Francis Niss, Liebherr Aerospace
Release Date: 2009-01-30
Liebherr-Aerospace is part of a very diversified private group of companies with nine separate divisions, the Liebherr Group. What is the role of aerospace activity within the group and how do you derive synergies from being part of Liebherr?The division Aerospace and Transportation Systems, the area which I am dedicated to, accounts for roughly 10 % of the total Liebherr Group turnover. In 2007 we achieved a consolidated sales volume of roughly USD 1 billion, roughly 90% of which come from aerospace activities. (The currency in which we invoice is principally USD.) There are some synergies within the Liebherr Group even though most of the other product lines have nothing to do with transportation systems or aviation; the Liebherr Group is active in the fields of for example earth moving & mining machines, mobile cranes, construction cranes and mixing technology, maritime cranes, machine tools and material flow technology, and domestic appliances like fridges, which may contain air conditioning technology but are still totally different from the air systems we develop, produce and support for aircraft and rail vehicles.
We enjoy some synergies because the origin of our aerospace activity is directly connected to the group’s historic capability in hydraulics (for cranes, earth moving machines, and so on). This is one of the reasons why Liebherr entered the aerospace market for landing gear and flight controls. The first step was to set up a repair and maintenance station in Lindenberg, Germany, for landing gear and hydraulic aircraft components. We expanded this operation, and now we are one of the leading suppliers of advanced systems in the fields of flight control and actuation systems, air management systems and landing gear.
Today, Liebherr-Aerospace offers several complete systems: air management, actuation and flight control and landing gears. Which specific activity drives your current growth strategy?
All our activities in the product lines air management systems, flight control and actuation systems as well as landing gears drive our growth strategy. Within this strategy, we have recently reached important milestones such as, for example, the participation in the Airbus A350XWB program in the field of landing gear and flight controls and various participations in the business jet- and regional jet-sector in the field of air management systems.
There are certainly both, pros and cons to being part of such a massive family-owned holding company. How does your status as a wholly-owned division of Liebherr Group impact your ability to formulate and act on a proactive growth agenda in aerospace?
As we are a wholly-owned division of the Liebherr Group we follow the growth strategy that has been defined by the Liebherr family. A basic principle of this strategy is that internal growth - that means growth by virtue of our own strength - should be the typical mode of expansion at Liebherr. Acquisitions of other companies are only taken into account, if it really makes sense and if it is necessary. This concept of a financially secured expansion has proved to be successful in the past. Also, Dr. Willi Liebherr, Chairman of the Supervisory Board of Liebherr-International AG, understands that - especially in our business – we cannot count on a very short-term return on investment since new aircraft programs normally require a commitment of funding R&D for up to five years or even longer before the first return is even registered. Our shareholders totally support a long-term strategy which is necessary for our business. In fact, we are one of the few family-owned Tier One aerospace suppliers in Europe and it is likely that we are the largest.
While the Liebherr Group’s operations are global in scope, we see that over the past five years turnover from the Far East and Australia region is stable at approximately 10% of group turnover. Can the same be said for Liebherr-Aerospace? To what extent have you been able to diversify your client base beyond simply serving Airbus?
We at Liebherr-Aerospace have factories in Germany, France, Brazil, Austria, USA, Singapore, and PR China, with anywhere from less than 50 to more than 250 employees, about 80% of the people we employ are still located in Europe. Our biggest facility by far is in Lindenberg, Germany, with ca. 2,000 employees and we have another 1,000 people in our company in Toulouse.
In terms of employment, we are very European, both as the Liebherr Group of Companies and as the divisional operation Liebherr-Aerospace SAS. At the same time, we acquire programs worldwide. We are active in programs of for example AVIC, Agusta, Boeing, Bombardier Aerospace, Dassault, Embraer, Eurocopter, and Sukhoi. Our strategy is to widen our customer base. I would say we have been quite successful.
