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Newly Formed Aerojet Rocketdyne Looks to Cut Cost, Consolidate Supplier Base

Jun. 17, 2013 - 03:45AM   |  
By ZACHARY FRYER-BIGGS   |   Comments
The Standard Missile-6 uses the Aerojet-produced Mk 72 first stage propulsion system.
The Standard Missile-6 uses the Aerojet-produced Mk 72 first stage propulsion system. (Aerojet Rocketdyne)
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PARIS — Aerojet Rocketdyne, the company created after Aerojet parent GenCorp acquired Rocketdyne from United Technologies Corporation and formally combined last week, is looking to save significant money through cost cutting measures without closing plants or laying off personnel, company president Warren Boley told reporters Monday at the Paris Air Show.

In total, a three-phase cost savings approach could cut up to a quarter of a billion dollars per year for upwards of a decade, Boley said, citing figures that had been verified by AT Kearney.

Some of those savings come from adjusting how the Rocketdyne part of the company will do business, such as swapping out its IT system.

“When you unplug Rocketdyne from its UTC parent company, you get tremendous overhead savings,” Boley said. “When you unplug their IT system and plug our IT system in there are significant savings.”

GenCorp, while buying Rocketdyne for US $550 million, left residual environmental cleanup and pension costs with UTC, helping to jump start potential savings, he said.

One of the phases of the cost-cutting strategy is focused on consolidation of the company’s supplier base, which stands at 2,500 companies. He compared the state of the rocket industry to that of the aircraft industry in the 1960s, ’70s and ’80s, before the major consolidation of the ’90s.

“When you take 2,500 suppliers and start to consolidate them, there’s another $80 million [per year],” Boley said. He wouldn’t estimate the number of total suppliers that will be left after the consolidation but said it would be “a lot less than 2,500.”

Beyond cost savings, the market for hypersonic missiles could prove an opportunity for immense growth, as the company looks to produce hypersonic engines, Boley said.

“Hypersonics could be bigger than all of Aerojet Rocketdyne is today,” he said. “That hypersonic weapon will be on every F-16, every F-15, every F-22, every F-35, every F/A-18.”

The F-35 would likely be the biggest feat given that the missile would have to fit in an internal weapons bay, but Boley said the technology is being looked at and expressed confidence that the company can make it work.

In many ways, whether it be advancements in reconnaissance aircraft capabilities or missiles, speed is the new stealth.

“Speed is becoming more and more critical,” he said. ■

For more Paris Air Show coverage, go to www.defensenews.com/paris.

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