RE: Letter from the Chairman                                                                                January 25, 2012

Dear Members and Prospective Members:

I can’t say that wishing things will get easier in aerospace is going to work in the next few years. Unfortunately I think we’re going to have to wish we’ll get better, more competitive, and stronger.

What are we facing?

Industry Consolidation – all of our customers are consolidating their supply chains – the slowing of defense and commercial spending is one reason but the shear reduction of cost in sourcing of too many suppliers is another. This causes our customers to rethink their supply base. Most have a group of suppliers that they feel are meeting their needs and they want to get these under a longer-term arrangement. At the same time, they know that some of their suppliers may not make good long-term partners but are reluctant to change until that theory has been fully tested.

Moving Production Lines – every major OEM is busy creating moving production lines to reduce overall cost and speed up cycle time. Moving production lines leads to vertical supply chains and that leads to a high demand for 100% on-time delivery and 0 PPM quality performance with ever decreasing pricing. Unless you have adopted a lean management system and implemented a highly mature process management structure, it’s not likely you’ll be able to reduce cost while improving performance.

The Economy – as if the above two changes weren’t enough, we have a changing world economy to deal with and you can’t under-estimate the financial difficulties our country, Europe, and Asia are experiencing. Thinking that things are going to come back to business as usual soon is a poor way to plan your business.

In 1990, the Wallace Co, Inc of Houston, Texas, won the Baldrige Award in the middle of one of the most significant downturns in their primary market – distribution of homebuilding products. Wallace pursued a strategy that not only helped them capture more market share from competitors but grew their business. Their strategy – process excellence.

Perhaps our American culture is best typified by our school system. Since the beginning of time, we have taken summers off from learning. Meanwhile some schools like the Kipp School started in NY, operates year round and achieves 60% more learning time than the traditional school system. And studies published by researchers such as Karl Alexander from John Hopkins University, show that the typical US school provides 180 days of learning per year while Korea provides 220 days, and Japan 243 days. And our children lose over 50 points of their test scores each year by taking off for the summer.

This country was built on hard working people who took their future seriously and I don’t see a lot of difference between what we are facing now and what we have faced in the past. The only question is, are we going to face it with a half-baked, “let’s wait and see, and I don’t work weekends and holidays” kind of attitude? Is our “summer’s off” culture going to take over and drive us into the ground because we’re not competitive? It’s time to get moving – for our employees and our families.

SEA provides resources designed to help small aerospace and defense suppliers to adopt a management system that supports process excellence, and continuous improvement, while building a lean enterprise. SEA is a non-profit so we’re able to provide those resources at a very reasonable fixed annual membership fee. And if you’re already performing at that level, then SEA provides the branding and visibility strategy you need to maximize your chances of capturing more market share in this unique economy.

SEA’s strategy is simple:

Customers – we’re facing some difficult times. If we lose a customer, it’s not easy to replace that business like we used to. So we need to focus on how our customers are making decisions about suppliers. The value that SEA brings to them is that we represent the best of the best suppliers in the industry with plenty of transparency and a track record of investing continuously in improving our performance with the goal of 100% on-time and 0 PPM quality. We do a lot of speaking and interaction with customers using the SEA Supplier brand so that when the time comes to replace a supplier, the first place they come is to SEA. Meanwhile our activities are designed to continuously “raise the bar” for every supplier in the industry making us look better and their suppliers look worse.

Suppliers - staying level or standing still on performance improvement is a losing strategy. SEA provides plenty of help to prepare for its voluntary independent certification to re-enforce our SEA branding. We create many opportunities annually to speak to suppliers and gain more visibility with our customers as the benchmark suppliers of the industry. We expand our footprint to gain the critical mass needed to represent the industry and its supply chain.

Summary
This strategy will work. I wouldn’t want to compete against it. Joining SEA makes sense even if you feel your future is secure because you’re still winning business.

Please contact SEA and we’ll be happy to walk you through the many resources and programs offered by SEA that can create significant value for you as a customer or a supplier.

SEA is supported by suppliers and sponsors. There is never any fee for customers who wish to work with SEA.

Sincerely,

Michael G. Beason
Chairman, CEO

ARCHIVE OF PAST REPORTS

Becoming a Leader
May 24, 2013

Process Maturity for Leaders
February 26, 2013

Collaboration
November 3, 2012

Improving Your Supply Chain
October 23, 2012

What does it take to compete and win business in today’s aerospace
and defense supply chain?
April 25, 2012

Aerospace and Defense Outlook
September 23, 2011

Why Get Certified Anyway?
April 8, 2011

Documenting Your Roadmap Processes Will Not Improve Your Operations
September 20, 2010

The Power of Branding
May 24, 2010

Where Process Improvement Goes Wrong
March 19, 2010

Perfect Performance
March 10, 2010