What Evidence Does the Case offer Regarding Esterline's Success? What Factors Appear to Have Contributed to Esterline's Performance?

1. What evidence does the case offer regarding Esterline's success? What factors appear to have contributed to Esterline's performance?

One of the evidences of success for Esterline is the year over year results between 2004 and 2005. During this time revenue increased from $614M to $835M, and income from continuing operations increased from $29M to $51M. Another evidence is the expansion of the company’s footprint to Washington, California, Wisconsin, Michigan, Illinois, Arkansas, North Carolina, Virginia, New York, Massachusetts, and Idaho, 34 business units and 7,500 people employed across the United Kingdom, United States, Germany, France, Mexico, and China. This shows a broadened network of production and engineering opportunities that can be leveraged.

Further success is demonstrated when Esterline achieved Tier 1 status with both Boeing and Airbus, and were awarded the contract to manufacture Boeing’s 787 overhead panel control cockpit system and Airbus TP400M turboprop sensor suite. The success was not only in the new business, but in the successful implementation of targeted acquisitions as Bob Cremin had worked to develop.

Creating a cellular process focused on families of similar product, and allowing each line to operate in a manner that made the most sense was also a large win for the company. This was a massive improvement over the jumbled approach that they had historically used. It enabled the lean implementation and empowering employees through the training of methods to lower costs and improve efficiency.

The key factors that lead to these successes are the consistency of Bob Cremin and his vision, his understanding of Esterline, and his anti-IT based solution. Bob Cremin had worked his way up the ranks to become CEO, in 1999 he took the action to sell 12 companies that were not aligned with the strategy that he had. This resulted in a shrinking of revenue to a mere $155M, but this was good because it reduced industry mix and provided more clarity to the objectives of specializing in aerospace and defense. In the time after this Esterline made 30 targeted acquisitions leading up to the results they achieved in 2005. Frank Houston shared the vision of Bob Cremin and did not put exceptional focus on IT, instead he focused on what the actual needs were for the business. This supported Cremin’s statement that “People tend to over rely on IT. IT systems are complex and people can get on ‘automatic’ just following the dictates of the system. Lean manufacturing pushes decisions down to people directly engaged in producing products. Incremental changes are key to innovation and continued improvement. This requires trial and error, and overly-structured IT systems often interfere with process innovation.”

2. What is the central question being addressed in this case? Why is it important

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