Thailand’s Aerospace Sector is Open for Business – But Don’t Forget the Soft Skills!
The aerospace industry in Thailand is gearing up for take- off and the savviest of businessmen, entrepreneurs, and investors should give critical thought to their entry into this market by not only being concerned with the hard skills relevant to aerospace, but should give just as much attention and consideration to the softer side of aerospace: the people.
THE GOVERNMENT’S PLAN
Within ASEAN, Thailand is known as the hub for manufacturing motor vehicles and components. In fact, the automotive industry accounted for over 40 percent of Thailand’s foreign direct investment ( FDI) from 2009 to 2013. What has led the likes of Toyota, Mitsubishi, Nissan, Honda, Ford, BMW, and others to Thailand? Answer: the support the Royal Thai Government ( RTG) gives to these kinds of investments, along with a relatively low- cost but skilled workforce. So, to compliment the auto industry, can Thailand add to its portfolio of strategic investments by developing the aerospace industry? If so, what do you need to know and do in order to be one step ahead of the game?
The aerospace industry already has representation in Thailand via the likes of Honeywell, General Electric, Airbus, Triumph Group Inc., along with tire manufacturers Goodyear, Continental, Michelin, and Leistritz. In fact, according to the Board of Investment ( BOI), there are over 20 companies actively involved in aircraft part manufacturing and close to a dozen companies performing various maintenance and repair on aircraft and aircraft parts. However, can it expand?
Under a new initiative called the “New S- Curve,” the RTG’S BOI announced that ten industries will make up what will be known as its “New Engines of Growth”. Under this RTG- backed initiative, the program will incorporate economic policy reforms, investment incentives, and promotional packages. Aerospace fits prominently in that plan.
One initiative is the Aerospace Industrial Estate Development Plan ( 2016- 2045), which will take place at U- Tapao- Pattaya international Airport and is currently being executed in three phases: ( 1) Aerospace Industrial Estate being developed; ( 2) Original Equipment Manufacturers being invited to build facilitates; and the development of a ( 3) Maintenance Repair and Overhaul sector.
Under this initiative the present focus is on servicing airframes, engines and their components. The top five components expected to bring in the most capital in Thailand are as follows: Landing gear, wheels and brakes; Auxiliary Power Units ( APUS); In- flight entertainment ( IFE) components; Engine Fuel and Control; and Avionics. Additionally, eligibility exists for what is called ‘ Super Cluster incentives’ for entities that cooperate with academic or research institutions or the Center of Excellence ( COE) in the cluster area.
STRATEGIC THINKING REQUIRES STRATEGIC PLANNING & STRATEGIC EXECUTION
A key question is, can Thailand develop the aerospace industry as they did with the auto industry and what can entrants learn from the experiences of the auto manufacturers? Whether thinking of Porter’s “Five Forces,” Jay Galbreth’s Star Modeltm, Mckinsey’s 7S or conducting SWOT/ SOAR analyses, or a PESTEL analysis, entrants into the aerospace industry have a unique and important factor to consider when establishing operations.
When looking through the lens of focal systems, this requires strategic thought and planning from the mega systems perspective ( Thailand as a country via the RTG) and from the macro perspective, which means the various companies who will take the opportunity and invest in Thailand’s emerging aerospace industry.
So what should potential investors/ operators do in order to reduce their risk and build a foundation that could lead them to decades of superior performance as has happened in the auto industry?
THE SOFT STUFF MATTERS!
The auto industry proved that a systematic approach to organization development ( OD) could be embraced with particular emphasis given to the softer side of operations: the soft skills or people fitting this into the design of their processes.
In the aerospace industry, organizational health is paramount and is repeatedly borne out by leaders’ testimonies. Larry Bossidy, former chairman and CEO of Honeywell and Allied Signal, comments that, “The soft stuff – people’s beliefs and behaviors – is at least as important as the hard stuff. Making changes in strategy or structure by itself takes a company only so far.” Former chairman and CEO of Pepsico, Roger Enrico, succinctly put it, “The soft stuff is always harder than the hard stuff.”
When speaking of soft skills, it is vitally important to talk about limiting beliefs. As quoted in Beyond Performance: How Great Organizations Build Ultimate Competitive Advantage, Pierre Beaudoin, President & CEO of Bombardier talks about the importance of beliefs stating: “The results of the assessment revealed a shortlist of limiting beliefs that affected the value placed on individuals, the role of teamwork, the efforts of continuous improvement, and the drive for results.”
Why is this important? Organizations operating in the aerospace/ aviation industry are categorized as High- Reliability Organizations ( HROS). HROS are organizations that if ( when) incidents occur their negative effects are catastrophic - people die. Examples of other HROS are offshore oilrig operations, nuclear power plant operations, and hospitals/ healthcare institutions, just to name a few. A key element towards designing and operating an HRO is giving critical thought to the reduction of non- technical or human error/ human factors failures.
After incidents such as the Tenerife airport crash, the Space Shuttle Challenger explosion, and the Deep Water Horizon drilling rig explosion, an analysis of these events suggested failures in leadership, poor team coordination, communications breakdowns, a lack of assertiveness, inattention, inadequate decision- making and personal limitations were to blame for these incidents occurring.
Incoming organizations should give extra consideration to embracing OE programs that focus on talent development. Programs with a systematic focus centered on mentoring- coaching- training that influences organizational culture shift changes through the use of continuous process improvement of core non- technical skills ( NTS) should be considered.
Developing such systems and processes will help to raise the awareness of important NTSS and human performance ( human factors) of local workers at all levels of the organization. Institutionalizing such systems and processes will highlight and raise situational awareness, concentration on problem- solving and decisionmaking, but above all it is congruent to and invaluable for developing robust and sustainable OE programs, middle managers, and organizational leaders.
Growth in aerospace is all about giving emphasis to both the hard- and soft- skill related tasks. Additionally, it is about allowing the systems, processes, procedures, structure, and much more to support your organization in pursuit of operational excellence.
Al Valentine is a certified master coach, master practitioner of OD, and Ph. D. candidate with expertise in leadership, strategy, cross- cultural communications, and more. He can be contacted at firstname.lastname@example.org.