Senior to Expand Thai Plant as Boeing, Airbus Seek Lower Costs

Senior Plc (SNR), a British maker of plane parts, will expand a production facility in Thailand as biggest customers Boeing (BA) Co. and Airbus SAS seek lower supply-chain costs and a bigger presence in emerging markets.

“What we are looking to do in Thailand is make it a full aerospace center,” Chief Executive Officer Mark Rollins said today in a phone interview. Investing in the facility, acquired as part of the purchase of fellow British plane-part maker Weston in 2011, will help to lower manufacturing costs and strengthen ties in high-growth Asian markets, he said.

Boeing and Airbus are seeking to cut costs as airlines struggling to make a profit demand better deals for new planes. Chicago-based Boeing CEO Jim McNerney has said suppliers that fail to comply with the strategy may be dropped.

“Airlines historically have not made much money,” Rollins said. “So Boeing and Airbus have had to be more competitive with their new narrow-body planes and because of that they are seeking for their supply chain to be more competitive.”

The Thailand facility, which historically made parts for British engine-maker Rolls-Royce Holdings Plc (RR/), has won additional business from Munich, Germany-based MTU Aero Engines AG and will also provide parts for the much-delayed Boeing 787 Dreamliner, Rollins said. The site will take on new work rather than business from other Senior locations, he said.

Topline Growth

Senior first-half revenue increased 6 percent to 399 million pounds ($614.7 million), the Rickmansworth, England-based company said today in a statement. Adjusted operating profit, excluding a write-off related to an acquisition, rose 5 percent to 53.3 million pounds. The company’s shares fell 3.1 percent to 264 pence as of 12:02 p.m. in London, paring this year’s gains to 32 percent.

Sales growth has been propelled by rising demand from Boeing and Toulouse, France-based Airbus, part of European Aeronautic, Defence and Space Co., for tubing, de-icing systems and other engineering products, Rollins said. Dreamliner production will reach 12 planes a month in 2016, compared with 10 a month by the end of this year, Senior said in the statement.

The company has increased its exposure to manufacturing of the A320, Airbus’s most popular plane, by 50 percent in recent months, Rollins said. Senior has also generated sales from production of the Boeing 737 and the Airbus A350 long-range jets, he said.

The company will continue to seek one or two small acquisitions a year to augment organic growth, Rollins said. Its composite aerostructures operations could be expanded in this way as those parts are increasingly used on new planes to reduce fuel consumption.

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To contact the reporter on this story: Robert Wall in London at rwall6@bloomberg.net

To contact the editor responsible for this story: Benedikt Kammel at bkammel@bloomberg.net

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