Published on February 4, 2009
Asian Aviation: Big Growth, Big Challenges Asia’s aviation sector is poised for strong growth but faces many challenges; strong leadership is essential in the coming years. Presentation To: World Private Jet Industry Conference 2009 By: Torbjorn Karlsson Managing Partner Aerospace, Defense and Aviation Practice; Asia-Pacific January 21, 2009 0
Introduction to Heidrick & Struggles Heidrick & Struggles’ Overview We Help Clients Build Winning Leadership Teams ► An international, premier provider of executive search and ► Searches and services for Boards and CEOs leadership consulting services, including talent management, ► Searches and services supporting CEOs and the entire C-level board composition, executive on-boarding, M&A effectiveness executive group ► 50+ years of industry experience and brand equity ► Access to large, global candidate pool ► Global team of nearly 400 consultants working from more than ► Focused knowledge of candidates in specific functions and 60 locations in principal cities of the world and emerging markets industries ► Pioneer in establishing industry practices, equity billing, and ► A range of services to help them build and retain effective presence in China and other emerging markets leadership teams Global Presence Industry and Functional Search Practices With over 60 locations and more than 1,500 employees around the Global Industry Practices world, we have the resources and contacts necessary to conduct a ► Business & Professional Industrial ► global, multinational, national, or local market search. Services Life Sciences/Health Care ► ► Private Equity & Venture Consumer ► Capital Technology ► ► Financial Services Global Functional Practices Board of Directors Human Resources ► ► Chief Executive Officer Legal ► ► Chief Information Officer Research & Development ► ► Chief Marketing Officer Supply Chain ► ► Financial Officers ► Specialty & Local Practices ► Diversity Services ► Middle East & North Africa ► Education/Nonprofit ► Russia & Commonwealth of Independent States ► Interim Executives 1 0000000
Big Growth, Big Challenges ► Bangkok’s new Suvarnabhumi Airport is a potent symbol of where things are going well in Asia’s commercial aviation sector ► On the other hand, bureaucratic meddling has plagued Suvarnabhumi from its inception, and it was opened years behind schedule ► On the surface, the opportunities available to commercial aviation in Asia are the same as those for other sectors: rising wealth, booming economies, and increasingly mobile populations. ► But the skies ahead are not entirely clear. Asia is far from being a single, homogenous place ► In just 20 years, Asian aviation has gone from being a staid, cozy sector to a dynamic, innovative business where there is fierce competition for passengers, routes, and financing ► Strong leadership is essential for coping with the challenges facing the sector 2 0000000
Asia has the potential to be the world’s biggest aviation markets, but… ► China’s airport infrastructure is good, but it has yet to liberalize its aviation sector. Only through greater competition will the quality of service available in China improve. ► India has the opposite problem. Its infrastructure urgently needs expansion and upgrading, but its deregulated domestic aviation market has resulted in a dogfight. ► In Southeast Asia one finds the full spectrum of what is good and bad in the Asian aviation business. ► Japan’s aviation sector is making slow progress toward liberalization, but obstacles still remain. ► Australia remains unique among the world’s aviation markets, remote from Asia’s main flight paths, making bilateral air travel agreements difficult to negotiate and hat’s more, Australia is fiercely protective So why does this matter to you? So why does this matter to you? 3 0000000
MRO Survey – A Proxy for Market & Talent ► There is a strong belief in continued globalization Globalisation and consolidation in the MRO industry. 88% of the respondents feel the industry will be more globalized in the next three years. Less ► There is also strong belief in continued globalized consolidation, 79% of respondents believe in Remain the 2% more consolidation vs. the 21% that believe a same plateau has been reached. 10% ► This globalization and consolidation will be impacted negatively by a shortage in human capital. ► That shortage is considered the single most important issue facing the respondents’ More companies and the industry at large. globalized ► Over one-third (37%) of all MRO organizations 88% do not believe their organization has the right management in place to deal with expected growth and changes. ► Looking forward, the search to fill such positions will increasingly lead companies to other regions of the world especially for developing regions. It appears that upper level employees will continue to be imported from overseas, but this will not necessarily correct their shortage for operational level employees which are less likely to be sourced to foreigners. 4 8100051
But The War for Talent is Also A Global Issue All over the world we are facing a shortage of talented people who have the transferable technical skills to compete in global business ► Today, only 20% of Americans have passports, yet American companies are looking to aggressively expand into Europe and Asia ► Meanwhile European businesses are searching for footholds in Asia and also further expansion in North America ► The Japanese, for the first time in 15 years, given their economic upturn, are looking to expand outside of their borders yet are finding they don’t have the senior management to get them there ► Chinese companies are following this trend and are increasingly committed to gaining a place on the international stage. In particular, Chinese organizations which were once state owned want to know if they have the same talent to compete against a General Electric, a Pepsi Cola, a Dell ► Indian companies are rapidly going global and as seen in their airlines, among other industries, are rapidly tapping into the global talent pool 5 0000000
