Foundation Forum

Mr. Don Kozlowski
Senior Vice President
McDonnell Douglas Corporation
Global Presence--The Industry Perspective
Mid-America AFA Symposium
St. Louis
May 3, 1996

My career started in about 1957 just up the road at Lambert Field, and I became very quickly impressed with this thing called Presence. Global Presence is not a new term in my lexicon. In those days, I was an analyst working on the early Mercury and Gemini space capsules when the company moved me into the fighter business, after just six months. Even then Presence was an issue and I was very impressed with the ability of carriers to go around the globe and how air power could go just about anywhere at anytime, with some limitation.

The last couple of years, though, have taught me about a critical issue in Presence air mobility and airlift when our aircraft was tasked to deliver the President to Bosnia. The C-17 has carried the emissaries of our foreign policy and the tools of humanitarian relief in recent months. Ultimately, it can also carry the instruments of war into combat. I ve learned how the C-17 and all the other aircraft in the airlift business get there "first" with the "most." These airlifters are the arterial lifeline of this thing called "global presence." I have a new found love and respect for airlift.

History will show that the C-17 and any airplane like it in subsequent years has the versatility to fill many roles. They will be needed in large quantities, both in the military as well as commercial forces.

World events in the last decade have placed an increased emphasis on mobility and a strain on the nation's lift capabilities. We at MDC are proud to be accomplishing something important to address that problem by building the Globemaster III, the world's most versatile airlifter. It wasn't always an easy path, and we didn t always have a good reputation. Perhaps we haven't shed all of that troubled image in toto, but we are determined to get rid of it once and for all.

Today, thanks to General Kadish [Maj. Gen. Ron Kadish, C-17 System Program Office] and to the cooperation of the Air Force and a lot of other people in DoD as well, and our suppliers, the C-17 is being heralded as a model acquisition program. Instead of being seen as a troubled corporation, we are looked upon as one of the leading aerospace companies, and we are bound and determined to keep that image. We must keep our mistakes and inefficiencies as a thing of the past, build on the lessons learned, and go forward and continuously improve.

We understand that change is constant and we must become better as we change. We are determined to stay on a continuous improvement path.

The C-17 is continuing to prove itself daily in real world operational missions such as Operation Joint Endeavor in Bosnia. Long ago the C-17 aced all of its tests, specifically the RM&A [Reliability, Maintainability and Availability Evaluation]. Some were skeptical about the results. Of interest, the RM&A tests turned out to be almost a model exercise for what happened in Bosnia. It involved about the same time interval, same number of airplanes and same number of crews, but the C-17 did even better in Bosnia. It shows how real world missions prove better than I could ever do how well the C-17 can do.

Cost and quality, while vital, are not the only measures of importance in the future. The flexibility of the Globemaster III makes it crucial to U.S. mobility and Presence. The C-17 has a three to one edge over any other large airlifter or commercial freighter on airfields worldwide where it can land and operate effectively. Presence means you don't know where you are going to have to go or when you are going to have to go, but at least an aircraft like the C-17 can get into places where others can't.

Landing on thousands of small airfields is one thing, but the C-17's ground maneuverability means more throughput, which is important to the user as are turn time and the cost of maintenance. There may be a case in the future for a large airlifter, such as the million pound aircraft mentioned in the New World Vistas Study, but it will have limitations on where it can operate.

Another item I want to talk about is precision airdrop. While we have unmanned vehicles that are guided to put combat firepower precisely on targets, so too, you can guide cargo loads to a specific user. Even if you can't get into an airfield, there are precision techniques available today to deliver those payloads.

It is also obvious that warning times are shrinking when it comes to employing U.S. power and presence abroad. Airlift will, therefore, be more critical in quickly providing that presence anywhere in the world on a moment's notice. The T-tails of the Air Mobility Command have become ever more visible symbols of American presence overseas. The day of moving a Naval fleet or aircraft carrier into nearby international waters is not over, but it certainly has limitations in speed and how close it can get to some locations. As we cut the number of carriers, that dimension of presence in foreign policy also is reduced. Not only can airlift get there, it brings the freight, the fuel and the people.

Tanker versions of the C-17 are another distinct force multipliers of the future. Again, ease of operations and supportability can be as important as getting there. As world events have shown, you can be going to a Kuwait operation one day, be evacuating civilians from Liberia the next, be running disaster relief materials to the Caribbean, and all the while supporting peace keeping forces, such as in Bosnia. There is also talk about utilizing the C-17 more frequently to support the president.

