Aerospace Business 2 Business

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AerospaceBusiness 2 Business
Breaking News
Breaking News
Breaking News
February 10, 2000 Big GE Unit to Offer
Services,Sell Parts on a New Web Site By MATT
MURRAY Staff Reporter of THE WALL STREET
JOURNAL General Electric Co.'s largest single
unit, GE Aircraft Engines, plans Thursday to
unveil a new business-to-business Web site that
will enable commercial airlines and military
customers to buy parts, among other functions,
via the Internet. The site launch is the latest
flowering of GE's company wide move to integrate
the Internet into its daily operations in an
effort to speed transactions and reduce costs.

• Kyriakos Leonidou, Francis Montet, Linda Moya,
• Ridzwan Nordin, Andrew O'Shaughnessy, Priscilla
  Pang

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The Aerospace Industry

• Aerospace term coined in the 1950s, when the
  space race was heating up
• Impetus for growth was war and the Cold War
• Since the demise of the Cold War, companies have
  found it necessary to merge with or acquire
  competitors
• Since 1989, downsizing and cost-cutting have been
  rampant
• streamlined operations, cut RD, reduced
  inventories, employment slashed by 50
• Today Aerospace is a 1B industry. Major players
  are the following plus Airbus Industrie - a
  European consortium expected to go head-to-head
  with Boeing

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Major Players and B2B Players
Parts Suppliers
Intermediaries
Manufacturers
Customers
Airbus Industrie Boeing Lockheed
Martin Northrop Grumman Raytheon
AARCorp Sita BF Goodrich GE Aircraft Honeywell
United Technologies
Aerospacemall.com Aviabid.com Partsbase.com
Commercial Carriers
Military / Government
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What They Do

• Parts Suppliers
• Aircraft engine sales leasing and overall
• Aircraft overall
• Made-to-order equipment systems
• Auxiliary power units
• Commercial avionics
• EGPWS warning systems
• Flight control systems
• Environmental control systems
• Landing systems
• Interior and exterior lighting

• Intermediaries
• Portal for aerospace, aviation and industrial
  information
• Auction community to buy and sell aviation parts,
  aircraft, services, and equipment.
• Career brokering
• Manufacturers
• Short, medium, long-haul aircraft (military and
  commercial)
• Defense electronics, systems integration,
  military aircraft systems, commercial aircraft
  assemblies
• Business aviation and special mission aircraft,
  engineering and consultation

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Where They Do Business

• Parts Suppliers
• AAR North America, Europe and Asia
• BF Goodrich North America, Europe and Asia
• GE Aircraft North America, Europe and Asia
• Honeywell North America, Europe, Asia
• United Technologies Worldwide
• Intermediaries
• Primarily North America
• Manufacturers
• Airbus Europe, North America, Middle
  East/Africa, Far East/Asia/Pacific, Latin America
• Boeing United States, Asia, China, Europe,
  Oceania, Africa and Western Hemisphere
• Lockheed Martin Government and commercial
  customers around the world
• Northrop Grumman primarily US
• Raytheon primarily US

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Who are the Customers?
Parts Suppliers
Intermediaries
Manufacturers

• International markets
• Commercial markets
• Military, defense, civil, government markets
• Aircraft leasing companies

• Airplane OEM
• Small parts companies
• Aviation consumers and professional buyers and
  sellers
• Aviation professionals looking for a job
• Air carriers looking for airplanes

Our Space and Aviation Control business serves
customers that range from aircraft manufacturers
and business aircraft operators to prime space
contractors and the U.S. government Source
Honeywell SEC 10K, March 1999
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What is the Value Proposition of Online B2B?

