Mergers on the starboard bow, Jim!

Two different Flight Global articles posted in February alone argue that the scene is set ripe for a wave of aerospace mergers and acquisitions.

Apparently there was only (only!) US$9 billion in M&A activity in 2012.

The reason? The big players have been chomping at the bit to merge for a while. They’e been stymied so far by the politicians. However, those same politicians, mainly in the US, now desperately need to cut back their defence spending. Hence the shackles will probably be removed.

What does this mean for the lowly aerospace knowledge worker with aspirations to satisfy and bills to pay?

  1. If you’re a young engineer or knowledge worker, looking for your first aerospace job, stay current. Check in with the usual aerospace weeklies (e.g. Flight, Avweek) to stay informed of which companies are doing what. Companies going through mergers or acquisitions do hire. They also sometimes abruptly change their minds, citing the merger. Think twice before staking your future with such a firm.
  2. If you’re currently working for a defence-oriented aerospace firm, don’t hold your breath hoping for that pay rise. A merger or acquisition equals chaos. That’s true whether you are the acquiring or the acquired. Managers in chaos are worried about where their next position is going to be. Ensuring pay rises for their people won’t be high priority. If merger-induced cash flow is a problem, payroll reductions will be a high priority.
  3. Payroll reductions will be a priority sooner or later anyway. That’s one of the supposed motives for a merger: economies of scale. So keep your powder dry, and your¬†CV up-to-date.
  4. If you’re working on the commercial side of aerospace, you’re somewhat better off.
  5. If job security is important to you, make sure you’re working for a firm with healthy exposure to Asian markets, since they have the best revenue potential.
  6. If you’re not so concerned about job security, now’s an ideal time to jump. Never been able to pursue that cost-saving idea? Now’s the time to develop it. But not internally. Nobody on the inside has the attention span to help you with it. Now’s the time to jump and develop it outside, and use your current employer as your first customer. Risky? Darn right. But as a civilian in a civil-war-torn country will tell you, “There ain’t no place that’s safe here!”
  7. If you’re not far from your hoped-for retirement, there’s a chance you might get a golden handshake. But don’t bank on it. The days of early redundancy and big payoffs are gone. This is where having a scarce skill can work against you. (I’ve lived through two mergers, and while there were layoffs, none of them involved engineers; on the contrary, engineers were the only ones the companies were still hiring.) More likely, this is the time to chase the promotion that you once craved but had given up hoping for.
  8. And finally, no matter what career stage you’re at, it’s time to pause and reflect: Any industry that calls US$9 billion of M&A activitiy low? . . . . . has a problem. Ricardo Semler, author of Maverick and the Seven-Day Weekend, suggests that companies are more likely to merge, not to achieve economies of scale, but to hide management failures. Ignore what the management tell you, and use your own judgement: Why is your company trying to merge? Are you going to be able to do better work merged or un-merged? Are your future prospects better merged or un-merged? If the latter . . . . . . it’s time to revisit your career strategy.

In times of great change, the wisest course of action is to be a change agent.

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