The Gulfstream Aerospace Production Review and Analysis presentation for Embry-Riddle MSA 641 Production and Procurement Management course in graduate studies

1. Gulfstream AerospaceProduction & Procurement Review & Analysis MSA 641 – Production & Procurement Management Final Presentation December 2010 by Can Bayrak

2. Overview Background & History Product Line Innovation Product Support Supplier Relations Customer Relations Production Story of a GV Conclusion References 2

3. Background What does Gulfstream Aerospace do? Gulfstream Aerospace Corporation is a global manufacturer of business jet aircraft. “The Gulfstream product line offers an exceptional combination of price, performance, and value-added customer preferences in each segment of the mid-cabin to ultra-large-cabin business jet market.” Gulfstream employs more than 9700 people at seven major locations: Savannah, GA; Appleton, WI; Dallas, TX; Long Beach, CA; Brunswick, GA; London, UK; and Mexicali, Mexico. 34 governments operate Gulfstream jets and 22 countries, incl. the US, use Gulfstream aircraft to transport their head-of-state. Gulfstream aircraft have also been reconfigured and equipped to be involved in missions as diverse as maritime and aerial reconnaissance, medical evacuation, and pilot and astronaut training. 3

4. History 1958 - First appearance as the G-I (a turboprop driven) series of Grumman Aircraft Engineering Co. 1966 – At the beginning of GII series production, military focused Grumman separated the business aircraft division and relocated in Savannah, GA. 1977 – The Gulfstream Line and the Savannah plant were sold to American Jet Industries, which was headed by an aviation entrepreneur Allen Paulson. Paulson renamed the company Gulfstream American. 1979 – GIII made its first flight. It also became the first business jet to fly over both poles. 1982 – The company renamed as Gulfstream Aerospace Corp. 1983 – The company went public by offering 8.8 Million shares of its stock. 4

5. History 1985 – Chrysler acquired Gulfstream Aerospace. Gulfstream entered the Fortune 500 list from the 417th place. 1989 – Paulson and Forstmann Little & Co. teamed up and bought Gulfstream back from Chrysler for $825 Million. 1994 – Gulfstream signed its first 5-year contract with NetJets. 1997 – With the expansion of Savannah plant in ‘96, Gulfstream began manufacturing two different aircraft simultaneously, the GIV & GV. 1999 – General Dynamics acquired Gulfstream for $5 Billion. 2002 – Gulfstream renamed its products with Arabic numerals instead of Roman ones (i.e. GII to G200, GIV to G400). 2006 – Gulfstream started to replace its product line (i.e. G100 to G150, G400 to G450). 5

6. Product Line Mid-Size Class Longest range & fastest speed in its class. Powered by two Honeywell TFE731-40ARs Avionics by Rockwell Collins ProLine 21 Being assembled by Israel Aerospace Industries (IAI) at Ben Gurion International Maiden flight on May 3, 2005. Robb Report ‘s 2010 Best of the Best Winner in mid-size cabin Price: $15 Million 6

7. Product Line Available in 3 configurations (6 to 8 people): The Executive The Universal The Hallmark Acquisition includes: 5-years Warranty Engines Primary Structures APU & Avionics Training Maintenance Optional: Enhanced Vision System TM Wide Area Augmentation System 7

8. Product Line Super Mid-Size Class Formerly known as IAI’s Galaxy line Acquired by Gulfstream in 2001. Went under several improvements: Sound-Proofing Package Redesigned Interior Weight Reduction (approx. 600 pounds) Powered by two Pratt & Whitney C306As Avionics by Rockwell Collins ProLine 4 Being assembled by Israel Aerospace Industries (IAI) at Ben GurionInternational. Maiden flight December 25, 1993. Price: $ 23 Million 8

9. Product Line Available in 3 configurations (8 to 10 people): The Executive The Universal The Hallmark Acquisition includes: 5-years Warranty Engines Primary Structures APU & Avionics Training Maintenance Going to be replaced by G250 in 2011. 9

11. Longest range & fastest speed in its class.

12. 3 Test aircraft are assembled by Israel Aerospace Industries (IAI) at Ben Gurion International.

