• Home
  • About
  • Team
  • Contacts
  • Blog

Singapore

  1. Home
  2. Blog
  3. Singapore

Singapore Airshow

Singapore

As I am wandering the aisles of the enormous trade show at the Singapore Airshow, I stop by the Florida Pavilion, just for a touch of something familiar. I start a conversation with a man in the booth of Future Metals, a company with headquarters in Tamarac, Florida. The Company appears to occupy an interesting niche in the aerospace business. They manufacture aircraft grade tubing and bar stock made of aluminum, stainless steel and titanium, as well as bars made from alloys of aluminum, nickel, bronze, beryllium and copper in many shapes and sizes.

Future Metals sells these products to aircraft manufacturing companies, maintenance organizations and aircraft modification centers through seven distribution centers in the United States and four international locations, including an office in Singapore.

I like the aerospace business because an American company that is a supplier to Boeing or Airbus is selling to the global market, whether that company has any international presence or not. Sooner or later, most of what it is selling is going to end up somewhere other than the domestic market. Even if the plane is sold to an American carrier, most of the big American airlines serve the international markets. The Boeing 767, 777 and 787 are mostly used on international flights, as are the Airbus A330, A350, and A380.

Singapore Airshow

I am in Singapore because I have read that in the next twenty years, over a third of all the commercial airliners delivered worldwide will be delivered to Asia. Airbus has estimated that in those twenty years Asian customers will purchase 29,200 passenger and freighter aircraft.

Expecting the same answer that I get from most other small, good looking companies booths where I have stopped at this show, I ask The Future Metals rep if his company is public and get the expected “no” but then to my surprise he goes on explain his company is owned by Berkshire Hathaway. I am somewhat taken aback by this piece of news, but it is good news (I do not have think about buying the company’s stock because I already own it).

Having owned and followed Berkshire for many years, I thought I knew all significant subsidiaries, but the rep went on to explain that Future Metals was part of the Marmon Holdings Inc. The fact is we know little about Marmon except that they own many companies, and that those companies have done well since the acquisition in 2008.

But, it was nice to find this small part of Berkshire in what is certainly a growth industry, with a strong presence in international markets; it makes you wonder how many other nice little surprises there are out there in that Marmon basket.

The Singapore show was a great education demonstrating that commercial aerospace is a huge industry with thousands of moving pieces. While Boeing and Airbus and other large aerospace companies are too big, and their margins too small, for me to be interested in them, they have hundreds of suppliers, some with very nice margins. While many of the best of these suppliers are privately held, there are a number of public companies in the small and mid-cap range with the ability to sustain moderate growth for a period of many years because of the backlogs at Airbus and Boeing.

I learned from the people at Future Metals was that MRO (maintenance, repair and overhaul) generally generates better margins than supplying OEMs (original equipment manufacturers). Companies may in fact be willing to sell parts to OEMs at little more that cost, figuring that once their part is on the airplane it may be replaced several times over the twenty to thirty year useful life. So, the MRO market may be much bigger than the cost of the original part sold to Boeing, Airbus, Bombardier, Pratt Whitney, Rolls Royce, or GE.

Singapore is an important location for companies doing MRO business in Asia. Singapore has very stable government with a strong tradition of “the rule of law” from its history as a British colony, and a government that tries hard to create a favorable business climate. Geographically, Singapore is centrally located between all the big Asian population centers, and Singapore has access to cheap labor from Indonesia, Malaysia and the Philippines.

An important part of the MRO sector involves supply chain management. If an airline has a 747 that is sitting on the ground somewhere in China in need of a part, the ability to get that part to the required location as quickly as possible is a critically important skill, and is one that the airline will pay well for. AAR claims to be one of the world’s biggest providers of this service. However their financial statements are not satisfactory. To learn more about this sector, in April I will be on our way to Phoenix for “MRO America”.

03/01/2014



Leave a Reply Cancel Reply

Your email address will not be published.


Comment


Name

Email

Url


Blog Archive

2020

  • The Stock Market

2019

  • Behavioral Investing

2018

  • Trumped
  • Warren Buffett vs Wall Street
  • Globalism, 1982-2000 Bull Market

2017

  • Volatility Underlying Calm Market
  • What’s new with CB&I?
  • Passive Investing
  • Economic Cycles
  • Current Stock Market 2017 Comment

2016

  • Global Plastics Summit Highlights
  • Value Investing vs Index Investing
  • How to Play an Index Bubble
  • Successful Investors
  • Is the Market Overvalued?
  • Operating Earnings
  • Article by investment manager in Bay Hill Living
  • Building Foundation

2015

  • 3G Culture – Dream Big
  • Myopic Loss Aversion
  • CBI Nuclear Energy
  • St Joe Company
  • What’s in a Word? Plastics.
  • Are Bonds Safer Than Stocks?

