Investment faith pays off

Profile B/E Aerospace

As B/E Aerospace celebrates its 20th anniversary, the company can look back on a rollercoaster ride. It has grown from a $4 million business via a long string of acquisitions to become a cabin interiors and fasteners specialist with a turnover in the region of $1.5 billion and a $6 billion installed base worldwide.

"We had to make a lot of changes after 9/11 to survive," says president Michael Baughan. The company had been growing through acquisition, but after 2001 saw its revenues drop "almost overnight" by over a third. A downturn that was a disaster for many of its competitors forced B/E to rationalise its production strategy and operating model, completing the integration of businesses that had been acquired as well as adopting lean principles.

But the company was adamant it would not cut investment in R&D and engineering - which stands at around 7-8% of sales, or $90 million last year and "a whole lot more this year" - when it was looking for ways to economise during the downturn. It is this continued emphasis on innovation and expanding its portfolio to which Baughan attributes the company's ongoing success.

The purchase last year of Germany's Draeger Aerospace boosted B/E's defence footprint - and the fasteners business of which it is now part - but B/E is likely to continue to rely on airlines for most of its sales, with over half of these coming from the aftermarket as airlines step up to the challenge of upgrading the interiors of their fleets.

Original equipment manufacturers including Airbus and Boeing are "important customers and partners", however. B/E cites the 787 as a key programme in its portfolio, and it has bought in to Boeing's strategy of relying on fewer integrators to supply complex systems. The company's engineering services division is small in terms of revenue, but significant for the integration capability it provides. "Strategically, it's a good fit with our products," says Baughan.

Russia's Superjet 100 programme is also significant as the first chance the company has had to act as a "complete interiors integrator" for an OEM, as well as giving it a higher profile in a growing market. The company is keeping a close eye on the evolution of its global presence. Its latest location is Dubai, to serve the growing Middle East market, and it is likely to establish more facilities around the globe.

B/E arrived at its current form through a series of acquisitions and "we're not ready to say we've finished", Baughan says. "We have a compelling product portfolio, but there is room to round it out."

Source: Flight International