Entrepreneur & Investor.
Entrepreneur & Investor.
TransDigm's Cost Controls

Issue #8: TransDigm’s Cost Controls

NOTE: this was a past issue of my weekly newsletter, Friday Gems. Join my free mailing list so you don’t miss out on future issues.

Today’s gems are these podcast interview excerpts with Nick Howley, CEO of TransDigm (a niche aircraft component manufacturer).

(context: reaction to 9/11, planes being grounded and flight demand evaporating)

I know what you’re thinking…. another Transdigm post?? I’m sorry, I’m just fascinated with this business, and wanted to double-click on their cost control strategy.

Everyone says they’re all about the bottom line, but how many are this relentless about actually protecting it? It seems simple enough on the surface, but at least from my experience, most companies just don’t have this level of discipline, especially as they’re growing.

The fixed/variable cost approach is pretty wild too, considering TransDigm is a manufacturing company. Just think about all the different kinds of fixed and variable expenses they have. It’s crazy to me (especially as a former CPA), that the CEO states it doesn’t really matter which is variable and which is fixed. And, he’s right, if you step back…it really doesn’t matter. What matters is the profits available to owners, and protecting/growing those profits. The simplicity and clarity with which Nick describes TransDigm’s cost control approach is refreshing and a great reminder of what every company’s ultimate focus should be.

In case you missed it, I published a Transdigm blog post earlier this week discussing some of the main lessons/takeaways from the aforementioned podcast with Nick Howley. There is a link to the podcast episode in my post, so check it out if you haven’t already!

P.s. if you’re a small business owner, check out the book Profits First. It’s an actionable guide to applying a similar approach to cost control, but specifically for small businesses.