2014

  • Chicago Bridge and Iron
  • CAMEX 2014
  • Global Economy October 2014
  • Fluor Corporation
  • Interesting Quotes from Daily Journal Annual Meeting
  • The Daily Journal Annual Meeting
  • Albemarle Corporation
  • Triumph Group
  • The American Energy Revolution
  • Singapore

2013

  • St Joe Company Update
  • Hedge Fund Managers
  • Triumph Group Inc.
  • Bitter Brew
  • An Antifragile Portfolio

2012

  • Leucadia National Corporation
  • This Time it is Different
  • Successful traders psychology
  • St Joe Company
  • Learning from Pain

2011

  • Long Cycles – Part II
  • Long Cycle
  • Nasty Month for Market
  • Make a Buck with Fortescue Metals Group
  • Berkshire Hathaway Look Through Earnings
  • St Joe Company Inc
  • Successful Investment Management
  • A Look Into Latin American Market
  • The Mother of all Quarters
  • 2010 Investment year results

2010

  • Fault Lines
  • US Market 2010
  • Berkshire Hathaway Third Quarter 2010
  • The Stock Market 2010
  • Berkshire Hathaway Second Quarter 2010
  • Berkshire Hathaway Performance
  • Long Term Greedy
  • Goldman Sachs
  • Berkadia and Leucadia
  • USG corporation
  • Berkshire Hathaway 2009 2010
  • Why Capitalism Works

2009

  • The Lords of Finance
  • The $44 Billion Dollar Train Set
  • Berkshire Hathaway 3rd Quarter 2009
  • Career Risk for Investment Manager
  • Berkshire Hathaway financial statements
  • Berkshire Hathaway Preferred Stock
  • Moral Hazard
  • Credit Default Swap
  • The Shadow Banking System
  • Learning Things the Hard Way
  • Our C-System
  • 2008 Investment results

2008

  • Investment Risk
  • Bear Markets
  • Generational Events
  • Orange sheets – Money is doing better
  • Inflation Not The Problem
  • Tipping Point
  • Long Term Capital Management
  • Financial Insurance
  • Western Refining Inc
  • Berkshire Hathaway Year To Date
  • Berkshire Hathaway Cash Flow
  • 2007 investment results

2007

  • Investment results 4th Quarter 2007
  • Greenspan on Inflation
  • Berkshire Hathaway Third Quarter 2007
  • Berkshire Hathaway Operating income 2007
  • Berkshire Hathaway Hedge Fund
  • Leveraged Buyouts
  • Stability Unstable
  • Weak Dollar
  • Berkshire Hathaway Chairman’s Letter
  • Steel Dynamics
  • Breakwater Resources
  • 2006 Investment year results

2006

  • New Investment Stocks
  • Equitas
  • Berkshire Hathaway Third Quarter 2006
  • Hurricane Synergy
  • Berkshire Hathaway Second Quarter 2006
  • Fat Pitch
  • Perfectly Obvious
  • Berkshire Hathaway Growth Rate
  • Berkshire Hathaway First Quarter 2006
  • Berkshire Hathaway Annual Report 2006
  • Inflation Is
  • 2005 Investment year results

2005

  • Exogenous Events
  • The Easy Money
  • Look-Through Earnings
  • High-Risk Mortgages
  • Unintended Consequences
  • Rydex Ursa Fund
  • Warren Buffett Premium
  • Private Equity
  • Latticework Mental Models
  • Buffett’s Lackluster Performance
  • 2004 Investment year results
  • Professor Smith’s Second Bubble

2004

  • Hedging Currency Disaster
  • Risk Assessment
  • Too Many Bears
  • The Chinese Century?
  • Patterned Irrationality
  • Timber
  • Costco’s Cash
  • Physics Envy by Charlie Munger
  • Asset Allocation Berkshire Hathaway
  • The Balance of Payments
  • 2003 Investment year results

2003

  • Hedge Funds
  • The trade deficit is not debt
  • Secular Bear Market
  • Which Index Funds?
  • A Different Drummer
  • Costco’s Float
  • The Power of Float
  • Berkshire Hathaway Annual Meeting 2003
  • Psychology of Human Misjudgment
  • Sitting on the Sidelines
  • Berkshire Hathaway intrinsic value
  • 2002 Investment year results

2002

  • Insurance company Moats
  • Bond Bubble
  • Berkshire Hathaway Cash Flow 2002
  • Behavioral Economics
  • The Bear Market 2002
  • Greenspan Put
  • Second Quarter Cash Flow at Berkshire Hathaway
  • Berkshire Hathaway Annual Meeting 2002
  • Red Wire – Green Wire
  • Stupid FED Tricks
  • The Bottom Line
  • 2001 Investment year results

2001

  • Don’t Fight the FED
  • Buy and Hold? – It all Depends
  • Ben Laden and Berkshire Hathaway
  • The Dinosaurs Dance
  • Costco Moat
  • Bubble Watching
  • Sit on your Ass investing
  • Berkshire Hathaway Annual Meeting 2001
  • Carnival Cruise Lines
  • 450000 Square Ft Furniture Store
  • Lunch Money Indicators – Annual report
  • Other People’s Money

2000

  • Bear Tracks
  • Build It and Money Will Come
  • Efficient Stock Market
  • Style Drift
  • Lunch Money Indicators – Options
  • Identifying Problems
  • Small Retail Stocks
  • Charlie Munger comments
  • Big Al and the Bubble Machine
  • Berkshire Hathaway Cheap
  • Index Funds
  • 16 rules for investment success
Make an appointment or contact us by phone: +1 (689) 246 49 49
© 1999 - 2022 Losch Management Company
Support by Global AGM