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Summary
The global aeronautics subcontracting market, a critical component of the sector's value chain, has been experiencing significant developments and challenges in recent years. As of 2020, early indicators pointed to difficulties for French suppliers and subcontractors, particularly due to the suspension of Boeing 737 MAX production which affected around twenty French companies. Despite this, the civil sector, predominantly dominated by Airbus and Boeing, remained a major contributor to the industry's turnover, with Airbus outperforming Boeing in terms of orders, especially after Boeing failed to secure any new orders in January 2020 for the first time since 1962. Moreover, within the military segment, the French aeronautic industry, supported by the government, has seen growth through sales of the Rafale fighter by Dassault Aviation, expected to benefit 500 French companies. On a regional level, Occitania and New Aquitaine housed 28% and 13% of the aeronautics employment pool respectively, signifying the geographical concentration of the industry. Subcontractors are also facing an increased need to invest in new technologies, such as 3D printing and automation, to keep pace with production demands. Despite growth in turnover, companies like Latécoère are recording net losses due to the heavy investment required to meet these demands. Regulatory changes and trends towards relocating production abroad continue to shape the market landscape, as reflected in a new production site opened by Safran in Poland in 2018 and the ongoing search for cheaper labor and skilled personnel abroad..Title: The Soaring Trends in the Aeronautical Subcontracting Market in France In recent years, the aeronautical subcontracting market has shown a dynamic but complex landscape, with several key trends shaping the industry. Subcontracting plays a crucial role in the aeronautics sector, with a significant portion, estimated between 70 to 80 percent, of the sector's added value coming from a vast pool of companies ranging between 10,000 and 20,000 in number. An essential factor influencing demand within this market is the volume of aircraft orders from major aircraft manufacturers. Although there was a slight decline in orders in 2019, the medium-term outlook expects absorption of these numbers. France, in particular, stands proud as a leader in the aeronautical subcontracting market. Despite fierce competition with global giants such as the American conglomerate United Technologies and the UK's Rolls Royce, the French market thrives with significant players like Thalès and Safran demonstrating robust performance. The overall market value of the global aeronautics industry was around 838 billion in 2018, constituting an estimated 26 percent from subcontractors and suppliers, approximately worth between 200 and 250 billion. The United States held the lion's share of this market at about 49 percent, while France stood strong with an 8 percent share, making it the second-largest player in this domain. In France, the aeronautical and space sector's national production in 2018 was nearly 97.3 billion, representing almost half of the total production in the European Union, including Great Britain. This production is primarily driven by the civil sector, which accounts for about 78 percent of turnover. Notably, equipment manufacturers contribute around 37 percent of this turnover, while engine manufacturers hold roughly a 15.5 percent share. The employment landscape within this sector also reflects its substantiality, generating nearly 187,000 direct jobs in France as of 2017. Recruitment drives continue to strengthen the workforce with engineers and managers making up around 42 percent of new hires, indicating a strong demand for high-skilled labor. However, challenges such as adapting to increasing production rates, quality control rigidity, and commercial pressures on pricing persist across the industry. With the production equipment nearing capacity limits and difficulties in recruiting skilled labor, the market is in a state of flux. On the one hand, companies are investing in new technologies such as 3D printing and augmented reality, while on the other hand, there are.### Prominent Players in the Aeronautical Subcontracting Sector The aeronautical subcontracting market features a diverse array of companies, specializing in various aspects of aircraft production and supply. Contributing to the robust ecosystem of aeronautics, these enterprises stand out for their technical expertise, strategic partnerships, and contributions to the industry’s value chain. **Thales** sits at the forefront of avionics and equipment manufacture, providing sophisticated technology solutions globally. Their wide-ranging product portfolio covers everything from advanced radar systems to cockpit electronics, catering to both civil and military aviation demands. **Safran** is another industry behemoth, operating across several domains including aerostructures, engine parts, and avionics. Known for technological innovation, Safran has a comprehensive product line that extends to interior equipment and landing gear systems, underscoring its diverse capabilities within the aeronautics sector. The American multinational **Honeywell** is renowned for its avionics provisions, interior fittings, and engine components. They have made a name for themselves by delivering an array of advanced systems that greatly enhance aircraft efficiency and performance. **Mechachrome**, while smaller in comparison to