B/E Aerospace's purchase last week of New York Fasteners (NYF) and the completion of the sale of Textron Fastening Systems (TFS) to Platinum Equity mark two more steps in the consolidation of an industry segment that has already seen its fair share in recent years. But more changes could be on the horizon for players in the fasteners sector.
Martin Schnurr, vice-president general manager Americas for Textron Fastening Systems, is adamant that the change in ownership will not affect the company's existing plan to focus on core business areas, notwithstanding the change of name and brand that new owner Platinum Equity plans to announce later this year.
For B/E, a key reason for its $68 million NYF acquisition is to boost exposure to the lucrative military market. But for the fasteners sector in a wider context, the deals are merely the latest in a long consolidation process that has unfolded against the backdrop of a changing market.
The move towards an increased use of composites, the soaring price of raw materials and developments in procurement that have seen value pushed further and further down the supply chain have all taken their toll on businesses operating in the fasteners sector and forced companies to rethink their strategies.
The shift towards an increased use of composites on new aircraft programmes undoubtedly has an effect on operators in this sector, leading to the development of new technologies to complement the new materials.
This in turn could lead to further consolidation. "So far, we have developed these technologies from within," Schnurr says, adding that if these internal capabilities to develop new products are limited: "You could expect a manufacturer to make a bolt-on acquisition. It is easier to bolt on than to develop new capabilities from within."
For Precision Castparts (PCC), the trend has worked in its favour, as it has led to an increase in demand for titanium fasteners. But the opposite could be true for manufacturers of other fasteners for aluminium structures.
Quite apart from the need to keep up with developments in composites, acquisitions are on the cards: Textron Fastening Systems could add to its product portfolio more easily by buying up a company with a complementary technology than by developing a new technology in-house. The company will focus on key business areas - including aerospace - and regions such as Asia where the company is "growing faster than the market". But there will be "opportunities for further bolt-on acquisitions", Schnurr says.
US-based Alcoa is also open to acquisition possibilities: "Growth is important to us and our growth strategy includes organic growth, global investment in growth and, where it makes sense, investing in existing companies that add synergy to Alcoa Fastening Systems (AFS) and value to our customers," says AFS's senior vice-president global customers and marketing Richard Sharpe.
PCC has expanded its product line with the acquisition of safety-critical aerospace fastener manufacturer Shur-Lok at the beginning of the year. It is still looking for further acquisition growth: "We're interested in critical aerospace fasteners that have long qualification times, are highly engineered, are specified on drawings and are usually made of nickel-based alloys or titanium," PCC says, adding it is "continuing to pursue some tuck-in acquisitions - active discussions are going on now with some near-term possibilities in the critical aerospace fasteners world." The possibilities currently on the table are based in America but PCC says it "would look outside the USA".
AFS's Sharpe also sees further potential for consolidation in this area of the industry. "Supply chain programmes are becoming more sophisticated and challenging across previously segregated market sectors. So businesses supporting those supply chain programmes need to adapt and grow too," he says.
As for B/E, next on the agenda is to merge NYF's complementary hardware distribution and vendor-managed inventory business with its own distribution operations based in Miami, Florida. More than 60% of B/E's fastener sales are in the aftermarket through its M&M Aerospace division. The integration of NYF is expected to expand B/E's presence in the military sector, which accounts for over 70% of NYF's $56 million revenues.
PCC sees its role in the fasteners business as a key one: "The aerospace world has gone through any number of consolidations - we're certainly working on being a consolidator in a particular niche."
And, for the industry at large, consolidation looks set to continue: "The top 10 manufacturers make up less than 20% of the market. The vast majority of the marketplace is small local manufacturers. There are tremendous opportunities for consolidation," says TFS's Schnurr.
Source: Flight International