The Aerospace industry has been consolidating for over 30 years; currently over 80% of industry revenues goes to the largest 20 companies (not 20%)! The critical mass for a small supplier has increased from $10 million revenues for a piece parts manufacturer to $40-$50 million for a subassembly provider while the number of suppliers has been reduced by 80%.
While the industry is considered large, mature, and slow growth from a total revenues perspective, the technology base remains extremely dynamic driven by: (a) the need for quieter and more fuel efficient commercial aircraft, (b) the need for advanced defense capabilities (unmanned vehicles, intelligence gathering, threat detection, stealth, delivery systems, C4ISR, batteries, sensors, etc.), and (c) the growth of mission specific small sats in the space sector. In addition, there has been a wholesale change of materials technology from metal to composites requiring a completely new supplier base. In the past 20 years, the use of composites has grown from less than 15% to over 70% of airframes (by weight).
As a result of these supply chain dynamics, OEMs are now offering long term commitments and multiple program buys to suppliers in exchange for committed productivity (price) improvements.
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