Abu Dhabi's Strata Plans U.S. Expansion to Serve Customer Boeing

  • U.A.E. plane-component maker starts 1-year study of U.S. move
  • Strata looking at U.S. partnership, outsourcing in Morocco

Mubadala Development Co.’s Strata aerospace-manufacturing unit is evaluating expansion in the U.S. through another plane-parts maker and is undertaking a one-year feasibility study of a move that would enable it to produce larger, more complex components.

Strata, which has $7.5 billion worth of orders from Boeing Co. and Airbus Group SE until at least 2030, is seeking to cut shipping costs by locating closer to its U.S. customer, and would look at setting up manufacturing there in five years, Chief Executive Officer Badr Al Olama said in an interview in Abu Dhabi.

Al Olama spent a recent trip to the U.S. “assessing what each state offers in terms of opportunity, whether it be some other aerospace company, whether it be some R&D facility, whether it be universities,” he said, without specifying potential partners or products.

Strata is the Persian Gulf’s only producer of aircraft components and is part of the United Arab Emirates’ efforts to diversify its economy away from oil. The division of Abu Dhabi’s state investment company Mubadala started operations in 2010 and makes composite parts for wings and tailfins, including flap track fairings for Airbus’s A380 and A330 models and vertical fin ribs for the 777 and the 787-9 Dreamliner built by Chicago-based Boeing.

The company, which wants to expand into making larger sub-assemblies for aircraft, would face competition in the U.S. from established manufacturers including Wichita, Kansas-based Spirit AeroSystems Holdings Inc. and local aerospace operations of Redditch, England-based GKN Plc, Al Olama said.

Strata has a target of breaking even in two years and more than doubling revenue to 1 billion dirhams ($272 million) by 2020 from 400 million dirhams this year. It plans to build a second plant next to its current factory in the emirate of Al Ain that would start operations by early 2019. To cut costs, Strata is looking to South Asia for new suppliers of raw materials currently obtained in Europe, and the feasibility study will also consider contracting out some work in Tunisia or Morocco, Al Olama said.

“The past five years were about building credibility,” he said. “The next five years are all about competitiveness.”

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