Northwest Aerospace News December 2018 | January 2019 Issue No. 6 | Page 24

T he name on the sign outside may be changing, but the mission won’t. While its parent company has agreed to be taken over by another aerospace manufacturer, the Rockwell Collins plant in Everett, Washington will remain an industry leader in designing, manufacturing and delivering lavato- ries and other interiors components to Boeing and the rest of the aviation world. The planned $30 billion merger of Rockwell Collins and United Tech- nologies Corp. was one of the biggest aerospace supply chain stories of 2018. The expected merger – which still hadn’t closed by the time this issue of Northwest Aerospace News went to press – is expected to create a global Tier 1 behemoth, called Collins Aero- space Systems, with capacity to deliver aircraft parts from nose to tail to its customers, while also delivering an es- timated $24 billion a year in revenues for its shareholders. The deal – which had United Tech- nologies paying $23 billion to buy Rockwell Collins while also assuming $7 billion of its debt – was announced in September 2017. It was originally expected to close in the third quarter of 2018. Regulatory hurdles took longer to complete than expected, UTC offi- cials said in September 2018. As a result, the planned closing date of Sept. 30 passed without any announce- ment of the deal being completed. Delays aside, it’s the kind of Tier 1 megadeal that industry watchers have been expecting. Speaking before last year’s Pacific Northwest Aerospace Alliance annual conference, for example, 24 NORTHWEST AEROSPACE NEWS Teal Group Vice President Richard Aboulafia said that with Boeing and Airbus placing more performance and profit-margin demands on suppliers, the most rational response for compa- nies at the top of the supply chain is to bulk up. Assuming the deal eventually is com- pleted, the new Collins Aerospace will have size, critical mass and a signifi- cant presence in the Pacific Northwest, thanks to a string of previous mergers that involved some other major names in the industry. Bigger suppliers have better bargain- ing power, he said. “Size, more than ever, matters,” Aboulafia said. “Criti- cal mass, more than ever, matters.” United Technologies acquired Goodrich Corp. in 2012, which led to it having three plants in Everett (one doing landing gear, one doing interiors and one doing 787 engine integration and related assembly), plus a carbon brake manufacturing plant in Spokane and an administrative headquarters in Kirkland. Rockwell Collins also has significant Northwest presence, including an electronics assembly site in Redmond, Washington, and a plant in Wilson- ville, Oregon, where it designs and develops heads-up and helmet-mount- ed displays for both commercial and military aircraft. CNBC’s resident stock picker, Jim Cramer, agreed. “Boeing can play off everybody,” he said shortly after the deal was first an- nounced. “But if you own the landing gear, you own the brains, you own the inside, the seating, you can be a player that can say to Boeing ‘We’re not part of your partners’ plan.’” “It changes the balance of power,” Cramer said.