When looking at the aerospace branch, the long-term trend in Far East and especially China moves upwards. The ARJ-21 will enter the market, Airbus is selling its aircraft in China, Embraer has a facility in Harbin. All these aircraft that are already and will be flying in the Far East need maintenance, repair and overhaul, i.e. the whole range of customer services, which also means business for us.
For future programs, such as the Trunkliner, we also offer our functionalities / integrated system solutions.
In Europe, there are mixed feelings about the development of new aircraft development programs in quickly emerging markets like Russia and China. There is fear that the reigning global duopolies in large and medium range aircrafts might be toppled through a major change in the status quo. Do the major new aircraft programs you’ve mentioned present more of an opportunity or a threat to Liebherr- Aerospace? Why should Liebherr be invited to increase its participation as a strategic partner in such programs?
These developments represent a clear opportunity for Liebherr to reduce its dependency on other customers. We had a clear strategy to be present in these two prestigious and aspiring programs, the ARJ-21 and the SuperJet 100, because both, the Chinese and Russian market will surely be important in the future. We are proud not only to be present in both programs, but to be present with two very different systems. For instance, in the ARJ-21, we are responsible for the complete nose and main landing gear systems, as well as the complete air management system. At the same time, we are responsible for both, the full air management and fly-by-wire flight control system for the SuperJet 100 program. These are very important milestones that we have reached. For the very first time we supply two complete systems in each aircraft. It is very important for us to be able to demonstrate our capability to develop, manufacture, supply and support fully integrated, large and complete systems and the regional aircraft market segment has offered us the opportunity to pursue this aim. Most companies only focus on one type of system.
Until the A350XWB- and Boeing 787-program, Airbus and Boeing did not assign and contract out complete and big system packages. But now, we have a clear position in the market as a very experienced partner for regional aircraft manufacturers in particular. Bombardier Aerospace was the first customer to request from us to take on the complete air management system for their Global Express®, covering all functions: air conditioning, cabin pressure control, bleed air system and anti-icing. Our facility in Toulouse took on this “break-through” project. Within the Liebherr-Aeropace division, we have a clear differentiation of product responsibilities in which air management systems are the responsibility of the Toulouse plant and flight controls/actuation and landing gears are handled by our German facilities in Lindenberg and Friedrichshafen.
In the 787 program, Boeing clearly focuses on passenger comfort – for example onboard air humidity. However, the next generation of ‘green’ aircraft is today’s hot topic and your activities do not exactly fall neatly into the improvements to aerostructures and engines which are attracting all the attention. What is the real contribution that Liebherr-Aerospace can make in the development of the ‘green generation’ of aircraft?
In fact, we are one of the founding members of the “Clean Sky” Joint Technology Initiative. We are together with Thales co-leader of the technology development activities “Systems for Green Operation” dealing with more electric solutions in the new generation of aircraft which will have to consume less fuel and generate less external and internal noise. Noise is typically a subject for landing gear during approach as well as for cabin air management. Also, in the future, more and more hydraulic actuators will be replaced by electric actuation solutions. We are already providing electric actuators for the A380 and A400M. Another focus area is the greater utilization of composites which is of particular importance and interest to us in the field of landing gear systems. We are very dedicated and active regarding this subject and we also derive synergies from the activities of other divisions of the Liebherr Group. The topic of reduced consumption and noise is for example also quite important for Liebherr’s earth moving machines division, so we clearly benefit from group-wide synergies.
It is often the case that new aircraft programs in emerging economies are advised to keep their aircraft simple and functional. What is the impact of this way of thinking on Liebherr’s hopes to maximize involvement in such programs as the ARJ-21? To what extent can your company’s unique competencies be incorporated into such aircraft?