13. Maiden flight December 11, 2009.

14. Going to replace G200 series:

15. Increased cabin length

16. New engine

17. New T-tail

18. New glass cockpit

19. Heated leading edges

20. 3 or more windows

21. Increased range

22. Decreased runway requirements

23. Powered by two Honeywell HTF7250G

24. Avionics by Rockwell Collins PlaneView250TM

25. Price: $ 24 Million 10

27. The Executive

28. The Universal

29. The Hallmark

30. Optional:

31. Enhanced Vision System TM

32. HUD II (Heads up Display)

33. Synthetic Vision (SV-PFD) System

34. Expected to be certified in 2011.11

36. HUD II (Heads up Display)

37. Synthetic Vision (SV-PFD) SystemPrice: $33 Million 12

38. Product Line Available in 6 configurations (12 to 16 people): The Executive (Forward & Aft) The Universal (Forward & Aft) The Hallmark (Forward & Aft) 13

40. Synthetic Vision (SV-PFD) SystemPrice: $40 Million 14

41. Product Line Available in 6 configurations (12 to 16 people): The Executive (Forward & Aft) The Universal (Forward & Aft) The Hallmark (Forward & Aft) Robb Report ‘s 2010 Best of the Best Winner in large-size cabin 15

43. HUD II (Heads up Display)

44. Synthetic Vision (SV-PFD) SystemPrice: $42.5 Million 16

45. Product Line Available in 6 configurations (14 to 18 people): The Executive (Forward & Aft) The Universal (Forward & Aft) The Hallmark (Forward & Aft) 17

47. Synthetic Vision (SV-PFD) SystemPrice: $58.5 Million 18

48. Product Line Available in 12 configurations (14 to 18 people): The Executive (Forward & Aft) The Universal (Forward & Aft) The Hallmark (Forward & Aft) Plus, cabin crew configurations 19

50. Enhanced Vision System II TM

51. HUD II (Heads up Display)

52. Synthetic Vision (SV-PFD) SystemPrice: $64.5 Million 20

53. Product Line Available in 12 configurations (13 to 18 people): The Executive (Forward & Aft) The Universal (Forward & Aft) The Hallmark (Forward & Aft) Plus, cabin crew configurations 21

54. Innovation Broad Band Multi Link (BBML) Delivers Internet access via a broad band data channel between the aircraft and the ground. Data speed is up to 3.5 Mbps Offered for Large, Super Large, and Long-range Jets (G300 and up) Supplied by ARINC Enhanced Vision System (EVS) I & II A nose-mounted FLIR (forward-looking infrared) camera to generate actual, real-time images of the aircraft’s surroundings. Designed by Elbit Systems of America – Commercial Aviation Kollsman EVS dramatically increases situational awareness at night and during low-visibility daylight conditions by allowing pilots to see terrain, runways, taxiways and approaches that are undetectable by unaided sight. 460+ Gulfstream aircraft with EVS I 30+ Gulfstream aircraft with EVS II 22 22

55. Innovation PlaneBookTM Electronic document manager that Gulfstream innovated. %100 paperless solution to flight documentation. Can be used as a tablet PC as well. Fujitsu hardware & Windows OS. PlaneConnectTM Transmits reports on your aircraft to experts on the ground all while you’re en route. Providing an automatic update of the condition of your aircraft during flight. Enables speedy resolution of any maintenance issues which may arise. The information identifies new trends with system reliability so that investigations can be ordered sooner and fleet corrective actions implemented faster. 23 23

56. Innovation Synthetic Vision – Primary Flight Display (SV-PFD) A large three-dimensional color image of terrain overlaid with the PFD instrument readings. Improved two dimensional blue over brown image Developed with Honeywell Includes both traditional and Head-Up Display (HUD) symbology; such as attitude, altitude, airspeed, bank and steering cues, flight path marker, Terrain Awareness and Warning System (TAWS) alerts, and Traffic alert Collision Avoidance System (TCAS) all remain the same. Optional upgrade to current operators of PlaneView-equipped Gulfstream G550, G500, G450 and G350 business jet models. 24 24

