Kevin O'Toole/London
US INDUSTRY is shaping up for yet another round of consolidation in the wake of Boeing's announcement that it is to take over the bulk of Rockwell's aerospace interest.
Speculation is mounting that McDonnell Douglas (MDC), which abandoned its own talks with Boeing in 1995, is looking to secure a major defence deal.
The Wall Street Journal says that MDC is already holding exploratory talks with Raytheon over acquiring its defence and space operations. Such a deal would give MDC annual aerospace sales of close to $20 billion, keeping it in touch with Lockheed Martin and Boeing, both of which are heading towards the $30 billion mark.
The acquisition of Rockwell's highly profitable aerospace and defence-electronics businesses (although not the Collins avionics unit) should take Boeing up to annual sales of around $27 billion, projecting from the performance in the first half of the year (see table).
Boeing says that its existing business is on course to climb back to sales of $22 billion this year, after reaching a low of $19.5 billion in 1995 as it hit the trough in airliner deliveries, worsened by a three-month strike.
Financial analysts believe that MDC will soon enter the merger-and-acquisition market, whether through Raytheon or smaller deals. The corporation had been tipped as a potential buyer for Rockwell's aerospace division, and it has also been mooted as a potential partner for Textron's Bell Helicopter unit.
Rumours abound about a potential shake-out in the fighter-aircraft market, depending on the outcome of the US Joint Strike Fighter combat-aircraft competition being contested by Boeing, Lockheed Martin and MDC.
The latest speculation comes as the industry is still in the process of absorbing its last round of consolidation. The first-half figures begin to show the contributions being made to Lockheed Martin's Electronics division after its acquisition of Loral .
Raytheon's position has been bolstered by the 1995 take-over of E-Systems, and was strengthened again by the acquisition of Chrysler's aircraft-modification and defence-electronics businesses in the second quarter.
Hughes has held its place in the rankings by its 1995 acquisitions of CAE-Link and Magnavox, which has now been renamed Hughes Defense Communications.
The group says that its DIRECTV satellite television service is also beginning to boost revenues and profits for the telecommunications division.
Northrop Grumman's first-half performance is starting to reflect the contribution from Westinghouse's electronics business, which was absorbed in March. The group will still face a major hole in its revenues when B-2 bomber work eventually disappears.
The group is less reliant than it was on the programme, following the Grumman merger, but the B-2 continues to account for nearly a quarter of sales.
The E-8 JSTARS and E-2 Hawkeye surveillance-aircraft programmes provided another 15% of sales in the first half, with shipsets for the MDC F-18 fighter and Boeing 747 each contributing less than 10%.
Source: Flight International
