Growth, driving down costs on new Spirit CEO’s agenda

Tom Gentile is Spirit AeroSystems’ newest executive and the man chosen by its board of directors to succeed retiring CEO Larry Lawson at the end of July.

In a wide-ranging discussion Thursday afternoon with reporters at the company’s Wichita headquarters, Gentile discussed his agenda for leading the city’s largest employer, plans for future growth and the strength of the company’s seven-year backlog of work on new commercial airplanes for Airbus and Boeing.

Gentile joined Spirit in April, hired by Lawson to serve as his second-in-command as executive vice president and chief operating officer. Gentile came to Spirit from General Electric, where since 1998 he worked in a variety of leadership roles for the conglomerate, including as president and CEO of GE Aviation Services and GE Healthcare Systems.

Earlier this month, Spirit announced Lawson, 58, would retire from the company after a little more than three years in the job. Lawson has been widely credit by financial analysts for improving the company’s financial performance.

Gentile said that first and foremost, he has been asked by Spirit’s board of directors to “hit” the financial targets they’ve set for him and continue to grow the aircraft supplier’s business as well as develop new business for the company.

Gentile said his other priorities are to deliver on the commitments Spirit has made to its customers, including meeting higher production rates Boeing has set for the 737.

Moreover, “the board was very clear they would like us to progress on long term (pricing agreements) with Boeing and Airbus,” he said. “The good news is there’s been a lot of active dialogue, constructive discussions.”

A third priority for Gentile is lowering Spirit’s costs of manufacturing.

“A significant part (of those costs) is in our supply chain,” he said: direct material costs and indirect costs. Gentile said that ultimately, if its suppliers can’t lower their costs, there are others who can.

“Local suppliers are figuring out ways to be more productive,” he said. “… And that’s what we’re looking for.”

Gentile said the company also will look for ways to grow through its current business, which includes not only building parts for commercial airplanes manufactured by Airbus, Boeing, Bombardier, Gulfstream and Mitsubishi, but also defense work.

The new B-21 Bomber program, he said, could represent a “material portion” of defense work for the company in the future. But he said he couldn’t provide more detail because the program is in its early stages.

He also said the company could grow through the acquisition of other companies.

“That’s something we would explore,” Gentile said.

Lastly, he wants to ensure that Spirit’s management team “really come(s) together as a high-performance team.” To that end, he and the team recently got together off of Spirit property in what he called a “team assimilation” exercise to better get to know one another.

“I give huge credit to Larry” for assembling a “great team with a diverse background,” Gentile said.

Spirit’s backlog of work stands at about seven years’ worth of commercial airplane production. Gentile thinks the backlog will hold up in the coming years, even though demand for additional widebody jetliners is probably “a little softer” than for narrowbody jets, such as the 737.

“I’m pretty optimistic the current backlogs are realistic,” Gentile said. “So I’m fairly bullish on the environment.”

This story was originally published June 23, 2016 at 6:35 PM with the headline "Growth, driving down costs on new Spirit CEO’s agenda."