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,
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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.