“I want everyone to be passionate about coming to work"

Ronald Draper is putting people before planes as he approaches his first anniversary as CEO of Textron Aviation. In his first extensive interview since taking on the role, he explains how he wants to rethink his company.

RON DRAPER is a numbers man. An engineer by training, he has spent most of his civilian career focused on processes and supply chains. His specialisation has been analysing and improving systems and, often, tough discussions with suppliers. He likes to measure things to six decimal places and plot them on a graph. But he wants his legacy as CEO of Textron Aviation to be defined by a softer, qualitative thing. Something that cannot be measured. He wants to make sure that every one of Textron Aviation’s 13,000 employees wants to come to work every day. “My main aim is to reconnect the staff of Textron Aviation with their passion,” says Draper, who clearly means it.

“There are a lot of passionate people here, but I want everyone to be passionate about coming to work – to rediscover why they joined the company – whether it is a love of airplanes, engineering or a passion for accounting. This is my top priority.” Draper describes being CEO as his dream job and is modest about achieving it. But it would be a mistake to think that it is an accident. He may describe himself as a “farm kid from Idaho”, but he is clearly ambitious and worked hard to become CEO. Draper has moved around different divisions of Textron and knows how culture can change.

He joined Cessna in January 1999 after eight years in the Army as a captain and helicopter pilot. “As a pilot, I was attracted by the Cessna name with its leadership in engineering and design,” says Draper. “I actually took a small pay cut when I joined – and Army pilots are not paid that well. I joined as a contributor – not managing anybody.” As well as throwing himself into Textron, Draper immediately signed up for an MBA at Wichita State University. He also became a six-sigma Blackbelt in Total Quality Management (which was very much a priority at companies like Motorola, GE and Cessna in the 1990s).

Draper rose to be director of supply chain management and he has specialised in working with suppliers throughout his career. He also gained his first experience of an aviation downturn after the dot.com bubble burst in the early 2000s when Cessna was forced to cut production. After five years at Cessna he was then asked to move to Bell Helicopter in Fort Worth Texas as a director of procurement. At the time, moving between Textron companies was relatively rare. He agreed to the move knowing he was joining Bell at a tough time. The company’s innovative Bell V22 Tiltrotor had suffered several fatal crashes and there were (false) rumours inside and outside the company that the programme was going to be cancelled.

“The culture at Bell at that time was definitely not as fun as Cessna,” says Draper, “but things improved.” After two years at Bell, Draper was head-hunted by another Textron division and moved to Augusta, Georgia to work on golf carts as vice-president of integrated supply chain at E-Z-GO (now known as Textron Specialized Vehicles). Golf carts are clearly not as complicated as aircraft, but Draper

enjoyed the fast speed of the production line with E-Z-GO pushing out more vehicles in a day than Textron Aviation builds in a year. Launched by two brothers, the facility still has a friendly atmosphere and is non-unionised. He and his family liked Augusta. But in 2011, Scott Ernest, the CEO of Textron Aviation, asked him to move back to Wichita as director of Production Control and Logistics. “My first love was Cessna, so it was an easy decision to go back,” says Draper.

Wichita (production) lineman returns

Just as when he moved to Bell, Draper was returning to a tough place. Like all business-aircraft manufacturers, Textron Aviation was struggling to cope with the sudden downturn following the Global Financial Crisis. Cessna’s core clients, entrepreneurs and smaller companies were having a particularly tough time.

In 2008 Cessna made an annual profit of $905 million and had an order-book backlog of $14.6 billion at the end of the year. When Draper returned in 2011, it had fallen to a $60 million profit with a backlog of $1.9 billion, although even this was an improvement on a loss of $29 million in 2010. But these numbers do not reflect the human cost of the downturn – particularly to Wichita, the city where Cessna and Beechcraft were launched.

In 2008 Cessna had a work force of 16,000 staff. Over the next two years this was cut to 7,800. “It was – without doubt – a difficult period. We had to do a lot of things to survive,” says Draper. “There was not much money for investment. It was a difficult place to work and for many people their work became more of a job than a career or passion.” Draper fitted in well with Scott Ernest who had himself joined Textron in 2011 after being vice president and general manager of global supply chain for GE Aviation. So, they both had a similar background. Cessna had already cut production by 2011, but Draper and his team continued to streamline manufacturing and the company’s supply chain.

“Having a flexible supply chain is vital,” says Draper. “We tell our team to think of it as different types of water. Some is frozen with suppliers, where we guarantee quantity for the next 90 days or so, some is slushy where we can change quantity and we need some to be liquid and very flexible.”

