INDUSTRY PERSPECTIVE: Gulfstream Aerospace
Joe Lombardo became president of Gulfstream Aerospace on April 9, 2007. He also serves as executive vice president of the General Dynamics aerospace group and was Gulfstream’s chief operating officer before becoming president. Before joining Gulfstream in 1996 as vice president of co-production, he served in leadership roles at Douglas Aircraft. He holds an MBA from Long Beach State University and a bachelor’s degree in sociology from San Diego University, both in California.
How will the third quarter look for Gulfstream, compared with the first two quarters of this year?
We really can’t compare the quarters directly because, as you know, we did a furlough in July, about four to five weeks, so work on our green aircraft and on completions completely shut down. We did the same thing in 2003 to save jobs.
Looking at the first halves of 2008 and 2009, deliveries of the midsize-cabin Gulfstreams (G150 and G200) decreased by more than half, while the large-cabin jets (G350, G450, G500 and G550) averaged 21 each quarter in 2009, down by just one for 2008. Why is that?
Based on the backlogs for all the models, we adjusted the production rates for the midsize aircraft earlier this year. The large-cabin airplanes had a bigger backlog, so we maintained the production rate longer. I really expect this year to
be a good one, though we’ll probably have fewer total deliveries than last year.
From Gulfstream’s point of view, how does the business aviation industry look in the U.S. in respect to flight activity, the maintenance business and new sales?
Flying hours are problematic and this affects our product-support organization. But flight hours appear to have flattened and there seems to be some favorability the last few months. Things are not as bad as they were in the first half. We are seeing more order activity, though it varies by model.
Same question with respect to outside the U.S.
International flying is also down and order activity is similar to North America. Our orders are balanced between North American and international.
In what ways has Gulfstream’s ownership by General Dynamics affected Gulfstream’s military business?
Our special-mission business is about the same as it was before General Dynamics acquired Gulfstream [in 1999], although we do benefit from General Dynamics’ strong government relations presence. Gulfstream has its own office for government programs in Washington, but we also benefit from General Dynamics’ network of contacts. Demand for special-mission products is not as
great as it is for our commercial products.
Do you see any lingering effects from the negative publicity that resulted when the CEOs of the big three automakers traveled to Washington by business jet to request taxpayer bailout money last November?
I think the effects have diminished greatly. As you may know, I’m a board member of GAMA [General Aviation Manufacturers Association] and along with NBAA we initiated “No Plane No Gain” in April. This is a grass-roots campaign, basically educational in nature, and I think it has been beneficial. The negative rhetoric has slowed down.
I also participated in the business aviation “Hill Day,” as I have for the last three years, which takes the message of business aviation directly to members of Congress. We fan out in organized teams and this year we met with 64 senators and members of the House of Representatives, or their representatives.
What lessons have you, as president of Gulfstream, learned since the financial meltdown that happened right around NBAA last year?
I believe we managed our backlog situation very well, shored up the holes [in the production schedule when orders were canceled or deferred] and managed our production-rate reduction. The absence of capital had a profound effect on orders, which was different from previous downturns. Some customers saw their financing just disappear.
What would you do if you see a similar situation developing in the future?
We’d look at any surge in demand differently. Knowing how well we can manage them, I think we would adjust our production rates sooner. All the manufacturers saw signs at the end of the first half of last year, but we thought our backlogs would sustain us.
What are the top items on your to-do list right now?
The G650 and G250 are our major development programs, and the G650 has a very aggressive certification program. We have an excellent program-management organization, led by Pres Henne, and they’ve done this before many times, so it is definitely doable. We’re not going to start cutting anything just to make a deadline.
Second, I’m concerned about our employees, sustaining the ones who are still employed and bringing back the ones who were laid off. Third, making sure Gulfstream continues to go out to the market with a strong brand, product line and product-support organization.
What keeps you awake at night?
The things I just mentioned, but really, I don’t like what this question implies–we all need a little sleep. The unpredictability of the market concerns me, too. I’m actually more encouraged about the market than I was earlier this year.