On the Record with
Gary Hay, CEO, Cessna Aircraft

Cessna Cushioned by Citation Backlog

Cessna has been pretty quiet as far as new product announcements go. But next year will be a different matter when the company celebrates its 75th anniversary with plans to introduce at least one or two all-new airplanes, according to Cessna CEO Gary Hay.

"There's the possibility of an all-new airplane or two, plus product line extensions; we have already given the green light to one of those new models at this time," Hay told Show News.

"It's a new model that replaces an existing one, and we know the timing and delivery starts on that plane. We're looking at new products across the product line."

But until then, "the news will be we are continuing to ramp up deliveries of the new models we started recently: the CJ1, CJ2 and Encore. We had a record delivery year in 2001 and record financial performance."

Hay said the company has also made significant strides on the operational side of Cessna's business--particularly in lean and process-based management--which Hay believes will help the company meet its delivery commitments and also launch the raft of new products for 2002.

"Our success has been by and large on our new product development strategy; we've rarely remained idle," he said. "We continue to believe that that strategy will serve us well in the future. "This is the first full year of steady production of the CJ1, CJ2 and Encore, and also the highest-count volume year on Excel, of which we delivered 85. We're coming off a period of time when we introduced four models in 1998. We did that on the timetable we committed to for our customers."

Cessna expects to experience another great year for deliveries in 2001, though sales have dropped for the company--as well as everyone else in the market--due to the economy.

"2002 we think has the potential to parallel 2001 in strength," said Hay. "We're carefully assessing the economy, and orders have slowed. The saving grace for us is a substantial (order) backlog of about 700 Citations, which has acted as a shock absorber.

"We're being conservative in our outlook for 2002; new order intake will be more like 1997. We expect an order intake of about 125 versus 415 in 2000, which was a record year. That sounds like a huge fall-off, but on a comparative basis, 125 orders will be a pretty good year."

Designing, certificating and delivering as many new products as Cessna has in the past several years has obviously created challenges for the company in upholding quality in its products.

"Two or three years ago the quality of our products as we were beginning to ramp up wasn't something we were always proud of," said Hay. "Now we've tried to increase our scheduling logically so we don't outpace quality with the (production) schedule."

Cessna calls its major quality related initiative "Cessna 20/20," which began two years ago and counts Six Sigma as one of its major tools. Since launching 20/20, Cessna has certified 30 employees as Six Sigma black belts, and 130 people have gone through black belt training. About 500 of Cessna's 9,500 employees have been exposed to Six Sigma training.

Cessna's flagship airplane, the Citation X, has been the main beneficiary of Cessna's quality efforts. The program is also being applied to the under-development Sovereign, and will filter down to the other aircraft in Cessna's product line over time.

To speed completions--one of the greatest quality challenges for business jet manufacturers--Cessna Aircraft has also begun construction of an $11 million, 80,000-square-foot facility for assembly of the midsized Sovereign business jet.

Construction is expected to be complete by mid-2002.

-Barry Rosenberg