From The Source: Ian Thomas, President of Boeing Australia and South Pacific | ADM July 2009
Thomas spoke frankly to ADM's Senior Correspondent Julian Kerr, about some problem projects and Boeing Australia's future.
Julian Kerr | Sydney
Profile: Ian Q.R. Thomas
1988 Research Assistant, Naval Forces and Arms Control, Stockholm International Peace Research Institute
1989 Masters in Phil Cambridge
1995 PhD Cambridge
1997 Assistant to Director of NATO Policy (Office of the US Secretary of Defence) and Special Assistant to the Deputy Undersecretary of Defence for Personnel and Readiness
2001 Director of International Policy, Boeing Military Aircraft and Missile Systems Division
2002 Vice President, Business Development, Boeing Integrated Defence Systems
2005 Vice President, Europe, Boeing Integrated Defence Systems
2007 President, Boeing India
2009 President, Boeing Australia and South Pacific
ADM: What's in Boeing Australia's business portfolio?
What are the reporting lines?
Thomas: It's diversified and dynamic.
We have representation and businesses here that reach right across the company; we like to think that Australia is in many respects a microcosm of The Boeing Company.
On the defence side, we have Boeing Defence Australia (BDA) as well as Integrated Defence Systems (IDS), of which BDA is a sub-set.
BDA has been active in Australia for many years focused on networking, communications, some significant development programs like Vigilare and HF Mod, but also support and sustainment and training for a number of important systems, including F-111, and we're looking at other activities on the training side as we move forward.
We have a significant installed base of products which include the C-17, Hornet, Chinook and a variety of weapons.
Boeing has about 3,300 employees in Australia; roughly half of which are in defence, and the other half in commercial aircraft.
The reporting lines tend to be back up into the units back to the US.
ADM: What about the turnover of the business in Australia?
Is that also evenly split between defence and civil?
Thomas: Turnover of the Australian entity last year was about $900 million split about 50/50 between defence and civil.
Over and above that were the sales of commercial aircraft and defence products and services out of the US.
Boeing Australia is still The Boeing Company's largest footprint outside the US.
We've had some headcount reduction on both sides of the business this year - a total of about 500 - and that is largely due to the economic climate we're in.
The long term growth in the market will certainly stabilise those numbers and over time perhaps bring them back a bit.
ADM: All IDS programs in Australia began reporting direct to the three IDS profit centres in the US - Boeing Military Aircraft, Support Systems, and Network and Space Systems - last August.
How has this affected the way business is conducted?
Thomas: The impact of the organisational changes has been profound.
The ultimate test of that of course will be our relationship with the MoD (Ministry of Defence) and the DMO (Defence Materiel Organisation).
It's no secret that we've had some challenges on execution and the performance of some of our programs.
I think the company understood and realised that we needed to make some changes.
Part of the strength of Boeing is its ability to reach right across the company, and increasingly right around the world, to move resources, whether they're human or financial or technical, so that we can shore up weak spots and leverage our strengths.
What you saw here over the past year or two in terms of BDA and its realignment with the IDS senior management was wholly appropriate.
It was done in a very transparent way and in cooperation with our customer to ensure that we had the right resources and leadership capability here in Australia and that it was aligned with the larger business, as opposed to not being as closely aligned as it should have been.
We find that when we get out of alignment as a large, complex business we can get into trouble, and that generally manifests itself with the performance of programs.
So I think you'll see us maintaining that kind of alignment and strengthening it over time.
ADM: Nearly all the senior Boeing executives in Australia are from the US.
Is this normal Boeing practice?
Thomas: It may have been a necessary corrective to bring in some US management, but I don't think that's a reflection on Australians, it's probably a greater reflection on Boeing.
Certainly the leadership teams in BDA and BAA are predominantly Australian and the general managers predominantly Australian.
It was a necessary corrective to inject US leadership into the company to ensure alignment, and once that alignment has become institutionalised there will be significant opportunities for Australians to take over these roles.
We became disconnected, and the way to get reconnected is to do it through people.
ADM: How is BDA regaining lost credibility within government and Defence?
Thomas: I think in two significant ways.
First and foremost there's a relentless focus on customers and execution.
In some notable cases we lost that focus, we let down our customer, we failed to execute.
Moving forward, I think we're making significant progress on the three main projects which have been projects of concern.
Certainly HF Mod and Vigilare we would expect to see coming off the list of projects of concern later this year.
That will be a decision made by the customer and the Commonwealth, but we feel we've got those projects back on track to meet the schedules.
As we get back on track with Vigilare and HF Mod - and Wedgetail - increasingly we're going to be in a position to talk about the future.
