As chairman of the Technology Foresight defence and aerospace panel, Dowty Group chief executive and Messier-Dowty chairman, Tony Edwards, knows how to tread carefully while getting his message across.
`The good news is that the Technology Foresight panel has really galvanised the industry’s relationship with the Ministry of Defence. Our objectives are not congruent, but they are overlapping,’ he says.
Now Edwards wants to do the same with the relationship between the aerospace industry and the Department of Trade and Industry in following the Foresight initiative through. In its new call for more Government funding for civil aerospace research and development, the aerospace industry has promised to match what it has asked the DTI to provide.
`What we’re looking for is the DTI putting up their share,’ Edwards says. This would amount to £100m a year, matched by £100m of industry money. The call is now being directed to trade secretary Margaret Beckett, but `in-depth discussions have not taken place yet’, he says.
`All three political parties before the election endorsed the principle behind Technology Foresight, which is that Government, industry and academia work together to develop wealth creation,’ he adds.
If the DTI does not come up with the money then the UK aerospace industry will `decline in the global market’, Edwards warns. He stresses darkly that companies like his have options. `The penalty for the Government is that valuable aerospace engineering jobs can be exported from this country.’
Edwards is in awe of the record of Dowty’s parent, the TI Group. The group’s market capitalisation has risen from £300m in 1986 to £2.5bn this year. The strategy of `bolt-on acquisitions’ with a `focus on a global niche’ has worked well, he says.
Within TI, the Dowty Group has sales of £500m, more or less equally split between the Messier-Dowty joint venture with TI and France’s Snecma, and TI’s wholly owned Dowty Aerospace.
After Dowty’s acquisition by TI in June 1992, non-core businesses – electronics, fuel systems and IT – were sold off, and Dowty’s polymer business transferred to TI’s John Crane Group. Then landing gear was spun off to Messier-Dowty, itself created by selling the Messier side of Snecma’s Messier-Bugatti in the first French aerospace privatisation.
Meanwhile Dowty’s original propellers, hydraulics and actuation business and the former TI Aerospace’s propeller rings and machining business were integrated in the new TI company Dowty Aerospace.
`The cost for Dowty was considerable, with 30% of the workforce laid off, while two layers of management were removed and two head offices in Cheltenham were closed,’ Edwards recalls.
But, as world leader in the sector, Messier-Dowty now has 40% of the global undercarriage market – up from 33% in 1993. `Every four seconds somewhere in the world an aircraft lands on Messier-Dowty landing gear,’ Edwards says.
Of Messier-Dowty’s two big rivals, BF Goodrich’s 30% share fell to 20% in 1996, though Menasco’s 17% tally in 1993 is up to 23% in 1996.
Last week, in a deal worth $70m, Messier-Dowty was chosen to supply the landing gear for the new Fairchild Dornier DO328-300 commuter jet.
Messier-Dowty is now trying to bring down the weight of landing gear, through its `Target’ titanium technology development programme. Another priority is to encourage clients to accept the idea of an off-the-shelf undercarriage.
`Until very recently all landing gear was customised,’ Edwards explains. Now Messier-Dowty is offering generic landing gear for new clients which are effectively ready items. For instance, the Airbus A319, 320 and 321 regional airliners have a common undercarriage.
Edwards says negotiations are now under way for two more common landing gear orders, one `an embryonic possibility for a military project, the other a fairly well developed concept for a civil programme’.
As a leader in specialised aerospace systems, Dowty Aerospace is number two in the world in propellers and claims world leadership in flash-welded ring technology. In hydraulics and actuation, Dowty claims `niche leadership’ in thrust reversers and hydraulic fuses.
At the Paris air show last week Dowty notched up a deal worth $100m to supply the propeller system for Lockheed Martin’s Alenia C-27J Spartan tactical transport plane.
Dowty Group’s future business prospects look good, though there is talk of a downturn in the civil sector. Much could depend on how many older, noisy civil aircraft are replaced. But Edwards points to the reduction in the number of unused civil planes and Boeing’s estimated $1.1 trillion market for new airliners between 1995 and 2015. Edwards highlights the `uncanny correlation’ between gross airliner orders worldwide since 1970 and airlines’ operating profits in that period. Profits are slightly down on their 1995 peak.
The Dowty Group has managed to avoid a dependence on military-related work. Edwards says: `Of the global aerospace market, 80% of our work comes from the civil sector and 20% from the military.’
Future hopes include Dowty Aerospace’s prospects of work from Boeing if its bid for the Joint Strike Fighter wins the contest against Lockheed Martin. This puts it in the opposite camp to BAe, which this week joined Lockheed’s project team.
But hopes like these, Edwards believes, may still depend on a recognition from Government in the UK that aerospace and defence, along with pharmaceuticals, are now the only unambiguous UK industrial success stories and need up-front Government backing – `not subsidies, but a partnership’.