Unprecedented opportunities for complex machining, assembly and component suppliers in the aerospace, defense and space industries; JSTAR is a value-add buyer and growth capital partner to the industry.
Buckle up to embark on a jet-fueled journey into the exhilarating, high-precision, not-for-the-faint-hearted world of complex machining and assembly component manufacturing for aerospace, defense, and space. The industry is packed with excitement, dynamism and a whole lot of metal.
SKYROCKETING INTO THE STRATOSPHERE: INDUSTRY GROWTH AND STATS
The trifecta of rising demand for new aircraft, the war in Ukraine and competition with China, and the commercial and military race to space is expected to lift the industry for years to come.
Commercial aerospace OEMs: Boeing, Airbus and the Smaller Whippersnappers.
The big shots, Boeing and Airbus, dominate the commercial aerospace industry and their production rates directly influence the fortunes of component manufacturers.
Boeing plans to crank up '23 monthly production of its 737 MAX to 38 aircraft, attempting to rebound from past turbulence, and by 2026 is targeting reach 50 aircraft per month. The 777 rate isn't bad at 3 per month with a targeted increase to 4 per month by 2026. 787 monthly production sits at 3 per month with a planned return to 5 per month by late '23. The US titan delivered 50 aircraft in May and, as of June '23, has a B737/787/777 backlog of 5,377 aircraft.
Airbus had a flying Paris Air Show, snagging a total of 801 orders, including the largest order ever at 500 from IndiGo. Airbus is revving up production targets as well, aiming to reach 65 aircraft per month by the end of '24 for the A320neo family (with a targeted increase to 75 by 2026), 14 for the A220 family by 2026. Production rates for the A330 are 4 per month and the A350 are 9/mo. The European titan is maintaining its lead over Boeing, having delivered 63 aircraft in May and, as of June '23, has a A320neo/330neo/220/350 backlog of 7,907 aircraft.
And those smaller whippersnappers are also continuing to grow.
Embraer expects to deliver 190 aircraft in 2023, a 20% increase from 2022 deliveries.
GulfStream is expecting to deliver 145 jets this year, up from 120 in 2022.
Bombardier is aiming to deliver more than 138 Global and Challenger jets this year, up from 123 in 2022.
While covid catalyzed a boom in private aviation, '23 trends are declining YOY but expected to remain above 2019 levels.
And don't forget about the eVTOL companies, who to varying degrees are progressing towards certification.
Wham, bam, thank you Uncle Sam; defense budgets around the world just keep growing.
With the 2024 US National Defense Discretionary Spending Request of $886 billion, spending is among the largest sums appropriated since WWII. The requested budget includes $170 billion on procurement for key programs including next generation fighter aircraft, helicopters, tactical combat vehicles, submarines and the nuclear triad; $145 billion in research, development test and evaluation; and $33 billion for space systems. Not to mention replenishment and other potential needs related to the over $100 billion supplemental spending so far on the war in Ukraine.
The other NATO countries have grown their defense spending since 2014 by 30% in constant dollars, resulting in estimated 2022 spend of $353 billion, with $91 billion of that amount spent on equipment. Take a look at the insightful charts below from NATO's website.
Holy Toledo, the space industry is growing.
The space industry generated $469 billion of revenue in '21 according to the Space Foundation, with commercial applications generating 77% of the revenue.
Primary drivers of significant continued growth include reusable launch vehicles, small satellites, and LEO constellations.
A 1Q23 study by Deloitte suggests businesses operating across the space value chain have opportunities to provide value and grow.
And while commercial space applications are the majority of industry revenue, national defense programs and infrastructure are top of mind for countries across the globe, including a $33 billion allocation in the latest 2024 US Defense Spending Request.
FRAGMENTATION GALORE IN COMPLEX MACHINING AND ASSEMBLY
According to McKinsey, the average American aerospace company relies on roughly 200 first tier suppliers and the indirect second and third tier suppliers total to more than 12,000 companies.
That's a whole lot of companies in the supply chain.
And the last years have not been easy. Few US aerospace companies have not been exposed to the 737 Max gyrations. Then add covid. Then add material, processing and other supply chain issues. Then add stretched accounts receivable terms. Then add quickly ramping production rates from OEMs and Tier 1s. That is a whole lot of leadership juggling, production planning, cash management and potential lack of access to capital.
If you are an investment bank or broker representing a complex machining and assembly aerospace/defense/space supplier, or an owner that is thinking about selling or bringing in a capital partner to your business, JSTAR is a flexible solutions-oriented capital and value-add partner. We have had great success in the sector and have tackled almost any problem and opportunity that a company is facing (together with our operating partners). We know how hard it is and what it takes to build a business, and treat your 'baby' like our own. We are unique, we listen, we deliver flexible investment structures that satisfy all stakeholder needs and time horizons that aren't bound by arbitrary institutional buckets, and understand that at the end of the day people really are everything.
Looking for a buyer or capital partner for a #ComplexMachiningAndAssembly component business? If so, contact JSTAR. We understand the complexities of the business and are ready and motivated to work symbiotically with you to provide #CapitalToGrow, #RefineStrategyAndExecution, #CatalyzeThoughtfulEfficiencies, #FixBottlenecks and #MakeLifeEasier for you and your customers, leadership, workforce and suppliers.