While the philosophy that bigger isn’t always better might fly in some industries, in the aerospace business, size does matter. Scale and the ability to offer total integrated system solutions — not just parts — separate significant players from those who barely blink on the radar screen.
“People who build aircraft want to be a giant erector set,” says Richard Ill, president and CEO of Wayne-based Triumph Group Inc. “They want to put the plane together, they don’t want to build the assemblies and components.”
Offering mere pieces and parts won’t win an invitation to the boardrooms of the Boeings, Cessnas and Airbuses of the world. The commercial airline and military customers Triumph Group serves want a three-course menu that includes building components, parts distribution and aftermarket repair and service.
“If we aren’t prepared to supply our customers with integrated solutions, we won’t be able to grow our company the way we desire to,” Ill says, noting that the company has grown from $60 million in aerospace sales when it was founded in 1993 to $700 million to $750 million this year.
“On the other hand, I’m surprised that $750 million in scale is not enough to continue to be a major factor, which we intend to continue to be in this industry,” Ill says.
He points to the two keys that matter most in aviation: scale and systems. These demands align with Triumph Group’s mission to provide a bag of tricks that can cover an aircraft’s needs from nose to tail, and Ill’s goal to break the $1 billion revenue mark in the process.
To continue growing, Triumph must continue to meet aircraft manufacturers’ increasing demand for pre-assembled machine systems and do it in a cost-effective manner.
Unified message
Triumph Group started as a melting pot of businesses that Ill and a handful of key managers purchased from what is today IKON Office Solutions. A majority of the businesses were centered in aerospace and aviation, and Ill began to nurture this focus through organic growth and acquiring related businesses.
“In the beginning of time, we were well under the radar and we were selling individual company products,” Ill says.
But early on, he realized that to compete in aerospace, Triumph needed to offer customers more than individual parts; the parts from the various companies needed to be combined into completed assemblies.
“We have moved up the food chain and we offer our customer base a wider array of assemblies,” Ill says.
An aircraft diagram on Triumph Group’s Web site encourages visitors to navigate various plane body parts to learn Triumph’s capabilities. Each section of the craft lights up with a description and a list of Triumph’s businesses, which includes everything from machine parts to cabin windows.
“If you had that plane diagram in 1993, the only parts on it would be spares,” Ill says. “Instrument repair, overhauls, leading edges for wings, machine parts for landing gear and a few constant speed drives. Very few.”
Ill figures the selection has multiplied by 20 since then.
“The industry is looking for that,” he says.
But many customers didn’t realize that Triumph could provide them the integrated solutions they were looking for. Linking individual businesses to a common logo was a critical sales tool, one missing from Triumph’s arsenal three years ago. Despite a business steeped in every facet of aviation production and services, the company’s early days were punctuated by a familiar reaction from customers during sales presentations, Ill says.
“It was evident, even in the early days, that we had to do something to raise the visibility of Triumph and of our capabilities so we wouldn’t hear our customer base say, ‘I didn’t know Triumph did that,’” Ill says.
“If we heard it once, we heard it many times,” he says, explaining the impetus behind Triumph’s aggressive branding initiative and its push to publicize the “Triumph T.” “If your customers don’t know you do it, they are not going to buy it from you.”
Triumph didn’t want a piecemeal reputation, and it needed to communicate that customers could source entire aerospace and aircraft systems and services from one provider. The diverse collection of 41 companies produced complementary products and provided services that would allow customers to use Triumph as a one-stop shop so they could assemble rather than manufacture aircraft.
Still, Ill says the organization needed to better illustrate the unified whole. It needed an all-encompassing identity — a bold name tag to show customers that its decentralized structure was a powerful team that could play with the big guys.
“When we branded the T, we then had the ability to bring together [all of our services] for customers,” Ill says. “We no longer hear, ‘I would have given you an order if I had known you sold that.’ Now, we have a standardization of that Triumph T, and we present that to the world.”
Scaling up
When Ill talks about scale, he lumps the aerospace and aviation industry into three categories — large, larger and largest — and he expects competition, consolidation and pricing pressure to widen the gaps between each segment. Being one of the big players is how Triumph will offer integrated solutions to its customers and continue to grow, he says.
The Boeing and Airbus types reign in the $6-billion to $29-billion group. In the lower stratosphere are companies including Triumph and those close to the $1-billion range. A notch below is a fragmented base of suppliers.
“Whether through mergers or acquisitions, the industry will consolidate,” Ill says, noting that this could present opportunities for Triumph, which evenly splits expansion efforts between acquisition and organic growth.
Although a bundled acquisition fueled Triumph’s start-up and strategic sales and purchases helped increase aerospace sales from $60 million to today’s $750 million machine, Ill cautiously regards this method as only part of the company’s plan for growth.
When Triumph invites another business to the “T,” the prospect must present a promising offer that includes three Ps — people, products and profit. This translates to the total system Triumph will eventually provide customers.
