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We’re also spending a lot of time developing the services opportunities for the markets, as they’re evolving. Some customers are moving more towards a long term service model. Some are trying to figure out what the approach. The one dynamic that’s of interest in this market, to me, particularly, is that, as budgets get constrained, and as people run into budgetary issues, they actually tend to look more and more at the “TotalCare” model, the long term service models, because they’re actually usually more cost efficient than their own approach. Because we get to spread the cost, we get to take the efficiencies across that broad portfolio. I mentioned the breadth and depth of customers we have around the world. When we can leverage the spares pipeline and we can leverage the infrastructure we have in our logistics train, and make sure that we are servicing all of our customers, we can do it a lot more cost effectively. So, they’re all looking at availability contracts, just as Mark described in civil. We can guarantee that mission criticality – that they will have the engine when they need it for their mission, anywhere around the world, 24/7. And they can have it to produce the capability that they need. It’s all well and good to have a large pipeline of spares, but if they don’t have the right engine at the right time and the aircraft isn’t able to eventually perform the mission – so it turns into reliability of the product as well with guaranteed reliability in the defence market, we can provide that kind of service. Again, it gives our customer the confidence so they can complete their mission. To do that, we continue to invest in our own capabilities, One of the nice things about the high level of integration across the Rolls Royce group, is that we get to leverage each other’s strengths. So, actually the first operation centre started up in Derby in the civil business. We now have an operation centre in defence in Bristol that’s running 24 hours a day, 7 days a week that’s monitoring numerous customers around the world and all their products. And, as we learn things about the defence business, we get to feed that right back into Mark’s business as we learn things and how to run our operation centre more efficiently. So, we improving that, we’re improving our response times, we’re broadening our capabilities, we’re putting more engine types into that kind of Total Care solution, and that’s helping all of our customers. So, this is just a glimpse of the current portfolio today, inside of defence. It shows how we break out. You can see two key numbers very quickly – 52% of the defence portfolio is service, and also, 52% is in the transport segment. So, you can see transport and ISR are two very strong market
segments. You’ll hear our customers talk a lot about that. We also have a strong presence in combat, but it’s a nice, balanced portfolio, whether you’re looking at it from the standpoint of development versus long term care, or whether you’re looking at it from market segment. If you exclude the commercial, the civil helicopter business, we’ve got about 18,000 engines in service around the world. A nice, broad portfolio. So, that’s where that 52% service opportunity comes from. Good positioning on both fixed and rotary wing. Our STOVL experience, our ability to create aircraft that can take off in very short runway situations, and land vertically, i.e., the LiftSystem for the Joint Strike Fighter is a technology that only Rolls Royce has. No other company in the world can do that. So, we talk about Blue Ocean kind of positions. I mean, that’s one of them that we have today, and it goes all the way to, really, the Harriers, but it goes up through technologies like what we have on the V22-Osprey, and then into that LiftSystem. If you get out to the show, take a stop by the stand and look at the technology that goes into that – the swivelling of the nozzles, and what we can do with that lift, and the amount of thrust we can put through that fan is unprecedented in the industry. And the ability to essentially get the exact same thrust out of an engine, and put it through a Lift Fan with no losses, essentially. And thrust is really a feat of physics that is unmatched by anyone in the industry. And then we’re a leader in the transport segment. It’s an incredibly robust piece of the market today. Transport is maybe one of the things that, it’s not the most talked about portion of the portfolio, but it’s needed day in and day out in the types of missions that our customers are doing, and that’s a very strong part of our portfolio. We’ll talk about market outlook. So, first, a little bit on trends in defence aerospace. Indeed, global defence budgets are under pressure in a number of markets, but there’s increased spending power in a lot of emerging markets – places like India, Saudi Arabia, South Korea – all very robust markets that are spending at high percentage points of their GDP on defence procurement. Who would have thought three years ago, that India, in the last three years, would have spent $27 billion on defence acquisitions. Those are the types of growth opportunities that, quite frankly, are offsetting some of the budgetary pressures in other parts of the world. Opportunities for services because of the sustained deployments. The deployments that are happening today in Afghanistan are driving the need to service all those aircraft, all those rotary wing platforms that are out
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