Our markets.

GKN’s four divisions operate in the global automotive, aerospace and land systems markets (including agricultural, construction and mining). GKN aims to achieve a leading position in these markets and deliver above market growth.

In the automotive market, GKN Driveline sells to manufacturers of passenger cars and light vehicles and around 75% of GKN Powder Metallurgy sales are also to the automotive market.

Key market drivers

  • Macroeconomic trends, such as consumer prosperity and confidence.
  • Fuel efficiency and emissions:
    • Demand for smaller vehicles.
    • Electric/hybrid applications.
    • Progressive electrification of the drivetrain.
  • Demand for personal mobility in emerging markets.
  • Lower weight and a focus on new materials.
  • Customer preference for quality and safety.

Trends

  • Overall, global production volumes increased 3% in 2011 to 76.9 million ­vehicles (2010: 74.4 million) whilst sales of cars and light vehicles increased by 4%, to 75.1 million vehicles.(1)
  • All major geographic markets, except Japan due to the earthquake and tsunami in March 2011, experienced production growth relative to 2010, with the strongest growth in North America and India.
  • Demand for larger (premium) vehicles and light commercial vehicles increased strongly. The demand for smaller vehicles, particularly in Europe, was lower as the prior year’s scrappage and tax incentive schemes had the effect of pulling forward demand.
  • Overall vehicle production in Europe benefited from a strong improvement in exports while in North America the economic recovery following the recession supported vehicle sales.

Outlook

  • External forecasts indicate that global production in 2012 will increase by approximately 5% to 80.7 million vehicles.(1)
  • This projected growth is the result of a return to normal production in Asia after the natural disasters in Japan and Thailand as supplies of components improve, together with continued recovery from the global recession.
  • Major markets that are expected to show the fastest growth include Japan (18%), North America (10%), China (8%) and India (6%).(1)
  • Europe is forecast to contract by 8% in the wake of the current economic climate.(1)
(1)
IHS Automotive.

GKN Aerospace is a global first tier supplier to manufacturers of aircraft, aircraft engines and equipment. The division has a balanced position in civil (58%) and defence (42%) aerospace markets.

Key market drivers

  • Backlog of aircraft orders for key customers.
  • Introduction and production rate of new aerospace programmes.
  • Levels of passenger air traffic.
  • US defence budget.
  • Crude oil/jet fuel prices.
  • Drive to improve aircraft and engine efficiency.
  • Environmental impact reduction programmes.

Trends

  • The overall aerospace market in 2011 was positive, driven by recovery of civil aircraft production and a generally stable defence sector.
  • A recovery in passenger and cargo volumes led both Airbus and Boeing to announce increases in production levels of both single aisle and wide bodied aircraft.
  • In the civil aerospace market, Airbus and Boeing reported that they delivered a record 1,011 aircraft in 2011 and took on new orders totalling 2,529 aircraft. Both companies continue to benefit from their extensive order backlog that has grown to over 8,200 aircraft.
  • US defence spending showed slight growth in 2011 with the President’s 2012 to 2016 Budget Request expected to remain relatively flat for 2012-2013.

Outlook

  • Passenger air traffic rose around 6% in 2011 and is projected to continue to grow at a similar pace throughout 2012. Longer term worldwide passenger market demand is projected to grow at around 5% with worldwide cargo traffic market growth at around 6%.
  • Boeing and Airbus forecast that between 28,000 and 32,000 new single-aisle and wide-bodied aircraft will be required globally over the next 20 years, with around 40% to support fleet replacement and approximately 60% to support market growth.

GKN Land Systems serves the agricultural, construction, mining, and industrial machinery markets, offering integrated powertrain solutions, wheels, structures and aftermarket distribution and services.

Key market drivers

  • Population growth and consumer prosperity.
  • Urbanisation leading to infrastructure development and increased mass transit.
  • Raw material demand.
  • Regulatory drive to cut emissions and increase energy efficiency.
  • Need for significant increased operational efficiency and reliability.

Trends

  • Recovery in European and US agricultural sectors continues.
  • Estimated average growth of 15% in the EU agricultural machinery market in 2011, with a market volume of €24 billion(1); and prospects for 2012 continue to be positive.
  • Infrastructure investment driving growth in the construction sector.
  • Continued increasing global demand for energy.

Outlook

  • The agricultural output required will double by 2050(2) to feed the world population which is expected by then to reach nine billion, from seven billion today. The need for increased farming efficiency will drive ever greater mechanisation.
  • By 2050, more than 70% of the world’s population is expected to live in cities(2) requiring massive urbanisation; the migration from rural areas creates need for roads, power grids, water containment and distribution systems.
  • Significant growth in agricultural and construction sectors is expected in Brazil, Russia, India and China.
  • Growth in global construction is expected to outpace world GDP over the next ten years. Growth in Asia and the cyclical rebound in the US will fuel global construction growth from $7.2 trillion today to $12 trillion by 2020(3).
(1)
VDMA Market Perspectives 2012.
(2)
FAO, How to Feed the World 2050 Deere & Company, January 2012.
(3)
Oxford Economics, Global Construction 2012.