The Australian -- Quickstep, F-35 parts maker, pivots for profit

http://www.theaustralian.com.au/nat...t/news-story/87b55a711ae21506b7ea42de9d254055

DEFENCE

Quickstep, F-35 parts maker, pivots for profit


Part of an industrial robot at Quickstep’s Sydney factory.

Quickstep’s new chief executive Mark Burgess.

• GREGOR FERGUSON
• The Australian
• 12:00AM August 4, 2017

Quickstep’s new chief executive Mark Burgess this week announced a pivot aimed at nearly doubling sales revenue with a renewed focus on aerospace and defence.
The Bankstown, Sydney, company’s new trajectory includes taking the carbon-fibre-composites manufacturer into its first profit, a shake-out in senior management and a 5 per cent cut in costs this financial year.
By the start of the 2021-22 financial year, Mr Burgess told The Australian, sales should have risen to more than $90 million, compared with $51.9m in 2016-17. Sales have grown by more than 30 per cent in the past four years, offset by more than $8m worth of capital investment at the Bankstown factory and $13m of R & D to improve its carbon-fibre-composite manufacturing system.
“We have been in existence for 12 years … and we have not yet made a profit. That is not a sustainable business model for any corporation, in my opinion,” Mr Burgess said.
That growth in sales will come principally from a ramp-up in production of airframe components for the F-35 Joint Strike Fighter. It supplies these directly to Northrop Grumman in the US as well as through the Australian supply chain for carbon-fibre and titanium tailfins, for which Marand in Melbourne is the lead supplier. The company estimates its F-35 work alone will be worth nearly $840m out to 2040 and beyond — it builds part of every aircraft.
Anticipating F-35 demand, Quickstep invested heavily to increase manufacturing capacity and automation. Delays in the F-35 program meant it had taken longer to achieve the anticipated production volumes but deliveries were meeting schedule and quality targets, he said. It continues to make 24 sets of flaps each year for Lockheed Martin’s C-130J and LM-100J airlifters.
Under the OneQuickstep program announced by Mr Burgess, the company will focus more on sales in defence and civil aerospace, recruit a new sales team, cut senior management from nine executives to five and freeze executive pay.
The company would shed its estimated $8m Hawkei army vehicle parts contract as it used glass-fibre material that was no longer core business, Mr Burgess said.
Quickstep would focus on the much higher-yield aerospace sector, where carbon-fibre components command nearly four times the value of items for the automotive industries: $US310 ($391) a kilo compared with $US86 a kilo.
Quickstep’s priority will therefore be designing and manufacturing control surfaces such as flaps and ailerons and complex items such as airliner doors and door frames.
However, Quickstep is not running from the automotive sector. It is also talking to sports and luxury car manufacturers in Europe. The company says it is possible to manufacture lightweight carbon fibre composite body panels to the same price and quality as metal ones. That makes it very attractive to performance car firms, said Mr Burgess, though he declined to name potential customers.
Gregor Ferguson is a defence innovation analyst and former editor of Australian Defence Magazine.

http://www.theaustralian.com.au/nat...t/news-story/87b55a711ae21506b7ea42de9d254055