ANALYSIS: Liebherr expects 50% aerospace business growth until 2018

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Landing-gear expertise has gained Liebherr valuable footholds in new programmes and will help drive growth in the next few years

Swiss-based engineering group Liebherr is expanding its facility in Lindenberg, southern Germany, to accommodate its participation in new aircraft programmes.

Last year, the manufacturer built a test centre at the headquarters of its aerospace and transportation systems unit in Toulouse, France, where the production of air management equipment is centred. But earlier this year, the company decided to invest €70 million ($86 million) to extend the Lindenberg plant, which sits close to the Austrian border. The plant specialises in flight control and actuation systems as well as landing gears.

Together with another facility in nearby Friedrichshafen, by Lake Constance, it employs 2,050 staff and generated about half of Liebherr's €913 million aerospace and transportation business in 2011. The group was founded by Hans Liebherr in 1948 to produce a mobile tower crane, and is still wholly owned by the family. Its turnover in 2011 was €8.3 billion.

Turnover from the aerospace segment is expected to hit €1 billion this year and grow by 50% during the next five years.

Liebherr wants to expand the Lindenberg plant by 36% in six stages, to 75,000m2 (807,000ft2), says its president Francis Niss. Construction for the first two phases - which have a combined value of €30 million and are to be completed in 2013 - has begun, while the remaining four will depend on the further development of a number of new aircraft programmes, none of which are in serial production yet. If everything goes to plan, the final extension is to be completed in 2018.

Landing gear will be the main growth area during the next few years. Liebherr is supplying the nose landing gear for the Airbus A350 and complete undercarriage for the Bombardier CSeries, Comac ARJ21 regional jet and C919 narrowbody.

A final assembly line will be built in Montreal for the CSeries landing gear, which includes equipment from North American suppliers, while the main components will be manufactured in Lindenberg.

For the C919, scheduled to enter service in 2016, a 50:50 joint venture has been formed with local partners. Final assembly will take place in China, but overall responsibility lies with Liebherr.

The manufacturer also has production plants in Guaratinguetá, Brazil and Nizhny Novgorod, a Russian city about 400km (250mi) east of Moscow which was renamed Gorky during the Soviet era and was closed to foreign visitors because of its military research and production facilities.

While the Guaratinguetá site specialises in aluminium subcomponents, mainly for air management and flight control actuation systems, the Nizhny Novgorod plant focuses on steel actuators for the aerospace business as well as construction machinery, such as cranes and earth-moving equipment.

The Guaratinguetá plant is being rebuilt after it was destroyed in a fire last year. Fortunately, nobody was injured during the blaze, which began in the surface treatment area at night. Production has been temporarily transferred to Toulouse and Lindenberg while the plant is being reconstructed, with some staff relocating across the Atlantic. However, new production machinery is already ready for installation in Brazil, with the site due to reopen before the end of the year, says Niss.

OVERHAUL GROWTH

Repair and overhaul is another central growth area for Liebherr. "Since more aircraft come out of their warranty [period] every year, we want to develop this capability," says Niss. In June, the manufacturer opened the fourth extension of its US repair centre in Saline, Michigan, enlarging the site by a third to 9,290m2.

This was "absolutely necessary" because of the large volume of Embraer aircraft in North America, says Niss. Liebherr supplies landing gear for the ERJ-145 and Embraer 170/190 families. While overhauls for the 50-seat regional jet are expected to run only until 2014, there should be a work increase for the latter types. Air Canada became the first landing gear overhaul customer for the Embraer 175 earlier this year. However, the Saline facility will also service A350 nose landing gears in the future.

The manufacturer is considering opening a similar support facility in Asia, says Niss, while at the same time putting emphasis on the importance of Liebherr's roots. "Our European sites will remain the most important ones. We are European and want to stay European."

Niss adds that he believes the investment in Toulouse and Lindenberg is a very good long-term investment, and also gives a sign to the company's employees that it is not jumping from one country to the next.

"Our company is a wholly owned family business, and this [investment] supports our long-term view."