The merger between American firms Woodward Inc. and Hexcel Corp. sent tremors through the entire global aerospace and defence industry – not least among trade suppliers and rival companies, since the union could create one of the world's largest aerospace and defence suppliers.
Although the new giant entity is likely to be stationed in Fort Collins, Colorado (US), where Woodward is based, some of you will undoubtedly be aware that both companies have multiple manufacturing sites here in the UK.
The question then naturally becomes: what does this mega merger mean for UK manufacturing?
Image courtesy of Depositphotos.
Reports indicate that an ‘all-stock transaction’ will combine Woodward’s operations with Hexcel, giving the latter a controlling stake in the merged entity which will be called Woodward Hexcel and boast an estimated annual revenue of more than $5bn (£3.8bn).
Woodward Hexcel will ultimately be run by Nick Stanage, the current chairman and CEO of Hexcel Corp.
Risk to supply?
A certain amount of supply consolidation by OEMs (original equipment manufacturer) is, arguably, a good thing because it promotes healthy competition among the select suppliers that one cultivates, potentially driving up production standards and encouraging innovation, while potentially managing the cost to the buyer.
However, there is a trade-off that can occur in choosing less complexity but potentially accepting a higher risk as one’s supply base shrinks and with it the list of possible alternatives should one collapse or for whatever reason fail to continue.
The other obvious supply factor associated with aircraft, aerospace and space industries is the complex and custom manufacturing requirements it bears, from main body sections to microchips. Reducing the number of specialist suppliers in these instances is not always entirely practical, nor a guarantee for stimulation of healthy competition.
Hexcel’s UK presence
Hexcel has manufacturing sites in Leicester and in Duxford near Cambridge. Hexcel Reinforcements UK Limited in Leicester manufacturers composite reinforcements and specialises in the production of lightweight carbon fibre multiaxials and highly engineered glass fibre and aramid fibre non-crimp fabrics.
While Hexcel Composites Limited in Duxford manufactures a range of prepregs (pre-impregnated) – epoxy (a colloquial term for the epoxide functional group), phenolic or BMI (bismaleimide) resin systems that are reinforced with carbon, glass or aramid fibres.
Duxford also manufactures hotmelt prepreg resin films, a range of adhesives, and honeycomb.
Key applications for products made at Hexcel’s Duxford site are commercial aerospace primary and secondary structures, helicopters, defence aircraft and aero-engines.
Woodward’s UK presence
Woodward has manufacturing sites in Gloucester and in Prestwick in Scotland.
Woodward is an independent designer, manufacturer and service provider of energy control and optimisation solutions for aerospace and industrial markets.
The future of Woodward Hexcel’s workforce
As with any significant merger, pertinent questions from personnel surrounding job security naturally arise.
Hexcel were quick to dispel any fears of redundancy or career collateral in the following official statement to its workforce: “We do not anticipate layoffs in our manufacturing operations as a result of the merger.”
While Woodward left the field slightly more open in its own employee announcement: “As with any transaction like this, there will be some changes, but it is too early to speculate about details, as we will be discussing integration plans over the coming months. However, we do anticipate a consolidation of our corporate staffs.”
Adding: “We are committed to a fair and thoughtful integration process and to treating members and employees from both companies with respect and transparency.”
Woodward also said it does not expect the merger to impact its facility footprint.
The all-stock merger is expected to be finalised in the latter half of 2020.