GKN makes no secret of the fact it thinks it could make a decent fist of running Airbus's wing structures business at Filton in the UK, if the airframer opts to sell as part of its Power8 restructuring. Since 2000 - when it was by its chief executive's admission "a small, patchy UK-centric" operation, turning over $150 million - GKN Aerospace has become a world power in military and civil aerostructures with $1.6 billion revenues.
Already a major supplier to the A380 and the Airbus Military A400M, becoming a stakeholder in the Filton site would shunt GKN up the Airbus supply chain, consolidating its position in the global aerostructures market. Although GKN Aerospace chief executive Marcus Bryson will not say if negotiations are taking place, he acknowledges that Filton would "fit very well strategically". He adds: "We have a track record of taking on businesses from OEMs [original equipment manufacturers] and making them a success."
He is referring mainly to GKN's takeover of the former Boeing military structures plant in St Louis in 2001, a move that made the company a name in the US for the first time and a supplier to programmes such as the Boeing C-17 and Lockheed Martin F-22. Since then, GKN has bought other North American businesses, most recently Stellex, a Long Island-based supplier of titanium structures to Boeing airliners. "It's a natural extension to St Louis and gets us on the 787 for the first time," says Bryson. Another is Teleflex, a supplier of engine parts to GE and Snecma. The Ohio company "takes us into the rotating business", says Bryson, adding blisks, fan and compressor blades and engine core cases to GKN's competencies in fan cases and blades.
The acquisitions, together with organic growth as GKN has won its way on to new programmes, should deliver $1.6 billion revenues for GKN Aerospace in 2007, a 20% annual compound growth over six years, and "highly sustainable", says Graham Chisnall, director of strategy at parent GKN. The acquisitions have been funded by the company's sale of its 50% stake in helicopter firm AgustaWestland to co-owner Finmeccanica in 2005. The disposal provoked a ripple of protest in the UK. But the offloading of a non-core business has proved a canny strategy.
Bryson believes GKN Aerospace can double in size in eight years. All things being equal, its role on emerging programmes such as A380, A400M, Boeing 787 and Lockheed Martin F-35 should see revenues grow to $2.2 billion, without acquisitions, says Chisnall. The company is also well positioned in two other sectors with huge growth potential. In March, it won a deal to supply the fuselage structural assembly for the HondaJet - its first step into very light jets. And last month, it was selected by Aviation Partners Boeing as a supplier of blended winglets for the company's expanding retrofit business on Boeing 737s and 767s.
Bryson believes the next battleground for the aerostructures sector will be next-generation narrowbodies. While breakthrough engine technology will be a game-changer, new composite materials will be vital to Airbus or Boeing creating airliners that offer customers major savings on operating costs and environmental impact. Only a few suppliers, with the scale to develop and produce large volumes of structural components, will be able to benefit. Although GKN has little presence in the narrowbodies market, "we will position ourselves to be in the right place when Airbus and Boeing press the button", says Bryson.
GKN has striven to be a UK champion in composites as part of a government push to establish centres of excellence in aerospace technology. A site on the Isle of Wight focuses on automated manufacturing research. The company wants to "get out of the autoclave", says chief technologist Phil Grainger: "The focus in the last few years has been driving costs out of composites." Although GKN's structures production splits equally between composites and traditional metals, composites is growing 15% a year, with the engine market showing most promise.
Like all tier one suppliers, GKN has been looking at outsourcing to China and India. It already has factories making transparencies in Brazil and Mexico, and has been a player in China in automotive for 20 years. But as it moves from labour-intensive to high-tech production, the argument becomes "do we do it for low cost or market access", says Frank Bamford, senior vice-president business development. Acquisition strategy is "focused on the USA", but - despite an attractive exchange rate - many targets are pricing themselves out of the market, says Bryson.
With a healthy spread of military and civil customers, in and beyond the USA, and with a foothold in several emerging technologies, GKN appears well positioned to achieve its long-term growth target. Increasing its commercial airliner business - particularly on next-generation narrowbodies - will be crucial, but the emerging Asian and Middle Eastern market makes Bryson confident that any downturn is some way off: "Often you know the cliff is coming. But we can't see the cliff."
Source: Flight International