Will Airbus and Boeing force their suppliers to merge?
Airbus and Boeing are reportedly pressing their suppliers to merge, reports Bloomberg. The hope is that consolidation will drive down production and research expenses.
Mergers in the sector, worth about $40 billion in sales according to Deloitte LLP, would help make bigger assemblies, paring costs and raising production quality, said Louis Gallois, chief executive at Airbus parent company.“Boeing, Airbus and the other airframers are looking to consolidate their supply chain, and we’re getting back into acquisition mode now, doing some research,” said Jerry Goodwin, CEO for aerostructures at Senior, which makes parts for planes including Boeing’s 787 Dreamliner. “We have the equity to make purchases.”
I wonder whether the trade is a shift in leverage toward the remaining suppliers. GKN, for example, is considered a "small" supplier, yet it already has a market capitalization of around $3.5 billion. Could this be a case of "be careful what you wish for"?
(Click here to view an interview with Airbus CEO Tom Enders at Farnborough.)
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