Interview with the Head of the Airframe Tooling Business Unit and Key Account Manager for Airbus/SatAir Georg Lambrich

What exactly is airframe tooling? What does the business model look like?

Well, when we talk about airframe tooling in a very broad sense, we’re talking about the tools that are used to manufacture and maintain aircraft, although each aircraft manufacturer defines their own dividing line between airframe and engine tooling. For instance, Airbus considers a bootstrap, which is a piece of equipment used to change engines, a clear example of an airframe tool, while Mitsubishi considers it an engine tool for its SpaceJet. Generally, however, you can say that airframe tooling traditionally revolves around “make-to-print” products. If I were to really simplify things, this basically means that we make tools as specified in the corresponding drawings and that we function as an extended workbench for aircraft manufacturers in this sense. Now, the range of airframe tools in our portfolio comprises virtually all mainstream aircraft OEMs by now, going from Airbus, to Boeing, to smaller manufacturers of regional aircraft, including ATR most recently. However, when we look at things more closely, it’s obvious that the job is not simply to make products based on existing drawings, as it includes a number of tasks that go far beyond that, including making changes to tools that are not ready for production, meeting multi-layered customer requirements, and managing complex supply chains, just to name a few.

As a company, we generally don’t own the IP, or intellectual property, for the products, meaning that we don’t get a final say in how drawings turn out and that we don’t have any direct influence on tool design. This stands in stark contrast to our ground support equipment, where our decades of know-how from in-house developments play a significant role. In addition, and in contrast to the Ground Support Equipment product division, the clientele environment we deal with is much less fragmented, as tools are distributed exclusively via the relevant OEM itself with few exceptions.

 

How many different tools are we talking about here?

Airframe tools are aircraft-specific for each model. If we use Airbus as an example, it goes from simple tools such as pitot covers, which are small protective covers, to complex tools such as bootstraps for engine changes. Needless to say, the price varies with the complexity of the tool, and in the case of bootstraps, it reaches the five-digit range pretty quickly. More specifically, we have more than 8,000 airframe tools in the system, with around 4,000 of them currently active. 500 to 700 of those are what we call fast-moving items, meaning that they are normally ordered multiple times a year.

On the other hand, some tools are only ordered once a year, while others are ordered in batches of 100s. What this means, basically, is that we sometimes function as a “custom workshop” and sometimes as a mass production manufacturer. In 2019, we delivered 1,200 airframe tools that covered around 300 different types.

 

What does the OEMs’ business model look like and who sells what to whom when it comes to airframe tools?

Our major airframe tool customers are Airbus and Boeing, as well as Sukhoi, Irkut, and ATR. Most OEMs sell or intend to sell their airframe tools directly to their end customers and are the exclusive distributors of these tools. And one big reason this works that way is that aircraft manufacturers now consider their tool business to be an integral part of their service offer, rather than just a burdensome appendage of aircraft production operations.

Right now, Airbus has a pool of suppliers. In contrast, ATR had a single exclusive supplier for a very long time, and now they added HYDRO.

 

How does a company become an OEM supplier of airframe tools?

Well, if I were to use Airbus as an example, a general agreement would be required in order to become an airframe tool supplier. On top of this, suppliers need to agree to an extensive set of rules that include, for example, a code of environmental protection regulations.

We’re able to also make highly complex tools with deep added value that require a lot of experience, with the best example being, once again, bootstraps. Other competitors are not as good at this, but the competition is getting stronger and stronger every year, meaning that we need to keep improving continuously and really tap into synergistic effects that reduce costs.

 

What are the main challenges when it comes to make-to-print production operations?

There’s a pretty big foundation for that business that needs to be mastered before a company can be successful in it, but the big three must-haves are on-time delivery, on-quality delivery, and on-cost delivery. And once a company is able to tackle this trifecta of challenges, it’s well positioned to get started in the traditional make-to-print business. However, that’s far from all that’s required. What kind of engineering know-how does the company have? Is the company only a supplier or also a partner? Can the company also, for example, develop and improve airframe tools as a result of its longtime history in tool production? Does it have experience developing ground support equipment? These are just a few important things that play a part in the business.

Another crucial element that can make or break a company when it comes to airframe tools is whether the supply chain is firmly under control and whether the company can respond quickly and sustainably to changing challenges and conditions. In 2017 and 2018, for example, Airbus reinforced quality standards, i.e., production exactly according to the drawing and a meticulous adherence to customer requirements. This was a boon for us, since we have a high degree of vertical integration at the company and only procure about 15 to 20 percent of airframe tools from the worldwide supply chain, were able to rely on our team to deliver when it counted, and are not externally controlled.

It’s also important to point out that OEMs expect for their end customers to get support for tools worldwide whenever necessary and that we have a worldwide service network with 12 HYDRO service-centers and are certified and authorized as a service company by Airbus. And what this means is that we’re a one-stop shop that provides our customers with support that goes far beyond simply product purchases.

 

Are airframe tools made strictly according to the corresponding drawings?

You’d expect so in theory. The OEM delivers the drawing and we produce the part based on it. Done and dusted. However, real life shows that there are huge differences from aircraft manufacturer to aircraft manufacturer. Sometimes there are drawings that are over 20 years old that were drawn by hand and that sometimes will not have metric dimensions or that are simply not producible, and this becomes more likely the older the aircraft model is. Now, sure, we could simply just fulfill the order blindly and follow exactly what the drawing says, but with the risk, that the tool cannot be assembled or it would be extremely expensive.

