Le plan stratégique de Luc Vigneron pour Thales

Strategic Plan 2010-2012

Strategic Review Strategic review of Group activities undertaken within the SBP2 framework Presentation to Board on 10/12/09 Global Group strategy confirmed for the major markets: Aerospace Space Defence Security date / references 3

Aerospace Major difficulties on several programmes Corrective measures to redress the situation First effects of the Civil Aerospace Crisis on sales End of recession expected in 2012 Euro/dollar exchange rate Threat to competitiveness to the horizon of 2012/2013 Pursue the preparation of future in ATM SESAR, NEXTGEN date / references Strategic partnerships in regions of growth Brazil, Russia, India, China 4

Space Enhance the competitiveness in telecoms (dollar market) and on ESA market Optimisation of internal cost base Strengthen business in Italy and in Germany Italy : Sicral 2, Sigmabus Germany : DLR partnership Strengthen the Space Alliance Complementarity of systems / services Pursue strategic partnerships outside Europe date / references Sale of payloads in Russia, in USA 5

Defence Major difficulties on several contracts Corrective action to put situation right Beneficial effects of French stimulus plan Must be followed by export orders Rapid technological evolution in tactical radio and optronic markets Opportunity / threat to worldwide market shares Capture market share in the naval domain in USA and in Germany JVs or strategic partnerships date / references Promote renewal of radar family From very short to very long range 6

Security Turn around contracts in difficulty Strong action needed Develop position in rail signalling Partnerships in growth regions (Brazil, Russia, India, China) Propose innovative solutions for Civil Security R&D investment in supervision and video analysis Strong growth in securing IT systems Expansion of the range of products and services date / references Strengthen local integration centres Broadening of their business domains 7

Remember: our strategy is global Key Key Key Customers Technical Domains Know-How Domains Worldwide Space Hardware Avionics States ATM Radars Software Public Operators Radiocommunications Defence networks Defence systems Processing Large Accounts Security systems Signalling systems date / references Optronics Systems Aircraft Cies Sonars 8

PROBASIS Performance plan 2010-1014 * "momentum" in ancient Greek

Global target A five-year action plan for a stronger Thales Improve margin to fuel initial and external growth worldwide Anticipate market price decreases and US dollar pressure Enhance working methods within the Group by systematically matching best practices date / references Target a € 1.3 bn impact in 2014 10

Major areas for performance improvement Reduce the cost of non quality focus operational units attention on strengthening programme management and increasing engineering capability bring all units to Thales « best in class » levels Adapt to market price decreases and US dollar pressure through the supply chain Stronger « make or buy », « design-to-cost » policies Further reduction of number of suppliers, rationalisation of production plants Reduce internal costs date / references shared services, support functions, general expenses, real estate 11

Methodology PROBASIS team headed by the CEO, assisted by the SVP Operational Transformation Team work involving the Operational Managers to define the action plans Follow up of action plans through monthly reporting The « principle of subsidiarity» will be systematically taken into account in the day-to-day execution of the action plans date / references 12

Chorus II 2010-2011

Chorus II Facts Major gaps revealed on Programmes Main root causes Upstream technical choices Contract management Processes are neither simple nor precise enough; their implementation is not rigorous enough Diluted responsibilities Consequences Reinforce the Design Authority Involve Purchasing, Legal and the Design Authority from the upstream phase onwards Develop process implementation measurement and date / references introduce a Right to Veto for the Quality Department at key gates Tailor the Chorus Reference System to support Thales Transformation 14

Chorus II Orientation Simplify and unify the Chorus Reference System (structure, content) Define the Chorus Reference System in two layers Steering: those elements that are strictly for managing processes Operational: those operational elements associated with daily business operations, including IS solutions Define convergence route at Group level while taking into account local business needs Clarify Thales operating processes and individual roles and date / references responsibilities within these processes 15

Planning 2009 2010 2011 T0 = 19/10/2009 2 months 2 months 6 months 12 months Initialisation Deployment architecture Realisation principles Target Target vision and Deployment Implementation Kick- Chorus II Kick-off Review date / references Project team and Group Process Owners 26th January 2010 16

New Group Organisation Project

Objectives of change Bring organisation closer to the customer De-centralise to be more efficient Simplify procedures to be more competitive Favour international Growth date / references 18

