After at least three turbulent years, Italian aerostructures company Dema is counting on an injection of finance and confidence from new majority owner, Bybrook Capital, to set it on course for growth again. The London investment house purchased an 85% stake in the 25-year-old business earlier this year, installing a new board, but retaining founder Vincenzo Starace, who retains a minority share, as chief executive.
Speaking in his office in Dema's main factory in Somma Vesuviana, just outside Naples, Starace describes the effect of Bybrook's arrival as a "revolution" after "a lot of financial difficulties between 2015 and 2017", coupled with the loss of significant customers such as Boeing and Leonardo Helicopters.
Now, after an agreement with creditors, Dema has cleared its legacy debt, he says, and has working capital to pursue goals such as increasing its presence in the defence sector and ramping up production on major programmes including the Airbus A220 and Bombardier Global 7500 for the Canadian manufacturer's own aerostructures division.
In the aerostructures supply chain, with aircraft investments worth billions of dollars at stake, airframers count on the long-term viability of tier one and tier two manufacturers as much as the latter depend on the former for their livelihood.
Last year, Dema's financial problems prompted a nervous Boeing to drop the Italian company, which had been supplying the 787, making a troubling situation worse.
Leonardo Helicopters also axed Dema as a supplier to its AW139/169/189 range, for a different reason. The former AgustaWestland decided to take production to Poland, leaving Dema with a near-redundant factory in Brindisi. The combined effect was a drop in turnover from €62 million ($71 million) in 2012 to €38 million in 2017, although this should recover to around €55 million this year, says Starace.
The company's main customers now are Bombardier – Dema designed and now builds cockpits and empennages for the former CSeries and the largest Global business jet – as well as Leonardo's aerostructures division, for which it manufactures composite Boeing parts and structures for ATR. Dema also makes engine parts for Pratt & Whitney.
MIDDLE EAST PARTNERSHIP
In May, Dema announced a "co-operation agreement" with Strata, the major aerostructures company in the Arab world. The deal came about after Dema in January bought the composite assembly assets and the contracts of GSE, a defunct business in Brindisi that had been supplying aerostructures to the Abu Dhabi-based firm.
The takeover of part of GSE – the Brindisi company's sheet metal activity is still trading separately under a state administrator – also saw Dema increase its ATR workshare. Dema is now responsible for 34% of the aircraft produced by the Airbus-Leonardo joint venture by weight, building the empennage, radome and doors.
There has been further good news. At the end of 2017, Dema took on direct responsibility for manufacturing the horizontal trailing edge and vertical leading edge on the A220, an activity that it had previously carried out through Leonardo. Starace also says there is a "strong opportunity" to win back work with Leonardo Helicopters, despite the decision to relocate most of it to Poland.
A bigger prize would be recapturing Boeing as a direct customer. GSE had contracts with the US airframer, which came with the acquisition and Dema continues to supply Boeing through Leonardo. "We are in discussion," says Starace, who adds that Dema has "invested a lot of capex already in the 787. We work very well through the other two channels, so why not directly?"
Elsewhere, Dema is targeting the defence market, where it has started doing some work for Israel Aerospace Industries and is talking to Elbit and Turkish Aerospace. This sector was previously shut to Dema as a result of a stricture of one of its former shareholders – an Italian bank – against dealing with the arms industry.
Although most of its contracts are build-to-print, Dema also employs some 85 engineers, carrying out third-party projects for the likes of Leonardo – it is coming up with a new rudder design for ATR – and Gulfstream, for which it has conducted research and development work on thermoplastics as part of a project part-funded by the Apulia regional government.
Starace says he is hoping to "close several deals" by March 2019 in time to present a new business plan to the main shareholder. Just with the ramp-up of production under existing contracts, revenues should break the €100 million mark around the turn of the decade, Starace expects, although new business from the likes of Boeing could push that up further.
Another priority is a "site optimisation programme" for Dema's three factories, with each becoming a "centre of excellence" for a technology such as composites, sheet metal, and mechanical assembly. Coupled with this, Dema is looking at introducing new industrial disciplines such as the Japanese philosophy of kaizen, or continuous improvement, says Starace, who adds: "We are very much focused on increasing our performance across all programmes in our portfolio."
Source: Flight International