This is why we see ourselves as OEM partners. We examine drawings with our extensive experience and know-how and ask very specific questions about how things are supposed to work or point out when material specifications are missing or dimensions are incorrect. Now, as I said previously, OEMs are the ones with the final say over drawings, so they’re the ones who make the corresponding changes after that. All in all, this means that we’re “tool improvers,” which is something that OEMs really value.

What do tool orders depend on? How does demand arise?

The demand for airframe tools ultimately arises from the demand for flying services, meaning that it comes from OEMs’ end customers. This includes, for example, MROs, as well as the airlines and operators themselves. However, the orders themselves at Airbus are triggered by the inventory. Now, it’s important to mention that demand is all but dead in the current crisis due to the many uncertainties related to COVID-19, and we’re feeling that directly as a result of the usual MRO activities that have been stopped.

How do aircraft manufacturers’ end customer sales work?

The big OEMs usually have their own sales force and their own distribution channel. You can see that with wholly owned subsidiary SatAir in the case of Airbus, for example. In fact, only Boeing has a traditional licensing model approach, but even they have an in-house sales operation via Boeing Global Services, which was formerly Aviall. The two subsidiaries I just mentioned are increasingly adopting the role of distributors, much the same way that Amazon has done this in the B2C market. In fact, SatAir no longer sells Airbus tools exclusively, and is now also selling engine tools, merchandise, and even Boeing equipment. And Boeing Global Services is doing the exact same thing but the other way around. For companies such as HYDRO, this means that the range of markets that can be reached is significantly greater, since we’re able to offer our own products, as well as make-to-print products, with the help of the OEMs. To continue with the previous analogy, it’s sort of an Amazon Marketplace.

 

 

What does your job as head of Airframe Tooling entail?

My job is basically to completely manage the Airframe Tooling business area. First and foremost, this involves optimizing product management for all airframe tools. My team and I are responsible for the entire airframe tooling product portfolio and need to push forward the corresponding continuous improvement process, which also involves our pricing strategy, defining minimum batch sizes, defining stock levels, etc.

The second most important part of my job is taking care of the global key account management for the Airbus Group for the HYDRO Group worldwide. Whenever there’s a contact point with Airbus somewhere in the world, I need to know everything about it, starting from the Airbus final assembly lines that our area sales managers, so called ASM, support on-site in various countries worldwide to every aspect related to contract management with regard to Airbus. For our customer, the advantage of this is that they have a single contact person that knows what’s going on everywhere and can take care of it. Finally, I have the ASM role when it comes to SatAir and am responsible for coordinating sales and ways to improve our customer relationship.

What kind of impact is the coronavirus pandemic having on the business?

That’s an easy question to answer. Due to worldwide travel restrictions, most airlines in the world were grounded until the end of May. And, of course, this means that those airlines required less maintenance and that OEMs were not selling aircraft anymore, which also means that those OEMs didn’t require any airframe tooling for their own direct sales. So, to put it simply, the crisis spread without mercy throughout the entire value chain, and the consequence was, and continues to be, a severe drop in demand. In fact, we hadn’t seen anything like it in our 50 years of existence as a company. Fortunately, we’re still going through our orders on hand from 2019, and we’re really happy that a lot of airlines started flying again on and after June 1st.

One great thing that I’d be remiss not to point out is that most aircraft orders placed with OEMs weren’t cancelled, but postponed instead, so that companies wouldn’t lose their place in the line for a new model or have to pay contractual penalties. Moreover, more than 90 % of the planes that are grounded right now have not been placed in storage, but are simply parked, which means that they can be ready to fly again in a matter of days. All this makes me cautiously optimistic about the future.

When will the industry recover from the pandemic?

Well, the good thing is that the demand for flights is still there, and it’s only the current restrictions and uncertainty among passengers that are affecting it. My assessment is that we’ll get back to how things were before the crisis very quickly after restrictions are removed or after a vaccine becomes available. In the meantime, we’re taking advantage of the crisis to optimize processes and be ready to take off the very day that things get going again.

 

 

A good day at work starts with…

When it’s really good, with me jogging for at least 30 minutes and then enjoying a relaxed breakfast with my wife. If it’s “only” good, with me getting to work without any traffic and waking up to fewer than 20 emails.

The first time I earned money was…

At the Public Finance and Health Economics Department at the Technical University of Berlin, as an assistant.

If I could choose my seat neighbor on an aircraft…

I’d take the middle seat and have Ryanair CEO Michael O’Leary on the left and British entrepreneur Richard Branson on the right. If Elon Musk were to sit in the row in front, I’d think we’d manage to make it through pretty much any intercontinental flight without a problem.

I lose track of time…

When kiteboarding and when with my family.

The so far most expensive purchase in my life…

My electric car, a Tesla Model 3, although the operating costs are really low. Everyone at HYDRO who knows me knows that I could talk about this for hours and hours...

I have always…

Had a close connection to France, both culturally and in terms of my family.

I have never…

Gotten a pilot license. It’s right at the top of my list of priorities!

If you want to get somewhere at HYDRO…

You need to be really proud of working in an industry that is extraordinarily global and, above all, really live this every day at the company. You need to have a passion for aviation, enormous curiosity, and be absolutely in love with HYDRO products, as well as with working at a medium-sized company and all that this entails.

When I was 18, I wanted to…

Become a pilot. What else?!

Home for me means…

The entire world, although admittedly with a slight focus on Germany and France. I consider myself to be a global citizen.