Business & GA, Commercial

Opportunity Knocks

By Bill Carey | February 1, 2009
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Amidst the doom and gloom of the global financial meltdown, there are discernible signs of movement, at least within the avionics industry.

In the stagnant economy we’ve inherited from Wall Street, companies can choose either to hunker down, contain their costs and wait for an upturn, or reach out. As this month’s Industry Scan section reveals, a number of avionics and affiliated companies are doing the latter — enlarging their footprints in key growth areas.

You wouldn’t think this is a time for mergers and acquisitions, yet we have several to report. Teledyne Technologies acquired data-loading equipment and portable maintenance access terminal provider Demo Systems, of Moorpark, Calif., for an undisclosed price, adding to Teledyne’s "total aircraft information management" portfolio. EMS Technologies agreed to buy Formation, of Moorestown, N.J., a manufacturer of servers, airborne wireless networks and other products, for $40 million. "Acquiring Formation signals EMS’s continued investment in its aero-connectivity strategy to become a more comprehensive solutions provider," said Paul Domorski, EMS Technologies president and CEO.

TransDigm Group bought Aircraft Parts Corp. (APC), of Holtsville, N.Y., from Unison Industries for $68 million, the latest in a string of acquisitions. APC designs and manufactures starter generators, generator control units and components for turbine engines. Ducommun Inc., parent company of avionics switch manufacturer Ducommun Technologies, acquired DynaBil Industries, of Coxsackie, N.Y., for $46.5 million. DynaBil supplies titanium and aluminum structural components and assemblies for aerospace. The acquisition broadens Ducommun’s capabilities as a supplier of aerostructures.

Just in time for our Connectors Product Focus this month, Delphi Connection Systems announced an agreement with JR Aero Services, of Cincinnati, to offer data connectivity products to the airline and corporate markets. That one gave me pause, as I associate Delphi mainly with the automobile industry. With sales of $22 billion in 2007, the former General Motors Corp., electronics and parts supplier, in bankruptcy since 2005, is among the world’s largest in that area.

In a telephone interview, Tim Ross, global director of sales and marketing, and George Bach, marketing strategist, retraced Delphi’s history of providing wiring harnesses and connectors for commercial and military aviation. The company’s group in Irvine, Calif., formerly was known as Packard Hughes Interconnect, and before that, Hughes Interconnect.

"There’s a lot of history within that group with the airline industry, so you don’t have a bunch of automotive guys out there trying to figure out how to service the military/aerospace market, because there is a very strong heritage that goes back 25 years," said Bach.

The partnership with JR Aero is geared toward another growth area — inflight entertainment (IFE) — and promoting Delphi’s wiring and connection products for USB, Ethernet and IEEE 1394 applications in aircraft. "The newest product that we’re talking about today is data connectivity and it’s really been a consumer-driven business," said Ross. "I think probably the first impact we’ve seen has been in the automobile market… but we’re also seeing the demand for it in aviation, in the marine market [and] in the agricultural and leisure markets as well."

This may be the greatest financial crisis since the Great Depression, but IFE system providers are still scoring touchdowns. In November, British Airways placed a "multi-million-pound" order for the Thales TopSeries audio/video on-demand system for new Airbus A380s, Boeing 777-300ERs and 787s. Thales, Panasonic Avionics and Rockwell Collins have ventured beyond widebodies to offer advanced IFE systems for narrowbody and regional aircraft.

Therein lies an opportunity that has drawn Delphi for the first time into the aircraft cabin data-connectivity market.

"On the one hand, Delphi has a roadmap for expansion into adjacent markets, leveraging a lot of the technologies they’ve developed for the automotive industry," said Bach.

"But at the same time, consumers have also been driving this issue, specifically in the airline industry. It’s a mirror image of what the automobile industry went through four or five years ago, when consumers insisted on having the opportunity to connect their portable devices in their vehicles. The manufacturers were caught a little flat-footed because they didn’t have the answers."

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