57. Innovation PlaneViewTM The most advanced integrated flight deck in existence - in display technology, avionics architecture, processing power and its exclusive Interactive Navigation (INAV) management system Honeywell Primus Epic Avionics Suite implemented Includes the EVS & SV-PFD The open architecture provides the capability to easily integrate avionics functions that are not yet envisioned. Optional JeppesenFlightDeck® charts & maps. 25 25

58. Product Support The largest company-owned product-support network in business aviation. Along with General Dynamics Aviation Services: 11 company owned service centers worldwide 14 authorized warranty and line service facilities 3000+ professionals dedicated to product support program. A dedicated G100 to deliver flight-essential parts and a technician to Gulfstream aircraft under warranty at airports throughout North America, Central America and the Caribbean. 24 hr. technical support Gulfstream operators consistently rank Gulfstream Product Support Program #1 in the annual survey conducted by Professional Pilot magazine and in the AIN Product Support Survey. 26

60. Mumbai, India

61. Tel Aviv, Israel

62. Hannover, Germany

63. Dubai, U.A.E.

64. Johannesburg, South Africa

65. Sydney, Australia27

66. Supplier Relations Gulfstream Aerospace Supply Chain Management portal Contains all the guidelines and detailed information a supplier will need to work with Gulfstream The portal creates a customer-focused, world-class strategic environment that produces expertise in the areas of strategic sourcing, materials management and supplier relationships. Contains Quality Assurance requirements that each supplier should meet. Enhances the suppliers to get in touch among each other, which improves communication quality. Annual Gulfstream ‘Supplier of the Year’ Awards Enhances the supplier dedication, which improves the overall quality and, thereby, increases the customer value of the aircraft. Categories of total value chain cost, quality, reliability, delivery, and product and aftermarket support. 28

67. Supplier Relations PPG Aerospace Supplies Gulfstream with high-solids topcoat, sealants, windshields, cockpit and passenger-cabin windows, and various light lenses Winner of 2008 & 2009 Supplier of the Year award VOLT Workforce Solutions Volt supplies aerospace engineers, IT professionals and manufacturing personnel to Gulfstream’s service centers. Winner of a 2009 Supplier of the Year award Aircell World’s leading provider of in-flight connectivity Makes two new high-speed network services beneficial to Gulfstream customers at the factory: SwiftBroadband Solution (only for G150 andG200) & Gogo Biz™ Inflight Internet Goodyear Supplies Gulfstream with its Flight Eagle® tires Winner of a 2009 Supplier of the Year award 29

68. Supplier Relations Deutsch Electrical connector supplier to Gulfstream Aerospace, operates a VMI (Vendor Managed Inventory) program within Gulfstream Aerospace which is responsible for the kitting and on JIT delivery of connectors to the manufacturing floor. Winner of a 2008 Supplier of the Year award L-3 Crestview (subsidiary of L-3 Communications) One of the most biggest providers of aircraft modification, fabrication and assembly in the world Uses lean manufacturing techniques and continuous improvement process to ensure its products and services result in enduring customer satisfaction. Winner of a 2008 Supplier of the Year award Coastal Logistics Group (CLG) Offers Manufacturing & Distribution Support Services Winner of a 2008 Supplier of the Year award 30

69. Customer Relations The Gulfstream Outstanding Flight Award Program The program was launched in 2008. Designed specifically to reward Gulfstream operators, both commercial and governmental, who use their aircraft in the most outstanding and noteworthy manner each year. Amway Corp. and the U.S. Air Force’s 310th Airlift Squadron namedas the 2009 winners Phoenix Air Group Inc. and the U.S. Navy’s Executive Transport Detachment Pacific named as the 2010 winners An excellent opportunity for Gulfstream to highlight not only the superior performance and safety of the operators, but also the outstanding performance and significant safety features of Gulfstream aircraft (Lombardo, 2008). 31

70. Customer Relations NetJets Gulfstream’s biggest affair First 5-year contract in 1994. Gulfstream dedicated a special group just to satisfy NetJets operators. The NetJets Support Team dedicated to initiating and monitoring unscheduled maintenance activities for the composite Gulfstream fleet of large- and mid-cabin aircraft. The specialists liaison directly with the operator and multiple maintenance providers to ensure adequate support wherever the aircraft may be located. U.S. Government A dedicated group within Gulfstream headed by a Vice President 2nd biggest customer after NetJets. The Government Leased Five Gulfstream C-37A Aircraft In $477 Million Lease And Maintenance Agreement for 10 years, started in 2001. An additional C-37A was ordered by the Air Force in 2010. The House Appropriations Committee added another $132 million dollars to the bill in July 2009 for a total of 3 C-37A aircraft. The FAA’s Gulfstream has the tail number # N1. 32

