2014-04-01 By Robbin Laird

The classic fighter import program for a country the size of Australia is to build for the domestic customer, the program ends, you do a little bit of sustainment work and then move on.

With the F-35 as a global program, a domestic supplier can position itself for global opportunities, and by so doing bringing core competitive competencies to the program itself.  Investments up front are paid for downstream as the program continues to produce planes and generates demand for parts for a global fleet.

It is about getting the opportunity and then positioning to provide globally competitive value to the program itself.

For Marand, an Australian solutions provider, the F-35 program has provided a venue to shape new global relationships, which complement their Australian business.

According to the company’s website:

Marand is a leading global supplier of precision-engineered solutions to a range of industries including Aerospace, Defence, Rail, Automotive and Mining.

Marand’s customer base is predominately Blue chip organizations including Lockheed Martin, Boeing, BAE Systems, Ford, BHP, Rio Tinto and Holden for which it designs and manufactures complex innovative equipment

During my visit to Australia in March 2014, I had a chance to talk with David Ellul, Managing Director of Marand about the company and their involvement in the F-35 program.

The intersection between the evolution of the company’s capabilities and their engagement in the program, a two-way street approach, was highlighted throughout the interview.

Ellul indicated that Marand started as a firm supporting the automobile industry in Australia and over time has transitioned  into the aerospace and rail businesses.  In fact, they have migrated over the past decade from having approximately 90% of their business in the automotive sector, to now less than 1% in automotive as the company has migrated to work in the other sectors in its portfolio.

Within aerospace, prior to F-35, their main client was Hawker deHaviland (now Boeing Aerostructures  Australia) for whom they designed and manufactured Aerospace Tooling

The initial engagement of Marand in the F-35 program was designing and building a unique trailer for installing the F-135engine into the F-35.  The trailer also removes the engine.

According to Ellul:

The requirement is quite complex.  It has to remove and replace the engine within a tight time frame in all of the environments where engines are changed.  From the production line to ship board and land based sustainment.  It has to do it for all three variants of the plane.

It has been a design and manufacturing job from the beginning. It is a clever piece of equipment that solves the customer’s requirements.   We are very proud of our design and engineering capability. 

Prior to the F-35 program engagement, Marand has not been a global exporter.  This has changed with the F-35 program. 

The company has added five clients through the F-35 program, which has allowed it to grow its export business.

Question: Why Australia?  Why Marand?

According to Ellul:

Australia has a tradition of innovation and although we are not a large company – we have 250 employees – we have diversified design and manufacturing experience and expertise and are able to solve complex problems and deliver good value, as we have done with the F-35 engine trailer.   

The second part of our F-35 work is in design and manufacture of complex Aerospace tooling. 

We have used our design and engineering capability to develop production tooling that makes our customers more productive. 

Over 1200 tools to all corners of the F-35 world. And the quality of our work has been recognized by Lockheed Martin as well. 

 In 2009, the CEO of Lockheed Martin, Bob Stevens, visited our company and gave us an award recognizing our role as a leading tooling company in the program.

The performance on the engine trailer and tooling provided the opportunity to be considered by Lockheed and their partner BAE Syestms to provide Vertical Tails for the F-35 program.

According to Ellul:

We recently had a ceremony to celebrate the delivery of the first Australian vertical tail set for the F-35. Next year we will deliver 4-6 tail sets and by 2019 we will be delivering around 70 per year for the program. As the second source, we will do around 30% of the total production of vertical tail sets. 

Once production ramps up, we’ll be looking for other opportunities on Aerospace structural work.  Five years ago, there’s no way we would have proved that we had the capability.  F-35 has done that for us.

But, with the ongoing help and support of  Lockheed Martin and BAE Systems, we’ve created a whole new capability in Australia

And without them giving us the opportunity and trusting us and working with us and training us, okay, it wouldn’t have happened.

Editor’s Note: A ceremony was held on March 31, 2014 at the Marand plant to highlight the delivery of the first vertical tail produced for a F-35 by Marand.  

