NAG - Round Table discussion-‘How to manage Cost Pressure in Aerospace market”

28 November 2018 P. van Lieshout

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Content & Agenda

1. General company presentation

2. Market developments Aerospace 2008- now

3. KMWE’s approach from 2008 – current

4. Considerations

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KMWE Group worldwide

€ 110M turnover> 550 FTE> 76 CNC machines

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KMWE Netherlands HQ in Eindhoven NL (current facility)

NLKMWE293 FTE14.500 m22100 m2 cleanroomISO9001/ISO13485AS9100

DutchAero93 FTE14.000 m2ISO9001/AS9100/NADCAP

NL

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KMWE Malaysia196 FTE9.000 m2150 m2 clean roomISO9001/AS9100ISO13485

IN

MY / SG

KMWE International

Joint Venture35 FTE300 m2

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Markets & customer portfolio

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Executive Board & Group structure KMWE / DutchAero

KMWE Group bv

KMWE Precision bv DutchAero bv KMWE International bv

E. VonckenCEO

M. EversCTO

B. GevenJ. Aalberts

AddFab bv (3DP)

KMWE Malaysia Sdn BhdIDEAS Ltd (India)

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Core Technology&

Capabilities

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Complex Machining (5 Axis HSM/HPM/Micron/Large)

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Automated Machining

24/7 operation

Robotized

Model Based CAD/CAM

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Quality Testing & Inspection

NDT X-ray

CMM Inspection

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Sheet metal Complex Fabrications (‘One-Stop-Shop’ concept)

Hydroforming Welding

Heat treatment

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Sheet Metal Components Bending, Forming & (Spot)Welding

Sheet metalBending Welding

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Thermal Spraying: (Aero) Engine parts

Quality control

Plasma/HVOF/Flame/Arc

Surface treatment

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Material Lab: Inspection & Test

Tensile TestCutting machine

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Aerospace market growth: MAJOR Business opportunities

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Market Aerospace developments & Trends last 10 years

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Aerospace Market developments & new Trend last 10 years

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Aerospace market developments

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Aerospace Market developments

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Betekenis voor Aero-industry NL en KMWE in 2008- en toekomst

1. KMWE’s marktpositie onder grote druk als subcontractor/toeleverancier

- GKN Fokker’s Business Jet (resoucing of full buy components)

- Airbus Group – Supply Chain reduction (resourcing of Tier 1’s)

- LTA’s met (veel) meer verantwoordelijkheid als Tier 2 supplier

2. Aanpassing marktstrategie noodzakelijk (Aerospace on the agenda!)

3. Technology roadmap aanpassingen (full-buy concept is must)

4. KMWE ‘Global presence’ becomes a must

5. Company scaling (to support large programs with financial stability)

6. New opportunities with major Tier 1 & OEM’s

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Betekenis voor Aero-industry NL en KMWE in 2008- en toekomst

1. NEW WORLD: KMWE concurreert met ‘Low Cost' regions ! !!!

Aanpassing van prijsniveau (en dus kosten) betekent:

- Company Strategy: meegaan naar Low Cost regions voor productie - Turkije in een JV - Maleisië (1 stap: Non Aero voor assembly)

- Technology: Investeren in automatisering in NL

- Business: meer toegevoegde waarde inbrengen - Sales: LTA’s onderhandelen met de bestaande klanten (Fokker - Airbus- UTAS ) - Earl(ier) involvements in Engineering & Design: reduce cost and add value

Alternatief: Termination of (Aero) Business !

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Requires

- ‘partnership’ and ‘strategic fit’ with foreign international companies

- Long term investment in relationship

- Funding

- Customer needs to be aligned

- No conflicting interests

- Cost level estimations >20% reduction needed

- Evaluation of: ‘total cost of ownership’ approach

Low cost production sites ? (our experiences)

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Automated production considerations

1. Clear Technology roadmap > 5 years

2. Production within a family-technology approach

3. 24/7 operations

4. Easy to operate and to relocate

5. Heavy technology investments in Engineering and CAM

6. Max standarization of the MFR processes

7. Limited materials (and parts production technology)

8. Best suitable brand in production equipment

9. New goal: No set-up times and high OEE

10.COST REDUCTION IS LIMITED TO 25-30%

11.Non Recurring investment needs to be justified for serial production

12. New quality inspection approach

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Next step for KMWE: Brainport Industry Campus (BIC 2018):

‘The new Factory of the Future for KMWE’

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Production & Logistic Area

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Production Facilities