Previous matrix Division 1 GBL 2 (Global Business Line) CENTRES OF GBL 1 (Global Business GTU 2 EXCELLENCE, SHARED GBS 1 Line) (Global Technical Unit) SERVICES, AND (Global Business GBS 2 GTU 1 FUNCTIONS Segment) CBL 4 CBS 1 CBL 1 CTU 1 (Country Country 1 LE 1 (Legal Entity) (Country Business CBS 2 (Country CTU 4 Business Line) Technical Unit) Segment) CBL 5 LE 2 CBL 2 CBS 3 CBS 4 CTU 2 CTU 5 Country 2 CBL 6 LE 3 CBL 3 CBS 5 CBS 6 CTU 3 CTU 6 Countries act as simple « host » structures for the Divisions date / references No global approach nor P&L responsibility at Country level, therefore local resources not optimised No real « business » motivation for the Country Directors, therefore insufficient regional growth 19

Disadvantages of current organisation Concept inherited from the Thomson-CSF era, when France dominated largely, with a business model based on direct exports to the rest of the world out of step with current size of Group’s presence abroad (>50% of employees) Overcentralisation of powers by the Divisions, so that : Responsibility removed from local teams Impossibility of Division’s staff to keep pace with everything Great difficulty in establishing local inter Divisional synergies (« silo » effect) Inadequate response to contracts difficulties, loss of commercial opportunities, failure to optimise local costs Matrix too complex, each Division having its own reference system and imposing it in each country (proliferation of reporting lines and systems, regional JVs uncoordinated) Significant waste of internal effort, lack of coherence within the Group date / references Too many interfaces with client Thales’ image misunderstood by client, scale of Group insufficiently 20 exploited

Example of current complexity of reporting lines 1 Finance Reporting 2 HR Reporting Thales Germany Thales Group 3 Operation Reporting 4 Technical Reporting CEO Thalesgroup 5 Sales&Marketing Reporting CCD Thales Germany HQ Area A Thalesgroup Area B&C HQ VP 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5 Thales Germany M&S 1 2 3 4 5 KAM DIV DIV DIV DIV Defence L&J NAV AERO SPACE KAM BA Security BA BA AS Trans C&S KAM DIV DIV Transport D3S Air Systems KAM Industry 1 2 3 4 5 1 2 3 4 5 TDD-GmbH SBL SBL SBL T&S Security CS 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5 Thales Koblenz BA date / references Defence 1 2 3 1 2 3 4 5 BU BU BU T&S Security AS/CS 4 5 5 5 21

Envisaged way forward Evolution of the matrix: Domestic Countries become responsible for bids, contracts, customer satisfaction and for P&L (= short term) Divisions to focus on R&D strategy, products & services, industrial policies (= long term) Evolution of Divisions: transition from six to seven, with the improvement of real coherence within each Division Reduction in the number of Business Lines: move from 44 to 33 Removal of management of Business Segments Removal of Country Division Director, Global date / references Technical Unit, Country Technical Unit concepts Unification and simplification of economic and financial reporting, via the Domestic Countries 22

Project for new matrix Management Domestic Country « Shared services » Business R&D Industry BL 1 Division 11 Division BL 2 BL 1 Division 22 Division BL 2 Country Directors are motivated by the global objectives of the Group in the Country, including successful implementation of contracts, customer date / references satisfaction, profitability and working capital requirement. Countries are responsible for optimising local resources (Integration centres, support functions) Divisions are to focus on worldwide strategies (R&D, products & 23 services, industrial policies)

New responsibilites Two types of role coexist in the project for the new matrix: Country axis: operational role, to include P&L, with a wide range of managerial responsibility (bids, programmes, customer relationship management, Human Resources and asset management, cost and WCR optimisation) example: Area Director Domestic Country Director Company Chairman & Chief Executive Divisional axis: functional role, to include responsibility for strategy, with specific powers on operational managers (definition of R&D policy, product policy & services, and industrial policy) and associated methods of control (approval of R&D budget, of industrial and technical date / references investment, and of technical content of bids) example: Division Director BL Director … 24

Project for New Country Organisation Area A Area B UK NATO Germany Southern Europe North and Region (inc. EEC) Central UN Spain Australia Europe Region Italy South Asia Region USA North and Austria Middle East Region Canada Central Asia Region Switzerland Central America Netherlands Region Singapore Norway Africa Region India South Korea Saudi Arabia date / references Domestic Commercial Domestic Commercial Countries Network Countries Network France, specific Domestic Country 25

