Transcript
RICHARD GOODHEAD
Rolls Royce plc effectively provides power for use in land, see and air, whether that’s in civilian aircraft use, defence use, marine use, power generation on land, or nuclear power, but specifically my area of the business is related to civil aerospace so that’s providing engines that power aircraft that are used in commercial use, whether that is for airlines or in the relevant business aviation.
What we're looking at very actively are increasing the level of choice and flexibility in the services that we offer to match the customer's needs as they evolve.
The other thing that we are looking to do is expand our scope of service provision beyond what has been traditionally narrowed, if you like, to maintenance of the engine. So preventing unplanned maintenance, making sure the engine works on the wing and if it does, as it will, require maintenance it's done in a planned way that minimises disruption to the airline. We can expand our scope of services to not only look at maintenance so that i.e. the engine doesn’t break, but we can also look at making sure the engine is more available, i.e. it's not got niggling problems with accessories, we could predict them and fix them ahead of time. The other thing that we can do is expand our scope of services into the efficiency, not just is that engine not broken but working well, but is it working as efficiently as it possibly could and in this world it means burning the least fuel, and burning the least fuel means it's having the least environmental impact. So these are all about addressing these challenges and meeting the needs not only of the customer themselves but also, arguably, society.
Once you’ve made the assumption, in terms of societal impact, that air travel is a good thing for society, some people believe that, some people don't. Obviously, I'm biased, I believe it is, I think it's a great economic contribution to society and it connects people, not just for business reasons, but for a whole host of other reasons. People like to travel to see each other and it's that person to person contact that makes the world go around.
In providing the propulsion systems that allow aeroplanes to connect people and make the world a smaller place, then clearly we are meeting some societal needs but we have to do it in as responsible a way as we possibly can and, obviously, the way that aeroplanes are currently powered is through the use of fossil fuels, so to minimise that and make it as clean and efficient as possible is a goal that we've been striving for at Rolls Royce for many years, not least of which because it doesn’t only meet environmental requirements but because there's competition in our industry, the person with the most efficient engine usually wins so we, we've always spent lots of our research and technology investment on doing just that.
We're making sure that we are as sustainable as possible in terms of the use and manufacture of our products.
But in terms of other areas then clearly there's economic sustainability as well so that is about us being able to sell enough of our product but such that we can make enough profit that we can survive as a profit-making organisation - we aren't a charity, we are a business. And so to, the best way to do that, obviously, is to meet your customer needs more effectively than your competition and that’s the route to achieving that economic sustainability which actually is linked to the financial sustainability because being a public listed company we are floated on the Stock Exchange and, hence, we have to make sure that our shareholders see a good incentive to invest in us as a company.
Combine that with successfully selling our products to our customers and making sure they meet their needs, then that gives us adequate cash flow which funds the whole healthy cycle of investing the cash flow back into research that allows you to give you a better product which you sell for a better price, you get more cash ad infinitum.
And then last, but not least, organisational sustainability. Rolls Royce has grown significantly over the last 30 years from being, arguably, a solely British company that was selling to a restricted area of the market in terms of customers that have been for whatever reason more predisposed to choose a British product, to now a definite multi-national global company with customers all over the world. That degree of growth requires the organisation to grow with it, but in a lean and efficient way, and so there has been much effort and thought put into how we achieve that without growing uncontrollably.
From a Rolls Royce perspective the competition that we face is intense. When you consider that Rolls Royce, as big as we are, is effectively competing with, arguably, the biggest company in the world in General Electric, then that in itself clearly offers a whole host of challenges which means that adage of work smarter, not harder, and being agile, becomes really quite important.