Textron Aviation also expanded significantly with the acquisition of Beechcraft Corporation in 2014. Draper was heavily involved in integrating the two businesses and their supply chains. “The business is very different now to before 2008,” says Draper. “We have made a lot of improvements and cut costs, accelerated lean manufacturing and can change much faster. We still build some of the aircraft by hand, but we also use robotics and the latest technology wherever possible.”

Ron Draper has a great depth of knowledge about the worldwide aviation business and has led several of Textron Aviation’s most impactful strategic initiatives. He has driven solid gains for the business in recent years, including the successful integration of our Beechcraft and Cessna operations, expansion of our quality management systems and global sourcing strategies,” said Scott Donnelly, chairman and CEO of Textron. Although Draper would not claim credit for all the initiatives, Textron Aviation had a 2% profit margin in 2011 when Draper joined. In 2018 it was 9%. Draper has taken over at a better time than Ernest. But it is still not a boom time. At the European Business Aviation Convention and Exhibition (EBACE) in Geneva in May, Draper was relatively positive about the next few months. But the sentiment changed. “Beginning in late May, we experienced lower order activity across our product lines, largely attributable to the uncertainties around tariffs and concerns about economic growth, which cause disruptions in both our domestic and foreign markets,” said Donnelly on a July investor call.

While Donnelly was upbeat that many of the issues would be resolved, Textron’s core smaller company clients are often the first to buy when economic confidence is high but delay purchases when there is bad news. Larger corporates with long-range fleet plans tend to be less volatile – and this is one of the reasons why Textron is moving into larger aircraft. Smaller companies and entrepreneurs often like to know they are getting a bargain so are more willing to consider pre-owned aircraft. The good news for Textron is that the percentage of preowned Cessna Citation jets available for sale has fallen significantly from more than 16% of the total fleet in 2008 to less than 8% now. Donnelly said that Draper was the right person to grow Textron Aviation and focus on new products. And he has three different new products to push. The Denali is a single-engine aircraft that will compete with the Pilatus PC12. The Cessna SkyCourier can carry either 19 passengers or three shipping containers and has had a letter of intent from FedEx for 50 planes. And the newly-certificated Citation Longitude. The Longitude is the priority this year.

Selling the Longitude “The certification of the Longitude is great news. There were concerns that it could be delayed following issues with the Boeing MAX, so this a sigh of relief,” says Brian Foley, founder of Brian Foley Associates, who spent 20 years as marketing director of Dassault Falcon Jet before launching his own consultancy. “The Longitude will now be the flagship aircraft and it is worth remembering that larger aircraft have better margins.”

The Longitude has a 2018 list price of $26.995 million and can fly 3,500 nautical miles. But selling Textron’s new flagship is not easy. All business aircraft markets are competitive but rival CEOs say that the super-mid-size segment is by far the most cut-throat. The Longitude is competing against the Bombardier Challenger 350 which dominates the market (more than 60% of super-mid-size aircraft were built by Bombardier and it has delivered more than 300 Challengers in the past five years), Gulfstream’s well-specified G280; and Embraer’s new Praetor 600 aircraft, which was launched at the National Business Aviation Association Convention in October 2018.

Customers now have four really good aircraft to choose from – and they are all playing each manufacturer off against each other. “It is a great aircraft,” says one potential customer who has flown on the Longitude with Draper. “But the price is an issue.”

A leading broker agrees. “It is hard for Textron to catch up in this market,” he says. “It is a good aircraft, but it costs more than the Challenger 350 which is the market leader.” NetJets has placed an order for up to 175 Longitudes which makes planning production easier (NetJets has also taken almost half of all the Citation Latitudes that have been built so far). One of the biggest decisions that Draper has taken so far is “pausing” the Citation Hemisphere. Textron announced the aircraft in 2015 choosing Silvercrest engines produced by Safran. Although Safran is one of the world’s most successful commercial engine makers with its CFM International joint venture with GE, the Silvercrest programme has been delayed..

Judging Draper

Running Textron Aviation is a big job. No other aviation CEO is responsible for building and selling 23 different types at one time. And no CEO can stimulate demand. But Draper has enjoyed his first year as CEO. “It is a different type of stress,” he says, “but anyone running a production line or purchasing has big stress every day.”

And although it may be hard to change the culture of every one of the company’s 13,000 employees, Textron Aviation executives around the world genuinely seem positive about their CEO’s first year. “Culturally, it does feel like things are changing,” says one Textron employee (who is not authorised to speak with journalists). “You get the feeling that he wants employees to feel part of the family, cares about them and that we are all on the same team. The messages we are getting are really positive. It is really exciting.” Others were equally upbeat. Customers have also reacted positively to Draper. But they also understand how difficult his mission is. “It is very encouraging, but anyone who has run a company knows how this culture is the hardest thing to change,” says one significant customer. “It does not happen overnight.”

Alasdair Whyte, Editor, Corporate Jet Investor