Safran Strong.jpg KLM

Safran Strong

French supplier standing up to OEM in-sourcing challenges.

Among the prime targets of the recently unveiled seating joint venture between Boeing and Adient is Safran, which is in the process of closing its acquisition of interiors specialist Zodiac Aerospace. If Safran CEO Philippe Petitcolin is nervous, he's masking it well.

"It's another competitor," Petitcolin told analysts on a recent earnings call. One that, in his view, has the disadvantage of also being in the aircraft-manufacturing game.

"Don't forget one thing: most of the [interiors] business is coming directly from airlines," he pointed out. "And usually, the airlines like competition, and they like to discuss directly with the seat manufacturers. How they're going to be more open to discuss with the OEM on seats, I'm not sure."

The threat of Boeing and Airbus moving deeper into their supply chains and pulling work back in-house—eyeing both manufacturing and aftermarket benefits—has top-tier suppliers on alert. In cases where intellectual property is the result of years of development, such as aircraft seats and complex structural parts, suppliers believe they will fare better than, say, in the build-to-print area, where parts are made to specs supplied by the OEM.

"Yes, there is a risk" in OEMs seeking to build more of their own components, Petitcolin said, "but it's also an opportunity. As long as you work with them, as we've seen with Airbus, it's an opportunity to create even more value for [us]."

Safran recently scored a notable win when Airbus extended its agreement to source A320neo-series Leap engine nacelles from the French supplier. The move comes amid Airbus's efforts to in-source nacelle work under the aptly-named "nacelle in-sourcing" project.

The project is more than a research-and-development exercise: Last year, Airbus said it would pull in some nacelle work on the Pratt & Whitney geared turbofan-powered A320neos.

Safran remains steadfast in its ability to thrive in the changing environment.

"Innovation, research and technology, spend a lot of money, make proposal to the customer, upgrade your products, propose new product," Petitcolin said. "It is really the only answer you may have in order to avoid that our customers be tempted to integrate vertically systems and equipment."

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