Innovation at CMC Electronics: Challenges and Solutions

1. Innovation at CMC Electronics: Challenges and Solutions

2. Contents • Overview of CMC • Products / Solutions • Markets • Competitive Environment • Competitive Challenges • Innovation Strategies • Conclusions

3. CMC Overview

4. CMC’s Product Lines Cockpits Aviation Products Custom Electronics 3

5. Custom Electronics Custom Displays Specialized Sub-systems Cockpits Microelectronics Aviation Products JSF Apache Custom Electronics A400M 4

6. Aviation Products Electronic Flight Bags Enhanced Vision Systems Satellite Communications Antennas FMS/GPS Cockpits Head-UpDisplays Global 7000 EC-145 Aviation Products Custom Electronics A310 PC 21 UH-60

7. CMC’s Cockpits SmartDeck C-130 T-6B Cockpits Aviation Products C-130 KT-1 Custom Electronics King Air 350 T-6B

8. Business by Sector International 35% Retrofit 60% Military 55% Canada 15% Commercial 45% United States 50% OEM 40% Highly Diversified, Balanced Customer Base — Export Oriented 7

9. Competitive Environment

10. Aviation Products Electronic Flight Bags Enhanced Vision Systems Satellite Communications Antennas FMS/GPS Cockpits Head-UpDisplays Global 7000 EC-145 Aviation Products Custom Electronics A310 PC 21 UH-60

11. Competition • Broadly diversified • Typically large • Typically vertically integrated, using their own products • Rockwell-Collins • Honeywell • Thales • Elbit • GE • Garmin

12. CMC’s Cockpits SmartDeck C-130 T-6B Cockpits Aviation Products C-130 KT-1 Custom Electronics King Air 350 T-6B

13. Competition • For transport aircraft retrofits: • Aircraft manufacturers: Boeing, Lockheed-Martin • Other systems integrators: Rockwell-Collins, Lockheed-Martin, Northop-Grunman • Small, local integrators: ASB, DERCO • For trainers and light attack • Aircraft manufacturers: BAE • Integrators and Tier 1: Elbit, IAI • General aviation suppliers: Garmin • For general aviation forward fit and retrofit • Other suppliers: Garmin, Avidyne, IS & S, Honeywell, Rockwell-Collins

14. Competitive Challenges

15. Challenges • Supporting very diversified product portfolio • Keeping a leadership position in diversified markets • Competing with large, vertically-integrated, global competitors • Managing a multi-site organization

16. Innovation Strategies

17. Multiple Strategies Needed – Why? • Need for ideas • How to get the differentiators? • How to understand the operational environment of our products? • How to trigger new ideas and turn them into marketable solutions • Need for funding • How to do more with less investment? • Need for the right Highly Qualified Personnel • How to get, develop and maintain the required personnel? • Need for strong supply-chain • How to get the right partners/suppliers? • How to flow down innovation down to suppliers? • How to flow up innovation from suppliers? • How to create innovative partners?

18. Multiple Strategies Needed • Leveraging customer funding • Because of the niche markets and some customization, CMC is able to get customer funding • Leading to a zig-zag product evolution; generally consistent with product roadmap, but addressing very specific customer requirements • Good source of product differentiation due to closeness to key customer needs

19. Multiple Strategies Needed • Maximizing re-use • Developing solutions for multiple applications • Forcing solutions with commonality and design for multiple applications • Challenging with to do concurrently with a customer-funded strategy

20. Multiple Strategies Needed • Pre-competitive collaboration • Working with different partners towards complementary goals • Access typically to unknown approaches or needs

21. Sourcing • CMC does not have the complete solution • Acquiring innovation as part of supply agreements • Selecting innovative companies as partners in systems solutions • « Risk-sharing »; we invest, they invest

22. Multiple Strategies Needed • Research and Innovation Consortia • Member of the Consortium for Research and Innovation in Québec (CRIAQ) from the beginning • Founding member of GARDN • Member of SA2GE • Project: IMA for Cockpit Applications • Support the development of technologies from Technology Readiness Levels 1 to 6 • Connects to the university researchers • Allows access to a different network • Allows access to future employees

23. Multiple Strategies Needed Standards Committees Attend committees of key emerging standards, create and promote new ideas, or at the very least influence them GPS/SBAS(RTCA) Cockpits (ARINC) NextGen/SESAR

24. Multiple Strategies Needed Leveraging Technologies Technology watch and technology roadmaps Integration of technologies yield different levels of innovation A simple new technology added to a product can expand its life New touchscreen to an old display, wireless connection, etc Importing technologies from other fields – aerospace is NOT where Electronics evolve Military infrared sensors led to Enhanced Vision Systems sold in Business Aviation Ethernet led to AFDX network used on A380

25. Multiple Strategies Needed Processes and Culture SCRUM / Agile Software Development Rapid Prototyping: hardware and software

26. Conclusion

27. Conclusion • Innovation is key to survival and growth with our diversified markets and products • Multiple innovation strategies operating in parallel are essential • Strategies need to cover all Technology Readiness Levels, and reach beyond our industry