The C-17 has already done these missions in its first year of operational capability. It is also clear that most American operations of the future will begin in the United States, not overseas. We may deploy to a forward base, but not necessarily on day one. We will need the maximum flexibility we can get.

In a sense, you can take a look at three different kinds of costs associated with Presence. You have the cost of building a weapon system and the cost of operating it in a contingency the operation and support dimension which becomes the life cycle cost. But what would the cost be to the stature of this nation if we didn't have airlift capabilities as we know them today? The world is a better place since we won the Cold War, but the spread of sophisticated weapons to smaller countries, and I might say the spread of democracy, equally causes unrest and you just don't know where the next trouble spot is going to be. We don't know whether we will have to rely on the diplomatic foreign policy "spearhead" or the "spearhead" of our combat might.

As the aerospace industry competes for a dwindling number of future programs and tight budgets, it must become more effective and more efficient in building quality equipment at an affordable cost. Whenever possible, we must look for commercial and foreign markets for additional sales or variance to drive down costs for military buys. Those opportunities are becoming less. The C-17, for example, has obvious foreign military sales market potential as the cost of the aircraft comes down. Its reliability and maintainability makes a small fleet with as few as four C-17s a viable option for some of our allies. Besides the tanker version, we are working diligently toward a commercial version, the MD-17.

In the early history of airpower, there were many stories about how we struggled in developing a capability to deliver air mail and we all paid a premium for the air mail stamp. Then UPS and FedEx led us into the air freight business, which today is blossoming. For tomorrow, I just ask you to visualize how you will sit in front of your TV tube, dial up the local automobile dealer, order your car, and it will be built and delivered to you by air in a few days. It takes about 24 hours to assemble a car, but transit to a dealer can take as long as a month.

Just as with airlift, speed is a major dimension in the commercial markets, whether you are going by truck or rail or air. In airlift of the future, whether it be military or whether it be commercial, speed will be one of the major advantages that we bring to the market place. People, as we all know, are willing to pay to get fast response.

We are also trying to reduce our costs in a whole variety of different ways. Today, Congress is debating whether to approve a six or a seven year multi-year buy for the C-17. Upping the production quantities bodes well to bring the price down. We've cut the price about 40 percent and hope to take another 10 percent out over the next few years. As we develop other modes of efficiency, we'll bring that cost down some more.

Our president and CEO recently said that simply improving the way we do business is just not enough, we have to change the way we do things. We are doing that. We are looking at new technology. A couple of years ago, we hauled tech orders around in paper format and for the C-17, it is over 1,000 pounds of paper. Somewhere around the 15th of May, we will be developing CD-ROMs for these documents. Somewhere in mid-July, we are going to turn on the C-17 Intranet, a Worldwide Web dedicated to providing not only maintenance data, tech orders, recent changes to those orders, but giving people in the field complete access to how we build the airplane on the production floor. We are going to electronically based work instructions, getting rid of all the paper in the factory.

Two years ago, we didn't have a plan for that. In the next few months, it will be in place. Two years from now it will probably be replaced with something even better. We are looking at helmet-mounted sights and computerized display readouts for the mechanics who build the airplanes to possibly let them talk directly with flightline folks who repair the same part on the airplane in the field. That technology is there today and we'll have it in place in just a couple of months.

Change goes faster than any of us can sometimes keep up with. We are also trying to change the way we handle data. Data, in its own right, is just a piece of the picture but it can lead to information. Information leads to facts and we are trying to drive to a fact-based management system. Facts lead to knowledge, and knowledge is power. But often the system will break down because of organizational boundaries where we don't share that knowledge. We are well on our way to deploying integrated product teams, self-directed work teams on the floor and teams with our suppliers. We've been working a teaming relationship with our customers for the last couple of years. I've been doing it personally for about 10 years, and teams provide a most productive way of getting the job done.

We are using optical technology in lieu of hand tools in the factory. We are getting rid of master tooling, replacing it with computer reference tools and geometric solids in the computers. The C-17 was conceived 30 years ago, maybe longer. It flew as a prototype in the early 1970s, the formal contract was let in the early 1980s, and today we sit with only 25 airplanes delivered. It was all designed in the old style with paper, and we are trying to bring it into the modern age. In the process of doing that, we re leap frogging some of the more current programs using later technology. In a couple of years, we should be not just as a model acquisition program, but also as a model program for factory standards, date of delivery standards and customer interface standards. We are being heralded as a pioneer in the reinvention of acquisition programs and have received a number of awards.

