A logical consequence of the global strategy

January 2008

Globalized markets do not necessitate a logistic tour de force, but rather a strategic orientation that is geared on the individual requirements of global clients. In order to live by this motto, last week�s takeover of a majority stake in the British firm HPL by the long-established company PFW Aerospace AG was merely a further step in expanding its international network. With the capital invested in the specialized provider of aerospace fittings and other aviation parts, PFW Aerospace is pursuing two strategic targets.

On the one hand, PFW will permanently enrich its comprehensive expertise for airplane-specific connecting elements. As the leading manufacturer of complex piping systems around the globe, PFW is now in a position to streamline the supply chain for its customers. By acquiring HPL, a company already well known for years as a reliable supplier, PFW can now support customer concepts even more comprehensively. Already in the conceptual, developmental and design stages for complex piping systems, but also in subsequent serial production, which PFW provides to clients such as Boeing and Airbus, a broad range of special connection methods can be now be drawn on in an even more targeted manner.

The second essential aspect of the deal covers an offensive market development in the Asian region. As one of the most quickly expanding aviation markets in the world, China, after Japan, represents a second location in which PFW will establish itself. For HPL already possesses a wholly-owned subsidiary in Xi'an, which will be expanded over the coming years from a production area of currently 1,800 square meters to one of more than 5,000 square meters. �We have already begun with preparations for the production expansion. By the end of the first half of 2008, we will begin manufacturing components in Xi'an,� explains R�diger Fox, Executive Board Member of PFW Aerospace AG and future Chairman of the joint company overseeing the commercial activities. Fox continues: �A majority of the capital from the purchase will be used for a fast ramp-up, which will make it possible for us to produce initial serial lots under adherence to all specific aviation standards in China.�

The choice of location is by no means coincidental. Established in 2004, the largest aviation-oriented industrial base in China is currently being developed in Xi'an/Yanliang. In addition to the large number of industrial settlements, fast growth here is typified by the permanent development of technical universities and institutions. The continuing expansion of the airport in Xi'an as well as other aviation enterprises in Shaanxi province are further factors underlining this ambitious project.

Thus HPL (Xi'an) Manufacturing Co. Ltd offers not only advantages in light of the offset question, which is gaining increased relevance. Even more importantly, the company provides comprehensive opportunities for setting up and expanding business relations with Asian customers. What�s more, through a balanced distribution of manufacturing activities between all PFW AG locations, clients can be offered the level of cost-efficiency that is essential in today�s permanent price competition. PFW�s forward-looking business strategy is underlined by a purchase option for the remaining shares by the year 2011.

In explaining the majority takeover of HPL, Fox continued: �As a leading supplier for the international aviation industry, we consider it our obligation to gain presence in all markets in which our clients are active or in which activities are planned for the future. Our commitment to the Chinese market is based on our insight of the high potential here as well as the high degree of competence which workers have attained locally.� Fox went on: �We are certain that in HPL we have found a partner with which we can synergetically push ahead within the field of complex piping systems and which can simultaneously expand our business activities on a long-term basis.�

Stuart LeComu, CEO at HPL, emphasizes the significance of the domestic market for the future strategy of the enterprise: �Global solutions for our clients also strengthen our position on the domestic market. While we gladly accept the challenge of international aviation business, the British market remains a key element for our ongoing strategy.� Asked about the most important advantage for HPL with this deal, LeComu added: �With PFW as a strong partner we are now in a position to undertake and experience key steps in expanding our customer base as well as our service portfolio. Only with expansion, made possible by capital from PFW, can we continue on the successful course that we have been following for years.�

About PFW Aerospace AG
PFW Aerospace AG is a global market leader in the area of piping systems for the aviation industry. The company�s service portfolio also encompasses the production of structural components, cargo loading systems and auxiliary tank systems. The company, which is headquartered in Speyer, Germany, employs more than 1,600 workers globally at numerous locations. Further information: www.pfw.aero

About the HPL Group
HPL is an established and reputable supplier of component parts and fittings for the aviation, gas and oil industries as well as for the automotive and maritime sectors. In its integrated sales approach, the enterprise, which is headquartered in Coventry, offers comprehensive services extending from the concept phase through serial production to spare parts supply. The focus of business activities is the machine-based manufacturing of metallic components. Currently, the company employs a staff of approximately 70. Further information: www.hartshillprecision.co.uk

About the person:
R�diger Fox (41 years old), Member of the Executive Board of PFW Aerospace AG, is responsible for manufacturing, purchasing and quality control. Already while completing his studies in Aerospace Technology in Stuttgart, R�diger Fox, born in 1966, was able to collect initial experiences at Airbus, both in Toulouse and Hamburg. After completing his studies, a position at ZF with international responsibilities offered him a broad spectrum of tasks. A second degree in Industrial Engineering, completed while working, became the basis for a subsequent position in the Purchasing division of BMW/Rolls-Royce, where R�diger Fox took over responsibility for the development and implementation of sourcing strategies. Following several years working in the electronics industry, including as Managing Director for several production locations in Germany, Fox is now once again firmly anchored in the aerospace industry as Executive Board Member of PFW Aerospace AG, which he joined in 2007.

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