More Related Content Similar to Rotocraft Sylvia Wower (20) More from Sylvia Wower (18) Rotocraft Sylvia Wower 2. ROTORCRAFT INDUSTRY
© 2009 DVIRC
Strategic
View: • Next generation US military helicopter manufacturers losing ground to Asia and Europe
• Attack, Transport, and Utility Rotary Wing represents 43% (apx. 16,500 units) of total military aircraft fleets
• MRO spending in 2009 for Military Fleet generated $61 billion (38,500 units), expected to grow to $67.5 billion by 2018
• Rotorcraft market is strong, especially compared to declining sales in other aviation sectors
• 2009 Rotorcraft Export: Europe holds 55% of world market ($1.54 billion) while North America holds 38% ($1.071 billion)
Financial
Trends: • The global aerospace and defense market grew by 9.8% in 2008 to $674.6 billion, and is forecasted to grow to $910 billion by
2013
• In 2008, the European aerospace and defense market generated $184.3 billion in total revenue, the Asian market generated
$124.6 billion, and the U.S. market generated $335.9 billion, capturing 49.8% of the global market
• Projected revenue over the next decade for the rotorcraft industry totals $143 billion for turbine rotorcraft and engine deliveries
- $27 billion for Civil airframe value
- $4 billion for Civil engine value
- $104 billion for Military airframe value
- $8 billion for Military engine value
• In 2009, new-build medium/heavy military rotorcraft revenues will be $6.7 billion, projected to be $10.3 billion in 2018
• Sikorsky Aircraft Corporation is expected to account for apx. 33% of the medium/heavy military rotorcraft market during
10-year forecast period
• Eurocopter experienced 30% decline in sales in 2009; lost civil sales being offset by military and governmental backlog
• Boeing Company’s Integrated Defense System (IDS) expects to generate $34 billion in 2009
• 16% of Boeing Company’s revenue is international sales, primarily from Asia and Middle East (expected to grow 20% by 2011)
Macro
Drivers: • The EU is incorporating airlines into Emissions Trading Scheme (ETS) starting in 2012
• Brazil signed a $1 billion contract for new EC 725 Cougars with Eurocopter in Dec 2008 making the Cougar the standard
medium helicopter for Brazilian Navy, Army and Airforce
• France and Germany have an emerging joint requirement for a Heavy Transport Helicopter with a service entry of 2020
• Turkey will be purchasing a fleet of 12 Mi-28 “Havoc” attack helicopters from Russia, and not the US-made Cobra attack
helicopters originally requested
• By 2015 Russia plans to triple its world market share for non-military helicopters to 15%
3. Industry
Drivers • US Military and Congress see the Global War on Terror as “Rotorcraft Wars”
• US Export Control Policy forces foreign competitors to ‘design out’ US components to avoid applying for a US export license
• With a projected production gap from 2019 onwards, US manufacturers will likely need to consolidate due to lack of new
aircraft models in the pipeline
• Fuel as a percentage of total operating expense is expected to drop to 29% in 2009, with alternative sustainable biofuels
identified to reduce greenhouse gas emissions
• Eurocopter’s “Bluecopter” diesel engine concept for light helicopters enhances green performance
- Targeted 40% decrease in CO2
Emission and 53% reduction in Nitric Oxide Emissions
Market
Trends: • R&D focuses on making rotorcraft sturdier, less vulnerable to enemy fire, more fuel efficient, quieter, and faster
• 3,924 medium/heavy military rotorcraft (largest segment) to be manufactured in US from 2009-2018, estimated at $88.1 billion
• Only 13% of helicopters in the DoD have fly-by-wire technology, expected to increase to 35% by 2020
• Smart Materials Actuated Rotor Technology (SMART) being studied by DARPA, NASA, US Army, US Air Force, and Boeing as
a way to improve performance and dramatically reduce noise and vibration
• Technologies focused on hoverability and safe landings in brownout/whiteout conditions being investigated using LIDAR, laser
sensors, and simulation devices
• Honeywell projects 3,500-4,500 new civil helicopters to enter service globally within five years (steady in 2009, but declining
2011 and 2012) with Corporate, Emergency Medical Services, Law Enforcement, and Utility accounting for 80% of sales
• Rolls-Royce expects a slowdown of new civil helicopters in 2009 and then increasing demand through 2013 (9,600 units from
2009-2018)
• In 2009, new civil helicopter purchase fell about 21% globally compared to 2008 levels
• 80% of new commercial purchases will be made to replace older aircraft in the same size/capability and price class, less than
11% of operators plan to trade-up
• Tiltrotor technology being integrated into commercial aircraft market
- Dual certification of AgustaWestland’s BA609 Tiltrotor VTOL Aircraft planned for 2012
