Special Report: Standard Aero’s and Landmark’s Paul Soubry Jr., President & CEO

Paul Soubry Jr., was named to lead Standard Aero and Landmark Aviation following the merger of these two MRO giants. His youthful appearance belies his experience. Soubry has held the position of president and vice-president of Standard Aero and oversaw the integration of their Tilburg, Holland unit. Soubry said all of the businesses he is responisble for are now MRO-related and they are focusing those facilities on engines, avionics and airframe paint. Following is the interview that was conducted with Soubry at this year’s NBAA.

Q: You appear to be very young....

A: The culture of Standard and the culture at Landmark is coming together and is very much an opportunity-based culture so those that get involved, contribute, those that want to be a part of it can make their own breaks and take advantage of those opportunities. I got very lucky at Standard Aero in a business that was diversified and growing and was given good opportunities at a relatively young age; I am now 44.

Q: When Landmark merged, they held philosophy meetings where they said, "Let’s merge all the philosophies." Are you planning to do that with this current merger?

A: Yes. I think one of the parallels of the company is the vision and the values. From decentralized infrastructure, decision-making at the right level, customer and turn time focus. We are going to work very aggressively on trying to make the company one so we are "we" instead of that side or this side, it will become one legacy. The good news is that all of the businesses that we have now are focused on MRO and we’re a combined company of engines, avionics and airframe paint. One of the things that Landmark has and does very well is understands the reality of the operators. So we’re seeing the whole airplane.

One of the challenges about Standard Aero, historically, is that only our field service teams or our sales teams never saw or touched a customer. What we mostly saw came in a box. So now we have this opportunity to push the customer reality right back into the company. We are really excited about getting back down to basics and to update the vision and values that are very close. There is an identity issue here that we are going to have to deal with, we have two different brands here and two different approaches. Our strategy is very much about investing in the people and the factories. Getting our facilities and our operations going before we are going to worry about brand or new logos. It is an issue for us [branding] but we really want to earn it before we buy it or label it. So we have this unique opportunity of focusing on the culture and bringing the company together before we spend a lot of time worrying what we’re going to call it.

Q: The Landmark merger was coming up to speed just as you came on board, how are you going to sustain the momentum?

A: The actual sale process took about seven months form the time that DAE approached the Carlyle Group about purchasing the two companies. There was a due diligence process and a foreign investment review process that was very thorough, candid and transparent. During that period of time there really wasn’t a lot of interface between the two companies; we were operating completely separately. So we get through July 31, there is a closure of the deal, DAE has allowed us to be very open with them. We have teams working together and visiting each other’s site, we had a situation in the past week or so where we had technicians from one site go and help with a surge of work at another site. We had one site that couldn’t handle the volume so it sent the work to another site. We are trying to build that momentum. Our external communication has been a little slow because we are focusing internally.

We are having employee meetings, are sending out weekly messages about what we’re doing, we have eight different integration teams working everything from finance to engineering to IT, operations, sales force choreography. There is a lot of momentum and there is a lot of excitement. And the other thing that I think is really important is that both of us [Landmark and Standard Aero] have gone through a series of ownership where it was private equity, both benefited from that ownership. But, we are always waiting for the phone to ring saying that there is going to be an ownership change, so we knew Carlyle wasn’t in it for the long term; they were in it for a period of time. So now having a big sponsor like DAE, they want to build a world aerospace company. They are serious about investing in short and long-term growth programs and it is very exciting for our employees to see someone that wants to be in that business. Two examples; just prior to the acquisition, we brought an opportunity to get authorized on very light engines (the Pratt 600 series) to Carlyle and they said that made sense but only if DAE would support it. DAE didn’t even own us at the time and they supported the acquisition of that license and authorization (see sidebar next page). Same thing in early July, a month before the merger went through, we wanted to get more involved in component repair so the Standard Aero business had the opportunity to buy a company called TSS Aviation, which demonstrates the desire of DAE to be able to integrate ourselves to offer full-service engine repair, component repair, accessory repair. So I think our employees are looking at that and saying, "That’s all the right signals, these guys are helping us go somewhere rather than buying us to shut us down or buying us to shrink us."

Q: Are you getting feedback from the employees on how it’s going?

A: Yes, we conducted our first employees survey last week and we’re now tabulating the results. We went out and asked employees to tell us how we’re doing. We’ve been putting a weekly blog or note on our internal portal site to keep people informed and we’re now working on an internal and external communication plan. It’s still in the honeymoon phase but it feels really good so far. We have a lot of excitement from a lot of people.

Q: What’s the progress with divesting the 33 FBOs?

A: That business is now branded airport service and it includes the FBOs, a charter business and includes the Raytheon/Beechcraft deal. Shawn Vick, the former president of Landmark, is managing the business and he reports to three independent trustees. There has been a tremendous amount of interest, 40 companies have expressed interest. They are going through a very formal process of trying to divest and find the right buyer for it. As far as we know, all indications are that it is on track and on schedule.

Q: Can you name any of those 40 companies?

A: The business is reporting to a group of trustees that are separate from this company, so I can’t name them. There has clearly been interest from strategic buyers (those inside the industry) and interest from financial buyers as well.

