’s activity is dollar sensitive, but he added that exposure will be reduced by 10 percent by 2010. “Our strategy is to keep the core of our technology in Europe, close to resources and decision-making centers, and increase other activity outside our traditional aerospace equipment sites. All Safran companies have facilities in dollar-zones or emerging economies and are able to transfer work there,” he said.
Since 2006 the equipment sector has spent more than $75 million in developing industrial facilities in “strategic areas” such as China and India as well as Mexico, Morocco and Poland. Other activity could be transferred outside Europe if the dollar continues to fall agaist other currencies. Safran subcontractors and suppliers are following suit with an increasing number of contracts in U.S. dollars, even with firms based in France. The company announced in January that its 39,400-strong France-based workforce would fall by 1,000 this year, prompting the group’s union to express concern for jobs after the reorganization and possible further delocalization.