The MoD has laid out a compelling vision of this in the White Paper; we want to be part of that future, we intend to be part of that future, and getting these troubled programs back on track is a big part of the job.
ADM: What about Wedgetail?
Thomas: You'll be aware that late last year we sat down with the MoD and laid out a plan for Wedgetail.
That included the recent operational utility demonstration, it included an independent technical review by MIT Lincoln Laboratory, and it includes a plan to deliver the first two aircraft in November, and the next four early in 2010.
We are increasingly confident that as we deliver those aircraft that we're going to be delivering a significant capability to the RAAF.
I won't go into the details, that's for the RAAF and DMO, but we're pretty confident we're moving in the right direction.
ADM: What lessons have been learnt from these problem programs?
Has there been a common thread?
Thomas: These are very complex systems and programs, and we've learned a lot about how to manage such programs and how to integrate such systems over the years.
It's a core Boeing competency.
That said, fixed price development is very likely something we won't be actively engaged in, going forwards.
The other point is that we will always strive to ensure that we have a relationship with our customer that allows us to work our way through a set of technical specifications that are realistic and achievable and which allow room for growth and trades.
Over the past few years it might be said that to some degree we lost the lock that should have existed and been maintained in a very dynamic organic sense between IDS and its Australian subsidiary.
So part of what we're doing with our very strong leadership team today is to build up program management skills and competencies, not only on the lines of what we have in Australia, but also along the lines of the larger Boeing Company.
But it's a two way street.
Our outstanding team here is offering up its own best practices which we can then roll out across the global company.
ADM: Now that Australia has signed the Spiral 1 Cooperative Development Memorandum of Understanding with the US Navy for the P-8A Poseidon, what are the prospects for domestic involvement in this development program?
Thomas: Should Australia buy the platform, I think that Boeing will have opportunities for training and support, and I think that to the degree we can find compelling tools and technologies, there will be a role for Australian industry.
ADM: What role do you anticipate BDA having in supporting the RAAF's Super Hornets?
Thomas: We have a very strong support, maintenance and upgrade capability both at Williamtown and at Amberley.
We're working closely with the DMO, we're taking our cues largely from the White Paper, and we'll take additional cues from the Defence Capability Plan.
Our goal is to ensure that our highly skilled workforce stays gainfully employed over the coming years, and we would fully expect the Boeing team to be active in the support of Hornet, Super Hornet, P-8A (should it come to fruition), and certainly Wedgetail.
We're looking at non-Boeing platforms, we're looking at rotorcraft.
Support, logistics and maintenance is a strong core competency of the company and it's going to be a big part of our future.
ADM: But you've lost a large element of Hornet maintenance to BAE Systems and L-3 MAS Canada.
Thomas: We may today face some temporary setbacks but we are still very much in the game.
Competition is good.
It's generally designed to be good for the customer, but it's also good for industry.
We still have a role with the Hornets - we are the OEM - and we're going to continue to work to stay engaged on the Hornet and Super Hornet.
There are no guarantees in business; you have to win your customer's trust and confidence every single day.
ADM: Will BDA bid as a potential prime contractor for the ADF's flying training and rotary wing training projects, Air 5428 and Air 9000 Phase 7?
Thomas: Yes, we're very interested in those programs.
We are the largest provider of aircrew training to the ADF. We deliver several programs to the ADF.
These are the C-17 Aircrew Training System using a balance of synthetic and live devices.
Training design and analysis for Wedgetail includes the use of high fidelity full motion flight simulators and in-aircraft instruction.
Pilot and aircrew training and fleet maintenance and support services for the Australian Army under the Army Aviation Training and Training Support (AATTS) contract is also an area of continued focus and interest.
Again, we have a core competency in that area, not just in Australia.
And we will bid on future programs, not just as BDA, but as The Boeing Company.
We can bring to bear the best of Boeing and the best of industry from across the world to ensure we deliver value, and that we execute and deliver on our commitments.
ADM: ScanEagle is an ongoing success story for Boeing and the ADF.
Is the contracted ScanEagle service restricted to the provision, launch, recovery and servicing of the flight vehicle or are flight operations handled by Boeing staff under ADF direction?
Thomas: With ScanEagle, Boeing generally sends a team into the field, generally into harm's way, to launch and recover the capability and to maintain it.
Where the asset goes is at the direction of the customer, and generally the customer controls the asset.
ADM: Could Boeing provide a higher level Tier 2 UAV contracted service if required, along the lines of the original JP129 capability?
Thomas: Yes, and we're approaching that opportunity through our Insitu Pacific subsidiary.
We're taking the basic ScanEagle platform and growing it in terms of range, payload and size - the same technology, but bigger and better, with enhanced EO/IR sensors, and possibly hard points on the wings.
We're looking to place that platform with customers.