Many of the aerospace companies here at Le Bourget are waking up to the giant opportunities that await in China.
The potential of the fastest-growing economy in the world is one to whet the appetite of finance departments, marketeers and investors, especially in light of the fact that fewer than 1% of the population have ever flown, and the country has fewer airports than the state of California.
One company that has already been slowly and steadily building a reputation and a plant in China to great effect is Meggitt.
Meggitt has quietly and conservatively been going about its business. Over the years it has talked about balance in terms of its defence and civil aerospace product lines and services; it has talked about balance in terms of its US and rest-of-world business. It has been making a series of small, but perfectly-formed acquisitions.
But now, chief executive Terry Twigger allows himself a wry smile: "It does all seem to be coming together," he says. Twigger is the master of the understatement.
Almost a year ago, Meggitt surprised the industry with the ambitious acquisition of Dunlop Aerospace's design and manufacturing business for 408 million ($760 million) on a debt and cash free basis. Since then Twigger has delivered an 8% increase in dividends; profits are up 15% and turnover is up 19%. Had the dollar been stronger the figure would have been closer to 30%.
He promised $7 million in cost cuts from the business in the first year and speaking just before the show, he said the company was on target.
"We had looked long and hard at Dunlop for quite some period of time," Twigger says, "but we weren't big enough to buy them. We knew them really well and had talked. There were a lot of similarities in the business, the manufacturing culture and the technology.
"When we were able to do the deal, we did. We then put a lot of time into the integration of the businesses and that has paid off."
Meggitt comes to Paris with a new logo and branding that Twigger believes will reflect the group approach to the different businesses that now operate under their own identities but as part of the Meggitt brand.
"You will see it more and more. We will continue to be making small acquisitions and giving organic growth to our shareholders. Any acquisitions we will make will be from our own cash flow. That's the way we have grown and there is no reason for us to change that," Twigger says.
But it is a small venture in China that could be the greatest acorn planted by Meggitt. Twigger describes the opening of the new MXM facility as "a massive milestone in the group's development".
MXM stands for Meggitt Xiamen Sensors and Controls, and has a 36,000ft2 (3,300m2) plant in Xiamen's aviation park on the coast facing Taiwan.
The plant opened ahead of schedule. "Our customers want us there and there are significant opportunities for marketing a wide range of Meggitt products on the ground," Trigger says.
"You could look at this as a foot in the water. It is not just about lower manufacturing costs. It is also about understanding the Chinese market better. We believe the domestic market for sensors is a good growth market in any case.
"Once again our investment was cautious and again successful. I am sure we will move more production to China over time."
Upturns
The traditional balanced Meggitt businesses are witnessing upturns in all areas. "We are seeing growth from using derivatives of our aerospace equipment in other industries," says Twigger.
While looking at adding to the supplier base in China, Twigger sees other benefits from attendance at Paris.
"I like to sense the atmosphere of the show. I think it is more upbeat than it has been for a few years. It is the one opportunity to see the mood conveyed across the whole industry.
"We get the chance to meet our customers and there is the value of having a shop window for other companies to look at us. Everyone is there sharing the same physical space."
This is the first major show where Meggit will be displaying products from the acquisition of Dunlop. These include Dunlop's wheels, brakes and anti-skid systems and the nose wheel and braking system for the A380.
This is a new capability for Meggitt, consistent with the group's established products and encapsulated in theme of Meggitt's stand and the group's slogan: "smart engineering for extreme environments".
The product range also involves aftermarket support for original equipment manufacturers across a wide range of aerospace products. About 60% of Meggitt sales are to original equipment manufacturers and 40% to the aftermarket.
Other Airbus A380 technologies on the stand include condition diagnostic systems from Vibro-Meter, Dunlop's heat management products and Meggitt Safety Systems' fire detection systems.
Meggitt Defence Systems, the group's targetry, ammunition handling and decoys and countermeasure deployment systems business, is represented here and on its own exterior stands. Following the launch of the new piston-engine aerial target, Voodoo, the division is presenting a clear challenge to the jet-powered drone market with the world's first glide target.
"Meggitt's scope and scale has expanded significantly since Paris '03," says Twigger. "The past two years have seen a number of acquisitions extending core competencies and market positions, leading to an expected group turnover in 2005 of over 600 million ($1 billion) - a leap of 34% since we last exhibited."
Source: Flight Daily News
