‘More supplier takeovers to come’

23 February 2010

23 February 2010 | Nick Martindale

Companies in the defence and aerospace sectors are likely to take over key suppliers in an attempt to exert greater control over costs on major projects in the coming decade.

According to a study by consultancy PricewaterhouseCoopers, the pressure to reduce costs will see the firms re-examine their supply chains and attempt to deliver “cross-national synergies”.

Mergers and acquisitions in the sector are likely to be “small and strategic” in 2010, PWC claimed. In 2009 the total number of deals in the sector fell slightly – from 305 to 293 – but the value decreased by 56 per cent to $10 billion.

The trend for buy outs has already begun in the civil aviation sector, the report said. Boeing's purchase of key Dreamliner supplier Vought last year was “indicative of a growing desire by the major producers to exert supply chain discipline and control”.

Other factors likely to lead to takeovers and acquisitions include greater government spending on cyber and border security and growing competition from emerging markets such as China.

Delays to programmes at Boeing and Airbus have prompted a rethink of the trend towards outsourcing and joint ventures that was common for much of the past decade, the study said.

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