giants like Thales and Safran, is well-regarded for its specialization in aerostructures and engine components. The company is known for precision engineering and plays a crucial part in the supply chain for both civil and military aviation components. **Figeac Aero** has carved out a niche in aerostructures, engine parts, and landing gear. With a reputation for high quality and reliability, Figeac Aero is a trusted name in the manufacturing of complex aeronautical components. **Latécoère** is an established supplier in the realm of aerostructures and avionics. Their technological prowess in electrical distribution and data transfer systems puts them among the important cogs in the massive wheel of the aerospace sector. **Stelia Aerospace**, a subsidiary of Airbus, demonstrates strength in aerostructures and interior equipment. Their expertise contributes significantly to the family of Airbus aircraft, integrating high-end cabin and cargo solutions that align with quality and luxury. **Le Piston Français (LPF)** is a key player in the domain of subsystems and engine parts. Despite being a medium-sized enterprise, their high-quality mechanical part production is critical to the functioning of more prominent manufacturers’ supply chains. **LISI**, another major player, operates across the spectrum of aerostructures, interior equipment, and engine parts. Their commitment to cutting-edge technology ensures
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- Number of pages : 30 pages
- Format : Digital and PDF versions
- Last update : 30/01/2024
Summary and extracts
1 Market overview
1.1 Presentation
Defined by the French Standards Association (AFNOR) as "the operation by which a contractor subcontracts, under his responsibility, to another person called a subcontractor, all or part of the execution of the contract of enterprise or of the public contract concluded with the contracting authority", subcontracting is part of a determined production cycle as well as the technical specifications required by the principal. as defined by the " Association Française de Normalisation"(AFNOR), subcontracting is subject to a specific production cycle and technical specifications laid down by the client. Subcontractors are organized by tier, corresponding to a value-added flow logic. Aeronautics subcontractors and equipment suppliers together account for 70% to 80% of the sector's added value, and represent a pool of 10,000 to 20,000 companies.
The activities of aeronautical subcontractors logically depend on the dynamism of aircraft orders from the world's leading aircraft manufacturers. By 2022, the industry will have achieved sales of over 740 billion dollars.
Domestic companies in the sector can also count on a surge in orders for Dassault Aviation's Rafale, which is benefiting engine-maker Thalès, equipment manufacturer Safran and shipowner MBDA in particular.
The aerospace industry as a whole has been severely affected by the Covid-19 crisis since the start of 2020, and is now one of the hardest-hit sectors. Prospects for growth and stability have thus evolved into a deep concern among industry players about the survival of many companies, including subcontractors. Nonetheless, the sector saw a resurgence of activity in 2022, particularly on a local scale. Airbus, for example, outperformed Boeing this year, with 661 deliveries versus 480.
1.2 The global market
Apart from France, which is a world leader across the industry's entire value chain, the aerospace subcontracting market brings together a number of OEMs and engine manufacturers from the four corners of the globe. The American conglomerate United Technologies (***). Aerospace activities account for around **% of this American giant's sales.
Lockheed Martin, ...
1.3 France, flagship of the aeronautics industry
Thalès, Safran, LISI and Latécoère are among the world's leading aerospace suppliers and subcontractors. Total national production in **** amounted to **.* billion euros for the aerospace sector as a whole, or **.*% of total production in the European Union (***). [***]
Production value of the aerospace industry France, Germany and the UK, ...
1.4 Business drivers for aeronautical subcontractors
The table below summarizes the various determinants of aeronautical subcontractors' activities. It should be noted that these determinants are the underlying trends and characteristics of the market, and therefore do not include the impact of the Covid-** crisis (***).
2 Demand analysis
2.1 The two giants Airbus and Boeing
The following graph shows the trend in annual orders for Airbus and Boeing. The influence of the pandemic on the sector is clearly visible. In particular, Airbus received *** fewer orders in **** than in the previous year. For Boeing, a drastic drop in orders is observable as early as ****, caused by the ...
2.2 Military expenditure worldwide
Military aviation is a large part of the French aeronautics industry, accounting for around **% of its output by value. In ****, worldwide military spending reached over $*.* trillion, a figure that has been rising steadily over the past ten years.
Military expenditure worldwide World, ****-****, Billions of dollars Source: ****
In addition, countries contribute ...
2.3 Air freight
Air freight activities within the European Union have made very little progress over the last ten years.
On a global scale, however, air freight transport, measured in billions of tonne-kilometres carried byICAO, has been rising steadily for the past * years, at a compound annual growth rate of +*.**% over the ****-**** ...