71. Customer Relations Apple Board Of Directors Rewarded CEO Steve Jobs With Gulfstream V in 2000. Gulfstream devoted special resources to assist customers at the 2010 FIFA World Cup in South Africa. National Air Services (NAS), the largest and fastest-growing independent provider of private aviation and fractional share services in the Middle East , signed a multi-aircraft contract for three G450s with options for 17 more G450s which if exercised will make the total potential value of the contract in excess of US$650 million. Israeli Air Forceagreement valued at some $174 million for three GVs, with an option for a second 10-year customer logistic support program valued at $32 million. $100 million contract by Japan Coast Guard for two GVs. Asia Jet, a Hong Kong-based private charter company, ordered a G150, a G200, and a G250. 33

72. a Visual Supply Chain 34

73. Production Challenges: Producing two or more different models at the same time. Lowering the costs while increasing the quality and safety of the product. Due to rapid changing market, adaptation should be as fast as possible. Performing more “final phase manufacturing” while utilizing less capacity. Constraints: The “final phase manufacturing” capacity is limited. Each aircraft is different. Different engineering configurations Personnel skills Inventory outfitting and manufacturing devices cost. The cycle time was over 30 weeks, not a competitive advantage at all. Aircraft is a difficult product to test, maintain, and service. So, how did Gulfstream Aerospace handle these challenges and overcome aircraft production issues? 35

74. Production The Answer: “Reducing variability while keeping diversity high.” Concurrent manufacturing and the Rollback program triggered Lean Production and Continuous Improvement among assembly level activities. “Within the value-stream of manufacturing, you have the necessity, if not the obligation, of maximizing the distribution of resources and tasks (Lombardo, 2004).” 80% of the customers are looking for the same, standard configurations. Reduction of cycle-times Standardized engineering methods (drawings, software, personnel skill, etc.) Standardized wiring, furniture, and cockpit solutions Standard requirements are, thereby, rolled back to initial phase manufacturing. 12-week outfitting cycle went down to four weeks. Gulfstream also value-stream maps its supplier activities and tries to find solutions to reduce costs. What else does Gulfstream do for quality improvement? 36

75. Production The Answer: “Total Quality Management (TQM) is a must.” Since the number of industrial engineers are limited to identify every single waste, employees are empowered by suggesting ideas to the “parking lot” idea pool. The parking lot is the pool of ideas that every employee from every level might suggest anything to improve lean manufacturing process by eliminating waste. To avoid excessive debris, the ideas are filtered according to following criteria: The idea should support 5-year lean vision. There must be a positive business case for it. There must be sufficient resources and budget for the idea. Clear definition of objectives with responsibility and schedule. Every ‘suitable’ idea are analyzed regarding its cost vs. benefit ratio In essence, Gulfstream focuses on Lean and 6-Sigma concepts to eliminate waste while improving overall quality and decreasing costs. Continuous Improvement is one of the key components of the process. 37

76. Production G450 & G550 Examples: Both aircraft has its final phase manufacturing at the Savannah plant. G45 & G550 are visually identical. Required pilot ratings are the same. They share most of the electrical infrastructure (cockpit displays, pressurization system, nose landing gear, oxygen & fire extinguishing systems, etc.) Since common systems require identical parts, the inventory variety is minimal. Reduction in various aspects: Skilled personnel Testing Maintenance costs Support difficulty Training costs Overall Inventory 38

77. Production Innovative G650 Parts count has been slashed by 50%, compared to previous large cabin aircraft. The large aluminum components assemblies have precisely positioned with pre-drilled mounting holes for fasteners. Assembly time slashed because no custom fitting, machining or filing is needed to build the primary airframe structure. However, G650 is a clean sheet product line for Gulfstream. There are various aspects that might increase cycle time: All fly-by-Wire aircraft New certification New pilot rating requirements Additional test aircraft 200+ orders today, valuing approximately $13 Billion. 39

