Engine Growth Bolsters GKN’s Civil Sector Expansion
With defense budget cuts starting to bite, GKN Aerospace (Chalets (B) 73, Hall 2b Stand F140) is stepping up its efforts to reduce dependence on military business. At a recent press briefing, the UK-based group’s CEO Marcus Bryson predicted that in 2013 almost 70 percent of revenues are likely to come from civil orders, with Airbus remaining its largest customer (accounting for 32 percent of revenues in 2012). “We don’t see defense as being a growth sector for the next four to five years,” he said.
If GKN’s aerospace division achieves its goal of logging $3.5 billion revenues this year, it will have more than quadrupled its business in the 10 years since 2003, when revenues were under $800 million. Winning aerostructures work on new programs such as Boeing’s 787 and the Airbus A350XWB have been big factors, but the group’s expansion into the growing engine structures sector has also represented a leap forward.
GKN’s acquisition of Volvo Aero, completed in October 2012, is starting to bear fruit. This year, the addition of the Sweden-based engine systems manufacturer is expected to boost total revenues from GKN’s aerospace division by around $700 million to $3.5 billion. Assuming GE’s planned acquisition of Italy’s Avio goes through, GKN is set to become the world number two in the engine systems market. Recent research by the Teal group has indicated that this sector is set to grow in value by 15 percent over the next five years, largely driven by increasing production rates of commercial airliners and large business jets.
According to Bryson, the acquisition of Volvo Aero has given it a significant position on the leading programs of the three leading engine makers: GE/CFM, Rolls-Royce and Pratt & Whitney. Much of the growth in revenues is expected to come from high production rates of CFM International’s Leap turbofan family, as well as from Pratt & Whitney’s rival Geared Turbofan products and Rolls-Royce’s Trent XWB.
The enlarged engine systems division consists of 16 facilities across 6 countries, and it is also involved in programs such as GE’s new GE9X (for Boeing’s 777X development) and the Trent 1000. In 2012, aerostructures accounted for 53 percent of GKN Aerospace’s revenues and engine structures delivered 42 percent (with 5 percent coming from special products such as anti-icing systems and fuel tanks).
The group’s engine portfolio now spans the following product areas: nacelles and inlets; fan blades; compressor disks and blisks; fan cases; compressor rotors; combustor structures; compressor and turbine blades; LPT case; guide vanes; turbine structures; engine system design; and full engine maintenance, repair and overhaul. “With the acquisition of Volvo Aero we got a prime contractor that is also a tier one supplier, and we bought it for its engineering capability that allows it to design and build a complete jet engine,” said Bryson.
Despite losing some new wing structures work for the A320 to Korea Aerospace Industries last year, Bryson told AIN that GKN’s existing contributions to the narrowbody will continue on the new A320 Neo model. He predicted that GKN is set to win increased content on both the Neo and the rival 737 Max program.
Recent investments at GKN’s Western Approach factory near Bristol have, according to Bryson, taken the technology and manufacturing prowess for its wing spar work to a new level and the company now wants to match this at its other facilities. But he added that GKN does not want to compete for work at all costs. “I don’t want to be making bucketloads of secondary structures,” he said. “We have offloaded some production to other companies’ factories.”
Meanwhile, GKN continues to expand its own manufacturing presence in both Mexico and China. At the same time, it has opened a new factory in South Carolina, close to Boeing’s airframing facility in the state, and Bryson indicated that he increasingly views the U.S. as being a prime location for low-cost aerospace manufacturing.
“We’re now in a great position with great technology and we’ve also got an excellent set of business relationships that are at a very high level,” Bryson concluded. “The perception [of GKN] by customers is now very different in that they come to us more to fix problems [rather than just make products] and this means they are looking to de-commoditize [the business relationship].”
GKN HAILS UK GOVERNMENT SUPPORT
GKN Aerospace CEO Marcus Bryson has praised the UK government’s March 2013 decision to provide £1 billion ($1.5 billion) in funding for the country’s aerospace sector as “transformational change.” The package requires industry to match this investment and is based on the creation of an aerospace technology institute.
“This moves research and development from a political timeframe to a business timeframe that runs through the term of the next administration,” said Bryson. “I’ve never seen anything like this in my time in the industry. The government has done its bit and its up to industry now. With the new tax benefits for R&D work this makes the UK a very competitive environment.”