Next Generation Manufacturing Study Arizona Aerospace and Defense Supply Chain Montreal, Canada December 5,

Project Sponsor: Arizona Manufacturing Extension Partnership (Arizona MEP) This project was partially supported by the State of Arizona Governor’s Office of Economic Recovery and the Science Foundation Arizona Research conducted by the Arizona State University, College of Technology and Innovation under the Cooperative Agreement # 70NANB10H192 Agreement Period: July 1, 2010 through June 30, 2011 Arizona Aerospace and Defense Supply Chain

Project Objective(s): Identify immediate lean manufacturing and supply chain needs of Arizona’s aerospace companies and suppliers. Operations/Problems Areas Addressed: Build a database of Arizona based aerospace tier 1,2,3 suppliers. Conduct a survey of suppliers for their use of next generation manufacturing concepts, e.g. lean six sigma; identify and assess needs. People: Gary R. Waissi, Jane E. Humble Sponsor(s): Arizona Manufacturing Extension Partnership (AZMEP) Science Foundation Arizona Arizona Governor’s Office for Economic Recovery Users/User Community: Aerospace suppliers Future Funding Targets: AZMEP, DoD, aerospace companies Technology and Impact : Database of Arizona aerospace suppliers Current status with respect to next generation manufacturing (NGM) Can help identify, support and advance competitiveness of the Arizona aerospace cluster.

Arizona Aerospace and Defense Supply Chain Value 1.The database includes 1,338 companies. We believe that the database is the most comprehensive single source of Arizona aerospace companies. This database will be helpful to the companies themselves, to government agencies, to universities and to research institutions, as well as to the Aerospace Defense Research Collaboratory, Arizona Aerospace Commission, Arizona Commerce Authority (ACA) and Arizona MEP. The database, if fully utilized, will help strengthen the Arizona aerospace cluster. We recognize that we may have missed some important companies. Arizona Aerospace and Defense Supply Chain

2. The survey results give a snapshot (current 2011 status) for a relatively broad sample of the aerospace companies relating to their strategic strengths, weaknesses, as well as opportunities and threats. Because the survey results will be shared with the participating companies, they can then compare themselves in various categories to the other companies. For example, do they believe that they are competitive globally, are there opportunities for improvement, are there changes within the company or external to the company that should or must be considered, etc? Arizona Aerospace and Defense Supply Chain

Core of the study --- Focus on eight areas/ survey question categories as follows: 1.Company demographics 2.Leadership 3.Customer satisfaction and innovation 4.Workforce strategies 5.Supply chain management 6.Lean process improvement 7.Sustainability and green 8.Global engagement. Arizona Aerospace and Defense Supply Chain

Source Enterprise Category Headcount: Number of employees New Classification (used in this study) Micro1-9 Small10-49 Medium – Low (M-Lo)50-99 Medium – High (M-Hi) Large – Low (Lg-Lo) Large – High (Lg-Hi)500 or more Table 2-3: The Company Size Classification of this Study: Six Categories Arizona Aerospace and Defense Supply Chain

Description of ActivityAZ DoC AZ MEPD&B BvDRef.USAACC CCR CW Search for Arizona aerospace suppliers X XX XX Company ID X X X Headquarters X X X General Company Information X XX XX X Employee Information X X XX Company Sales XX XX Company Demographic X X XX Certificates and Affiliations X SIC and NAICS Codes X XX Key Executives X X X X Parent Company Information X X X Table 3-1: Data Categories and Primary Data Sources AZ DoC = AZ Dept. Commerce AZ MEP = AZ Mnf. Ext. Prtnshp D&B = Dunn & Bradstreet BvD = Bureau of Van Dijk Reference USA ACC = AZ Corp. Commission CCR = Central Contractor Reg System cw = company website Arizona Aerospace and Defense Supply Chain

Figure 3-1: Arizona Aerospace Supplier Database Structure Arizona Aerospace and Defense Supply Chain

Approximately how many employees does your company have? All Firms Micro 1-9 Small M-Lo M-Hi 100–249 Lg-Lo 250– 499 Lg-Hi ≥500 Number [N] of Respondents by Category Percentage [%] of respondents100%16%37%21%11% 6%9% Table 4-1.2: Number and Percentage of Respondent Companies by Size Category Arizona Aerospace and Defense Supply Chain