The War for Talent – Going Forward In industrial nations the shortage of talent will worsen ► Japan alone will lose up to 60 million people over the next 30 years ► In 30 years there will be 70-80 million fewer Europeans than there are today ► 50% of the top people in US companies will leave in the next 3 years We know the situation in China and India is different. Yet, in spite of the population wealth, the talent problem in China is just as pressing ► The talent pool in China is shallow ► Exacerbated by the Cultural Revolution which affected a large group of individuals who would be in management position now ► In China, just as in the rest of the world, there is a severe shortage in globally experienced senior management ► A recent report by Business Week showed there is shortage of 70,000 globally experienced Chinese managers and by 2010, McKinsey predicts India will face a shortfall of 500,000 staff capable of doing work for multinationals 6 0000000
Excellence Through Business Planning and Acquisition Process Acquisition Target is Identified Acquisition target is identified in marketplace. Due diligence starts. Business Planning Cycle Heidrick & Struggles 1 Heidrick & Struggles engaged early The company has engaged Heidrick in business planning cycle to discuss & Struggles to consider talent marketplace activity, talent and options for deal The company has 2 potential deals. identified a target Heidrick & Heidrick & Client Struggles Struggles engaged Deal is completed Deal is announced to public markets Deal is and executive team is already completed engaged. 5 Successful integration and value Assessing creation starts. talent 3 Human Capital Solution Assessing talent Heidrick & Struggles provides H&S assesses talent throughout Human Capital human capital solution before deal is acquisition process/due diligence Solution in place even announced (this makes advising every step of the way. integration easier and the deal more 4 successful from the onset) 7 0000000
Conclusion Embrace Globalization - But be ►Asia-Pacific is the future, now more than ever, but it clearly lags mindful in infrastructure and has greater diversity than anywhere else. ►But its worth staying the course. According to a survey of 1,410 CEOs in 45 countries globalization is having a positive impact on APAC is the future but the their organizations (Pricewaterhouse Coopers) challenges, especially in the ►However, the factors that led to increased internal business Business Aircraft Segment are not complexity (i.e. risk) for CEO’s to a large or very large extent to be underestimated! included expanding their operations into new territories (65%) engaging in mergers or acquisitions (65%) and launching new products and services (58%). All key strategies in penetrating the emerging business aircraft market. ►Externally, complexity was driven to a large extent by international, national or industry-specific regulations, laws, standards and reporting requirements as well as by competitor's actions. Challenges this industry only knows to well!! To navigate this “obstacle course” you need Human Capital, the oil of ► tomorrow. Human Capital is the oil of tomorrow - it’s in high demand Industry pay has only recently started to become attractive but still lags ► and is often hard to find alternative professions like legal, medical and finance. That means making a decision to send high potential individuals abroad ► where they can gain the technical skill sets, organizational know-how Like oil you also need analysis, and experience that will help your company grow, long term prospecting, investments and nurturing to capitalize on its It’s a long term investment – you need to operate a talent pipeline with ► benefits! employees continually being sent abroad, to return a few years later If you want to look like heroes, if not to your board, but potentially to ► your successor, you have to invest in human capital 8 0000000
Torbjorn Karlsson Managing Partner, Industrial and Aerospace, Aviation and Defence Practices, Singapore Professional Profile Torbjörn Karlsson leads the Aviation, Aerospace and Defense practice in Europe, Middle East Africa and Asia. He is also involved in the transportation and supply chain sectors. Prior to joining Heidrick & Struggles, Torbjörn was Vice President, Commercial, Asia Pacific for Honeywell Aerospace. He is a seasoned marketing and sales professional with over 18 years experience in Asia Pacific based in Jakarta, Bangkok, Hong Kong and Singapore, promoting aviation-related products (including aircraft) and services for large aerospace companies such as Saab Aircraft, Rockwell Collins and Cathay Pacific. Torbjörn has a wealth of experience across the aviation sector. He has managed and designed logistics and sales management processes, identified and closed gaps in opportunities, developed sales campaigns that have returned significant value, and devised asset management strategies. Torbjörn has spent many years in the consulting, airport, aviation electronics and regional aircraft markets. His accomplishments include the management of European and American supplier relationships to develop new markets and identify new business opportunities and markets. He has managed Asian client relationships to grow business for multidisciplinary product ranges including hardware, software and integrated solutions, refocusing emphasis to match changed market environments-increased competition and revised purchasing criteria. In addition to handling all marketing and sales activities for commuter aircraft in China, Taiwan, Southeast Asia and Indochina leading to an increase in fleet of 100% over three years, Torbjörn also laid the foundation for consulting and hardware contracts increasing sales at major regional airports. Education Torbjörn studied Mechanical Engineering at the Royal Institute of Technology in Stockholm, Sweden and earned an MBA from European University in Jakarta and Brussels, Belgium. He also is a certified Six Sigma Black Belt. 9 0000000
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