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ANALYSIS: Recaro aims to lead in business and economy cabins

Recaro Aircraft Seating chief executive Mark Hiller is nothing if not ambitious for the privately owned German business in which he is also a shareholder.

"We are the market leader in economy seating," he says. "And there is a fair chance that, 10 years from now, we can also be the leader in business class."

Behind his confidence is the fact that the company, based in Schwaebisch Hall, a 1h drive from Stuttgart, is investing heavily in both research and development into the business-class market – about one-third of its 1,500 staff at its German HQ are involved in engineering and design. It has also established a flexible, four-country production network that can respond rapidly to short-notice contracts and demand peaks, says Hiller.

Recaro – which hived off its automotive seating business and licensed the Recaro name to Johnson Controls in 2011 – is now a purely aviation-based concern. It broke through the €500 million ($560 million) revenue bar in 2018, hitting that target by October (full-year figures are not yet out). That represents an increase of more than 50% since 2013, when the company's current five-year strategy took effect.

Annual production across its four main assembly facilities totals more than 110,000 seats, about 85% of them for economy cabins. That growth – in contrast with many of its rivals – has been "all organic", says Hiller. However, he notes: "Growing organically is another challenge as it means reinventing the company every few years. The company I joined 15 years ago was very different."

Aside from its main plant in Germany, Recaro has sites in Dallas, Poland, and Qingdao in China, which it is expanding. Last year, the company also opened a dress-cover production facility in Poland. Recaro has a largely outsourced supply chain and does not want to take all its cover work in-house, but the move "will help us understand and control these technologies", says Hiller.

DIVISION OF LABOUR

Although each facility has specialisms – most new products begin life at Schwaebisch Hall, while Poland is "an extended workbench for high-volume, economy products" – the idea is the set-up in each is sufficiently consistent to allow Recaro to allocate work rapidly to factories according to where the customer is, which has the capacity, and currency considerations.

Recaro's range extends from basic economy seats to highly bespoke business-class designs, with balanced shares between Airbus and Boeing and single-aisle aircraft and widebodies, says Hiller.

More than 90% of its sales are buyer-furnished equipment, although three years ago, Airbus awarded Recaro its first supplier-furnished equipment deal – a seat based on its 3530 design.

Hiller says Recaro enjoys an economy cabin market share of around half on the Airbus A350 and Boeing 787, and supplies around one-third of all A320s. For the past three years, line-fit has dominated as both main manufacturers ramp up narrowbody production, although retrofit business dominated before that and Hiller expects the balance to swing again as "the OEMs hit a peak".

Recaro, which is showing off several new products at AIX 2019, is investing €100 million in new infrastructure, including an enhanced research and development centre in Schwaebisch Hall. The company's long family-owned heritage is proof of its "long-term commitment", says Hiller. "Our growth plan is driven by organic, and focused on seating," he says. "We won’t be expanding into adjacent markets."

For more news, pictures and analysis from AIX 2019, visit our dedicated event page

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