Key market drivers
• Continued growth in air passenger traffic. • Development of lightweight materials that improve aircraft efficiency. • Worldwide defence budgets. • Environmental impact reduction programmes. • Increasing products demand in emerging markets together with increasing need for technological capability requires a global manufacturing and sourcing strategy.
• Growth in the commercial • Development of new generation aircraft and aero aerospace market is expected engines that are quieter and more fuel efficient. to continue in the medium term • Cost pressures intensify as a new generation of aircraft but this will be offset in the short completes its development cycle and enters production. term by a further decline in the • Commercial aircraft sales backlog at the principal OEMs military sector. is at an historically high level. • World aircraft production is • Production rates for many commercial single aisle expected to grow at 2% per annum aircraft and the new generation of twin aisle aircraft are over the next five years. rising in response to increased demand. • Airbus and Boeing forecast a • Global competition among aircraft manufacturers and global demand of between 31,000 supply chain continues to develop. and 38,000 large commercial • Focus on robustness of supply chain from OEMs and aircraft over the next 20 years. willingness to insource if necessary. • Military market continues to shrink as F-35 still in initial ramp-up phase and established programmes tail off.
• Increased affluence in developing markets. • Demand for more fuel-efficient vehicles and lower tailpipe emissions. • Increasing demend for electrification in vehicles. • Demand for personal mobility in emerging markets. • Customer and consumer focus on quality and safety. • Move by OEMs towards vehicle platforms that support larger build volumes.
• External forecasts indicate • Global light vehicle production increased by 1.4% in that global vehicle production 2015 to 88.6 million. in 2016 will increase 3.1% to • China’s production growth eased as a result of 91.4 million vehicles. market uncertainty. • Production in Europe increased by 4% due to recovery in • The fastest growth is expected in India at 8.9%, with China Western Europe, which was partially offset by a collapse increasing 5.4% and North in Russia and the rest of Eastern Europe. America 4.1%. Europe is expected • North America’s output increased, boosted particularly to grow at a slower rate, 1.5%. by the build of light trucks. • Brazil is expected to decline by • The fastest production growth in 2015 was in India due 12.7% in 2016. to market recovery. • Japan’s production declined in 2015 due to weak demand following sales tax changes. • Brazil was affected by continuing economic problems resulting in low domestic demand.
• Demand for more efficient agricultural equipment to improve yields and meet an increased demand for food as populations grow. • Regulatory and economic pressures to increase energy efficiency and reduce CO2 emissions. • Infrastructure development and global demand for commodities. • Need for significantly increased safety, operational efficiency and reliability.
• Low commodity prices have impacted most land systems markets during 2015. • The global agricultural equipment market declined in 2015 impacting Europe and, more significantly, the Americas. • The construction equipment market in China almost halved in 2015. • Industrial markets saw growth in renewables, while crane and marine applications saw a decline.
• Agricultural equipment markets are expected to weaken in Europe in 2016, with a further decline in the Americas and a slowdown in growth in China. • Construction markets are expected to decline due to overcapacity and high stock levels. • Most industrial markets are expected to remain flat or fall slightly; wind energy markets are expected to grow.
GKN plc Annual Report and Accounts 2015