Quickstep: The Sky And The Road Are The Limit

This story features QUICKSTEP HOLDINGS LIMITED. For more info SHARE ANALYSIS: QHL



(This story was originally published last week. It has now been republished to make it available to non-paying members at FNArena and readers elsewhere).

By Greg Peel

The manufacture of aeroplanes is undergoing a revolution. With improved strength-to-weight ratios now imperative in a world of secularly higher oil prices, aircraft manufacturers are rapidly shifting away from aluminium skins and other parts and towards composite plastic materials, just as they once replaced heavier steel components with lighter-weight aluminium.

The rush is on to exploit composite materials, specifically resin reinforced carbon fibre. Australians would appreciate that each year as we watch the Sydney to Hobart fleet leave the heads, we learn that this year’s favoured maxi-yacht is sporting a new high-tech carbon fibre this, or Kevlar that. Well the race through salt water on a yacht is little different to the race through the skies on a plane. But for aircraft builders, technological developments have a commercial basis.

Most will also be aware that the world has been waiting for the commercial launch of two new maxi-planes – the Boeing 787 Dreamliner and the Airbus 380. And waiting, and waiting. The Airbus has begun the odd run but there are still delivery hold-ups after several years, while only last night did Boeing showcase a test flight of its 787 – also years behind schedule. While it is easy to assume the GFC is responsible for holding up delivery of these aircraft, in fact the GFC has had little to do with.

What has had a lot to do with it is composites.

When manufacturers shifted from steel to aluminium, the construction process was not a lot different. There may have been some welding issues to overcome, but both materials could be shaped and riveted in a similar fashion by metalworkers who began with easy-to-handle sheets of the stuff. But when one moves from metal to plastic, it’s a whole new world. In short, metalworkers are of little use.

Hence Boeing’s and Airbus’s ambitious plans for the rollout of their new flagships was delayed to a large part by a simple lack of composite manufacturers, factories, technicians and know-how. Traditional metalworks were of little use – you might have well hand a caveman a computer.

To produce a typical composite fibre panel, for example, one begins with sheets of carbon fibre which are woven in a typical warp and weft arrangement and are about as stiff as your mother’s table cloth. These sheets are then saturated (or “wetted out”) with some form of resin (eg epoxy, polyurethane) and several are laminated together while wet, thus providing a thick, very sticky table cloth. The lamination is applied to a mould, and then the moulded section is “cured” in an autoclave – a high pressure oven of sorts. Once cured and released, the carbon fibre sheet is now stiff, lightweight, and very, very strong.

While the resultant component has a far superior strength-to-weight ratio than anything before, one problem with composites is their strength-to-wait ratio. The heat curing process is quite simply a very slow one, and as each component has to be treated in this fashion one needs a whole factory-full of armies of autoclaves steaming away around the clock in order to ever match the speed of shaping or casting aluminium sections.

The world simply does not have that many autoclaves, and nor does it have enough composite technicians to man them even if it did.

This is a big problem for the aerospace industry. Estimated carbon fibre demand in aerospace is forecast to grow from 5,100 tonnes in 2008 to over 46,000 tonnes by 2020 – an average growth rate of 20% per annum. The world is madly trying to produce new, full-composite aircraft such as the 787 and 380, as well as the Lockheed Martin joint strike fighter and the A400 transporter.

The extensive use of composites in these aircraft will reduce operational costs by 30%. There is no new aeroplane being designed across the world now that does not include a high percentage of composites. Between them, Boeing and Airbus have back-orders in excess of 5,000 planes. Each uses an average US$5.3m worth of composite components.

And into this world has stepped Quickstep.

Last week I met with Quickstep’s relatively new CEO and MD, the affable Philippe Odouard, along with a gaggle of aviation reporters. A Frenchman, Odouard boasts significant management experience in the global aerospace and defence sectors.

Fremantle-based Quickstep Holdings ((QHL)) hit the headlines recently after signing a Memorandum of Understanding with Lockheed Martin, and with Lockheed’s partner Northrup Grumman, to provide parts for the construction of the F-35 joint strike fighter. (See Quickstep Hits The Mach ). The MOU is expected to lead to a Long Term Agreement to be signed in March, which is estimated will be worth $700m to Quickstep over 22 years.

Led by the US, there is already demand for 3,173 of these aircraft across nine countries, including Australia which wants 74.

Now – one might be forgiven for thinking that when you split $700m over 22 years you’re not really talking an extraordinary amount of money. But that would be to miss the point.

Quickstep does have the autoclave capacity, and the technicians, and the required international licence, to satisfy Lockheed’s demand for specific parts. There are parts being built across the globe for these F-35s, with a bias towards contracts being awarded to those countries also buying the planes, as far a-field as Turkey.

[Side note: Before you, too, make yourself look foolish in front of a whole lot of aviation experts, Turkey is a respected world-leader in composite manufacture.]

But Quickstep’s jewel in the crown is its development of a new form of autoclave heat curing process for composite manufacture – a process which uses less pressure, reduces energy costs, reduces tooling costs, reduces required plant investment, and, most importantly, significantly speeds up the process. And it also produces a superior product as an end result.

This is one reason why Lockheed was drawn to Quickstep, despite the fact Quickstep could actually make Lockheed some parts. Quickstep can actually make such parts in much less time than other producers.

You can just here the heads of Boeing and Airbus executives turning sharply. Less time? Cheaper? Stronger? Who?

Although Quickstep has recently completed a large state-of-the-art production facility in Fremantle, it has no intention to use this facility to satisfy the entire world’s aircraft part orders. Lockheed’s orders will do for now. But what the Lockheed order will do for Quickstep is to (a) provide a secure underpinning of known earnings, (b) provide the opportunity for Quickstep to demonstrate its technology on a commercial scale, and (c), simply alert the world.

Thereafter, Quickstep is expecting a combination of more orders and a queue of composite producers looking to licence the Quickstep technology. This is where the company will really make its money. One might suggest the Lockheed order is a “company maker”, but for reasons of exposure more than anything else.

And we haven’t even begun to talk of the rush across the globe by car manufacturers to reduce their vehicles’ carbon emissions by whatever means, including new engines, new fuel sources and, of course, higher strength-for-weight ratios.

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