2.4 Increase in air passenger traffic
The keystone of the sector, passenger air transport is set to grow over the next few years, rapidly surpassing its pre-pandemic level. This increase in air traffic represents a favorable environment for growth in the outsourcing sector over the next few years.
Air passenger numbers compared with **** World, **** - ****, as % of ...
3 Market structure
3.1 Characteristics of the business fabric in the aeronautics sector
According to Gifasthe aerospace industry generated ***,*** direct jobs in France in **** (***), with engineers and managers accounting for **% of them; employees, technicians, supervisors representing **% and skilled workers **%, with **,*** people recruited in **** and *,*** new positions created. In ****, the sector has recruited nearly **,*** additional people.
The job pools are **% in Occitanie (***), there is a ...
3.2 Value chain
The aeronautics supply chain involves several thousand companies, from parts manufacturers to maintenance and repair operators.
Parts manufacturers: IHI, Meggitt, ITP Aero, L* Technologies Sub-system manufacturers: Mitsubishi Heavy Industries, Kawasaki, TAI, GKN Aerospace Equipment and engine manufacturers : Thalès, Safran, UTC Aerospace Systems Aircraft manufacturers: Airbus, Boeing, Dassault Aviation Customers: AirFrance ...
3.3 Challenges for the subsidiary
Subcontractors often find it difficult to adapt to the demand for higher production rates, shorter delivery times, uncompromising quality control and downward pressure on prices. Manufacturers suffer "the scissor effectthe "scissor effect" of lower production rates for older programs, before benefiting from the ramp-up of new programs (***).
An overheated production ...
3.4 Outsourcing geography
Offshoring...
To minimize production costs and find new pools of skilled personnel, industry players often relocate part of their production abroad. On July *, ****, SAFRAN opened a new production site in Poland, for a total investment of €**m. This new plant employing *** people focuses on the production of a single part: low-pressure ...
4 Offer analysis
4.1 The challenge of supplier ramp-up
Growth in the aeronautics market goes hand in hand with the need to increase the production capacities of the various suppliers in the aeronautics value chain. For Airbus deliveries, for example, the production rate of Tier * suppliers is still the limiting factor. [***] But it is above all SMEs that suffer from ...
4.2 Main expense items
Change in weight of raw materials and procurement, and personnel costs France, ****-****, in Source: ****
In a sample of ** equipment manufacturers with sales between €** and €*** million (***), the weight of raw materials has tended to remain relatively stable. Between **** and ****, this weight increased by just *.* percentage points. In ****, the weight of raw ...
4.3 Lower working capital requirement (WCR)
In ****, the WCR of operators in the same sample fell by *.* days' sales compared with ****. This evolution is explained by a decrease in customer lead times and an increase in supplier lead times. However, inventories at these same companies increased in ****.
[***] Customer, inventory and supplier lead times for aeronautical equipment France, ...
5 Regulations
5.1 Legislation on subcontracting
In France, Law no. **-**** of December **, ****, on subcontracting, sets out the terms of organization between subcontractors and subcontracted parties. This law has been successively consolidated by several other laws and ordinances, the latest being ordinance n°****-**** of November **, ****, laying down the legislative part of the public procurement code. This ...
5.2 The EN9100 standard
This quality standard was recently revised for the entire aeronautical sector. This iinternational standard, the most widely used in the aerospace sector, aims to take better account of the constraints weighing on the subsidiary's players, while guaranteeing ever-greater aircraft safety.
Among the major changes, the responsibility of each company is reinforced ...
6 Positioning the players
6.1 Segmentation
The companies listed below represent a cross-section of France's largest aerospace suppliers, equipment and engine manufacturers.
6.2 List of companies included in the statistics
The various statistics concerning intermediate operating balances, working capital requirements and expense items presented in the "Supply analysis" section have been compiled from the financial data of the following companies:
ACE Aéronautique Aero ** Aero Gearbox International Alkan Alsenam Ami Metals France Athos Aéronautique Auxitrol Aviacomp Blanc Aéro Corse ...