Project for new organisation of Divisions (1) Four dual Divisions (Defence and Civil) Defence & Security C4I Systems (3.1 B€): Network & Infrastructure DSC Systems, Radio Communication Products, Information Technology Security, Protection Systems, Critical Information Systems DAO Air Operations (1.2 B€): Defence Air Operations, ATM & Navaids Systems, Surface Radars Avionics (2.4 B€) : Commercial Aircraft Solutions, DAV In Flight Entertainment, Military Avionics, Helicopter Avionics, Electrical Systems, Training & Simulation, TWT & Imaging Subsystems date / references DSP Space (1.5 B€): Thales Alenia Space organisation unchanged (JV with Finmeccanica) 26

Project for new organisation of Divisions (2) Two Divisions 100% Defence: Defence Mission Systems (2.2 B€): Electronic Combat Systems, DMS Mission Airborne Solutions, Above Water Systems, Under Water Systems Land Defence (1.5 B€) : Missile Systems, Optronics, DLD Protected Vehicles, Armament & Ammunition One Division 100% Civil: Transportation Systems (1.3 B€) : Main Line Signalling, DTS Urban Rail Signalling, Integrated Supervision Systems, date / references Revenue Collection Systems 27

New commercial organisation of Domestic Countries Large Clients ("Key Accounts") Large Clients ("Key Accounts") Country Key Account Executive Key Account Executive Corporate Local KAM KAM KAM KAM KAM KAM Companies date / references The Key Account Executive is the Country Director or a close collaborator KAM = Key Account Manager 28

Timetable New organisation project explained to Unions: 10 December: Thales SA CCE 15 December: Thales European Committee 21 December: Major French Thales companies Consultation of Unions about the project: January 2010 Implementation after consultation of Unions date / references 29

Project of New Executive Committee

Project of New Executive Committee Luc Vigneron Chairman & CEO Alex Dorrian Patrice Durand Executive Vice President, Area A, Senior Vice President, CEO of Thales UK Finance & Administration Marko Erman Yves Barou Senior Vice President, Senior Vice President, Research &Technology Human Resources Blaise Jaeger Senior Vice President, Area B Patrick Fournié Jean-Loup Picard Senior Vice President, Senior Vice President, Operational Transformation Strategy date / references Pascale Sourisse Pierre-Eric Pommellet Alex Cresswell Jean-Loïc Galle Michel Mathieu Jean-Pierre Forestier Reynald Seznec Senior Vice President, Senior Vice President, Senior Vice President, Senior Vice President, Senior Vice President, Senior Vice President, Senior Vice President, Defence & Security Defence Mission Systems Land Defence Air Operations Avionics Transportation Systems Space C4I Systems 31

Project of new Area organisation

Project of New Area Organisation Area A HR Area B Int’ l Co-ord A LEGAL FINANCE Sales & Marketing Domestic Operations B Business Development Northern & UK Nato/UN Central Europe inc EU Germany Europe South & South US Italy East Asia Northern & Spain Canada Central Asia Middle East Saoudi Arabia Netherlands Latin America Austria date / references Australia & NZ Africa Switzerland Norway Singapore South Korea India 33

Project of New Area Teams Alex Dorrian TBD (1) Blaise Jaeger S. Lucot TBD (1) TBD (1) R Eskinazi G Delevacque O Conrozier A Dorrian E Buckley I Azemard P Mathieu M Hellenthal A Cameron P Salvato M.L. Bourgeois O Guibert A Parrondo TBD O Badard JY Tolot A Blokhuis C Kuberek M Veider date / references C Jenkins C Costes B Giger G Pedersen L Mayer I Kim F Dupont 34

Project of French Key Accounts Management

Project of French Key Accounts Management R. Seznec P. Sourisse P.E. Pommellet M. Mathieu J.L. Galle M. Erman J.P. Forestier B. Jaeger DCMAT DGA/DA DGA/DO DGA/UM ESIO DGA/UM HORUS DASSAULT DGA/UM NBC DCNS DGA/UM TER DGA/UM AERO DIRISI DGA/UM COEL COFACE DGAC CEA EADS SDE DGA/UM HELI DGA/DDI EADS/ASTRIUM EADS/AIRBUS DGA/DS RATP EMAT DGA/UM MID MIN AEE CNES EADS/ MBDA DGA/DT SE Transport EMA DGA/UM NAV SE AFF EURO ESA EUROCOPTER MIN E&R SNCF GENDARMERIE DGA/UM RAF SE COM EXT SE Pro/Eco Num LA POSTE EMAA MEDDAT EMM MINIMM SIMMAD MINDEF SSF MINEFI MININT NEXTER OTAN (France) SGDN date / references TOTAL 36

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Le plan stratégique de Luc Vigneron pour Thales

by Le Point on Dec 14, 2009

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Le plan stratégique de Luc Vigneron pour Thales — Presentation Transcript