Demand for Composites to Surge

Demand for composite material is predicted to double by 2015, which is leading to major investments from aerospace manufacturers, as well as numerous mergers and acquisitions (M&A), according to a new report from Catalyst Corporate Finance and Ricardo Strategic Consulting.

 

The penetration of composite material is increasing due to the demand for high-strength lightweight material and improved fuel efficiency.

 

The use of composite has increased in the aerospace sector; recently, the new Airbus A350 XWB, an aircraft developed with a high proportion of composite material, completed its maiden flight.

 

In the aerospace sector, the market for composites will continue to surge and is estimated to be worth US$4.1 billion by 2016.

 

The demand will be driven by increasing passenger traffic, which will support major aircraft build programs and demanding production rates, with continued development of interiors, comprising a large number of GFRP components. In addition, with a need for OEMs to increase fuel efficiency, carbon-fiber-reinforced polymer (CFRP) is becoming an increasing share of structural weight.

 

The demand also will be fuelled by developments in combat aircraft, such as Lockheed Martin's F-35 Joint Strike Fighter, which is manufactured using around 30% CFRP, according to the report.

 

This increasing use of composites is affecting the market in other ways, with strategic buyers using acquisitions for growth to expand into higher-end markets and gain access to new processes and technologies.

 

In addition, companies are implementing a vertical integration strategy to safeguard their position in the supply chain, another feature of recent M&A activity.

 

The report states that the drive toward increased use of composites across a range of sectors, mergers, and acquisitions was expected to continue to reach record levels over the next few years.

 

Catalyst Corporate Finance partner Mark Humphries says that the driving force behind this trend would be raw materials manufacturers looking to secure component production capacity, alongside OEMs that will be leveraging partnerships to access key technologies.

 

"We expect to see not only trade buyers active in the market, but increasing interest from private equity, who will see the sector as an opportunity to develop, buy, and build platforms or acquire businesses to build their portfolio in the sector," Humphries says.

 

The research report has been put together by Catalyst Corporate Finance and Ricardo Strategic Consulting, with contributions from National Composites Centre (UK).

 

Catalyst is an international corporate finance advisor specializing in company sales, acquisitions, private equity, and debt-funded management buy-outs.

 

Ricardo Strategic Consulting, part of Ricardo, is a consultancy for engineering, technology, project innovation and strategy. It offers services to transportation original equipment manufacturers, supply chain organizations, energy companies, financial institutions, and governments.