Engineered components supplier Doncasters is optimistic about its future prospects, as increasing commercial aircraft production boosts its orders, writes Helen Massy-Beresford. But the UK-based manufacturer admits that soaring prices and lead times for materials are a cloud on the horizon and emphasises the need to improve supply-chain efficiency to keep costs down for its customers.
“Lead times and costs are rising,” says divisional managing director for aerospace Mike Askew. “In particular titanium has a lead time of over a year, which constrains our ability to grow – but everyone has that problem at the moment.” As part of its strategy, Doncasters wants to expand its manufacturing capability in low-cost economies. The group has a facility in Mexico, run on the basis of a “campus” where different divisions are gradually setting up manufacturing capability. Aerospace work in the Mexican facility has increased over recent months, Askew says.
The company is also studying the feasibility of setting up facilities in low-cost countries, such as China. “It’s partly about having a low-cost source for our products,” says Askew, “but the strategic issue is market access – China is a very large and growing market and we have to ask ourselves if a presence there is necessary.” The group has a realistic approach to low-cost expansion and is “reviewing the situation with caution”, he says.
Doncasters manufactures components – including the precision casting, forging, fabrication, machining and production of superalloys – for the aerospace, industrial gas-turbine, medical, automotive and petrochemical industries. Twelve of the 25 businesses that make up the group operate in the aerospace sector, with sales of $249 million last year boosting Doncasters’ ranking by five places to 94 in the Aerospace Top 100.
In common with other lower-tier suppliers, Doncasters must gear-up to match rising commercial aircraft production rates, in some cases replacing capacity eliminated in leaner times. “Volumes are picking up and plant utilisation is improving – it’s not yet at pre-9/11 levels but it will be by the end of the year,” Askew says. But the rapid rebound in commercial aerospace has brought supply-chain challenges. “The market remains very competitive and the recovery has been dramatic – in some areas we’re struggling to get capacity back in place quickly enough,” he says, although the situation is “generally better,” with demand outstripping supply.
An important contract for the company - which underlines the importance of supply chain efficiency in the current market - is with systems supplier Hamilton Sundstrand. In a deal potentially worth more than $300 million, Doncasters undertakes complete supply responsibility for components of the auxiliary power unit (APU) on the Boeing 787. “The role we see ourselves operating in is supply-chain integrator – we have the breadth and depth of capability to offer a one-stop shop,” says Askew.
The group hopes to be able to expand the scope of its current deal to allow it to take over the logistics for other components of the APU as a supply-chain manager. And Doncasters also plans to negotiate other, similar deals in which it provides customers with a complete package, managing the supply chain and using its own manufacturing facilities. “We supply all of the world’s engine manufacturers and we’re having discussions with all of them about this approach using the Sundstrand model,” says Askew.
Source: Flight International
