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Friday, May 3, 2013

Multi-Year Contracts Anchor GKN’s Defense Business Despite Turn Toward Civil

By Andrew Drwiega, International Bureau Chief

Marcus Bryson, CEO of GKN Aerospace, reports that the company’s sales are up 13 percent to just under £7 billion. GKN is a Tier 1 supplier to the aviation industry and operates through four divisions with facilities in 35 countries and an employee base of 50,000.

Bryson said that GKN has turned its traditional reliance of the defense market around from 70-30 percent defense/civil to only 39 percent of turnover today. That change happened in the last decade. However, the company is far from shunning the defense market, it has just reacted quickly to the downturn in defense spending.

Military sales are predominantly split between the United States (26 percent) and Europe (13 percent). Bryson said that the company was benefiting in the U.S. from being involved in multi-year programs such as Bell/Boeing’s V-22, Sikorsky’s UH-60 Black Hawk and in the ongoing development of its heavy lift helicopter, the CH-53K (for which GKN builds the rear fuselage). “Being with mature and multi-year programs is a good place to be,” he said. GKN’s income from these programs will be steady throughout during the acquisition of each aircraft: around $3 million for every CH-53K and just under half a million for each V-22 and UH-60.

Byson stated that the value of the defense business to GKN has risen from around $700 million in 2003 to $3.5 billion today. However, he did not see any upturn in defense spending for the next four or five years, particularly in the company’s main markets. The company has been a supplier of parts and components outside of Europe to other OEMs including India's Hindustan Aeronautics Limited (HAL).

The company is also working with Bell Helicopter on the 525 Relentless program, providing metal and composite panels and parts. Having also supplied Eurocopter with parts and components, more recently witnessed in an order for self-sealing fuel tanks for the upgraded UK Royal Air Force Puma II helicopters, GKN is both optimistic and cautious about new helicopter developments.

Although Bryson would like to see GKN involved in the future Armed Aerial Scout and Joint Multi-Role (precursor to Future Vertical Lift) developments for the U.S. Army, he is aware that relationships with all the OEMs need to be handled carefully. As far as current progress goes, “we are behind closed doors on future discussions” was all he would say.

Related: Airframe News

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