According to a Lockheed Martin press release:

Melbourne, Australia, Mar. 31, 2014 – A ceremony was held today at Australian company, Marand, commemorating the delivery of the first ship of Australian made F-35 Lightning II Joint Strike Fighter vertical tails.

The Honourable Dr. Denis Napthine, Premier of Victoria and The Honourable Michael Ronaldson, Senator for Victoria representing the Defence Minister were among the distinguished guests in attendance.

This delivery of the first major air frame components marks an important production milestone for Marand, BAE Systems and Australia, demonstrating the significant industrial benefits the F-35 program brings to the growing Australian aerospace industry.  The work on the F-35 vertical tails is subcontracted to Marand by BAE Systems and is one of the largest planned manufacturing projects for the F-35 in Australia, with 722 ship sets anticipated.

 “We take our commitment to international participation very seriously, and today is a very proud day for us, for Marand, and for Australia’s F-35 programme.  In just two years, we have worked side by side with Marand to develop a world class aerostructure facility with a first-rate, repeatable capability for the next 20 to 30 years,” said Cliff Robson, senior vice president F-35 for BAE Systems. 

David Ellul, managing director of Marand, commented, “This is a major step for Marand to move into the field of aerostructures manufacturing.  I am very proud of our team for achieving so much in such a short time with tremendous support from BAE Systems. The unique capability we have established will serve the Australian Defence industry and create high technology Australian jobs for many years to come.”

The F-35 Lightning II aircraft will provide the Royal Australian Air Force with a transformational 5^th generation fighter capability and provides significant benefits to the Australian aerospace industry, with more than $350 million (USD) already contracted and $6 billion (USD) in expected manufacturing orders over the life of the programme.

“The F-35 is not only transforming the battlefield but also the global aerospace industry. This programme is built on a foundation of unprecedented partnerships that not only tie our countries together, but also link our companies with one another. There’s really no better example of the true global nature of this programme than right here at Marand,” said Orlando Carvalho, executive vice president Aeronautics, Lockheed Martin Corporation.

 

 

2014-03-30 By Robbin Laird

Ferra engineering is an international company based in Australia, which engages in the design, manufacture and delivery of advanced aerospace/defense components and systems for a number of well-known manufacturers. The company is an Australian based supplier for the F-35 as a global program, and as such, brings its expertise to the program, and at the same time benefits from the global nature of the program.

During my visit to Australia in March 2014, I had a chance to interview Mark Scherer, CEO of Ferra Engineering and a winner of EY Entrepreneur of the Year Award as well.

The company provides high value engineering products to the commercial and defense sector for a number of global companies.  It has a balanced portfolio between commercial and defense and with the company’s location close to Asia has viewed first hand the competitive pressures for commercial technological development.  These lessons are being applied to the defense sector as well.

Australia has developed firms in the technology sector, which are capable of being globally competitive, and the relative small size of the population of the country, if you cannot be, you probably cannot exist.  Australian companies to the F-35 program bring this spirit and experience of global competitiveness. 

Notably lacking in public discussions of the F-35 program Inside the Beltway is an understanding that the global sourcing brings with it both high quality and high value suppliers which will drive up reliability and drive down cost.

Perhaps next time on 60 minutes they might mention the global nature of the program and the competitive capabilities built into the program by building a global supply chain early in the program.

Question: How would you describe the basic activity of your company?

Mark Scherer: We’re basically engaged in civil and military aerospace. We provide mechanical subassemblies ranging anything from airframe structures to pylons, or adaptors. Although we do some machining, but our focus is on producing value-add through components which we assemble, test, and then actually sending it to the customer quite often directly onto the production line. We are not just producing parts we are providing assembled packages to the final manufacturer.

Question: Why Australia in terms of high quality global manufacturing?

Mark Scherer: There is a culture of innovation here.  Our companies tend to be smaller than global competitors and more agile.  We are not afraid to test things, and I think that’s, that’s an advantage. We have to be a bit keener than some of the larger companies, say in the States or in Europe who traditionally are much closer geographically to the OEMs than we are.