Which of the following were produced by your company during the past 5 years? [Check all that apply] All Firms N % ATC Communication Systems & Components 11 9 Aircraft Operating & Control Systems 3024 Airframes & Components 3831 Avionics Systems, Instruments & Components 3327 Chemicals 4 3 Coatings & Paints 9 7 Composites 9 7 Computer Software/Services & Databases 8 7 Electrical & Electronic Components & Hardware 3831 Engines & Engine Components; Propellers 2722 Crew/Passenger Supplies & Services 6 5 Hardware Hydraulic /Pneumatic 2319 Inflatable 5 4 Interior Equipment & Furnishings 1210 Landing Gear/Wheels & Brakes 1613 Lighting Systems & Equipment 7 6 Metals & Metals Services 2117 Oxygen/Fire Suppression Systems 2 2 Test & Inspection Equipment 2319 Tools & Machines 1714 Training Equipment & Services 5 4 Other (please specify) 3831 Total Number of Respondents [N]123 Table 4-1.7: Product Categories During the Past Five Arizona Aerospace and Defense Supply Chain

How many suppliers does your organization have for direct materials? All Firms N % Number of Suppliers >= Don’t know 7 6 Total Respondents by [%] by Category [N] % Table 4-5.1: Suppliers for Direct Materials Arizona Aerospace and Defense Supply Chain

Figure : What process improvement systems are in place within your organization? [Check all that apply] Arizona Aerospace and Defense Supply Chain

To what extent are the following processes automated? [Check all that apply] Level of Automation 0% Automated Manual only 25%50%75%100% Automation Total [%] Response Count Material preparation and processing (Shaping, removing, depositing, transforming, finishing…) 38%16%10%24%12%100%79 Testing/inspection for quality52%18%15%11%4%100%89 Product assembly75%8%9%7%1%100%80 Packaging84%6%5%4%1%100%85 Arizona Aerospace and Defense Supply Chain

Figure : What formal certifications does your company have? [Check all that apply] Arizona Aerospace and Defense Supply Chain

Figure 4-7.3: Does your company have a green enterprise strategy in place ? Arizona Aerospace and Defense Supply Chain

Where are your customers located? [Check all that apply] All Firms Micro 1-9 Small M-Lo M-Hi 100– 249 Lg-Lo 250–499 Lg-Hi ≥500 Arizona 62%63%62%70%80%50%25% Western/SW US 46%56%48%45%70%0%25% Throughout US 71%69%71%85%90%16%50% North America 33%38%19%60%50%17%25% Europe 32%38%19%45%70%17%25% Asia 29%31%17%45%60%17%25% Africa 13%25%7%10%20%0%25% South America 17%25%14%10%40%0%13% Mixed worldwide 28%38%21%15%40%50% Don't know 1%0% 12% Other (please specify) 3%0% 5%20%0% Mexico1% 10% Middle East2% 5% 10% Total Respondents by Category [N] Table 4-8.1: Where are your customers located? Arizona Aerospace and Defense Supply Chain

Where are your suppliers located? [Check all that apply] (N) All Firms Micro 1-9 Small M-Lo M-Hi 100–249 Lg-Lo 250–499 Lg-Hi ≥500 Arizona44%50%43%55%50%33%13% Western/SW US41%50%38%50%60%17%13% Throughout US74%81%74%80% 67%38% North America29%31%21%45%30%17%38% Europe22%25%10%40%30%0%38% Asia18%31%10%20%10%0%50% Africa2%6%0%5%0% South America3%6%2%0%10%0% Mixed worldwide18%6%14%15%10%33%63% Total Respondents [N] Table 4-8.2: Where are your suppliers located? Arizona Aerospace and Defense Supply Chain

Is your company planning to expand operations globally? [Check all that apply] (N) All Firms Micro 1-9 Small M-Lo M-Hi 100–249 Lg-Lo 250–499 Lg-Hi ≥500 No 60%81%67%55%50%33%25% Yes. planning has started 17%0%21%25%0%17%25% Plans are in place for expansion 2%0% 10%17%0% Global expansion is in process now 15%13%5%20%30%17%38% Don't know 6% 5% 0%17%13% Total Respondents by Category [N] Table 4-8.4: Is your company planning to expand operations globally? Arizona Aerospace and Defense Supply Chain

Next Steps As a continuation and leveraging from this study we plan to conduct a strategic assessment of selected Arizona based aerospace companies focusing on operational excellence, supplier development, strategic growth, current and future workforce needs and development, technology adoption and integration, as well as green products and practices. The primary goal of that planned effort is to develop a standardized Strategic Assessment Framework, or Tool, that could be repeatedly utilized by companies in the aerospace industry, or by consultants working with those companies. The secondary goal is to provide immediate value-adding feed-back to the companies assessed. Arizona Aerospace and Defense Supply Chain

Questions/comments Issues: -Continuous updating and improvement; database will be outdated quickly -Aerospace Small Medium Enterprise (SME) needs -Funding sources for future work For details and to download the full report go to: Arizona Aerospace and Defense Supply Chain