General Dynamics 2010 Annual Report Download - page 24

General Dynamics Annual Report • 2010 4
manufactured at Gulfstream’s headquarters in Savannah, Georgia, and
outfitted at one of the group’s U.S. completion facilities. The mid-cabin
models are constructed by a key supplier and outfitted by Gulfstream in
one of the group’s U.S. completion centers.
While the installed base of aircraft is predominately in North America,
international customers represent nearly 60 percent of the group’s
backlog, with growing order interest from emerging markets including
the Asia-Pacific region. Private companies and individual customers
collectively represent approximately two-thirds of the group’s total
orders. Gulfstream remains a leading provider of aircraft for government
and military service around the world, with aircraft operated by nearly 40
nations. These government aircraft are used for head-of-state/executive
transportation and a variety of special-mission applications, including
aerial reconnaissance, maritime surveillance, weather research and
astronaut training.
To maximize profitability, management has adjusted aircraft
production rates, invested in innovative product development and
facilities, and enhanced the group’s global service network. For example,
prior to the recent economic downturn, Gulfstream amassed a multi-year
large-cabin backlog by making measured increases in aircraft production
that consciously lagged growing international customer demand. This
backlog provided Gulfstream increased flexibility when global economic
turmoil began to negatively impact the business-jet market in late 2008.
In response to this sudden market deterioration, we quickly and aggres-
sively cut 2009 production levels to stabilize the backlog. We also
reduced employment, cut overhead costs and introduced a multi-week
summer furlough to adjust the group’s manufacturing operations.
Improved new order activity and lower customer default levels enabled us
to maintain large-cabin production in 2010 while modestly increasing
mid-cabin production.
The Aerospace group continuously invests in research and
development (R&D) over the course of each aircraft model’s lifecycle
to introduce new products and first-to-market enhancements that
broaden customer choice, improve aircraft performance and set
new standards for customer safety, comfort and in-flight productivity.
The two newest aircraft to join the Gulfstream family, the super-
mid-size G250 and the ultra-large-cabin, ultra-high-speed G650,
demonstrate this innovation. The G250, which will replace the G200,
offers the largest cabin and the longest range at the fastest speed
in its class. The G650 has the longest range, fastest speed, largest
cabin and most advanced cockpit in the Gulfstream fleet and defines
a completely new segment at the top of the business-jet market.
Scheduled to enter service in late 2011 and mid-2012, respectively,
both aircraft continue to perform well in flight testing, and they each
remain on track for aircraft certification in 2011. Gulfstream’s
new and upgraded aircraft models are designed to minimize
lifecycle costs while maximizing the commonality of parts among the
various models.
Current product-enhancement and development efforts include
initiatives in advanced avionics, composites, flight-control systems, acoustics,
cabin technologies and enhanced vision systems. Recent innovations
include the second-generation Enhanced Vision System (EVS II) and the
Synthetic Vision-Primary Flight Display (SV-PFD), both of which assist the
pilot during low-visibility conditions. EVS II is a specially designed,
forward-looking infrared (FLIR) camera that projects a real-world infrared
image on the pilot's head-up display (HUD), while Synthetic Vision provides
three-dimensional images of the terrain, runway environment and obstacles
on the pilot’s primary head-down display. These products work in tandem
to provide pilots with unparalleled situational awareness regardless of
weather, terrain or landing-field conditions.
In November 2010, we announced a $500 seven-year facilities
expansion project at Gulfstream’s Savannah campus designed to ensure
the group is well-positioned to meet future demand for business-jet
aircraft and support services. This investment plan includes constructing
new facilities, renovating existing infrastructure and expanding the
group’s R&D center. The new effort follows a recently completed
$400 multi-year project in Savannah that established a purpose-built
G650 manufacturing facility, increased aircraft-service capacity,
improved the group’s customer sales and design center and created
a state-of-the-art paint facility. This expansion initiative has paid
immediate dividends. For example, the new manufacturing facility,
designed for lean manufacturing and precision assembly, has successfully
produced the five G650 test aircraft that are being used to meet the
program’s certification testing schedule. Further, the newly expanded
service center helped accommodate the significant recovery in customer
demand in 2010.
In addition to the increased service capacity in Savannah,
Gulfstream’s service network continues to evolve to address the
demands of the growing international installed base. In 2010, we
focused on increasing the group’s international parts and materials inven-
tory, adding key personnel in fast-growing markets including Asia and
South America, and realigning our existing North American service organi-
zation. In the western hemisphere, Gulfstream’s product support team
continues to deploy a team of technicians in support of urgent
customer-service requirements. We have also leveraged our 2008 acqui-
sition of Jet Aviation, a maintenance and repair services provider with aircraft
service centers in more than 20 locations worldwide, to provide customers
around the world first-in-class service and support 24 hours a day.
Jet Aviation also expanded the Aerospace group’s portfolio to include
premium aircraft-outfitting operations for airframes produced by other
original equipment manufacturers (OEMs). Jet Aviation performs aircraft
completions and refurbishments for business jets and narrow- and wide-
body commercial aircraft at locations in Europe and the United States. As a
trusted provider of turnkey aircraft management and fixed-base operations
(FBO) services to a broad global customer base, Jet Aviation supports the
continued growth and diversification of the Aerospace portfolio.