Suppliers to aerospace prime contractors will face a tough time over the next five years as their customers continue to screw down costs.
That was one of the major findings of a survey released at the show by Flight International and Computer Sciences Corporation (CSC).
Though the recovery is now well underway and likely to continue over the next year, prime contractors will steadily reduce their supplier base.
To remain in the game, sub-contractors will increasingly have to be prepared to shift away from the traditional customer-supplier relationship, into partnering relationships with the industry's major players.
"There will be very little joy for suppliers to the primes over the next five years in terms of price management," says Kevin O'Toole, Flight International's business editor.
Survey
For the survey, which was carried out by an independent market research organisation, a series of questions was put to European aerospace companies - 50 in seven countries - which collectively represent the views of more than 80% of the continent's aerospace industry, with annual sales totally $50-60 billion.
The survey finds that the US is continuing to set the trends in the industry, followed by the UK, then by the rest of Europe.
It also points out national differences in the approach to consolidation and future joint ventures.
British companies are very strongly in favour of consolidating by mergers and acquisitions, while their French and German counterparts prefer to set up consortia.
The report's other conclusions include :
national markets are clearly in decline;
western Europe is still the most important market for future development, but Asia-Pacific is growing rapidly;
most companies are looking to information technology (IT) and process improvement to boost their productivity;
those industries which have restructured early are emerging ahead of their peers.
Every one of the companies contacted has already embarked on cost-cutting programmes, and 88% have refocused on their core businesses.
The search for new efficiencies through IT methods is now particularly apparent, says Dr Tom Williams, president of CSC's UK division.
"This started in the US five to six years ago. It's prevalent now in Britain and it's about to hit Europe."
Companies are looking to IT to facilitate the next set of changes to the way they do business - both by providing solutions to business problems and also through outsourcing their IT functions.
"I see the market for IT growing, all the way from the top end where companies are seeing IT as an enabler to make them more competitive, to the point where employees are using PCs to organise their diaries," says Williams.
The survey results are available on CSC's Internet home page at http://www.csc.com or through Keith Bennett on +44 (1252) 385613 or in the US by calling John Gulick on +1 (703) 641 2588.
Source: Flight Daily News