Australia also has some cutting edge technologies in some key areas.

Australia has been quite good in looking for better technologies to manufacture things more cost effectively.

One example is in titanium machining. We are using a laser in front of the machining to bring the temperature up and bring it to a stage where you actually can double your feeds and speeds without any extra additional cost. We developed that technology together with Commonwealth Scientific and Industrial Research Organisation (CSIRO).

This process cuts some of the machining costs in half.

CSIRO is now commercializing that technology, so they’re working now with machine tool builders to bring to a broader market. We have been machining with lasers now for three years.

Question: Being close to Asia must also create some first hand knowledge about the need and approaches to drive down costs as well.

Mark Scherer: It does.

I would say Australia being so close to Asia especially on the civil side, we’re very exposed to what a cost structure, what’s the capability in this region is.

And I would say with regard to civil aerospace or the automotive sector, Australia needs to be really able to work with Asia and come up with the technology where we can compete with the Asian cost structure. If you can’t do it process by process, you have to do it with technology. So we are very exposed to lower cost competition and how best to compete with technology.

I basically spend a lot of time in Asia, and I come from the civil side of aeronatucis and the automotive industry. About 15 years ago, I was looking at factories and plants, which were charging out $1 an hour fully, loaded rate.  When you work with system like that, it definitely becomes very ingrained that there is a complete shift on in our approaches to remain competitive.  We are not in Europe and hoping to wish away the challenge.

Question: What programs are you involved in with civil and military aerospace other than F-35?

Mark Scherer: We are involved with several different programs. Half of our production is for civil programs, directly for Boeing on programs like 737, 747 and 777.  We produce for Airbus by providing finished materials to Parker Aerospace and we provide materials for the P-8 program, the Tiger, and NH-90 as well to mention a few.

With regard to the Tiger helicopter we provide the pilot controls – the gear stick, the rotor pedals and the various parts that allow the pilot to control the helicopter – to Tiger assembly sites in France, Germany and Spain.

Question: Now let us turn to the F-35 program and your involvement in and perspective on the program. What are you providing for the F-35 and how does it fit into your basic approach to the future?

Mark Scherer: We produce weapon adapters for the aircraft.  When we started there was a limited supply chain capability in country.  We had had to ship our components to the US for heat treatment, service treatment and our hardware was shipped to us from the US.  This drove up cost.

But because it is a long-term program, we managed to get local people onboard to up skill them and to allow us to produce more content locally and to become more cost effectively.  We now have over 20 local companies, which are now producing for use, and we can do a whole complex structure from start to finish in Australia, which drives up quality and drives down cost.

Question: And the F-35 program provides a catalyst for other investments and capability developments as well?

Mark Scherer: It does.

Traditional programs may go three or four years, so if capability is missing of your supplier, it’s quite often that’s not enough for the supplier to invest in a complete capability.

But because we take a long-term view and because some of the governments were also keen on up skilling, it allowed us really to promote the same capability as well for other programs.

For example, the same supply chain that we use in F-35, can also do, say, the Blackhawk pylons that we supply half of the global fleet for. We had the flow on effect.

The capability we established then had flow on effect into other programs.

Question: And the consequences for the F-35 program?

Mark Scherer: I think Lockheed is depending very much on the global supply chain approach to bring both continuous innovations and cost reductions to the program.

Indeed, this is really an important element of the program – its global sourcing and the opportunity for a company like mine to get engaged in the program and bring what we believe are unique capabilities to the program and to learn along with the program as well.

Recently, I had the, the opportunity to talk to General Bogdan, and he basically said that the program is in great shape, the F-35 program.

He emphasized that industry really need to keep driving the cost down and he said as long as we can keep going down the cost curve, volume will come through. The volume needs to go up to achieve the target costs but it’s a bit of the chicken and egg.

I think that’s the way Australia has demonstrated and Mr. Bogdan said that actually he has seen Australian industry with some really good innovative technology, which is now flowing in to the F-35 program.

