Flight International - 26 June 2018

(Jacob Rumans) #1

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18 | Flight International | 26 June-2 July 2018 flightglobal.com

business to be in.” He describes
GKN as “really well-positioned
for future platforms,” adding:
“The only difference [is] we are
now a standalone business.”
GKN’s group management was
abandoned in April, and the indi-
vidual leadership teams in the
company’s aerospace, driveline
and powder metallurgy divisions
now report directly to Melrose.

Nearly half of GKN Aero-
space’s £3.64 billion ($4.
billion) revenue in 2017 was gen-
erated by its aerostructure busi-
ness, while the engine systems
and special technologies divi-
sions – the latter supplies electri-
cal wiring, aircraft windows and
helicopter landing-gears – ac-
counted for 37% and 14% of
turnover, respectively.
A key part of the manufactur-
er’s strategy is to build a “strong-
er... global aerostructures organi-
sation” with a “strong balance”
between Europe, North America
and Asia. “That’s extremely im-

portant for our customers,” says
Büthker. “If you want to be a big
player in the market, you need to
follow your customers.”
In 2017, GKN generated 51%
of its sales in the USA, and 42%
in Europe. In order to shift the
balance toward Asia, the manu-
facturer intends to establish both
manufacturing and maintenance
facilities in that region.
Büthker sees potential to pro-
duce components in Asia for
Western-built aircraft, and to
partner with emerging local
OEMs on new programmes. A
tentative co-operation agreement
was signed with Chinese manu-
facturers AVIC and Comac in


  1. Demand and work share
    obligations in the region are
    strong, he says, adding: “Boeing
    and Airbus are requesting us to
    invest in India and China.”
    The plan for both the aerostruc-
    tures and engine systems divi-
    sions is to build them into a
    “coherent global system” of organ-
    isationally-aligned centres of ex-
    cellence that employ similar tech-
    nologies and processes. But in
    order to concentrate the business
    on core capabilities, other activi-
    ties are currently under review for
    potential divestiture, Büthker
    says.
    While GKN’s wiring business
    has an international footprint –
    production facilities are located


in China, India and Turkey – the
division serves a “niche market”,
Büthker says. “The structures
market is big [and] the engine
systems market is big,” he says.
“If you really want to focus on the
aerostructure business, then it
needs to be global.”

TECHNOLOGIES ARM
Despite the growth plans around
aerostructures and engine sys-
tems, Büthker still sees a role for
GKN’s special technologies arm.
The division could serve as a
platform to sell and buy business-
es, he suggests, adding: “Melrose
is obviously interested in start-
ups.” This could open up oppor-
tunities to gain access to new
technology, he says.
Earlier this year, Melrose
proposed, as part of its acquisi-
tion bid, the sale of GKN’s pow-
der metallurgy division. UK
broadcaster Sky News reported
in June – citing unnamed sourc-
es – that the unit’s sale is target-
ed later this year, but Melrose
declines to comment.
Büthker notes that selling off
the powder metallurgy unit –
which includes additive manu-
facturing operations – would not
affect GKN’s aerospace business.
Additive manufacturing capabili-
ties that are relevant to aerospace
are located with the aerospace
division, he says. ■

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F


ollowing a turbulent period
for GKN – which ended in its
acquisition by turnaround spe-
cialist Melrose Industries in April


  • the UK engineering group’s
    aerospace arm is confident it can
    continue to invest in new tech-
    nology and grow its business
    under its new ownership.
    GKN Aerospace chief execu-
    tive Hans Büthker says that tech-
    nology development and an abil-
    ity to expand the company’s
    international footprint are central
    business drivers, as they will
    allow it to bid for packages on fu-
    ture aircraft and engine pro-
    grammes. “If you want to jump
    on other platforms, you need to
    be prepared,” he says.
    Speaking in London on 15
    June, Büthker said Melrose is
    “fully committed” to a long-term
    investment plan and growth
    strategy, which GKN Aerospace
    had been pursuing before the
    takeover. He acknowledges
    “some discussion” and “to a cer-
    tain extent concern” among GKN
    customers about Melrose’s suita-
    bility as a shareholder, as its bid
    was fiercely opposed by GKN’s
    former group management.
    In March, Tom Williams, chief
    operating officer of GKN’s largest
    client, Airbus, was quoted in the
    Financial Times as saying that the
    aerospace industry requires “a
    commitment to long-term invest-
    ment and strategic vision”, which
    he saw as incompatible with typi-
    cal venture capital or restructuring
    models. “It would be practically
    impossible for us to give any new
    work to GKN under such an own-
    ership model, when we don’t
    know who will be the long-term
    investor,” Williams warned.
    Büthker says that the owner-
    ship change and its implications
    have been discussed with “some
    key customers”, and the situation
    has “absolutely calmed down”.
    Pointing to predicted growth for
    the aerospace industry as a whole,
    he insists: “Melrose is there for the
    long term... because this is a nice


STRATEGY MICHAEL GUBISCH LONDON

Melrose maintains GKN’s global focus


Engineering group will keep emphasis on investment and expansion after its acquisition by business turnaround specialist

Airbus had warned that restructuring at one of its major suppliers could affect long-term relationship

Airbus

“Melrose is there for
the long term...
because this is a nice
business to be in”
Hans Büthker
Chief executive, GKN Aerospace
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