• Intermediaries provide level playing field for
  small and medium parts suppliers with large parts
  suppliers
• Parts Suppliers B2B and Intermediaries B2B enable
  reduced costs for Manufacturers
• Reduced procurement staffs and costs
• Reengineered procurement process
• Eliminate manual paper process
• Common history of business transactions between
  buyer and seller
• Intermediaries provide Manufacturers up-to-date
  product comparison information across suppliers
• Intermediaries broker effective relationships
  between aviation professionals looking for jobs
  and aerospace companies
• Intermediaries provide Airline Carriers
  opportunity to by airplanes, through auctions for
  example, comparison shop across manufacturers

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Online Basics

• Computer Sciences Corporation recently conducted
  a study of the e-business strategies of the major
  players in the aerospace industry. All the IT
  executives of these companies said they had Web
  sites, however 55 said those sites were strictly
  informational, with 18 interactive, 18 able to
  deliver information and 9 percent able to make
  transactions.Source AerospaceOnline
  http//www.aerospaceonline.com (November 1999)
• Parts suppliers
• Generally provide company and product information
  as educational content
• More advanced sites have capabilities to
• place orders (GE, AAR)
• search products, track orders, check inventory
  availability, technical support, customized pages
  for customers and other suppliers (GE, AAR,
  Honeywell, United Tech)
• purchase online (GE)

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Online Basics (cont.)

• Intermediaries
• Information about the aviation market
• Revenue plan
• Free registration
• Commission based
• Advertising commission
• Manufacturers
• About the company (all)
• Company history / milestones (all)
• Meet the executives (all)
• Company financial information (Boeing)
• Career opportunities (all except Airbus)
• News and events (all)
• Product information (all)
• Online procurement processes (Airbus, Boeing,
  Lockheed Martin)
• Supplier relations information (Boeing, Lockheed
  Martin)
• Investor relations information (all except Airbus)

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Sample Online Value Added Web Pages
Online training offered by Honeywell
Airbus member-based service check parts
availability, interchangeability, excess
material, prices
Auction community / marketplace to buy and sell
aviation parts, aircraft, services and equipment
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Online Value Added Parts Suppliers
BF Goodrich
United Tech
Honeywell
AAR
GE

• Personalized pages
• E-mail subscription to news and new product
  information
• 1 hour guaranteed delivery at select airports
• View pictures of ongoing repair work
• Online training
• Options to either exchange or borrow parts

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Online Value Added Intermediaries
AerospaceMall.com
Partsbase.com
Aviabid.com

• Web design consulting services
• Discussion boards
• Personalized pages - account status, monitoring
  auction items, end an auction early, edit
  personal information, feedback
• Auctions allow members to set their own price
• Escrow payment services
• Multiple auction schemes - English Auction Dutch
  Auction, Japanese Auction, Sealed Bid
• Multiple shipping options
• Allow search for parts and aircrafts
• Aviation news

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Online Value Added Manufacturers
Lockheed Martin
Northrop Grumman
Airbus Industrie
Raytheon
Boeing

• Market status update / stock quote
• Online publications THE LINK, quarterly
  newsletter, Above Beyond magazine
• Photo or Video gallery
• Kids page
• Gift store
• Philanthropy
• Education, grants, scholarships, donations to
  not-for-profits
• EDI interconnection for online e-commerce
• Latest multimedia technology (FLASH)
• Small business relations (women and minority
  owned)

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Online Opportunities

• Opportunity
• Multilingual interfaces
• Attract undiscovered customers
• Recruitment of smaller carriers and private
  owners
• Provide tools for EDI to B2B transformation

• Benefit
• Increased global reach
• Increased revenues
• Cost reductions, enlarged supplier customer
  network

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Online Opportunities (cont.)

• Opportunity
• Purchase contract negotiation via the web
• Password protected work area where account
  executive and customer can negotiate terms
• Ongoing communications via the web
• 11 Bboard between customer and account executive
• History of all online conversations

• Benefit
• Customer access to information on their terms
• Access web
• Call their account representative
• More powerful communications than paper or e-mail
• Can be secured
• Version control
• Common history of business relationship

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Industry Issues

• Transfer of design and technology base
• This does not necessarily mean giving up the most
  advanced technology. It could involve something
  as simple as showing foreign workers how to
  operate a particular piece of equipment. To
  maintain technological and informational
  superiority, companies restrict what they make
  available online.
• Government involvement in the industry
• In the international arena, the US aerospace
  industry is competing against companies that are
  directly or indirectly owned by foreign
  governments. Asian and European governments have
  a strong influence in the aerospace industry and
  this is a barrier of entry for US companies
  trying to increase their market share.
• Some European countries condone bribes for
  solicitation of contracts, this is some thing US
  companies cannot offer.
• Trade barriers and sanctions also limit
  international transactions.