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Interview Synopsis

Howmet Aerospace – A&D supplier dynamics

  • Multi Asset
  • Industrials
  • North America

With airlines among the industries hardest hit by the coronavirus pandemic, shocks have been sent through various supply chains. In order to understand the ramifications for Howmet Aerospace, which provides components to both the aerospace and defence (A&D) sectors, Third Bridge Forum spoke to a former VP from Arconic Inc.

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Howmet’s fortune fluctuates across the A&D sector

When asked about notable trends, the specialist explained that “there is a clear distinction between aerospace and defence in terms of how COVID impacts one and [is] really not impacting, to any significant degree, the other.” While commercial airlines are experiencing dramatic declines in business, there have been only minor impacts on defence supply chains. “For companies who have a strong presence in defence markets, related weapons and aircraft, and anything having to do with the US defence budget… it enhances their ability to weather the storm.”

Howmet’s market positioning was also discussed, with it being noted that the company offers a “really finely tuned, hand-picked, high-value portfolio”. Over time, Howmet has focused on capturing technically challenging and innovative parts of the supply chain that garner a higher profit margin, and this lays a strong foundation for when the industry picks up again. “I don’t see any reason why the vast majority of the portfolio in place at Howmet would not have a bright future to compete in better markets.”

Other topics discussed include Howmet’s major competitors in each of the major product categories, the company’s exposure to the Boeing Max 373 and YoY growth expected in the defence segment. The specialist also explained how they expect the outcome of the US presidential election to impact defence spending. “In the past, it seemed to not matter with respect to defence in the short term. Over the long term, yes, there can be an impact in terms of policy and emphasis on defence, but that typically takes a couple of years to deploy.”

To access all the human insights from Third Bridge Forum’s Howmet Aerospace – A&D Supplier Dynamics Interview, click here to view the full transcript.

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The information used in compiling this document has been obtained by Third Bridge from experts participating in Forum Interviews. Third Bridge does not warrant the accuracy of the information and has not independently verified it. It should not be regarded as a trade recommendation or form the basis of any investment decision.

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