- Mecachrome Groupe
- Honeywell
- Figeac Aéro Groupe
- Latecoere
- Stelia Aerospace
- Le Piston Français
- Lisi Aerospace groupe
- Lauak
- Collins Aerospace
- Heli union
- CURTIL
- E.S.P.A.C.E
- GATTEFIN Ets
- Safran Groupe
- Zodiac Aerospace (Groupe Safran)
- INDUXIAL
- NEXTEAM Chatellerault - Ex Mecafi
- Nexteam Ventana
- ROSSI AERO
- Thales
- Sabena Technics (TAT Groupe)
- Expliseat
- Domusa Groupe
- Daher
- UUDS Aero
- Crouzet
- JVGroup - BT2i
- LFG Groupe
List of charts
- Size of aeronautics industry by country
- Aeronautical industry sales
- Breakdown of sales in the defense and aeronautics sector
- Aerospace industry sales
- Subcontracting in the aeronautics industry by company size
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Latest news
Sabena Technics opens new helicopter workshop in Provence - 10/01/2024
- Specialist in civil and military aircraft maintenance
- Following the acquisition of Aéromécanic in Marignane (Bouches-du-Rhône) in 2020, Sabena Technics moves to the Marseille Provence airport
- The group employs over 3,000 people at 18 sites worldwide, and generates sales of 700 million euros.
- strengthened in 2022 by the acquisition of Héli-Union, the supply and maintenance of military helicopters sector representsrepresents more than 450 employees working in Toussus le Noble, Pau, Angoulême and Marignane, and accounts for around a quarter of Sabena Technics' total sales.
Figeac Aero aims to cut costs to reduce debt - 10/01/2024
- Aircraft parts manufacturer Figeac Aero has received financial backing of 58.5 million euros in 2022 from Tikehau Capital for a 26% stake.
- The family of founder Jean-Claude Maillard retains a majority 54% stake in the company.
- Figeac Aero employed 3,200 people at the end of the Covid-19 pandemic.
- By 2023, the company had increased its sales by 21% to 341 million euros.
- Sales should reach around 385 million euros in 2024, and aim to return to its pre-crisis level of 447 million euros in 2025.
- Figeac Aero forecasts annual growth of 10% to reach 550 to 600 million euros by 2028.
- Figeac Aero aims to increase its Ebitda from 13% of sales in 2024 to 16% in 2028.
- Figeac Aero has an order book of 3.7 billion euros.
- Figeac Aero has invested 14 million euros in the construction of a 5,000 m² workshop in Casablanca, Morocco, where it employs 600 people.
- The company opened a plant in China in a joint venture with aluminum manufacturer Shandong Nanshan in 2023.
Crouzet to be acquired by Tikehau - 10/01/2024
- The consortium of buyers is negotiating to acquire 100% of Crouzet, a French manufacturer of mechatronic components based in Valence.
- One third of Crouzet's business is linked to the aerospace industry.
- Crouzet has 1,300 employees.
- The acquisition is expected to be worth around €160 million.
- The company is active in various sectors, including nuclear, medical, rail and automotive.
- Crouzet is present in several countries, including Morocco, China, Switzerland and the United States.
- The company has been in the hands of the LBO France fund since 2017.
BT2i and JVGroup merge aeronautical SMEs - 10/01/2024
- BT2i and JVGroup join forces
- Both companies aim for sales of 100 million euros by 2024.
- Sales of 25 million for JV Group before the takeover.
- BT2i sales of 60 million by 2022.
- JVGroup employs 250 people at three production sites.
- BT2i has 650 employees at seven sites.
- Headcount forecasts for both companies for 2024: approaching 1,000 employees.
Cybersecurity: Thales adds a new string to its bow in record time - 06/12/2023
- Thales has finalized the acquisition of US-based Imperva, valued at 3.6 billion euros, making the group "one of the world's five leaders" in cybersecurity.
- Second largest acquisition in Thales history after the takeover of smart card specialist Gemalto (€4.8 billion in 2019).
- With Imperva, Thales claims to have 5,800 experts in 86 countries in cybersecurity, with sales of 2.4 billion euros in 2024 compared with 1.6 billion in 2022.
- The Group also announces that its Identity and Digital Security branch, which includes civil cybersecurity, biometrics, bankcard and ID document activities, will account for 10% of Group sales in 2024
- Based in San Mateo, California, Imperva generated "over $500 million in sales" annually and employs more than 1,400 people
- Thales has made a number of acquisitions in the cybersecurity sector, including Australia's Tesserent, Spain's S21sec, Luxembourg's Excellium and the Netherlands' OneWelcome.
- With Imperva, Thales becomes a global player in both segments: data security and application security
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the aeronautical subcontracting market | France
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