Volvo 1999 Annual Report Download - page 39

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37
During the year Aero delivered the 100th RM12 engine ordered by the Swedish Air
Force for use in Gripen aircraft. The Air Force has ordered a total of 204 Gripen aircraft
and 215 engines. Combined with the export order received in South Africa, this ensures
planned production up to the year 2011.
Aero’s Aerospace Components division received two strategically important
contracts in 1999. O ne involves design studies for turbines for Vinci, Europe’s latest
rocket engine, which is to be used in the upper stage of the Ariane 5; the other is a
contract to produce more than 200 turbine blades for Viking-engine turbo pumps used
in the Ariane 4 rocket.
Strategic developm ent
An important element in Volvo Aero’s strategic development has been to reduce
dependence on the Swedish military market.The Swedish military accounted for more
than 90% of Aero’s sales at the beginning of the 1970s. It has been successively
reduced from 33% at the beginning of the 1990s to 14% in 1999. This was accom-
plished through expansion in commercial engine components, service, engine overhaul
and leasing, due to acquisitions, among other actions.
Continued growth for Aero focuses on two areas: components to the aerospace
industry and service to airlines and other players in the highly extensive aftermarket
in the aviation industry.
As a part-owner in a number of engine programs, Aero holds a strong position in the
engine component segment. The acquisition of Norsk Jetmotor further strengthened
this position. Invoicing in the service sector represents 55% of Aero’s total invoiced
sales. The acquisition of The Ages Group provided access to new markets and in-
creased expertise in the aftermarket. The agreement with Boeing and the acquisition
of Jet Support opens favorable possibilities for spare parts business to the airlines.
Goals for the year 2000
Aero’s primary goal for the year 2000 is to continue to expand. Work is also being
focused on the development of relationships with Boeing and other companies in the
aircraft industry in order to establish additional joint ventures for The AGES Group.
During 1999, the large engine producers General Electric and Pratt & Whitney
informed that they intend to outsource approximately 90% of their production to
contractors. This offers substantial opportunities for commercial component manufac-
turing within Aero. The focus is on continuing cost reduction at the same time that
quality work has the highest priority.
A major ambition in 2000 is to begin preparations for exports of Gripen aircraft to
South Africa at the same time that the program to gain more export orders for the
Gripen are continuing. Within engine components, preparations are under way for
production and first delivery of components for use in General Electric’s F414 military
engine program, in accordance with a contract signed in January 2000 with General
Electric Aircraft Engines.
My view of Volvo
Sten
Abrahamsson,
Renova AB, Sweden
Truck owner
Volvo offers reli-
able service and a
good retailer net-
work. Long-term ,
good cooperation,
especially within
the environm ental
area. In m any
cases, that is as
im portant as the
products them -
selves.