CHIEF EXECUTIVE’S REVIEW continued
As well as new aerospace technology gained through the addition of Fokker, during the year we acquired Sheets Manufacturing Inc. which provides us with the opportunity to manufacture innovative lip skin products on an industrial scale. The lip skin technology offers weight reduction and improved aerodynamics, and will be used on the Boeing 737 MAX and other Boeing aircraft. Additive manufacturing (AM), or the 3D printing of metallic components, is increasingly seen as an important new process for most of our markets. We are developing our position in AM and were pleased that GKN Aerospace proved successful in winning its first production orders for parts, which will be used on military aircraft. GKN Powder Metallurgy is now supplying aerospace certified titanium powder from our USbased pilot plant for new AM parts. GKN Driveline’s leading technology was demonstrated when its eDrive axle project won a prestigious Automotive News PACE award, considered to be the industry benchmark for automotive innovation. eDrive axles are a second electrically driven axle which provide all-wheel drive (AWD) capability as well as improved fuel efficiency. GKN Driveline is the leader in that market with
more units on the road than our competitors. eDrive today is a relatively small part of our business, but it is expected to grow as vehicles become increasingly electrified. GKN Land Systems made progress with a new industrial shaft monitoring service and innovative wheel profiles. The progress of the past year could not have been delivered without the tremendous efforts of the whole GKN team around the world. I thank them sincerely for their hard work and commitment.
• In automotive, external forecasts predict growth in global light vehicle production of around 3% with increases in China, North America, Europe and India, while Brazil is expected to show a further sharp decline. Against this background, GKN Driveline and GKN Powder Metallurgy are expected to continue to grow organically above the market. • GKN Land Systems’ sales are expected to fall further due to softer agricultural and construction equipment markets. Although the economic backdrop is uncertain and some of our markets remain challenging, 2016 is expected to be a year of good growth, helped by the contribution from Fokker.
Looking to the future, I am confident that GKN's strategy – which is set out in more detail on pages 6 and 7 of this report – will bring continuing success. As regards the outlook for 2016:
• Aerospace markets generally remain in transition as some aircraft programmes run down and others ramp up. The overall market will be slightly down, according to external forecasts. Against that backdrop, GKN Aerospace’s 2016 organic sales are expected to be broadly flat, although the results will benefit from the contribution of Fokker. In the medium term, our strong commercial order book supports continuing growth for GKN Aerospace.
Nigel Stein Chief Executive
Group strategic progress
The acquisition of Fokker strengthened GKN's progress against all of our strategic objectives.
Leading in our chosen markets Leveraging a strong global presence Differentiating ourselves through technology Driving operational excellence
• Organic wins across the Group and strong sales performances in the automotive businesses. • Further strengthening capacity in Mexico (GKN Aerospace), US (GKN Driveline) and China (GKN Powder Metallurgy and GKN Land Systems). • Acquired Sheets Manufacturing Inc. to provide GKN Aerospace with unique new technology. • Strong progress in eDrive and eAxle developments. • Continued to develop strong position in additive manufacturing across GKN. • Further strengthened the ‘Voice of the Customer’ programme, aimed at improving GKN performance. • Quality and process excellence programmes across the business.
Sustaining above market growth
GKN plc Annual Report and Accounts 2015