Paris 2011: New programs drive Hamilton Sundstrand growth path
It’s less than two years since Alain Bellemare became president of Hamilton Sundstrand at the end of 2009 at the height of the aerospace industry’s most recent downturn. So this is his first Paris Air Show at the helm of the U.S.-based group and he’s in a hurry to make his mark with a plan to grow its annual revenues from around $6 billion now to $10 billion by 2015.
“For us the recovery started in 2010, although it’s been a bit soft at times,” Bellemare told AIN ahead of this week’s show. “[However] we’re very well positioned and have content on all the new aircraft out there–the most being on the Boeing 787, with over $3 million per platform. We are also on the [Airbus] A350, JSF [Joint Strike Fighter], Comac 919.”
Windsor Locks, Connecticut-based Hamilton Sundstrand was formed through a merger, finalized in June 1999, of Hamilton Standard, best known for its propellers, and Sundstrand Corporation, best known for producing auxiliary power units (APUs). The new entity now has eight aerospace business units (each with annual revenues of between $250 and $750 million, and all growing) and two other divisions–Space and Industrial.
“We are very well set for future growth over the next five years,” said Bellemare. “And we are truly focused on the execution phase for these programs. I don’t think there’s any program we’re not on–there’s not one out there where we have less than $1 million of content [per aircraft],” he said.
But sales growth is one thing, profit growth is another and cost reduction will be a key part of getting that equation right. “We have a solid roadmap to take costs out over the next three years,” said Bellemare. Part of this has been shifting some production to emerging markets, such as Russia, Malaysia, Morocco and China, where Hamilton Sundstrand can tap lower labor rates. Another part is applying UTC’s “ACE” concept–standing for “Achieving Competitive Excellence.”
Hamilton Sundstrand claims to have a “huge installed base,” said Bellemare. Being on numerous in-production aircraft such as Airbus and Boeing airframes, the company has ended up with equipment on “over 80 percent of aircraft flying today,” he said. “That equates to 7,000 aircraft, and roughly four million components.”
So supporting users of its equipment is another priority. “We opened a new customer response center last year in Windsor Locks,” said Bellemare. “It is manned by professional engineers who can provide a solution in a timely manner. Since the center opened last November we have had about 1,500 cases and have closed 95 percent within five days.” This does not include AOG situations, said Bellemare, as these are dealt with immediately.
Another change at Hamilton Sundstrand has been the establishment of a new aerospace customer organization under the direction of Dave Gitlin. Its purpose is to more directly connect with some 40 OEM clients in the industry “We have someone accountable for each customer and all the metrics that they measure us on,” Gitlin told AIN. In 18 months we’ve gone from the bronze to the silver level, and we’re now trying to get to the gold level.” These levels are internal measures based on overall feedback from the OEMs.
“We’ve been able to add $8 billion to our backlog, too,” Gitlin added. Recent successes for the company include being selected to provide APUs for Bombardier’s new Global 7000 and 8000 business jets.
The company also now has a larger stake in China’s new Comac 919 narrowbody airliner. “Today we’re up to $1 million per shipset–electrics, pilot controls and fire suppression systems from our Kidde division,” said Gitlin. “We have also been negotiating the contract for the Airbus A320Neo, so we should be on that as well.”
Hamilton Sundstrand aims to add even more value to its business by taking on integrator roles for the primes–fitting together systems supplied by its own divisions and by other companies. “Where we’ve brought the biggest value is on the 787,” said Bellemare. “We have brought a lot of system integration value but how much that will be seen on future aircraft remains to be seen.” In his view, the 787 is at the cutting edge of aerospace technology, with its more electric architecture giving his company a chance to shine.
A prime example of this is Bombardier’s new CSeries airliner. “On the CSeries we have the entire electrical system and emergency power and lighting, and fire suppression,” explained Bellemare. “We can also bring real hard value to the customer in technology innovation in improving specific fuel consumption, reducing weight and so on. We are investing $1 billion a year in research to help with new innovation. Each business unit drives its own technology agenda and we also have a central technology organization looking at higher level technical challenges.”
Bellemare, who was previously president of fellow United Technology company Pratt & Whitney Canada, said that running such a large and complex organization is not that difficult. “The simple way to look at it is you have to make it a stimulating and challenging environment for your people. When working on these exciting projects, attracting and retaining talent is not a problem,” he said.
Hamilton Sundstrand’s space division is a prime example. “It’s a good $400 million business, and we have good content on Orion, ISS [the International Space Station] and producing space suits. The programs we are on are doing well; they are not capital intensive and it’s good technology,” he said.
So is the goal of growing revenues fully 40 percent in the next four years attainable? “We’re very well positioned right now with over $50 billion backlog and [with production positions] on all the new aircraft,” said Bellemare. “It’s really about executing, performing and improving productivity so we are positioned to capture the next wave over the next 25 years.”