While sales at most aerospace suppliers are starting to show signs of a slowdown, CMC Electronics remains bullish and is confident it will continue chalking up double-digit growth through the current downturn.
The Canadian avionics manufacturer has been growing at a steady digit clip for several years, with nearly equal growth for both its commercial and defence units and a balanced mix of OEM and retrofit sales auguring well for 2009. "We don't see any downturn," says vice-president of strategy and business development Gerald Charland. "So far we see growth even in 2010."
ORGANIC GROWTH...
CMC is sticking to a strategy of pursuing fast organic growth through rapid new product development and plans to launch several new products in 2009. Several of this year's new product launches will be in parallel with CMC's FronTier research and development project, which involves developing a new integrated cockpit that will initially be deployed in business jets from 2013 (Flight International, 3-9 February).
The former Canadian Marconi business was acquired by Washington-based Esterline Technologies for $345 million in March 2007. CMC's results are not detailed in Esterline's accounts, but the company, which recorded revenues of C$205 million ($168 million) in its year to September 2006, is, with 1,250 employees, by far the biggest of the nine companies in Esterline's 3,000-employee avionics and controls group, which posted 32% revenue growth to $611 million in the year to 31 October 2008.
Charland says diversification has been the key part of a strategy that should help it thrive in the downturn. A decade ago military sales accounted for 75% of revenue stream, but the military/commercial mix has been 50/50 since the middle of this decade.
Products including electronic flight bags, enhanced vision systems and GPS equipment have helped CMC ride the recent wave of business aviation growth to take the sector's share of its commercial business to 40% - up from 10% in 2005. Charland acknowledges sales could be hit by slowing business jet production, but sees retrofit business offsetting that decline.
And, he says, CMC is glad to have decided against getting heavily involved in the very light jet sector, now one of the hardest-hit business aviation segments.
...WIDELY SPREAD
CMC's commercial business is split widely, with several OEMs accounting for between 1% and 2% of total sales. It supplies Airbus, Boeing, Bombardier and Embraer, and is a tier one supplier in the new Chinese and Russian regional jet programmes.
In defence, Charland expects sales to grow despite pressure on military budgets. CMC, he says, has multi-year commitments for most of its defence contracts and its biggest single programme, the cockpit for the Beechcraft T-6B turboprop trainer/light attack aircraft, has just entered production.
CMC, which also supplies a portion of the cockpit for the Pilatus PC-21 and the entire cockpit for the Korea Aerospace Industries KT-1, could benefit as militaries look to turboprop trainers to save money. Charland says CMC several years ago took the strategic decision to become a big player in turboprop military trainers and not enter the advanced jet trainer sector because it wanted to enter "a market with a bigger volume hit".
Charland says another one of CMC's mainstay products, Lockheed Martin C-130 cockpit retrofits, also remains robust, with a large order set to be disclosed shortly. CMC's three largest single customers are all on the military side, with the US Department of Defense accounting for 9-10% of revenues, Canada's Department of National Defence 6-7% and Sikorsky 7%. CMC is the longstanding supplier of display systems on the Sikorsky UH-60 Black Hawk and supplies flight management systems for the new-generation Black Hawk and the Canadian navy's new S-92 fleet.
CMC also supplies more than 150 airlines directly with electronic flight bags and GPS receivers.
CMC is confident the planned ramp-up of T-6Bs for the US Navy will proceed as scheduled and the export market will remain robust after the sale of 24 T-6Bs to Morocco.
Source: Flight International
