A vision cannot be relevant if it does not include an analysis of the world around us and the challenges we face.
For our industry, these challenges are as follows:
- a world of mobility: the huge increase in air traffic – an annual growth rate of 5% – must comply with increased environmental requirements.
- an increasingly unstable world: mass terrorism, nuclear proliferation and development of Cyber warfare are giving rise to new security needs.
- a widening gap between the US and Europe: the United States spends twice as much as Europe on military equipment and six times as much on their military R&D.
- A hyper-competitive world: even though we are suffering from the effects of a weak dollar, we are facing the recovery of Boeing and the new ambitions of some of our competitors and we must prepare ourselves for the arrival of new players (in particular from Russia and China).
These challenges are also opportunities. For example, environmental requirements provide an opportunity for us to develop new products and new technologies. EADS should also benefit from increasing security needs and closer links between defence and security.
EADS does not only have a vision – most of all it is a vision!
EADS has strong European roots. Our company is at the head of some of the greatest European achievements, such as Airbus, Ariane, Eurofighter or Eurocopter. We are proud of this. But our playing field is the world.
EADS' competitive advantage: deliver the best of European technology to serve the needs for mobility and security; we promote cutting-edge technologies, scientific excellence and programme leadership to contribute to global progress.
We face three major imbalances:
- The EADS portfolio depends too much upon Airbus which accounts for more than 64% of EADS revenues, and therefore has a high vulnerability to commercial aircraft cycles and to the huge financial burden of aircraft programmes.
- EADS is mainly focused on platforms, whose growth will probably be limited after 2010, even though the services linked to these platforms will experience considerable development in the coming years.
- EADS sourcing is not global enough: 77% sourcing and 97% employees are in Europe although 57% of our revenues come from outside Europe. Access to markets and technologies, cost reduction and protection against dollar volatility mean that we need to reinforce our industrial footprint and partnership-building outside Europe.
Working for customer satisfaction: our first and foremost responsibility is to enhance our credibility and reputation in the eyes of our customers, i.e. on-time, on-cost and on-quality delivery of our major programmes A380, A400M, NH90 and Tiger. Tomorrow, we need to succeed in our new programmes, such as A350XWB, NSR, Ariane 5 new generation, military UAV and anti-missile defence. A strong focus will be placed on process improvement in order to regain operational excellence.
Restoring our profitability and focusing on value creation: the present level is clearly not acceptable and does not allow us to prepare the future of the company. We have to recover as soon as possible the average level in our industry.
Moving towards an eco-efficient company and acting consistently to sustain our future development. For EADS, anticipating and addressing the environmental challenges is to become a major future axis and a clear technological, industrial and managerial choice.
Promoting ethics, compliance and transparency throughout EADS. Leading by example is a necessity and a managerial leverage. We are extremely visible, with huge media coverage. More than others, we need to promote ethical behaviour.
2020 Strategic Goals / Targets for EADS
The worldwide leader in air and space platforms and systems
Become the worldwide leader in air and space platforms and systems (mainly platform-related systems architecture and integration) with a complete portfolio of products, both commercial and governmental (commercial aircraft, military transport, mission aircraft, helicopters, fighters, UAVs, missiles, launchers, satellites, systems and secure networks).
Achieve best-in-class operational and financial efficiency to reach 10% EBIT in the first half of the decade 2010-2020.
Focus on core and optimise financial means
Focus on core. This means a new business model approach and the reallocation of human/financial resources which are currently locked in non-core legacy activities. Divestments in non-core areas have to be implemented.
Achieve around €80bn turnover by 2020 and reach a 50/50 balance in Airbus / other Divisions' revenues.
Mission-critical service provider to our customers
Achieve a 25% services share – against 10% – of business by 2020 (hence €20bn), focusing on high-value services initially related to platforms, requiring and developing both customer intimacy and product intimacy.
Become a true global industrial company with 40% of EADS sourcing and 20% of EADS employees outside of Europe. Achieve $10bn revenues in North America in non-Airbus businesses and gain a prime position with US Government.
Moving towards an eco-efficient enterprise
Move towards an eco-efficient company. Environmental issues are to become a transversal driver towards sustainable development. Airbus' ambitious targets are already defined. To be done for non-Airbus Divisions.
Means to implement the vision
The objectives proposed by our vision are challenging.
All these goals will require various resources. Not only financial means, but also technologies and competencies. Technologies and people are the cornerstone of EADS. Consequently, both deserve our full commitment.
With that in mind, it is necessary to:
Ensure the financial resources we need to implement the vision:
- To attract funding, we need to restore our profitability. The target of 10% EBIT on sales in the first part of the next decade is extremely challenging, especially with a weak US$.
- In any case, EADS has to find ways to share costs and risks of programmes with partners. By doing this, EADS will lighten its balance sheet.
- Cash generation and efficiency of capital employed are of first importance. Target setting for the variable part of managers’ remuneration will be adjusted consequently.
- EADS has to protect its equity base, which creates confidence in investors. To do so, all market instruments can be used: bonds, hybrids, convertible bonds, capital increase.
- Divestment of non-core assets is part of our funding policy.
Keep and reinforce our technology leadership:
- Shape a technological policy at the EADS level that strengthens Group synergies.
- Develop a portfolio of technologies to satisfy key future customer/product requirements in the field of economics, mission performance, environment and survivability.
- Maintain and, when needed, increase our R&T effort, and secure public and private R&T funding, to get as early as possible at least €300 M for Airbus.
Improve people management:
- Develop future talent and reinforce our people development strategy, with the aim of building and retaining competencies required for platforms and systems (mainly platform-related systems architecture and integration), services and the management of complex projects.
- Implement forward-looking skills management on all levels to guarantee that EADS has the necessary skills to meet future challenges and avoid any technological disruption.
- Improve cultural diversity – between men and women, origins and nationalities – to turn diversity into a competitive advantage. Objective selection criteria – the right person for the right position – will drive our human resources policy. We will encourage stronger mobility and push transnational teams to create one camp: EADS.
Integration will strengthen the efficiency of interfaces between corporate functions, shared services and the Divisions. Divisions will keep their own operational responsibilities, consistent with EADS synergies, efficiency and global vision.