The aerospace supply industry is still in the early days of a long-term
boom in orders, say industry participants at a recent suppliers summit
hosted by GE Capital at GE Aviation’s headquarters in Cincinnati, OH.
The large majority of participants, who were split about evenly in
serving wide-body and narrow-body commercial aircraft platforms said
they plan to increase their workforce over the next 12 months (84%),
expect to win new long-term supply agreements in the next three years
(91%), and expect aircraft deliveries to continue to grow at least
through 2016 (76%).
“We are in the midst of a ‘super-cycle’ of aerospace manufacturing,”
said Gib Bosworth, managing director of aerospace financing at GE
Capital, Corporate Finance. “Advanced manufacturing practices will play
a very important role in how these parts and components are made, so we
at GE see a valuable role we can play in helping these suppliers stay on
top of this manufacturing technology curve as well as have the capital
they need to build production capacity.”
“Today, additive manufacturing is only .02 percent of total global
manufacturing, so there is a lot of opportunity going forward,” said
Greg Morris, leader of additive technologies for GE Aviation. “I think
it’s great that the majority of the survey respondents are already
incorporating this technology or plan to in the near future and I expect
that number will continue to rise.”
When asked about their manufacturing future, 87% said they will be
investing in new manufacturing equipment over the next 3 years.
Regarding incorporating additive manufacturing, 27 percent are already
doing it, 10 percent expect it to happen within the next year and 37
percent expect it in the next one to five years.
M&A activity is expected to be very robust over the next 12-24 months,
with 92 percent of respondents said they expect it to increase. “The
response makes sense. Record high backlogs for commercial aircraft give
buyers an unprecedented level of visibility,” said Yair Reiner,
aerospace and government services analyst with GE Antares Capital, a
leading provider of M&A financing to private equity-backed middle market
companies. “Plane makers want suppliers to become both stronger and
leaner, which encourages and rewards consolidation. And defense
spending, a significant thorn for the industry in recent years, is
showing signs of stabilizing.”
GE Capital’s survey was conducted on October 28, 2014 at the company’s
Commercial Aerospace Leadership Forum, held at the GE Aviation Learning
Center in Cincinnati, OH. The 80 respondents were suppliers and
manufacturers to the aerospace industry, and private equity
professionals active in the aerospace industry.
GE Capital, Corporate Finance has provided aerospace suppliers and parts
manufacturers with working capital and equipment loans for 25 years. GE
Antares Capital formed a dedicated aerospace industry vertical in 2014
to better serve private equity clients who are actively involved in the
industry.
About GE Capital, Corporate Finance
GE
Capital, Corporate Finance provides asset-based, cash flow and
structured loans and leases to mid-size and large U.S. businesses
expanding in North America, Asia and Europe. Financing supports working
capital, growth, acquisitions, turnarounds and balance sheet
optimization in key sectors: aerospace; automotive and transportation;
chemicals and plastics; construction and building products, corporate
aircraft; oil and gas; food and beverage; manufacturing; marine; metals
and mining; paper, packaging and forest products; retail; and technology
and electronics. With Access GE, clients also benefit from access to
GE’s best practices to help build their business. Visit geccf.com/newsroom
or follow @GELendLease
on Twitter.
About GE Antares Capital
GE Antares is a unit of GE Capital. With offices in Atlanta, Chicago,
Los Angeles, Toronto, New York, and San Francisco, GE Antares is a
leading middle market lender, offering a “one-stop” source for GE’s
lending and other services offered to middle market private equity
sponsors. GE Antares was recognized by Private Debt Investor and Private
Equity International as 2013 Lender of the Year, North America and
Mid-Cap Lender of the Year, North America, respectively. For more
information, visit geantares.com.
GE Capital offers businesses around the globe an array of financial
products and services. For more information, visit gecapital.com
or follow company news via Twitter (@GECapital). GE (NYSE: GE) works on
things that matter. The best people and the best technologies taking on
the toughest challenges. Finding solutions in energy, health and home,
transportation and finance. For more information, visit ge.com.
Copyright Business Wire 2014