Q: How are you keeping up with the demand for maintenance professionals if there is this industry-wide shortage?

A: That is a great question. It is a real issue. You go into any one Landmark or Standard Aero facility and you’ll see a tremendous amount of tenure, you’ll find experienced people. In the next period of time, this will have an impact because of retirements. The military is a tremendous source of trained people and that has served us well in some of our markets and facilities where people get out of the military but want to stay in aviation. Since 2001 there has been a rationalization of expertise in the civil airline maintenance world so that has been another source of people, but again, those people are senior and well experienced.

Our strategy has been and will continue to be hiring for fit, style, personality, approach and then training. We have our own internal training and development business that we call, today, Standard Aero University, but we have hired people to help train and grow our own. In some situations we have training labs inside our facilities, we have standardized curriculum for base-level gas turbine mechanics. Other training programs are in place on the Landmark side of the business. Our future will be bringing in skilled, experience people to what we believe will be a fun, positive work environment. That means teaming with technical colleges and teaming with universities, high schools and even grade schools to get people interested in aviation. In one site we’re very active in the air show. Getting kids and their parents to see an air show and become excited about aviation and saying, "That’s cool, whether I want to be a pilot or technician...." We want to get the buzz back in aviation, the shine has been off a little from the grassroots perspective for a number of years now.

Q: General idea of how many people have gone through the internal university?

A: Our internal training program is a combination of technical training as well as professional and leadership training. We provide that service to, for example, the U.S. Air Force on how to run lean facilities and operations. So we have probably put several hundred leaders through our internal operation excellence type programs. All of our technicians go through a continuous training cycle as well as the new technicians go through, so several hundred have gone through those programs.

Q: Employees are coming from and moving to all parts of the company?

A: We’ve been very lucky moving people internally. I can think of an example where a parts cleaner worked in technical operations and then moved up through customer service. I can think of examples of administrative or support people who want to get involved with operation leadership or technical inspection and investigation. I think one of the successes of Landmark is that opportunity to move and grow and cross train. Rather than someone coming into the business and thinking they are going to be a technician, a manager, a supervisor, a director, a VP, we want people to think that our company is one where you can zigzag, whether it be location or function. The best leaders are the ones that understand engineering, operations, supply chain, sales and marketing and have been able to see those by working in those different environments. I think that’s going to be something we continue to push in growing people — learning the whole customer cycle — rather than being a pro at engineering.

"Shame on us if we let bureaucracy creep in or become victims of our policies because we’re a bigger business."

Q: What can you say about the re-branding?

A: We want to spend the next couple of months focusing on our employees and making sure that they universally understand what we want to be and what we’re all about because we are bringing some big workforces together in total we’re now 3,900 employees. I would suggest that by the end of this calendar year or early 2008, we’ll have had time to digest and think about how to adapt and use the brands that we currently have in the external marketplace.

Q: Anything else you’d like to discuss?

A: The Landmark side of the new company has tremendous technical, sales, and marketing expertise and capability. At Standard Aero we focused on operational excellence, with very self-directed work teams and an emphasis on operational efficiency. So we’re pleased to bring these capabilities together. We feel that this will contribute to our success. That and a balanced portfolio of services for the business aviation, airline, military, helicopter and industrial engine markets.

On the people side, we believe training, cross-training, growth opportunities and a great work environment are key. Every day is different in a maintenance and repair environment, and we often don’t know what we’re going to get in, when we’re going to get it, what may be wrong with it, and how we can best resolve it. There are different ways to solve problems. So we look to the workforce for ideas and innovation. Instead of having single skilled people or centralized cleaning or testing departments, we’ve decentralized in order to focus on production velocity and understand how the engine, part or airframe works, for example.

Q: What are you telling the clients that have worked with Landmark for all this time...how are you planning to maintain that personal contact that they’ve grown to expect?

A: The sites will still be the sites that we have. The people will be the same people that they were dealing with before. We think we can enhance the customer experience with more technical expertise and more investment folks on the facilities. We are not intending to dramatically change the way we do business today, we think we can enhance that. If there is a personal relationship and professional history that was there we are going to build and grow on that.

There are lessons to be learned, gaps in technology and performance from both companies, so we’re excited to create a gap analysis and decide that there are some things we can leverage both ways. As a customer I would look at that and say, "There are things that can be brought to my relationship." We met, for example, this morning with a fraction operator and while he’s in business aviation, it is a fleet. The conversation with that customer today was interesting because we are talking about managing it as a fleet and we have knowledge and experience of airline and military fleets that were appropriate for that conversation. Now, we can touch more things for more customers; the personal touch we have to keep. The very first leadership meeting we had was we have to think big and continue to act small. So shame on us if we let bureaucracy creep in or become victims of our policies because we’re a bigger business. [In] the decentralized nature of the way we want to run this business, we need the people in front of the customer to have the authority, training and skill set to be able to make the decision to satisfy that customer requirement rather than having to deal with corporate. The focus will be on the individual customer or the fleet or the military or whomever we’re trying to satisfy.