We are the No. 1 by far in supplying complete air management solutions. In fact, we are the only company which can rely on such experience. We have provided systems and equipment for aircraft programs of for example Airbus, Antonov, AVIC, Bombardier, Sukhoi, and also for several helicopters. Clearly that has motivated some of our customers in Russia and China to have us on board in this area. At the same time, our demonstration of landing gear capabilities through positive experiences with Embraer, for whom we have already delivered complete landing gear systems, established a clear advantage for us in convincing the AVIC I organization to choose us as their partner in this area as well. We were selected, even though larger and big competitors have the same competence. Our commercial approach was very important in the negotiation for the ARJ-21 program.
What exactly differentiates the Liebherr-Aerospace commercial approach from that of its competitors?
It was clear that AVIC wanted to select capable partners. Without our experience in air management systems and landing gear we would not have had any chance. However, since we were very interested in getting both contracts, we made a quite aggressive proposal and won both systems after some very tough negotiations. This demonstrates also the long-term strategy of Liebherr: we are not out to earn the quick Euro or Dollar. Everything we do aims to constantly reinforce our image of quality and reliability. Due to the activities in our construction machinery division, our brand name is well established and quite famous in China.
Liebherr-Aerospace’s operation in Wuhan is only a few years old now. What are your expectations for the growth of Liebherr-Aerospace in China and for the contribution of such activities to Liebherr?
The Wuhan organization focuses only on repair and overhaul as well as customer service, mostly geared toward serving the expanding Airbus fleet in China. We also support the ARJ-21 once it enters service very soon. Today, we also run business through our fully-owned Liebherr companies in Shanghai and Singapore. Even though we have a quite important organization in Singapore, the Chinese market is now less interested in sending equipment and systems there for repair, due to considerations like for example turnaround time. Fact is, that Liebherr will further strengthen its presence in China.
Very few European companies have the privilege of being selected as partners on the ARJ-21 program. How likely is it that you will leverage Liebherr’s strong collaborations in China to move further beyond the MRO function? Do you anticipate setting up a more permanent industrial presence in China?
At the moment we directly employ a small number of people in China. However, we have been invited by AVIC to explore the opportunity to subcontract some parts of either the ARJ-21 landing gear or air management systems in China. We are very pro-active in exploring this kind of Chinese cooperation with the support of AVIC. Of course, it must make sense for us and the final customer, meaning that any such move must bring costs down. I’m quite sure that we will be able to identify some interesting sources.
We have already been invited by COMAC to explore with them the possible participation and contribution of Liebherr-Aerospace in the new Trunkliner program. Of course we are very interested in participating - this time not only with landing gear and air management systems, but also with flight control and actuation systems – i.e. with all three of our product lines.
For the ARJ-21, at that time, our feeling had been that it was possibly better to display European expertise and participation. The same could be said for our involvement in Russia. Their systems coming from the US of Europe were welcome. Now, things are clearly changing. In the future, it might be interesting for COMAC and us to establish a stronger Chinese presence and image, including local China-based research and development and manufacturing, to express a full commitment to new programs like the COMAC Trunkliner aircraft. This is still under evaluation since the program has not yet been officially launched and we have not yet been informed of its further way of proceeding. Nonetheless, we see participation in this exciting and challenging program as a tremendous opportunity and we are flexible; we totally understand that our Chinese friends might very well look for a greater Chinese presence as a pre-condition to a participation in the Trunkliner.
Is this to say that the new approach to foreign participation on key systems in COMAC programs will involve more of a balance of European and Chinese expertise and activity, thus leveraging both European expertise and a lower cost base as well as better access to the burgeoning local market for aircraft in China?
Yes, absolutely. We are quite sure that we want to be present in COMAC programs and that Chinese participation will be higher.
In light of your will to establish a stronger presence in China, what would be your final message to the decision makers at AVIC and COMAC?
It would be helpful for us to work with AVIC and COMAC to identify together real synergies and product segments for which it makes sense to create local competencies and capabilities. Whatever we do together must make sense; it must not be a duplication of existing capabilities of Liebherr-Aerospace in Europe. We are well prepared to be pro-active in analyzing these matters with our Chinese friends.
| Company: | Liebherr Aerospace |
| Position: | President |
| Country: | France |