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Sunday, August 1, 2010

Garrison 'Thrilled' to Lead Bell

Bell CEO John Garrison completes his first year this month. He has never piloted, designed or built a helicopter but the former Army officer has a stick-to-fundamentals plan for leading one of America’s storied aviation companies.

By Bob Cox

John Garrison says he is “thrilled, honored and humbled” to be the chief executive officer at Bell Helicopter, a post he was assigned in August 2009 by parent company Textron Inc.

“It is a thrilling industry. There’s amazing things going on in this industry,” Garrison said in his first extended interview. “I’m honored, leading a company like Bell Helicopter going toward 75 years, what an incredible legacy. It’s a company that has changed the way the world has flown.”

Garrison added that he is “humbled because, if you think about what helicopters do, both in commercial and military fleets, they do amazing things.”

Garrison has spent little time at the company’s headquarters in Fort Worth in his first nine months on the job. Instead, “I’ve been out talking to our military and commercial customers. Going around the world and, really, listening to what they need.”

Textron named Garrison to lead Bell based on his prior seven years experience as president of its EZ-GO golf cart business first and then president of the entire Industrial division. Garrison is direct, low key and earnest, traits befitting an Army officer and West Point instructor. His words are measured and he doesn’t make bold, sweeping statements or predictions.

In the wide-ranging interview Garrison was asked to assess the state of the company and his plans for shaping its future direction and its products and technologies.

Rotor & Wing: What are your thoughts on Bell’s prospects now that you’ve had time to assess the company and meet with customers?

Garrison: The military side of the business is stronger than the commercial side right now, clearly. The hard work and the perseverance the company has exhibited and the customers have with the V-22 and the H-1, we’re right in the middle of a substantial ramp on both those programs. They’re doing very well.

They can say what they want, but the fact of the matter is the V-22 has been put into combat. It has done incredibly well. The Marines are thrilled with the performance of the aircraft in combat. As is the Air Force. The H-1 is deployed. It’s the Marines aircraft of choice.

Our OH-58—if you just think what that aircraft has done—it has the highest operational time and the highest operating tempo of any aircraft in theater.

All and all, that side of the business is in good shape. There’s been a lot of hard work done over the years to get to where we are today. And there’s more to do.

The commercial side of our business, it’s down right now. We’re relatively flat. We think the market is going to probably start to grow again in the 2011-2012 timeframe.

R&W: Bell has now had five CEOs, numerous organizational and managerial changes and much turmoil over the last decade. Employees, customers and the industry want to know where Bell is headed. What is your vision for the future of this company?

Garrison: The vision really starts with the mission and the mission is one Bell. We are one team, and the mission is to help our customers be successful. But at the core we’ve got to provide value to our customers, both military customers and commercial customers.

R&W: And how do you provide more value to your customers?

Garrison: There are four tenets to that. The first is a balanced business. Bell has been successful throughout time because it’s had a balance between its commercial business, its military business and its aftermarket service and support business. We’re going to make investments in all three elements of the businesses. We’ve made substantial investments in the military side of the business, the V-22 and H-1. We’re going to compete very aggressively for the Army’s AAS (Armed Aerial Scout). We’re investing some of our own money in upgrades of the OH-58.

We’re going to grow our commercial business. We’re going to invest in products like the 429. It’s a great product. It’s going to enable us to compete effectively in that light twin section, especially in markets we haven’t competed in very successfully in the past: Europe, Asia, South America. That product gives us a capability to compete head-to-head. The 429 provides better performance and a better value proposition than competitors’ products.

The other part of the business that is incredibly important is the customer service and support business, because that’s what enables you to get the subsequent sale; world class support. Our helicopters have to go to work every day. Bell has, through thick or thin, 16 years in a row won the Pro Pilot award for customer service and support.

We’re going to invest in that segment of the business as well. We just closed an acquisition, Aviation Services in Prague. It gives us a great platform over in Central Europe. We plant the flag, if you will, to begin to take market share in the European market. It’s the second largest market in the world and we haven’t had the success we would like.

R&W: Beyond maintaining a balanced business, what else does Bell have to do remain competitive and to regain some of its past luster?

Garrison: You have to offer differentiation to the customer. What is it about your product and service that is different from the competitors. Bell is a company that has a strong history of differentiated services to the marketplace. It’s differentiation on products, but also on service and support. Just because we’re number one [in support] doesn’t mean we can’t get better. We’re not a me-too company. We’re going to do things that are differentiated. Differentiation that helps the customer be successful.

Bell CEO Garrison acknowledged that the commercial side of the business was relatively flat, but was quick to add that he thinks the market is going to start growing again in the 2011-2012 timeframe. Bell
We have to continue to improve our responsiveness and our global cost competitiveness. The world is moving at an incredible rate. Our customers are working at a pace that is rapid. We have to keep pace with our customers, both military and commercial.

