CLAY JONES, PRESIDENT, CHAIRMAN AND CEO, ROCKWELL COLLINS
Rockwell Collins Has its Cake and Eats it Too: Military Sales
Accelerate, Commercial Sector Rebounds
It's a fact that global turmoil is boosting the bottom line for Rockwell Collins. "We expect the government market will continue to be strong due to the geopolitical issues which you see on the news every day," says Clay Jones, president, chairman and CEO of Cedar Rapids, Iowa-based Rockwell Collins, maker of electronics and communication equipment for military and commercial aircraft.
The numbers speak for themselves: Jones says his government sales grew by 14% last year, helping to boost company-wide revenue to €2.02 billion ($2.5 billion), up 10% from 2002. The company expects its government sales to increase another 21% this year.
While intuition says "geopolitical issues" would tend to strike fear in the commercial aviation sector and depress growth, that does not appear to be the case in today's environment. "The thing we're most excited about is the recovery in the commercial market," says Jones, adding that after low or negative growth in 2002 and 2003, this year will bring a "low- to mid-single digits" uptick. "The prospects for both markets growing are good," Jones says, "and we're optimistic."
Jones' optimism goes hand-in-hand with a smart business plan anchored on four emerging areas that span both the government and private sector: transformation of militaries around the world to networkcentric operations; the need for information management in the commercial, regional and business aviation world; open systems architecture for avionics; and an expansion of Rockwell Collins' maintenance and logistics services.
The rising star in the military arena is the proliferation of communications technology needed for networkcentric capabilities—systems that allow comprehensive, real-time, precise knowledge about a battle or the global security environment. Jones says products like Rockwell Collins' Multifunctional On-the-Move Secure Adaptive Integrated Communications (MOSAIC), successfully demonstrated in a U.S. Army field trial in June, will be the "glue" that will hold the transformation together. Jones says the networkcentric market is growing at 35% a year and alone could generate €0.4 billion ($0.5 billion) in revenue in five years. "It's a modest part of our revenue now," he notes, "but we're just beginning."
In the commercial aviation industry, information management is the buzzword. "We have a set of products and systems solutions that provide connectivity to the last frontier on the planet—onboard an airplane," says Jones, adding that "early adapters" are already flying the hardware and software needed. Lufthansa is now using a Rockwell Collins onboard server that provides Internet access for airline cabins through a broadband link via Connexion by Boeing. For business aviation, Jones says that "within a year," Airshow 21 will be offered aboard the Bombardier Global 5000. Airshow 21 includes Internet, email and LiveTV, all of which will come as part of a "turnkey office in the sky," claims Jones.
Along with more comprehensive service and support packages and open systems architecture technologies, networkcentric communications and information management for commercial aviation are slated to become about half of Rockwell Collins' revenue stream within five years, up from about 35% today.
Jones says the company is largely "where it needs to be" to realize that growth, but he did not discount acquisitions. "We'll be adding alliances and acquisitions," he says. "However we don't require, nor do we think acquisitions will be a big part (of that growth)."
