Seamless Integration Takes Flight

28 September 2010 (Last Updated September 28th, 2010 18:30)

The aerospace and defence sectors are reaching a pivotal point in their recovery. Liam Stoker speaks to Mahindra Satyam associate vice-president of strategic partnerships Gaurav Gupta about the challenges facing the industry and Mahindra Satyam's new "Art to Part" facility.

Seamless Integration Takes Flight

Mahindra Satyam, the brand identity of Satyam Computer Services, hopes to supplement the aerospace and defence market recovery with its new “art to part” facility; a seamless, single-window partnership model in which both design and manufacture areas are combined. With Boeing falling victim to the pitfalls of outsourced fabrication in the manufacture of the 787 Dreamliner, Gaurav Gupta believes that this single-window approach can benefit the aerospace and defence industries.

Liam Stoker: What new services does Mahindra Satyam feel it can offer the aerospace and defence sectors?

Gaurav Gupta: Firstly, we have separate entities that deal with the differing sectors, so we have an aerospace manufacturing company and a defence systems manufacturer as well as our design sector, so by bringing them together we can offer integrated engineering with a 360° relationship to impact the design and fabrication of both aerospace and defence systems as part of a single entity.

What we can do is go back to our customers that are asking for a specific design service and offer them the services of the entire group, and this is where the term art to part originates from. If we take a wing as an example, we can design the wing itself and then have our manufacturing aspect fabricate the part for our customers.

LS: How can Mahinda Satyam benefit customers using this streamlined approach?

GG: Overseas, there are not as many engineering graduates as before, so industry costs remain high and programmes are becoming more complex, needing more people to come in, and this is the sort of problem that has been affecting the Dreamliner.

“‘Art to part’ is a seamless, single-window partnership model in which both design and manufacture areas are combined.”

The Dreamliner itself was on the launch stage for three years and in manufacture for five, so people’s capital has been stuck for eight years in an investment that hasn’t come to fruition. This leaves the industry stuck without cash and engineers, so you need partners in order to fulfil orders.

The biggest market for reliable partners now is India, as we can offer the technical skills required coupled with the financial security needed to see the project through. There is no debt culture in India and the industry is cash rich at the moment, which makes us an attractive proposition for those in the aerospace and defence industries.

Another integral area is the safety of patents that India can guarantee over China, whose record with patents isn’t fantastic.

LS: How important is innovation in engineering solutions to the aerospace industry?

GG: Considerably important. We’re beginning to set up links not just with fellow companies, but also with universities so we still have people coming through the ranks because of an investment in education and increasing technological understanding from the floor up. I believe that, in the next three years, this will be at the forefront of the company’s focus.

LS: The 2010 Farnborough Air Show showed glimpses of recovery, how does Mahindra see the current state of the aerospace industry?

GG: The aerospace and defence sectors have a very, very slow recovery stage. The aerospace industry itself tends to lag almost a year behind conventional ecosystems and consumer led industries, so a recession in the banking sector may not be felt initially. When the retail sector was beginning to recover, aerospace and defence was beginning to feel the effects of a recession.

“The biggest market for reliable aerospace and defence partners now is India.”

The aerospace sector is still in a recession, and as a result, more and more orders are becoming optional, rather than firm orders for the definite delivery of aircraft.

There is a feel good factor, displayed by the orders made at Farnborough, but there is no 100% guarantee that these optional orders will be made firm.

If you look at what Boeing is selling, they’re selling the 787 which isn’t even flying yet and now they’re in a position where orders are being cancelled.

LS: So how is the industry itself changing in response to this?

GG: What is changing is the presence of purchase power. Brazil and India are emerging with considerable buying power of aerospace and defence products, and what India plans to purchase over the next ten years is the sum total of the rest of the world in terms of aerospace and defence. India alone will purchase over $100bn of defence and aerospace equipment over the next seven to ten years and this is only procurement alone; there is an equal aspect of manufacturing to take into account.

India does not have a BAE Systems or an Embraer like Brazil, so it needs an Indian home-grown industry to emerge and this is a perfect time for India now that we are leading and buying products, and you can use this as a ladder to move up and establish your own, home-grown industry… a market with huge potential.

LS: Recent news stories suggest that air forces, particularly in Europe, could be forced to consider leasing and sharing aircraft as a result of budget cuts. What is Mahindra’s take on this?

“The aerospace and defence sectors have a very, very slow recovery stage.”

GG: What we’re beginning to see is a preference for not only leased aircraft, but also the possibility of leased parts and components. You have companies supplying parts, such as landing gear, to Boeing or Airbus for substantial sums. What we envisage happening in the future, is cases of landing gear being supplied for a period of ten years and manufacturers being charged per landing, rather than a lump sum for that particular part.

LS: And, finally, what is the biggest challenge facing the aerospace and defence sectors in the immediate future?

GG: Probably the availability of resources and skilled man power, coupled with the potential risk factor. If you take into account a place like Vietnam, a company would have no problem identifying the levels of man power required to complete an operation, but the level of skill may not be at the necessary level. China would be able to provide suitably skilled engineers, but poses a certain element of risk in regard to patents.

This is where I believe India, or perhaps Brazil, can be a considerable contender for the location of future aerospace and defence developments. We’ve invested considerably in academies and universities in order to develop a sufficient base of skilled engineers and the finance is there to reduce the risk of the investment.