ALEXANDER CAMPBELL / LONDON
UK aerospace supplier sees move as way of bridging DoD maintenance sales gap
UK aerospace supplier UMECO has taken a majority stake in component kit provider Tailored Logistics (TLC), into a move that will extend its reach in the lucrative US military maintenance, repair and overhaul (MRO) supply market. TLC provides custom component kits for the overhaul of military and civil aircraft. Its largest customer is the US Department of Defense. UMECO hopes that acquiring TLC, with its established presence in the USA, will help it benefit from the US defence spending boom.
UMECO will pay between $9 million and $15.2 million for TLC, which achieved $14.7 million sales and $2.5 million adjusted profit before interest and tax last year; the exact sum will depend on TLC's profits this year.
UMECO's chief executive, Clive Snowdon, says that TLC's sales force is one of the company's most attractive features. "We particularly liked their direct sales force, which is scattered around the USA...and selling directly into the defence department." UMECO does little business directly with the DoD; defence sales in North America make up only 11% of sales. Snowdon says. "We felt strategically that the US DoD was an immense gap in our sales; we have relatively limited penetration there at present."
Combined with a $70 million supply deal with Bombardier earlier this year, the TLC acquisition means that UMECO will see most of its growth in North America. Snowdon says: "We already have a relatively high share of the UK market and most of the continental European market still works on the traditional model where the manufacturer of bolts or whatever sells directly to the user. Probably most of our growth will come from North America."
Source: Flight International