“We want products that will help us expand and offer more to our customer base, and virtually all of our acquisitions have added a product or service to our bag of tricks, if you will, to make us more attractive to our customers,” Ill says.
For example, two years ago when Triumph acquired a heat exchange business from Parker Hannifin, now called Triumph Thermal Systems, the purchase provided Triumph with new product complementary to its existing hydraulic line. Most of all, its strong management team flourished with Triumph, Ill says.
While the business was not a major piece of the pie for Parker Hannifin, it was a profitable one. Once under Triumph’s wings, capital and managerial support allowed the thermal systems operation to flourish.
In this acquisition and all others, Ill knows that while products fuel sales, talented pilots lead a business toward success. He searches for entrepreneurial hybrids, leaders who can operate solo, managers wired to drive toward their own goals but able to retrofit their operations to meld the mechanics of a large corporation.
“The ones who do it best have a great deal of common sense, are very loyal and are knowledgeable about their products and how they fit in with everyone else’s,” Ill says.
“Some people are excellent managers of companies that were $10 million in sales. But they couldn’t grow with us. It is a challenge to find the right people who can grow with you. I employ entrepreneurial managers and we protect the integrity of each company [we acquire], but we all have to learn to be part of a group and contribute to each business as we climb the integrated solutions food chain.”
This in mind, Triumph established a corporate structure with cross-functional teams and specialized sales forces for each business.
“Human resources and the sales forces that cross over all groups are most important,” Ill says, adding that, “This doesn’t mean that individual companies have nothing to do.”
Dedicated HR, IT and sales professionals in each business focus on their particular products and services.
Geographic sales teams that understand Triumph’s mission can sell an array of total solutions to customers because they connect with every business under the corporate umbrella.
“Sales teams that present to our customer base might include four to six companies to produce one product,” Ill says. “You may have a machined part from one company, an actuation system from another, sheet metal from another, and that is formed and assembled into a part that is then delivered to a customer.”
Triumph is now positioned to make the most of its portfolio of businesses during boardroom presentations.
Further, a $25-million to $30-million annual commitment to increase operating capacity will ensure the company integrates the latest technology — always a challenge in this progressive industry — while providing funds for equipment repairs, machinery and product development efforts. This investment has always been a critical budget line item for Triumph.
He set an early precedent for constantly evolving to meet market demands.
“Capacity and expansion will allow us to offer more to our customers and, at some point in time, become a billion-dollar company,” he says.
Controlling costs
Having the size and the ability to offer integrated solutions is only half the battle. You also have to have a competitive price, and that means finding opportunities across the globe to squeeze costs out of the system.
“Aerospace is very obviously an international business,” Ill says, pointing to Triumph Group’s European locations and a work-in-progress facility in Bangkok, Thailand, which he says is a direct result of the company’s international growth.
Already, 23 percent of Triumph’s business is international. This will increase with continued investments in businesses in Thailand, for example.
“We will make acquisitions in Europe and other parts of the world, if possible,” Ill says. “We are not limiting our acquisition options to only the United States.”
Ill realizes that outmaneuvering the competition requires lowering costs for customers, and with repair and overhaul business augmenting the company in Asia, he says that Triumph will investigate practical opportunities.
“In all manufacturing sectors, not just aerospace and aviation, people are looking for low-cost sourcing and for integrated solutions,” Ill says. “There is constant pressure from our customer base — a constant pressure that I hope is self-imposed, because we have to [lower costs] to survive in the business world.”
The low-cost, high-output companies that can manage the volume that commercial airlines and defense programs require will survive.
Ill wants to build a big machine, but it has to be lean to cost-effectively provide customers with the total solutions they want.
“We’ve made a significant commitment in both people and capital to the lean manufacturing process,” he says, pointing to a Spokane, Wash., facility that was reconfigured into Triumph Group’s Lean University. Triumph’s reasons for acquiring the operation that was once a Boeing plant were twofold.
“It gave us a brand-new product to offer our customer base, and it was a plant that was very lean,” Ill says. “They had taken a lot of costs out of the system; the plant was built properly from Day One.”
Now, the Spokane facility serves as a school for Triumph employees, who are trained there before they assume their posts at various plants.
“That is how we transfer lean practices throughout our organization,” Ill says.
So far, Ill is satisfied with Triumph graduates and their progress at each of the company’s U.S. facilities. But, just as with revenue, product offerings and volume, in general, he knows that his team can’t turn on autopilot just because the system runs smoothly.
Lean operations help keep costs in line and a large scale allows Triumph to meet a diverse range of customer needs, but if Triumph doesn’t continue growing, adding to its capabilities and giving customers integrated solutions, its competitors will certainly step in.
“You have to get better at doing things all the time,” Ill says. “Otherwise, you won’t be able to compete with those who do get the job done.”
How to reach: Triumph Group Inc., www.triumphgroup.com