When you get in trouble as deeply as we did, you do a lot of things for survival. That engine got going to go fix things, and pretty soon you find out you are passing up the rest of the world. Next spring we are applying for the Baldridge Quality Award. We are doing well thanks to all your help.

Obviously, the C-17 was a very good airplane to begin with. The flight crews love it, and the user is very happy with it. As a corporation, we still want to bring the price down and deliver a quality product.

Right or wrong, and only history will tell, we chose the journey to first get on the quality kick and fix everything and then let the costs follow. I still believe in that approach. However, you can't lose sight of costs. The taxpayers are not in business to pay fat prices so we worked on the cost engine as well. As I said, we took 40 percent out and we have a lot more to go.

We need a very reliable product. We need a product that doesn't break. We are achieving departure reliability standards very comparable to what we are getting in the commercial market. I see no reason why we can't be as good as, if not better than, the commercial airplanes. We are looking at investing in the airplane to get its departure and inherent mission success rates even higher.

We are also transitioning concerning the depot support business. We know outsourcing and privatization is a tender subject. As a corporation, though, we stand ready and committed to support the C-17 in any way that the Air Force wants. But, the contractors and our suppliers have to be prepared to stand up to that. It is not easy to guarantee that your support infrastructure will be there after the airplane is out of production but still flying. We are preparing to do that. I believe we can develop an acquisition strategy and manage the entire airframe with a support infrastructure to put the money where it is most needed probably investing it back in the airplane so it doesn't break in the first place and if it does break, to minimize the repair cycle and the maintenance costs.

I've already talked a little bit about some of the technology we are looking at to improve the maintenance for the user in the field. We want the field mechanic to be able to ask a question of the mechanic who built the C-17, perhaps while he is actually building one in the factory. You can get too infatuated by the technology and look for technology for technology's sake, but we want the technology work for you by getting the information and knowledge you need from this system and you don't have to worry too much about how it gets there.

We try to follow three fundamental principles that I got from my Air Force friends in the intelligence community about 25 years ago accuracy, completeness and timeliness. Accuracy was another way of saying, do the right thing or do it in a quality fashion. Today it is very difficult to do the right thing if you don't know what to do and if you don't have all the information. So we start with trying to do the right thing, whether it is building the airplane or making a management decision with these teams on a day-by-day basis.

The next piece is doing it right. Sometimes you can figure out what to do, but we don't always do it too well in terms of execution.

Finally, we try to do it in split second speed. Response time is very important in the commercial marketplace, whether you are talking about transitioning a new product to market or whether you are fixing an existing product. Some of the old terms are still just as valid today as they were then - do the right thing, do it right and do it with speed.

In closing, we see change as a continuing process and if you don't come out of the change cycle for the better, it is not good. In order to do that, we have learned by some severe experiences. We have stumbled a few times as a corporation, both in terms of implementing programs as well as implementing Total Quality Systems a few years back. It is interesting that at Long Beach where we failed most severely years ago, we are today succeeding in the implementation of team structures, continuous change and continuous improvement. The C-17 is alive and doing well, and I thank you for the opportunity to join you.

GEN. SHAUD: Thanks, Don for your insights. Do we have any questions from the floor? Question: Your predecessor took some hard knocks implementing Quality. You spoke about some of the lessons from this experience, but can you go a little deeper?

MR. KOZLOWSKI: I sure can, but how much time do I have? I happen to be a quality zealot. You can get sidetracked if you start compromising. If you focus too much on the almighty dollar as the fundamental metric by which you make decisions, you are going to lose sight of the real things in life. Our job as a contractor is to deliver a product and to make customers happy. If you don t, you are just not going to stay in business. If you start making decisions just based on dollars, you will make the wrong decisions. So, we changed the priorities. In my book, it is quality first, schedule second and cost is third. Cost in many cases is a fallout. If you do it right and you do it on time, usually you will meet your original estimates and you will make money. So the problem on cost goes away if you get the first two right. That is a fairly simple message we've been using for years and as far as I know, it is still working in Long Beach and as long as I am there, we will stay on that.

GEN. SHAUD: Don, how about foreign sales for the C-17? Is anything happening there?

MR. KOZLOWSKI: There is a lot happening at our level, and there is a lot happening at the DoD level. But until we get a signed multi-year contract, which is a few weeks away and until we fill the critical shortfall that AMC has, it will be difficult to say when we can propose delivery positions for these external customers. My guess is that for both the foreign markets and the commercial application of the airplane, we will see a lot of that in the next 12 to 18 months.

GEN. SHAUD: Thanks, Don. You've personified the industrial part of our global presence team. Thanks for being here.

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