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close eye on the new business unit. The acquisition comes at
a time when Boeing has been venturing into the aftermarket,
with increasing success. The company’s dedicated aftermar-
ket business unit - Boeing Global Services - seeks to achieve
US$50B in commercial, military, and space services revenue in
ten years. This poses a threat to UTC and other players in the
aftermarket field. Airbus too has been pruning its list of suppliers
and has begun to do more of its own work in-house.
In July this year, Boeing formed AvionX, a division that would
focus on the development and production of avionics systems
for navigation, flight controls and information systems. The new
division is likely to face stiff competition from the aircraft parts
giant because of Rockwell Collins’ proven capabilities in the field.
Some experts, including Todd Harrison of the Center for
Strategic and International Studies, believe that the acquisition
is primarily for UTC to entrench itself more in the commercial
aircraft supply market. Any growth in the company’s defence
business, they add, would be a welcome bonus.
Bumpy Road Ahead
he merger creates headaches not just for OEMs but
also companies such as GE Aviation, which will not only
have to compete with UTC for electrical power sys-
Ttems deals but also in the field of avionics. The avionics
market, which the company had entered with its acquisition of
Smiths Aerospace in 2007, now wears a different look, with
plier will a behemoth with annual revenues of competition from not just UTC but also Boeing’s new division.
over US$60 billion, not in the Airbus-Boeing
league but comparable to them. The creation of Collins Aerospace, while denting the market
prospects of companies such as Honeywell, Esterline, Meggitt
UTC subsidiary Pratt & Whitney, which is one and Parker Aerospace, also shows them the possibilities that
of the largest aircraft engine manufacturers, a well-considered acquisition would open up for them. Industry
supplies to Airbus. Embraer and Bombardier watchers say that it would not surprise them if one or more of
as well as the F-35 fighter programme. The them decide that they have had enough of caving in to OEM
Boeing 787 jetliner has a considerable demands for price concessions and decide to follow the UTC
number of UTC power systems and com- model. Clinging to status quo would be suicidal at a time when
ponents, as well as flight deck displays by competitors are innovating and growing; even as it waits for the
Rockwell Collins. The negotiating leverage merger to become official, UTC has quietly gone on to acquire
that Collins Aerospace would enjoy with its Predikto Inc., a fledgling Atlanta-based predictive analytics soft-
sheer size and portfolio breadth is not the ware company that will help it discover and fix problems in its
only reason why Boeing will be keeping a jet engine manufacturing and other industrial businesses faster.
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