78. Production Rates Source: GAMA 40

79. Story of a GV High-performance Instrumented Airborne Platform for Environmental Research (HIAPER) An advanced airborne research platform built and modified to serve the National Science Foundation's environmental research needs for the next several decades. One of the Special Missions of Gulfstream Aerospace In December 2001, Gulfstream was awarded the contract of manufacturing a special modified GV which will be used for testing scientific payloads at such high altitudes that will enable scientists to conduct important atmospheric studies in and near the Tropopause. Modifications were made by Gulfstream and Lockheed Martin at Savannah, GA plant & Greenville, SC center, respectively. While a regular GV costs approximately $56 million, the HIAPER GV cost around $80 million. Production of the basic green aircraft was completed in 2002. Lockheed Martin kept the aircraft for testing and modification until June 2004. The final product delivered to the University Corporation for Atmospheric Research in 2005. 41

80. Story of a GV 42

81. Conclusion Assemble-to-Order approach 80% of the orders are standard configurations. The interior and additional Cockpit solutions are implemented on demand. Initial manufacturing phases are not interrupted by any customization demand. The customization occurs is during final manufacturing phases. Various Lean Manufacturing and 6-Sigma approaches Multiple Test aircraft, testing different systems concurrently. Multiple aircraft production simultaneously. Robust supplier & customer relations benefit both quality and inventory flow. Initial Manufacturing phases are done in several sites around the globe. Final Manufacturing phases are done in several sites around the globe as well (Savannah & Israel plants). Even though Gulfstream strives for reducing variability in product line, the company competes at several markets. Mid, Large, and Ultra-Large cabin portfolio 43

82. References Anonymous. (2010, August 28). PPG Aerospace Earns Gulfstream 2009 Supplier of the Year Awards. Investment Weekly News. Anonymous. (2010, September 13). Volt Workforce Solutions Receives Gulfstream Supplier of the Year Award. Professional Services Close - Up. Jacksonville. Anselmo, J. C., Garvey, W. (2010, October 18). The Haves and Have Nots. Aviation Week & Space Technology, 52-62. Business Editors. (2003, October 30). API assists Gulfstream achieve number one product support rating. Business Wire. General Aviation Manufacturers Association. (2010). Shipment database statistics. Retrieved December/1, 2010, from http://www.gama.aero/media-center/industry-facts-and-statistics/shipment-database?page=compare&tab=company&type1=all&comp_id=207&year1=2000&year=2009&quarter=1&type=all&submit=Go George, F. (n.d.). G650 Assembly. Aviation Week. McGraw Hill. Gulfstream Aerospace. (2010). News home. Retrieved November/29, 2010, from http://www.gulfstream.com/news/ Gulfstream Aerospace. (2010). Products enhancements home. Retrieved November/29, 2010, from http://www.gulfstream.com/product_enhancements/ Gulfstream Aerospace. (2010). Products overview. Retrieved November/29, 2010, from http://www.gulfstream.com/products/ Gulfstream Aerospace. (2010). Product support home. Retrieved November/29, 2010, from http://www.gulfstream.com/product_support/ Gulfstream Aerospace. (2010). Sites home. Retrieved November/29, 2010, from http://www.gulfstream.com/sites/ High-performance Instrumented Airborne Platform for Environmental Research (HIAPER). (2010). HIAPER project office. Retrieved November/29, 2010, from http://www.hiaper.ucar.edu/what_is_hiaper.html Lombardo, J. T. (2004, November). Concurrent manufacturing, re-engineering and variability control. Presented at the Fifty-Sixth Advanced Manufacturing Forum. The Pennsylvania State University, PA. National Business Aviation Association (NBAA). (2010). Member directory. Retrieved November/29, 2010, from https://data.nbaa.org/source/security/site-logon.cfm?section=unknown&activesection=home&a=1 Peaford, A., Nichols, S., Thomas, G. (2011). 2011 Pocket Guide to Business Aircraft. Flightglobal Trimble, S., Hall, T. (2010, October 12). Diversity Rules. Flight International, 64-65. 44