And I think that’s something that Australia is good at. We are quite good at adopting new ways, innovative ways and quickly adopting them.

And it is not just about cost; it is about cost effective technological adaptation over the life of the F-35 program and we think we can really contribute to this effort within our areas of competence.

Editor’s Note: The following is taken from the Ferra Engineering website:

About FERRA

Ferra specialises in the design, manufacture, assembly and test of aerospace structures and sub-systems.

Serving local and overseas defence and aerospace companies, we support our customers on development programs, established platforms and provide a wide range of services including spare parts for regional, business and military services. Our products have proven to be highly competitive in international markets, with exports amounting to over 70% of our business.

One of our key success factors has been the formation of a number of alliances with major international aerospace and defence companies.

Based on ongoing performance and providing best value, Ferra has been able to continuously expand this market and has become one of the largest independently owned Australian manufacturers servicing the aerospace and defence industries.

Ferra is well recognised by industry and government as a leader in its field.

Listed below are some of the latest achievements:

2012 – Contract Award – Multiple long term agreements signed with Boeing for supply of P-8 components

2012 – Contract Award – Ferra Engineering awarded contract to produce Weapon Pylons and Mission Kits for the MH-60R Romeo Helicopter

2012 – Contract Award – Long term agreement signed with Boeing for supply of CH-47 components

2012 – Award – Ferra Engineering awarded Boeing Supplier of the Year for 2011 in the International Category from supply base of over 13,500 suppliers

2011 – Contract Award – Long term agreement signed with Boeing for supply of F-18 Rudder Pedal Kits

2011 – Contract Award – 5 year long term agreement signed with Boeing for 618 line items – Boeing CAS

2011 – Contract Award – 5 year long term agreement signed for 767 & 747-8 production components

2010 – Contract Award – 5 year long term agreement signed with Boeing for 51 line items for 747-400 commercial aircraft

2009 – MOU Signed – Ferra signed MOU with Lockheed for supply of F35 AME Weapon Adaptors for FRP to Marvin Engineering

2009 – Titanium R&D – Ferra presented first F35 titanium part produced by direct manufacture (titanium deposition) in Canberra to Lockheed Martin F35 Vice President Tom Burbage.

2008 – Award – Platinum supplier status award for Northrop Grumman

2008 – Award – Boeing award for outstanding supplier achievement for bulk head machining project

2008 – Partner with Lockheed on advanced R&D to research specialised titanium machining process

2008 – F35 business increased to estimated $1.1 billion over the life of the program

2007 – GE FAI approvals completed – All parts successful passed customer approvals

2007 – Research partnership with University of Queensland for development of titanium manufacturing processes assisted by  Australian Government

2006 – Contract award for F35 AME Weapon adaptor assemblies

2005 – Award – Finalist Ernest & Young award for Entrepreneur of the year for Ferra Co-founder Mark Scherrer

2004 – Eurocopter (EADS) appointment as key Australian partner for Tiger / NH90 to supply pilot controls

 

 

 

 

 

 

 

 

2014-03-27 By Robbin Laird

During my visit to Australia in early March, I had a chance to talk with some of the F-35 suppliers in Australia.

When one frames this subject, the term “suppliers” to a nation’s F-35 program suggests a legacy approach, whereby one is assembling an aircraft in country and for the life of that engagement one is supplying parts for that single nation’s aircraft.

This would mean for Australia, that a relatively small number of aircraft would be produced, and supply and support houses would then engage in the production or assembly of those aircraft, and when that production run or acquisition run was over, that would be it except for whatever role the supplier might have in maintaining the aircraft.

The F-35 program has a very different approach.

It is designed for a long-term production cycle for the engagement of a network of  global suppliers, and participants in the program and rather than producing simply for their own nation’s planes but for the global production run and sustainment effort.

This means as well that there is the possibility of having multiple suppliers for the aircraft, which ensures that competition is built into the supply chain driving down cost, and raising reliability rates on parts to be supplied to the aircraft over time.  This means that the type of companies you can attract to the program see the point of investing in the program for the long haul; and these are clearly going to be among the best suppliers, and more than willing to meet the competition globally.

