Fast 5: Meggitt Looks To Recovery At Expanded Singapore Operation
Adrian Bunn, general manager, services and support – Asia-Pacific at Meggitt, talks about the doubling in size of its Singapore operation and where he sees the recovery of the region's aftermarket headed.
What was the strategic thinking behind growing capacity at the Singapore facility and adding new part numbers?
The expansion gives us more space and while the Singapore facility isn't our largest operation, its the broadest representation of Meggitt at a single site. The 100 new part numbers is largely about adding depth to existing breadth. Fire detectors is an important product and we've started our own fire detector capability for that component and most of the part numbers consist of more sensors, valves and heat exchangers. Some of what we have built in Singapore were capabilities that were previously being sent to our sister shops across the Meggitt network. But the turnaround time just wasn’t what it was when we were able to offer the service locally. This is due to proximity, as it would naturally take longer to send a product from Asia-Pacific for repair to the U.S. where it’s easier to send it to Singapore, for instance. It's also about expanding the coverage of platforms. Specifically, we've been building capability for new-generation platforms such as the Airbus A320neo, Boeing 737 Max and engines such as the LEAP and Trent XWB.
Before the expansion, were there existing capacity concerns in Singapore?
That was certainly the case before we expanded. This was originally envisaged in 2019 and the actual expansion happened the following year. Despite occurring during the pandemic we kept going with the expansion plans. Space was a problem before - we were fully formed but relatively small so we didn't have the room to work as optimally as we would have liked. Our sensors team for example were crammed into a small space. During the pandemic these factors did work in our favor. Whereas before safe distancing would have been a real challenge with people working on top of each other, we had more space to spread staff out and work more safely. From that perspective it was a happy accident that it happened when it did.
In the expanded Singapore facility, which technology investments has Meggitt prioritized?
The priority has been having the necessary equipment to perform as much work as possible in Singapore. An SAP system upgrade is planned for the facility later this year and we've looked at creating more digital interfaces. However, much of our investment has gone into test equipment and tooling. It's not necessarily cutting edge technology, but if we are able to perform the work as mandated in the component maintenance manuals, then we can do this quickly and get it back to our customers. Sustainability is also a factor, and we want to increasingly avoid moving parts acround the world as often as we can.
How did the COVID-19 pandemic play out at Meggitt's Singapore operation?
In 2020, the pandemic hit us in Asia-Pacific earlier than it did in the west so the drop off was felt earlier. The extent of this drop off was initially offset by activity work in engine shops where there was a lot of activity. It started to bite more in the second half of 2020 and that period was very challenging for us. The following year 2021 started slowly but picked up in the second, third and fourth quarters. Our MRO repair business performed better than we expected with the likes of China performing very strongly, and during that period, we even managed to win share away from third party MRO specialists during that time. Revenues remain down in Asia-Pacific but not anywhere near the overall market average. We manage spares distribution and MRO in Singapore. We’ve held our own and won some share back from third parties. Many of our staff in Singapore had never seen a downturn and only experienced the boom periods of the region, so adjusting to this was one of our biggest challenges of the past few years. Hopefully 2022 is the year where we start to see signs of further market recovery.
The recovery in Asia-Pacific is sluggish. How do you see it playing out in the region this year and beyond?
In this current period, we are still seeing high case rates in Asia-Pacific’s and many governments are still dealing with the pandemic in a conservative way. Certainly, the first half of 2022 is going to be a difficult period and I believe it is unlikely that largescale international travel will resume to China until 2023. This year, the defining factor will be the Asia-Pacific region recovering from a very low base. There’s consistent opening of borders from different regions with some of our near neighbors such as Malaysia and Australia opening to some extent. There’s optimism that Asia-Pacific can recover quicker than some markets but it’ll likely be 2023 to 2024 until we are back to pre-pandemic levels. The biggest challenge of the next year will lie in material availability. During the pandemic, we saw customers being much more sensitive to have what they needed there and then. In Asia-Pacific, customers are slightly more conservative about inventory holding than their counterparts in North America and Europe, who may hold a smaller inventory and respond in a more agile fashion. However, the pandemic pushed the boundaries of this. Whether its spares availability or quick MRO turnaround time, the new fight lies in bettering responsiveness, agility and material availability.