Stephen Fitz-Gerald, CEO of Marshall Aerospace Group, talks about his strategy for growth in engineering solutions and the privileges of running one of the UK’s few exemplary Mittelstand-like manufacturing firms.
To read this interview complete with a brief career biography for Stephen Fitz-Gerald, go to our October digital issue of see the print magazine.
“We are experiencing a period of unprecedented government support for the growth of the defence industry,” says Steve Fitz-Gerald enthusiastically as we huddle in the glass-fronted booth of Marshall Aerospace Group’s busy stand at DSEI, the international trade show for the defence and security industry.
Mr Fitz-Gerald’s optimism is riding high on the back of his recent appointment as chair of the Value
Stream Competitiveness Team within the Defence Growth Partnership (see box).
It’s an appointment which will require the CEO to collaborate closely with a variety of government departments but also one which endorses the transformation strategy he has led so effectively at Marshall in order to make the firm resilient in a climate of declining defence spend by UK MoD.
What does value stream competitiveness mean?
Stephen Fitz-Gerald was recently selected to chair the Value Stream Competitiveness Team within the Defence Growth Partnership.
“The team’s remit is about more than supply chain. It’s about the whole support, solutions and service infrastructure for defence.
“Sir Andrew Pulford, chief of the Air Staff, made clear in his speech [at DSEI] how important it will be that industry develops the effectiveness of this value chain. His biggest concern is; how does he train his forces to remain relevant for the future.
He won’t be able to train real-time on aircraft and will have to factor this into total acquisition costs for equipment throughout its life-span.”
Fitz-Gerald says he will draw on his experience at Marshall, which partners with key defence OEM’s to deliver parts of a defined final capability for customers, to lead the value stream competitiveness team.
Broadly speaking, there are three things that defence manufacturers, whose industry undeniably faces some stark challenges, can do to safeguard their future.
One; look for applications for their technologies and capabilities in civil markets. Two; export goods and support to foreign governments with healthier defence budgets. Three; grow and innovate the service and solutions side of their businesses.
Marshall has a strong pedigree in the first two areas with the civil aerospace side of its business traditionally accounting for around 50% of revenues – civil contribution declined in recent years but is rebounding following two MRO acquisitions this year.
Marshall also has a well-established international customer base. The Australian, Canadian and Dutch governments are particularly valued and constant customers.
But when Mr Fitz-Gerald joined Marshall in 2011, he did so with a mission to transform the company’s approach to the final pillar in its sustainable growth strategy – the provision of customer-driven engineering solutions.
Stephen Fitz-Gerald’s best and worst career moments
Cruising at altitude: “My best moment was being asked to become CEO of Marshall. It is a privilege and a responsibility to be invited into a heritage company and be given the support of its owners to transform it. They have trusted me to meddle in their business – that’s something you don’t take lightly.”
Turbulence: “I won’t go into the specifics, but the worst moments have been when I’ve realised I should have made decisions quicker. Waiting for more information does not always help to make a less risky or more intelligent decision.
Sometimes, speed is of the essence, and you should not be afraid to take quick action and then correct and adjust your decision making as you go forward.”
“I came to Marshall from a service business,” Fitz-Gerald explains. “Cobham Aviation Services was founded on output based contracting. We were focused on delivering an effect for the customer. But the industry generally is much more input driven and it was a core focus for me in my first two years at Marshall to make the company more delivery focused and more relevant to the customer.”
It’s not that Marshall hasn’t got a strong service element. Its MRO offerings are a core capability, but there’s a difference between offering support solutions, where you deliver spares and repairs and delegate responsibility for extracting value from them to the customer, and providing engineering solutions which mean accepting new levels of problem solving responsibility on a continuous basis.
And there’s only one way to judge how good you are at delivering service value to a customer states Fitz-Gerald – you must gain and record their endorsement. Any company that claims to offer service solutions but can’t display external verification of its effectiveness isn’t worth its salt he asserts before pointing out that Marshall this year received a nomination from Boeing for supplier of the year thanks to its collaborative work in improving service levels for Boeing aircraft.
Growing confidence in complex service provision is a canny strategy from Marshall’s CEO which responds to a number of market and political factors, not least of which is Future Force 2020 – the government policy which will see the UK armed forces reduce considerably in size and become for more reliant on reservists.
This new-look armed forces will require more support than ever from industry in providing services, capability and training.
But the transformation provides more than simply a service delivery opportunity continues Fitz-Gerald. “Force 2020 is a two-way value offering to business. The reservist model will need see industry becoming even more closely embedded in supporting the armed forces. But business should also embrace the opportunity to welcome more reservists and the time they will spend outside the company.”
He explains, “Each reservist is allocated £20,000 worth of training by government. That’s an investment by the military in our skills as an industry.”
M for Marshall and Mittelstand
There’s been good news about the UK Mittelstand in recent months with GE Capital’s Leading from the Middle report showing that it includes more rapid growth companies in its ranks than its German role model.
But there’s still a long way to go in growing the number of UK firms which qualify as being Mittelstand-like before the UK can claim to have a similarly robust industrial base to its German cousin.
Marshall is a prime example of the company profile we need to see more of.
“We occupy a fairly unique space,” admits Stephen Fitz-Gerald. It’s something he wants to see change. “Around seventy per cent of growth in the UK economy comes from companies of less than twenty people. That’s where the innovation is coming from.
“The trick now is for us to work out how to draw those companies into our value chain and support them in scaling up in order to meet the demands of a major programme.”
It’s not Marshall’s ambition to simply scrape the innovation off the surface of SMEs that bubble with ingenuity Fitz-Gerald continues. “There have been too many cases in the past where big companies have swallowed up great ideas because the firm that produced the concept couldn’t fund their cash flow.”
Instead, Marshall’s is keen to see ingenuity flourish and grow up alongside it. “That’s why we support Martlet, our innovation growth fund. Alongside other business angels this allows us to support the growth of fast moving technologies for industry with early-stage capital.”
Marshall tends not to invest in innovations that are very close to its core business, explains Fitz-Gerald – “we feel that we are likely to be active in those areas ourselves” – but it does see value in increasing the exposure of its employees to other areas of “very fast moving and agile technologies”.
Fitz-Gerald feels that a respect for intellectual property and innovation should be defining characteristics in a growing UK Mittelstand. They are central to Marshall’s company values he says.
What else does Marshall’s have to teach companies with ambitions to step into the mid-cap arena?
“Something which Marshall has in abundance and which I have never experienced to such an extent anywhere else is a spirit of adventure. I have never known a company take such a positive approach to risk taking.”
A lot of this comes down to the family ownership structure comments Fitz-Gerald. The Marshall family shareholders are entrepreneurial and support short term decision making cycles while keeping long term ambitions in mind by re-investing profits to sustain momentum on ideas.
“I speak with the principle shareholders almost every day, and when I want to make a decision I get support very quickly,” Fitz-Gerald sums up.