No business can be said to be recession-proof but Warwickshire-based Umeco has more cause than most to be optimistic. Duncan Tift talks with chief executive Clive Snowdon to find
out why.
Umeco is a leading international provider of supply chain and advanced composite materials primarily to the aerospace and defence industries.
The majority of these products and services are supplied to major customers including Rolls-Royce, BAE Systems, Smiths Industries, Goodrich Aerospace, Boeing, Airbus, Lockheed Martin and the US Department of Defence.
The Leamington Spa-based group is managed through two divisions – Supply Chain and Composites– and generated revenue in the year to March 2007 of £333.9 million.
The group, which employs 1,600 people globally, has facilities throughout the world, including the UK, North America, Europe, China, Singapore and South Africa.
Much of its success is due to the healthy condition of the global aerospace sector which has seen massive orders placed with leading manufacturers and pioneering development work in the use of new materials.
“We are still seeing double-digit growth and despite the current climate we expect this to continue,” says chief executive Clive Snowdon, picking up the story.
That growth is driven by several factors. Firstly, around 70 per cent of all Umeco’s business is derived from the civil aerospace market and with Boeing and Airbus saying they have something like a seven-year backlog of work– equivalent to around 7,300 planes – then suppliers are confident of work for some time to come.
Added to this, there has been a huge increase in new orders and the companies expect to deliver around 950 planes this year – this compares with 831 in 2006.
Long-term prospects are strong because of the level of economic growth in the Middle East, Asia and China. Many so-called legacy carriers – usually national airlines – will also be looking to update their fleets with more modern, efficient aircraft.
Many of these will be manufactured using revolutionary carbon-composite materials, which are lighter than traditional materials and together with new-generation engines can produce more fuel-efficient aircraft.
Umeco is helping to pioneer the use of such materials and the enlightened approach is paying dividends in terms of orders. “The high price of oil is helping to make composites a far more attractive proposition,” says Mr Snowdon.
One aircraft to feature the new materials is the Boeing 787 Dreamliner. The much-delayed project is expected to be completed by quarter four of 2009 when the first of the new planes will be delivered.
There is much riding on the project for the Seattle company, which has suffered a series of setbacks recently, notably the loss to Airbus of a major tanker contract to the US Air Force.
The figures involved are mind-boggling. Boeing is thought to have orders for around 900 of the revolutionary aircraft, each costing $200 million.
“Once this has started to feed into the industry then it is going to have a major impact,” says Mr Snowdon. “The sooner this gets going the better as far as we are concerned because it is likely to sustain our business for some time to come.”
Airbus also has a backlog in orders of 189 for its new super-jumbo, the A380. “As more of these get into fleets, then again we will see our business grow,” says Mr Snowdon.
Umeco – through its AGC (Advanced Composites Group) subsidiary – is one of a number of firms joining Airbus in a major £103 million collaborative research programme to develop the Next Generation Composite Wing (NGCW). This will be crucial to the plane maker and it is thought that the system will be used on the replacement for the A200 series and A320.
The Government is contributing half the cost for what is seen as one of the most significant joint aircraft research and technology initiatives in the UK for decades.
NGCW brings together 16 British industrial companies and research bodies on the three-year programme. In addition to Umeco, the list includes Redditch-based GKN, Goodrich Actuation Systems, which has a major operation in Coventry, defence group Qinetiq, GE Aviation and eight regional development agencies.
According to Mr Snowdon, the partnership involvement is a considerable boost for the firm. “This puts us at the top table and we are very excited to be a part of it,” he says.
To maintain its position at the head of the pack, the company is recruiting new engineers to work at its R&D centre in Derbyshire and it will be key in NGCW development. The work will bring major benefits in terms of more fuel efficient aircraft – both in the civil and military fields. The technology will be applied not just to medium-sized airliners, but also in business jets, transport aircraft and possibly military jets. Aside from this, Umeco is also benefiting from a major extension of its parts supply contract to aero engine manufacturer Rolls-Royce.
The deal, agreed last year, has taken the existing contract to 2015. The work is being managed by Pattonair from its new £7?million facility in Derby.
According to Mr Snowdon, who was the recent recipient of the Entrepreneur of the Year title for his work in transforming the fortunes of Umeco over the past decade, the only thing that would dent the firm’s confidence would be a fall in orders for both Boeing and Airbus.
Considering the demand for their products, however, this would appear unlikely.
