Report predicts imminent consolidation, driven by falling numbers of new aircraft, price pressure and technology
The long-awaited consolidation of the $22 billion global aerostructures industry is on the verge of taking off and will leave around eight "Super Tier 1" suppliers, according to a new report by UK-based consultancy Counterpoint Market Intelligence.
Increasing competition for a declining number of new aircraft, pressure on aircraft prices, prime contractors needing fewer, more capable suppliers and investment in expensive new manufacturing technology are the main factors behind the consolidation, says the report. The process has been given a major boost by Boeing, which decided to deal with only a few Super Tier 1 suppliers for the new 7E7.
One result was Alenia and Vought's agreement to team on supplying 26% of the 7E7 airframe, on which Alenia is investing an unprecedented $600 million in new manufacturing technology. Other Tier 1 candidates include Goodrich, Hurel-Hispano, Kawasaki Heavy Industries and Mitsubishi Heavy Industries, with the UK's GKN, France's Latecoere and EADS in the running to complete the line-up.
The report says the aerostructures sector accounts for around 30% of the annual value of new civil and military aircraft sales and points out that it remains one of the last sectors of the aerospace industry not to have consolidated. There are currently 36 Super Tier 1 suppliers with sales of more than $100 million and around 90 smaller companies.
One of the report's authors, George Burton, says the demand for more composite materials in airframes to keep weight - and therefore costs - down is driving major investments in automated machinery to replace the costly, largely manual composites manufacturing processes now used. This favours larger suppliers with existing composites experience. "Only those who invest in this machinery can expect to remain in the business of manufacturing large primary structures," says Burton. "This will be necessary to achieve the economies of scale that will keep costs down."
The aerostructures sector is about evenly divided between in-house suppliers within primes such as Airbus and Boeing, and external suppliers, says the report, which includes advice on the acquisition strategies open to aerostructures companies. Burton believes the majority of the likely moves in the aerostructures industry will be made "within two or three years", leaving three "worthwhile" sectors: Super Tier 1, niche technology and low-cost producer.
JULIAN MOXON / LONDON
Source: Flight International