In turn, the long production run of the aircraft allows a company to wish to participate and to invest because planning can be for the longer term and not just a decade or less engagement in a smaller or mid-size nation’s acquisition cycle.

Such a company is the Australian company, Quickstep Holdings Limited, the manufacturer of high-grade carbon fiber components.  In a discussion with the CEO, Philippe Odouard, the company and its approach to the F-35 program was the focus of attention.

Question: What is your background?

Odouard: I have been in Australia for more than 30 years.  I came to Australia with Sagem and then moved to what is now Thales and had an opportunity to work with a new Australian startup, which is now Quickstep.  The founder of the company had developed some very innovative solutions for composite manufacturing, and the innovative business climate in Australia has allowed the company to grow.  We are focused on global exports and currently have state of the art manufacturing facilities at Bankstown Airport in Sydney and have offices in Germany and the United States.

Question: What is the approach of the company to the market?

Odouard: We are involved in the F-35 program as well as working with Lockheed Martin on the C-130J as well as with Boeing, Airbus, and Sikorsky.

But we are not just involved with aerospace.

We see the future for composites in the automobile manufacturing sector as a significant growth industry.  To meet the mandated environmental standards, which are getting more stringent in many countries, the weight of vehicles needs to be reduced along with shaping new propulsion plant technologies.  Composite manufacturing is clearly a key element of building capabilities to reduce vehicle weight.

The military market is important for us because we are a first world developer and producer.  The military market demands high end products with significant reliability built in.  This is an area where a high end producer can have an advantage over the lower cost countries like China.

Question: How do you see the F-35 program and its impact on your company?

Odouard: We see the program as the military equivalent of a civilian aerospace program such as the A320 or the Boeing 737.  It is a program with a long production run and global reach and allows us to engage in a global production engagement.

With the F-35 program, we are supplying key composite elements to Northrop Grumman, which is the major producer of the fuselage, and whose new plant is a state of the art automated manufacturing facility.

A measure of the recognition we receive from Northrop is that the President of Northrop Grumman Aerospace Systems came to Australia for the opening of our new facility in Bankstown, Australia.

http://investor.northropgrumman.com/phoenix.zhtml?c=112386&p=irol-newsArticle&id=1707643

Indeed, during the opening ceremonies we had a video link back to Los Angeles where the Northrop team participated virtually in the opening which symbolizes the approach of working closely together to deliver reliable parts.

In fact, we compete within the supply chain to provide high quality parts and have been consistently recognized by Northrop to be at the head of the class.

Question: Why Australia for your company?

Odouard: The simple answer is that the inventor of the technology was Australian.  We moved from Perth to Sydney to facilitate the upsurge in production for the global market.

The Australian government in its approach to defense products recognizes that it does not have a large domestic infrastructure for defense production and is looking for companies that can position themselves for a global engagement.  The approach is to amortize cost by not simply building up a domestic industry, which needs to be fed by domestic acquisition, but rather one that can work effectively abroad and help the Australian government amortize the cost of its core acquisitions.

The business model is very different here from what Brazil has done with SAAB.  After the Gripen acquisition is over it is over.  You are not going to get exports and your growth abilities are limited.

In the F-35 case, our investment allows us to participate in a global supply chain for a global aircraft.  It also allows you to shape a core team of developers and manufacturers and to take that core team into the global marketplace and to operate in adjacent fields as well.  The investment in the F-35 engagement is a real trigger to value from the Australian government’s point of view.  It is not a dead end street.

Recently, the head of the F-35 program came to our facility and was pleased to see our efforts at shaping new approaches to production and to affordability driven by technological innovations.  We believe that the global competitiveness built into the program will be a real benefit both for us and for the program.

Editor’s Note: The Quickstep website is a good guide to the approach of the company and its global engagement. 

http://www.quickstep.com.au/

The video below by the CEO provides a short overview to the company and its basic approach.