ALEXANDER CAMPBELL / FARNHAM
UK company expects shakeout in sector to leave handful of $2-4 billion contenders
GKN aims to triple sales at its aerostructures business over six years as a result of acquisitions and developing technologies.
The UK company's strategy director, Graham Chisnall, says that, despite a "shakeout" among systems suppliers, there has been no significant consolidation in the aerostructures sector.
"It's still quite a fragmented business. Over the next four to six years it should consolidate into a small handful of larger structures companies, with turnover of $2-4 billion," he says. GKN's Aerospace Services division will be one, growing "through acquisition and programme capture".
Aerostructures dominates GKN's £559 million ($873 million) Aerospace Services division. It, in turn, represents a third of the company's aerospace activities. The other main aerospace business is its 50/50 AgustaWestland joint venture with Finmeccanica.
Aerospace Services was chosen as a supplier to Boeing on its Sonic Cruiser last year - the first UK company to join the programme - and Boeing confirmed last week that GKN would develop aerostructures for its replacement, the 7E7. Chisnall believes the Boeing link will be crucial: like other suppliers, GKN needs to form lasting relationships with major manufacturers now or risk being shut out. "We are conscious that landing contracts now makes you a strategic supplier in the future," he says, adding that prime contractors will be willing to sign "only companies they think are reliable". Outsiders will find it difficult to break in once relationships harden, he adds.
EADS is one of the manufacturers introducing the new supply chain model. EADS procurement head Claude-Henri Hereus is developing a list of trusted suppliers -called competitive partners - which will have significant advantages, including last call rights on bidding for new contracts.
Earlier this year he cited "less uncertainty and more trust" as the main advantages of sticking to this list of suppliers, adding "The non-recoverable costs for us become tremendous in the case of a switch of supply."