• Helicopter Emergency Medical Services (HEMS) sector facing safety and operational issues with 26 risk factors identified
Jobs:
• Strong demand for skilled labor is intensifying, which will in turn increase real wage rates
• Average salary in 2008 was $56,007 and expected to increase to $63,547 in 2012
• Wages will generate some pressure on corporate profits even as production revenue rises
INTELLIGENCE REPORT
© 2009 DVIRC
4. Pricing:
• Rotary wing accounts for 6% of total aerospace raw material demand (56.6 million lbs)
• Aggregate aluminum demand in the aerospace industry will fall below 420 million lbs in 2009, but is expected to increase to
600 million lbs by 2013
• Aluminum pricing will follow domestic aluminum consumption: 9,861 thousand metric tons in 2011, a 4.5% increase from
2009
• Nickel alloy demand will decline by 12% in 2010 to 101 million lbs
• Steel alloy demand will decline from 240 to 215 million lbs by 2010 but is expected to pick up by 2012
• Aggregate aerospace composites demand is 40 million lbs in 2009 and will double by 2015; pricing validity will increase
• Total raw material demand projected to increase at a 4.5% CAGR through 2019; titanium and composites will grow the
fastest
• Jet Fuel pricing is down 26% from 2008-2009 but is expected to level off in 2011
Regional
Focus: • June 2009, US Navy canceled Martin/Agusta Westland VH-71 contract to develop presidential helicopter after budget more
than doubled to $13 billion and was delayed several years
• Boeing Company completed a 6-yr. Army contract (Block I) to retrofit and upgrade 22 Apache Longbow Crew Trainers,
22 Maintenance Training Devices and a Longbow Collective Training System
- Block II includes upgrades to the digital communications systems to improve communications with the ‘tactical internet’
- Block III of the Apache Longbow Helicopter (2008 onwards) includes increasing digitization, joint tactical radio
system, enhanced engines and drive systems, capability to control UAVs, new composite rotor blade, and landing gear
upgrades
• A two-phase Joint Performance Based Logistics (PBL) contract from US DoD awarded to Bell-Boeing for the development
and upgrading of the Osprey Fleet
- Phase 1 ($581 million over five years) awarded in January 2009, provides integrated logistics support
- Phase 1.5 ($11 million) awarded in June 2009, is a modification to an existing contract, designed to implement reliability
improvements on a select number of aircraft components which have been determined to have a significant impact on
mission readiness
- Phase 2 (not yet awarded) will include supply chain management, which encompasses the purchase, repair, stocking and
delivery of approximately 15,000 spare and repair aircraft parts
• Boeing Company and AgustaWestland signed a contract to manufacture and support 16 ICH-47F Chinook helicopters at
Boeing’s Ridley, PA facility for the Italian Army ($1.23 billion), deliveries begin in 2013
• Joint Heavy Lift Rotorcraft program is US Army’s next-generation of rotorcraft to replace Boeing’s CH-47 Chinook, delivery not
expected until 2025
• Subsonic Rotary Wing Technology Development Contract awarded by NASA in February 2009 to Bell Helicopter Textron
Inc., Boeing Co., and Sikorsky Aircraft Corp. for $40 million with a 5-year period of performance
• Piasecki Aircraft Corporation’s “Speedhawk” Vectored Thrust Ducted Propeller (VTDP) Compound Helicopter Program, part
of the Army Advanced Technology Demonstration program to improve future Rotorcraft performance, is now in Phase 2 of flight
testing and modifications
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Source: Bureau of Labor Statistics; Moody’s Economy.com; Lexus Nexus; Integra; Deloitte; Department of Commerce; Global Insight, Inc.; Harvard Business Review; Hoovers; McKinsey Quarterly;
ING Foreign Exchange Wholesale Banking; Economist Intelligence Unit; Edgar; Federal Reserve Bank; PricewaterhouseCoopers Healthcare Indicators; Hospital Statistics; Bruegel Brussels Belgium;
Standard & Poors; Security Price Index; Wall Street Journal; Consumer Confidence Board; EcoTrends 2009.Federal Energy Regulatory Commission; Rolls-Royce Market Outlook; Boeing 2009-2028
Key Indicators; AeroStrategy-Military Maintenance, Repair and Overhaul Market Outlook; AMM (Aerospace Metal) Outlook 2008; Bombardier Aerospace 2007-2008, The Growing Role of Emerging
Markets in Aerospace; ITA Flight Plan 2009; Bombardier Aerospace 2008-2009. Growing Role of Emerging Market s in Aerospace; Aerospace Industries Association; Air Transport Association; FAA
Aerospace Forecast 2009-2025; Rotor & Wing Magazine; Forecast International Market Analysis 2009; Icon Group World Market for Helicopters (2009).
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