And we have to be globally cost competitive. We have a foundation here in Fort Worth and in Amarillo and Mirabel that we can be globally cost-competitive.

We have to continue to make investments in our manufacturing. We’ve made sizable investments in our manufacturing footprint in Fort Worth over the last five years. Our ability to be globally cost-competitive will ultimately determine our success and I’m confident we can be successful.

The other element is around an execution culture. That’s a culture where you meet your commitments to your customer. You do what you say you’re going to do. If you look in the past period of time Bell has done that well, but we can get better in terms of executing to our development timelines, of meeting our commitments.

R&W: On the commercial side, what do you plan in terms of new product development? A couple of years ago Bell was openly discussing derivatives of the 429 or a medium twin, but there has been little said about those in the last year.

Garrison says that military business at Bell is strong and will continue to be “incredibly important” to the company. He also said that Bell has been much more important to parent company Textron during the aviation downturn than fixed-wing sister company, Cessna Aircraft. Bell
Garrison: We have the newest helicopter on the planet, the 429; certified by Transport Canada, the FAA and EASA. It provides some incredible performance. We’re just ramping up the 429. I was in Singapore, the first time we’ve demonstrated it there. I was in India, the first time we’ve demonstrated it there. We haven’t been able to compete in that light twin space and we think the 429 is going to give us an opportunity to be successful there.

In terms of product development, we’re going to do things and then say here’s what we’ve done. We’re not going to talk about a whole lot of things ahead of time.

I believe in talking to customers, understanding what customers are looking for, having customers intimately involved in the development process, but then going behind the curtain and executing your plan. You pull back the curtain when you’re ready to deliver the product to the marketplace.

We’re going to be relatively silent, if you will, on what’s going on in the development world. Rest assured we’re listening to the customers as we develop those products going forward. Throughout this commercial downturn we’ve actually increased our engineering investment and spend in the development activities. I think that clearly indicates that we are serious about developing commercial products.

We are going to compete along the lines of product upgrades. Bell invented the product upgrade. We got away from it. We’re going to get back to upgrading our products on a reoccurring basis.

R&W: Do you have the backing of Textron to make the investments needed to pursue your product development plans?

Garrison: You have to generate your own resources. Part of our execution is we had a great cash flow generation year in 2009 and will continue that strong cash flow generation. Our requirements are that we have to generate the cash flow to invest back in the business. Textron is clearly willing to invest back in the business. Our job is to give them business plans that we can execute and deliver the return that they’re looking for. I’m confident we can do that.

When you look at what’s happened in aviation during this downturn [within Textron], Bell and Cessna have kind of flip-flopped. Bell is much more important, if you will, to the parent company.

R&W: It seemed under prior management regimes that the priority at Bell, the direction from Textron, was take care of the military at all costs and then apply whatever resources remained to the commercial business. Will that change?

Garrison: The military has and will continue to be an incredibly important customer to us. But while that was going on the 429 was actively in development. It did show that you could do both while also maintaining the customer service and support side of the business.

R&W: What’s your plan for the BA609 civil tiltrotor? In recent years it has been a low priority project. Bell executives have said there isn’t a viable market in the U.S. for the plane at the projected price. AgustaWestland officials have said repeatedly they still believe there’s a market.

Garrison: We’re continuing to work with our Italian partner on how to continue development. I think what we’ve said is the commercial market may not be as large as we once thought it was.

We continue testing. We did testing last year for autorotation capabilities and they were successful and showed it could perform autorotations.

R&W: Going forward, what is Bell doing to develop new technology for vertical lift aircraft? What are you doing to advance the science and technology?

Garrison: Part of our engineering and technology budget is in technology development at our XworX facility. It’s further out. There are derivatives of tiltrotor; derivatives of traditional rotary wing technology that our teams are looking at.

From the military side, it’s the JMR (joint multi-role) program that’s out there in the 20 to 25-year time period. That seems like a long time off, but you have to start early. We’re working with the [U.S. Department of Defense] Vertical Lift Consortium.

R&W: Your predecessor, Dick Millman, once lamented not that Bell lagged the industry in the implementation of the latest engineering and design tools and processes; CATIA 5, design to manufacture, CMMI—the modern tools of engineering. There’s concern in the industry that Bell wasn’t keeping up. Is that changing?

Garrison: As part of our investment plan we are making investments in our engineering technology suite so that we have up-to-date engineering in design, PLM—project life cycle management.

We are making investments in engineering tools that will help in development cycle times. That will help in cutting costs.

Look at the number of papers that were presented at AHS by Bell Helicopter engineers. Look at the number of tech fellows that academia, DoD, and commercial aerospace call on for Bell’s expertise in the vertical lift area. I would say our engineering technology needed to be invested in but our underlying engineering capability is second to none.

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