by Richard Pettibone, Aerospace & Defense Companies Analyst, Forecast International.
With commercial aviation production booming, GKN has successfully positioned itself to capture a significant share of this market. As a top Tier 1 aerospace supplier, most notably to Airbus, GKN has strengthened its operations with three key acquisitions in the past few years.
GKN began to bulk up its Aerospace unit in 2008 with the purchase of Airbus’ Filton site. With this buy, GKN Aerospace gained a key position in Airbus programs, producing critical wing structures and composites. Today, Airbus accounts for about 20 percent of GKN Aerospace’s revenues.
A few years later, the company expanded its operations once again with the purchase of Volvo Aero. In one stroke, the company gained a major presence in the aviation gas turbine market. As next-generation engine programs are developed, composites will play a large part in their design. By having both composite aerostructure and engine capabilities in its portfolio, GKN will be an attractive partner to engine manufacturing primes for these upcoming systems. In addition, the acquisition again increased the company’s global footprint, adding a factory in Newington, Connecticut, near engine prime Pratt & Whitney.
More recently, GKN Aerospace expanded yet again, adding Fokker Technologies to its portfolio in late 2015. This blockbuster deal brings together two of the world’s leading aerospace technology companies. Both GKN and Fokker are major Tier 1 suppliers to platform manufacturers in the military, commercial, and business aviation sectors of the global aerospace industry.
The acquisition of Fokker will strengthen GKN’s aerospace manufacturing footprint, and expand GKN’s content on such key aircraft programs as the A350 commercial airliner and the F-35 Joint Strike Fighter. The product lines of the two companies fit well together, promising considerable synergies in such areas as aerostructures manufacturing and wiring systems production. Plus, the incorporation of the Fokker Services business unit will expand GKN’s presence in the increasingly important MRO market for civil and military aircraft.
The deal will also result in GKN assuming Fokker’s 5.5 percent share in the NH Industries consortium that builds the NH90 military multirole helicopter. GKN will also inherit the type certificates for the out-of-production Fokker 50 and Fokker 60 turboprop airliners and Fokker 70 and Fokker 100 regional jets.
In addition, like the Volvo Aero deal, the buy gave access to a key ancillary market, in this case electrical wiring, via Fokker Elmo’s wiring and interconnect operations. As aircraft rely more and more on electrical systems, this is expected to be a growth center going forward.
Finally, the purchase also fulfilled another requirement of GKN’s strategy – geographic expansion. While the growth in Europe is a given, Fokker also has an extensive network of international locations, with some 1,000 employees in China, India and Turkey. With aerospace growth slowing in the U.S. and Europe, expansion into these regions will become even more important in the years ahead. Having an established foothold will make capturing market share here all the easier.
In the USA, expansion has not been overlooked, even though it lacks the drama of a big acquisition. The focus here has been on building capacity near key customers. For example, GKN is currently building new factories close to Boeing’s operations in Washington and South Carolina for the production of winglets for the 737 MAX program. The company also has operations at Honeywell’s engine campus in Arizona, making nacelles for the HTF7000 engine.
As Airbus and Boeing begin to increase production to fulfill their record backlogs, GKN Aerospace’s financial returns will maintain stability as a result. Despite the slowdown in new aircraft orders, the multiple years’ worth of existing orders will keep assembly lines busy for years to come.
Please feel free to use this content with Forecast International and analyst attributions, along with a link to the article. Contact Ray Peterson at +1 (203) 426-0800 or via email at ray.peterson@forecast1.com for additional analysis.
The focus of Forecast International’s Defense & Aerospace Companies series is on worldwide aerospace and defense prime contractors and subcontractors. Concise reports provide data on individual corporations regarding recent mergers, restructurings, and joint ventures. Also included in each report are financial and industrial segment data, snapshot coverage of major programs, and recent U.S. DoD contracts.
A military history enthusiast, Richard began at Forecast International as editor of the World Weapons Weekly newsletter. As the Internet grew in importance as a research tool, he helped design the company's Forecast Intelligence Center and currently coordinates the EMarket Alert newsletters for clients. Richard also manages social media efforts, including two new blogs: Defense & Security Monitor, covering defense systems and international issues, and Flight Plan, which focuses on commercial aviation and space systems. For over 30 years, Richard has authored the Defense & Aerospace Companies, Volume I (North America) and Volume II (International) services. The two books provide detailed data on major aerospace and defense contractors. He also edits the International Contractors service, a database that tracks all the contractors involved in the programs covered in the FI library. More recently he was appointed Manager, Information Services Group (ISG), a new unit that encompasses developing outbound content for both Forecast International and Military Periscope.
