Doncasters sees soft landing in 2013
Record numbers of new aircraft orders, particularly for commercial jetliners, have driven expansion at aerospace precision components and assemblies manufacturer Doncasters (Hall 4, Stand G10). Furthermore, under the new ownership of Dubai Investment Capital (DIC), the UK company is better positioned to invest in its future, according to group chief executive Eric Lewis.
Lewis sees business expanding over the next five years and hopes for a soft landing after 2013. However, one key unknown factor is when U.S. major carriers will require aircraft and how many they will need.
“DIC has been ultra supportive, has encouraged investment and has approved our five-year plan,” said Lewis. In 2006, the Arabian Gulf venture capital fund acquired Doncasters from Royal Bank of Scotland (RBS) Equity Finance for more than $1.3 billion.
Recognizing that the 2006 deal was between two venture capitalists and that Doncasters had been “bought to be sold,” Lewis has welcomed DIC’s less urgent strategy. “They will take a three- to five-year view, rather than look only to the next quarter’s results as would a public company,” he predicted when DIC stepped in.
Now Doncasters is “moving toward” a potential initial public offering of shares early in the next decade, when Lewis expects DIC will retain “a significant proportion” of the company’s stock. Meanwhile, he said he “couldn’t wish for better support in developing a proper rationale” for investment in the business.
DIC has approved the “vast majority” of planned capital expenditure and “most is in place” as Doncasters continues a $30 million expansion at its Blaenavon plant in south Wales, with the creation of 125 highly skilled jobs. The exercise in post-cast processing work is in addition to a previous $8 million investment to develop the company’s engine ready-components strategy.
Doncasters also is investing some $70 million in its gas turbine vane and multi-vane casting operation at Droitwich in central England. The company is spending nearly $20 million more on new five-axes digitally controlled “machining centers.” Altogether, it plans some $240 million of capital expenditure for the next two years, said Lewis. “We see significant growth in industrial gas turbines that will require the extra facilities.”
It has completed the acquisition of U.S. precision components and fastenings manufacturer FastenTech from CVC Capital Partners for almost $500 million and the business already is feeding the bottom line. Lewis said growth has exceeded predictions and the venture has yielded an unexpected $20 million of intra-group sales.
Doncasters’ workforce consists of 7,400 people in China, Europe, Mexico and the U.S., including 1,800 at FastenTech. A recent growth of some 20 percent in employee numbers has been accompanied by a 40-percent increase in revenues, said Lewis.
Conceding that there have been few new aerospace-related contracts recently, he said Doncasters sees “significant opportunities” arising across the group businesses from the delayed Airbus A380 and Boeing 787 programs, and it has reorganized its budgets to accommodate the extended gestation of the two new jetliners. The company provides 787 auxiliary power unit components, as well as forgings, casting, rings and casing for its Rolls-Royce Trent 1000 engines.
Doncasters’ forgings and casting operations are benefiting from the production ramp-up of the A380. In fact, delays in the program gave it more time to redevelop its production capacity.
The company is benefiting similarly from slippage in the A400M military transport project.
Other civil aircraft work includes ongoing development of stainless steel brake torque tubes for Dunlop Aerospace Braking Systems’ contribution to Embraer’s Phenom 300.
Doncasters recently appointed an energy director as it works to improve efficiency. Despite airlines facing credit cost or fuel price pressures, the company is not being pressed by aerospace manufacturers to reduce prices, although it is certainly can’t raise them, acknowledged Lewis.
The company also is active in component manufacturing for both aircraft engines and industrial gas turbines. Customers include Alstom, General Electric, Pratt & Whitney, Rolls-Royce, Siemens and Snecma.
Doncasters’ core manufacturing processes include precision casting, forging, fabrication, machining and production of super alloys. It also manufactures turbine airfoils, rings and casings, structural castings, compressor airfoils, turbine engine combustion components, fabrications and exhausts. It also produces airframe aerostructures and components, turbocharger compressor and turbine wheels.