Dennis Santare (MD, US MRO): This is an interview with Michael Howard who is joining Proudfoot as an executive vice president in the MRO practice. Mike, welcome to the firm!We were really excited about your background, your experience in MRO, and your past experience in the U.S. military — so it's really exciting that you're joining us, especially at this time in our journey as we develop into what we call Proudfoot 3.0, bringing our consulting practice and our capabilities into the modern age.
So, we can start by just having you tell us about yourself, your strengths, what you bring to the table, your areas of expertise, and what you're most excited for in your new role here.
Mike Howard (EVP, US MRO): Thanks, Dennis. And yeah, I'm very excited about joining Proudfoot!
Just to give a quick background, I started my career as an officer in the United States Marine Corps flying F-18s, so I’ve had had a long-term relationship with the aerospace and aviation community. I served from 1995 to 2004, and I left the Marine Corps to work at General Motors as an engineer in their electronics group, and at that time I also worked on an MBA at the University of Michigan. Upon completion, I joined a boutique consulting firm focused in the aerospace MRO market, called Aerostrategy. We were eventually acquired by a larger consulting firm called ICF, and I was there until just recently.
As far as what I bring to the table, I like to think that given my diverse experience, I have strong leadership capabilities, and can lead at various different levels. Leadership is really a core capability for a United States Marine Corps officer. I think the other big strength that I bring is domain experience. I've spent a lot of time in aerospace as an aviator and then as a consultant in the aerospace industry, and during my consulting time I've worked with clients that range from the customer, to the large aircraft OEMs, to the component and engine OEMs, and then on to the tiered suppliers and service providers that provide the MRO activity.
The opportunity to join Proudfoot really excited me because, in the past, the consulting firms that I've worked for were more boutique or focused firms. What this opportunity is for me is a chance to work with clients I care about in the aerospace industry, to address some of their most pressing issues, but have a broad offering of capabilities we can bring to the table.
DS: Thanks Mike, that’s exactly what we want to hear! What are some of the biggest lessons learned along the way, or some words of wisdom you might have?
MH: The first one is, in a consulting engagement, you have to make the determination early whether you can truly discover all the data that's available, or if you're going to have to live with the fact that you only have ~80 percent of the data. Knowing whether you can have it all or only put together a percentage of it is pretty important, because if you don't have that ability, but you try to go find all the data, you're wasting time and money on a fruitless exercise. On the other hand, if that opportunity is there to find all that data, and you shortchange that discovery effort, you're not providing the value that the client needs and should be afforded.
I think the second thing is, as I mentioned, I spent ten years in the Marine Corps, and the Marine Corps is a very structured organization: it's very clear who's in charge and who's the follower at every echelon of the organization. What I’ve found in consulting is that those roles tend to change on a situational basis. Someone may be in a position at one point where they really need to take an active leadership role, and it's important that they recognize that, while at other times that same person with that same team really needs to understand that their position is to take guidance and execute. You have to learn to play your position, and for each consultant on a team, it's critical to be able to articulate and understand your role, and then play your position properly.
DS: We need to emphasize that with all of our consultants and clients. It's one thing to have a statement of work with what the client thinks they need, but then being able to understand the nuances and listen along the way is really important to making sure that needs are met and that the results are what the client's expecting.
Looking at the market and the industry, what are some of the key trends and opportunities you see, and how do you think the industry will be different between today and 10 years from now?
MH: I think there are two key trends that stand out. The first is what I would call a move to shift MRO activity out of the airline. Airlines have put a big focus on ROIC as a metric for how well they're doing. Having internal maintenance capabilities is capital intensive. So, what we've seen over the last 10, 15 years, but particularly over the last five to eight years, is the outsourcing of maintenance capability to third party suppliers.
So, I think what that means is there is more opportunity, there's a bigger piece of the pie that is available to provide MRO services to airlines. The other thing is, because of the nature of what a lot of airlines are looking for, instead of procuring MRO activities from multiple suppliers, they're looking to say, "hey I really want to have one player that I source from who does everything for me.” And by “everything,” we've seen airlines that have gone from doing some stuff in-house and outsourcing some stuff — to a point now, where literally every aspect of maintenance, including inventory management, supply chain management, even line maintenance, which is a pretty critical capability for any airline, because it drives turnaround times, cancellation reduction, things that are important for customer satisfaction — we've seen outsourcing of that as well. And I think you'll see even more going forward, and it’ll be interesting to see whether the large network carriers such as Delta, United, etc. will go down that path when they already have a massive internal capability.
The second thing is obviously just the growth in emerging regions and countries. Air Travel in North America has been very strong since we got out of the Great Recession, but that growth compared to what's been going on in China, India, Brazil is just dwarfed by the growth there. So, there's a much bigger need for maintenance capability in those countries. For instance, we've seen a lot of MROs putting up brick and mortar facilities there, so they don't have to ship things back to North America or Europe. And the other part of it too is that we're seeing the emergence of new aircraft OEMs, which I liken to what we saw in the automotive industry in the '70s and '80s, where you had these automotive OEMs such as Toyota and Honda emerge and grow, and what that really meant was increased competition. And with increased competition came a laser focus on cost reduction, efficiency, Lean Six Sigma, etc. Those capabilities, and those processes were all very much developed in the automotive industry because of the hyper competition that occurred. So, I think we're going to see that in the aerospace market globally, and in the MRO market specifically.
DS: I couldn't agree more. I spent a few years in MRO looking around the world for opportunities, and I would echo Brazil, Asia for sure — high growth regions — and to the extent that you know geopolitics and foreign investment policies are in favor of expansion, I think we'll see a lot of expansion in those areas and an opportunity for Proudfoot to assist our clients in figuring all that out.
MH: And just to emphasize competition, here’s a pretty good data point to give you a sense of how much of a focus there is: Delta Airlines over the last eight years has reduced maintenance cancellations by over 98 percent. That's significant. And it is significant because the airline industry knows that the way that they are going to compete in the future is through customer satisfaction and service, and that can only happen by having aircrafts on time with the right people in place. So, yeah, I think it's an exciting time. It's certainly a time where I believe Proudfoot is well positioned to service aerospace MRO clients.
DS: Great. Thank you, Mike. I want to wrap it up there. It's been great to have you on the phone for a bit, and we’re really looking forward to having you on board and to your partnership as we continue to build the practice. Talk soon!
This transcript has been lightly edited for length and readability.