Spirit AeroSystems’ new CEO will be architect of its future

Larry Lawson, Spirit AeroSystems’ new president and CEO, said he wanted to become a fighter pilot and was accepted into the Air Force Academy.

“But I wore glasses,” he said. And that kept him from flying with the Air Force.

Instead, he took his dad’s advice: If you can’t fly airplanes, why not design them?

Today, Lawson is designing the future of Spirit AeroSystems, which he joined in April after his selection by Spirit’s board of directors. Lawson replaced Jeff Turner, who retired.

“We’re on a mission to make this a great business as well as a great designer and manufacturer of aerospace products,” Lawson told The Eagle on Wednesday during his first local media interview.

The goal, he said, is to grow the company over the long term. Spirit, with about 11,000 employees in Wichita, is the city’s largest private employer.

Turner has said Lawson is the right guy to lead the company.

“He’s a big airplane program manager,” Turner said at the time of his retirement.

He also brings a fresh set of eyes to the job.

“I think he’ll be great,” Turner said. “He’ll be different.”

‘Hands-on’ management

Lawson, who came to Spirit from Lockheed Martin, describes himself as a “hands-on” manager.

He said his role is to define the direction Spirit is headed and develop a strategy that’s easy to understand to get there.

“The simplest strategies are the most effective,” Lawson said.

After developing a strategy, he said he drives the team to strive to be great.

“If you’re going to come to work and work this hard, then the standard ought to be world-class,” Lawson said. “You want to achieve something you want people to go home at the end of the day and feel like they’ve accomplished something and create real value that will last for them, and maybe the generations of their families that come to work here.”

“My job is to figure out how to enable people to get their work done,” he said. “What I do is facilitate the collaboration that’s needed to power through the issues that have to be taken on, trying to facilitate rapid decision-making.”

Lawson said he and his wife, Debi, plan to get involved in the community. They found a home here before they made the move to Wichita from the Dallas area.

Lawson has joined the board of the American Diabetes Association in Wichita, an organization he has had a long affiliation with while in Dallas and Atlanta. A cyclist, Lawson will ride in the association’s Tour de Cure in May.

Defense work

Lawson said defense work will be a focus for the company.

“The same thing that makes us attractive to our commercial customer – the fact that we can provide both design and manufacturing capabilities at distinctly lower costs than the prime contractors – make us equally attractive to the defense industry,” he said.

That’s especially true in a time of declining defense budgets, he said, where there will be more and more pressure on cost.

Spirit has work on the Boeing KC-46A refueling tanker for the Air Force, the Boeing P-8 Poseidon for the Navy and the Sikorsky Ch-53K heavy lift helicopter.

And it has “other things I can’t talk about right now,” Lawson said.

In five or 10 years, defense work could make up 10 to 15 percent of Spirit’s sales. Today, Lawson guesses, it’s less than 5 percent.

“It’s a growth opportunity,” he said.

A sound business

When he arrived at Spirit, Lawson said he found a “very sound” fundamental business.

Its niche is in its design and manufacturing capabilities.

“We’ve got great people, a good team, great products,” Lawson said.

“When I look at the company, I don’t see products as much as I see teams and people.”

He said he was surprised to see how many new development programs Spirit had taken on since it became a company in 2005 after Boeing sold its Wichita commercial aircraft division.

In its early days, Spirit wanted to diversify its customer base by taking on new programs. Its only customer at the time was Boeing.

Spirit needed to be part of some key long-term airplane programs, including Boeing’s 787 Dreamliner program and Airbus’ A350 XWB, Lawson said. They were new designs called “clean-sheet” programs, which present challenges.

“Someone hands you a blank sheet of paper and says, ‘Now … make a fixed-price commitment to production for a product that’s not all that well defined,’ ” he said. “That represents in and of itself a challenge.”

The ability to make cost estimates and write contracts that give an opportunity to make adjustments is difficult.

“I think Spirit has had challenges in all of those areas: estimating, contracting and performing,” Lawson said.

That’s what led to losses on the new programs. In August, Spirit announced a $350 million to $400 million charge on its Gulfstream programs. That followed a $590 million charge in the third quarter last year related to multiple new programs.

The company also announced in July it was laying off 360 salaried support and management employees in Wichita and at its facilities in Oklahoma.

The mature programs must fund the new ones and keep shareholders happy.

“We can be better, so we’ll work on it,” Lawson said.

A full review

Lawson said he has initiated a comprehensive review of all aspects of Spirit, one he expects will be complete by the end of the year.

He has set up four phases of improvements: Measure yourself; work to do better; get all programs operating as well as the best performing program; become world-class.

“The best in the industry – that’s the final objective,” Lawson said.

“This isn’t the first time I’ve done this. I know it will work.”

In his early days at Spirit, Lawson made some key changes. The first was to reorganize, moving Spirit from a business centered around product management to an organization organized around program management.

“It was the single most important change we made at Spirit,” Lawson said. “That alignment was essential.”

Next, the company brought in additional talent in top leadership roles, including Duane Hawkins as senior vice president of operations; Heidi Wood as senior vice president of strategy, mergers and acquisitions and investor relations; and Sanjay Kapoor as chief financial officer.

The current CFO, Phil Anderson, will move to senior vice president for defense and contracts, overseeing the company’s contracting and putting in place the structure for the company to go after more military work.

And Spirit has put the Oklahoma division in Tulsa and McAlester up for sale.

Spirit also is working to reduce costs with suppliers, with its overhead, facilities and in other aspects of the business. Until the review is completed, it’s too soon to predict what other changes might lie ahead, Lawson said.

With new programs, the shift will be away from brand-new designs. There aren’t many brand-new programs out there on the horizon, he said.

Most new work will be for derivatives of existing programs, which are easier to execute. For example, Spirit has work on the Boeing737 MAX, the Boeing 777X and Airbus A350-1000, all derivatives of existing programs.

The company will continue to invest in its customers going forward.

“We don’t have a lot of customers,” Lawson said. “They’re really partnerships. They’re really important, and we’re going to invest in them.”