In the early 2000s, Airbus and Boeing divested of their aerostructures businesses. This was part of a broader strategy to become aircraft integrators, writes Forbes. However, Airbus has recently reversed this move, as it now considers aerostructures as a core airplane design and manufacturing activity.
The divestitures by the OEMs provided a growth opportunity for tier 1 suppliers, which are companies that provide components and systems to the OEMs. One of the best examples of this is RTX, which has grown significantly through mergers and acquisitions in recent years.
RTX, formerly known as United Technologies Corporation, grew by acquiring Goodrich in 2012, B/E Aerospace in 2017 and Rockwell Collins in 2018. It then merged with Raytheon in 2020. RTX today is comprised of three business units: Collins Aerospace, Pratt & Whitney, and Raytheon.
“While RTX has grown through the larger acquisitions stated earlier, there have also been divestitures including the Collins GPS Military business and the Raytheon airborne tactical radios businesses to BAE Systems in 2020. Forbes reports that RTX CEO Greg Hayes stated, “Of course, our transformation isn’t done. We will continue to develop initiatives to better leverage our scale and breadth and to enable operational excellence and a best-in-class cost structure.”
The trend of tier-1 growth is not new, but it has accelerated in recent years. This is due to a number of factors, including the increasing complexity of aircraft, the need for cost savings, and the desire to gain market share. This growth is transforming the aerospace and defense industry, says Forbes, with these companies becoming more powerful and influential, and playing a greater role in the design, development, and production of aircraft.
Here are some of the key trends in the tier 1 aerospace and defense market:
- Consolidation: The industry is consolidating, as larger companies acquire smaller ones. This is driven by the need for scale and efficiency.
- Innovation: Tier 1 suppliers are investing in new technologies, such as additive manufacturing and artificial intelligence. This is helping them to improve the performance and efficiency of their products.
- Internationalisation: Tier 1 suppliers are expanding their reach into new markets. This is driven by the growth of the global aerospace and defense industry.
- Digitisation: Tier 1 suppliers are using digital technologies to improve their operations. This includes using data analytics to improve decision-making and using 3D printing to reduce costs.
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