Power player

The Dubai Aerospace Enterprise is all about win/wins, but can Bob Johnson, the recently appointed chief executive, steer the global aerospace company away from the influence of the government and the Emirates Group?

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By  Barbara Cockburn Published  September 1, 2006

|~||~||~|It is widely acknowledged that when Dubai’s ruler, Sheikh Mohammed bin Rashid Al Maktoum says he’s got a vision, he sees it through. The Dubai Aerospace Enterprise, a company based in Dubai that will build, by 2015, a US$15billion global aerospace, manufacturing and services corporation, is one such vision. The global aerospace company will have six components, including services, manufacturing, research, engineering, airports and leasing, which is no mean feat. This project is the brainchild of the ruler and the $15 billion investment has come from the Dubai government and the government-owned Emirates Group, which also incorporates a world-class airline. Sheikh Mohammed bin Rashid Al Makhtoum says he wants the biggest and best of everything and he makes it happen. His “can and will do” attitude instantly makes the DAE a force to be reckoned with. But can Bob Johnson, the newly-appointed chief executive of Dubai Aerospace Enterprise, drive the organisation forward to exist independently from the Dubai government and Emirates Group, whose chairman is Sheikh Ahmed bin Saaed Al Makhtoum? Johnson is adamant that the DAE is an independent entity. It’s hard to take him seriously, considering the amount of investment poured into the project. Johnson, 58, had actually enjoyed a brief retirement when he retired from Honeywell Aerospace at the beginning of the year, as its chairman. He was then chosen by Sheikh Ahmed to lead the new project. Sheikh Ahmed, who is also the chairman of DAE, said at the Farnborough Airshow in July that Johnson’s arrival “is a significant step” forward in the recruitment of a top level management team. The Sheikh believes Johnson brings a wealth of experience and, with him at the helm, the American will quickly become an integral part of DAE. In response, Johnson said: “From our base in Dubai, DAE is one of the most successful and innovative businesses in the global aerospace industry inside the next ten years. Dubai is setting out to break boundaries and deliver groundbreaking initiatives and it has a track record of succeeding on a world stage. That’s what we plan to do with DAE.” It seems dubious that DAE will be independent of the Dubai government and Emirates Airline, but Johnson defends DAE. He says: “Sheikh Ahmed is the chairman of Emirates as well as being chairman of the board at DAE, but there are also six other investors. The objective for DAE is to establish a continuing business with growth opportunities that returns profit to its shareholders. “I’m sure there’s an objective for Emirates Group as a business, but it’s not a requirement that Emirates gives its work to DAE or that we give work to Emirates. I like to think that our relationship would be described as friends doing business in the same industry.” But he hopes that DAE “earns” work from Emirates “because we’re qualified to do it and we would love to do their work.” Johnson says: “As we establish ourselves in the leasing, engineering and research entities, we would like to provide graduates to Emirates Group. I’m not competing with them. I would be pleased to go to them for advice, just as I would approach other experts in the aviation industry.” Tellingly though, he says: “I think of Emirates as the best. I might like to understand their processes and learn how we can become as recognised as them.” Johnson has 36 years of experience in the industry, beginning at GE Aircraft Engines. By the time he joined Honeywell, a supplier of aircraft engines, where he was president and chief executive officer, from 1999, he held senior roles across several companies in the aerospace industry. He says: “Managing an aerospace business, with the complex product manufacturing and engineering, means I’m familiar with the aerospace industry. I am familiar with customers and technologies, products, resources and processes too.” But why retire at the beginning of this year, when it is evident he’s not the sort of man who embraces idleness? He explains: “I had retired from Honeywell after accomplishing what I’d wanted to and I wanted to build a house in Phoenix, Arizona, my home. I’m also a member on four corporate boards. “I’ve had past involvement in Embry Riddle Aeronautical University, and I’m on the board of directors and trustees of Arizona State University. “I wanted to do one more thing that was unique and of some consequence. I’ve been around the world, but have not spent time in the Middle East. I like to learn and I’m enjoying being in a new environment, surrounded by learning experiences. It’s consistent with what I’ve done before.” Besides, he says: “Phoenix has a lot in common with Dubai; deserts, sustainability, both are fast growing cities and the weather’s the same. I don’t think it’s too hot here. This isn’t hot.” He was drawn to the DAE project because he was impressed with the character of DAE’s investors and employees. “How quick, intelligent and full of integrity the people are and I love the diversity of the cosmopolitan city. I think it’s a city of the future and this is a model. It’s great to be here and help accomplish this start up,” he says. Johnson has certainly not escaped the vision of Dubai: “This place is new, everything’s fascinating and dynamic. It’s significant that there’s a clear sense of accomplishment and whatever people say they will do - they do.” The planned completion of the DAE project is 2015, but Johnson says he’ll be around for as long as he can add value or as long as he’s needed. He’s using his experiences working with universities to mentor DAE employees to lead and manage without him. He believes that Dubai will be the centre of the global aviation industry, with a presence in manufacturing and services around the world. “We want students from around the world, we want to lease airplanes and have a hand in airports around the world, but our goal is not to move all the work to Dubai.” In a bold statement, he says: “It has to be a global company with Dubai as the centre of energy here, but the jobs should be, firstly, where they should be.” But who decides where the jobs are best stationed? “As a business, our intention is to satisfy the expectations of shareholders for returns and growth; to satisfy the requirements of customers and to be better than all our competitors, and that includes value for the price they pay,” he says. “In addition, it is to have a stable workforce to work for our customers and to move work to where we can satisfy that equation - where it’s most economical.” DAE has set benchmarks and targets to become the best, so it can be its own resource, as well as a resource for other companies. It will specialise in aerospace, engineering and will also have a department dedicated to financial disciplines. He acknowledges the shortage of pilots, technicians and mechanics currently blighting the region. He says: “DAE degrees will compete in a world market and produce wide talent. We want to learn what we have to do to be people’s first choice.” Johnson wants the DAE to be part of the manufacturing supply chain in the engineering business. “We could be a second or third tier supplier, or we could buy small companies and aggregate them to be larger companies. We could help them get to the next stage of efficiency where previously their size had kept them from being able to have a global outlook in their footprint or reach. “There are a number of people with a keen interest in these partnerships, but we have to be selective by understanding what the current opportunities are and establish a business with staying power and growth. “We’re going to analyse the opportunities, so we can add to the success of other companies, add value and gain a reputation to be the best.” But he doesn’t think the vision is ambitious, he says: “I think its right. This is a region where the growth is next door and in the middle of it. There are lots of people in South Asia who have not travelled, there’s lots of economic development and job growth in those areas causing demand for airports. This, in turn, influences the demand in the industry.” Historically, he observes, the travel industry has been a US and Europe-centric business and he believes that there’s no reason why it shouldn’t and couldn’t be based in Dubai, where it can be closer to the action, closer to the growth, providing employment and returns to investments in the region. DAE is “all about win/wins” and it’s about having relationships that are positive for all the partners in Dubai, Emirates Group, the airports and the Department of Civil Aviation. He says: “It’s a win/win with our competitors in the business. We would love to be a great competitor and this will cause them to get better.”||**||

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