GE Capital – Aerospace Supply Industry Surging
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GE Capital – Aerospace Supply Industry Surging

ge capital nf2The 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.  GE Capital’s survey was conducted last month at the company’s Commercial Aerospace Leadership Forum, held at the GE Aviation Learning Center in Cincinnati.  The 80 respondents were suppliers and manufacturers to the aerospace industry, and private equity professionals active in the aerospace industry.

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%).

gib bosworth“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.”

Greg Morris nf1“Today, additive manufacturing (3D printing) 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 saying they expect it to increase. “This response makes sense”, said Yair Reiner, aerospace and government services analyst with GE Antares Capital.  “Record high backlogs for commercial aircraft give buyers an unprecedented level of visibility.  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 provides asset-based, cash flow and structured loans and leases to mid-size and large U.S. businesses. Sectors of interest include: 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 (www.gecapital.com). 

2014 PEPD • Private Equity’s Leading News Magazine • 11-10-14

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