TransDigm Group

{{Infobox company

| name = TransDigm Group Incorporated

| logo = TransDigm_Group_logo.svg

| logo_size =

| former_name =

| type = Public

| traded_as = {{ubl|{{NYSE|TDG}}|S&P 500 component}}

| industry = Aerospace components

| predecessor =

| founded = {{start date and age|1993}}

| founders = {{ubl|W. Nicholas Howley|Douglas W. Peacock}}

| hq_location = Cleveland, Ohio, U.S.

| key_people = {{ubl|Kevin Stein (President & CEO)|W. Nicholas Howley (Chairman)}}

| revenue = {{increase}} {{US$|7.94 billion|link=yes}}

| revenue_year = 2024

| operating_income = {{increase}} {{US$|3.53 billion}}

| income_year = 2024

| net_income = {{increase}} {{US$|1.48 billion}}

| net_income_year = 2024

| assets = {{increase}} {{US$|25.6 billion}}

| assets_year = 2024

| equity = {{decrease}} {{US$|-6.3 billion}}

| equity_year = 2024

| num_employees = 16,600

| num_employees_year = 2024

| parent =

| divisions =

| subsid =

| website = {{url|transdigm.com}}

| footnotes = Financials {{as of|2024|09|30|lc=y|df=US}}.{{Cite web |url=https://www.sec.gov/ix?doc=/Archives/edgar/data/0001260221/000126022124000083/tdg-20240930.htm| title=TransDigm Group Incorporated FY 2024 Annual Report (Form 10-K) |date=November 7, 2024|publisher=U.S. Securities and Exchange Commission}}

}}

TransDigm Group Incorporated is an American publicly traded aerospace manufacturing company headquartered in Cleveland, Ohio. TransDigm develops and manufactures engineered aerospace components. It was founded in 1993, when four industrial aerospace companies were combined by a private equity firm in a leveraged buyout. TransDigm expanded the range of aerospace components it manufactures through acquisitions over the years. It filed an initial public offering on the New York Stock Exchange in 2006.

Corporate history

=Early history=

TransDigm was formed in 1993{{cite web | last=Eaton | first=Sabrina | title=Cleveland aerospace company accused of Pentagon profiteering | website=cleveland.com | date=June 18, 2019 | url=https://www.cleveland.com/open/2019/06/cleveland-aerospace-company-accused-of-pentagon-profiteering.html | access-date=October 7, 2020}} under the name TD Holding Corporation.{{cite book|last=Hill |first=Karen |title=Transdigm |work= International Directory of Company Histories|publisher=St. James Press |date=2011|isbn=978-1558628014 |volume=119}} It was founded with an initial equity investment of $10 million.{{RP|228}} The company was created by founders W. Nicholas Howley and Douglas Peacock, along with private equity firm Kelso & Company, in order to acquire and consolidate four industrial aerospace companies from IMO Industries Inc. in a leveraged buyout.{{cite news | title=Warburg Pincus to Acquire TransDigm for $1.1 Billion | first=Robin|last=Sidel|newspaper=The Wall Street Journal | date=June 9, 2003 | url=https://www.wsj.com/articles/SB105509853318716200 | access-date=October 7, 2020}}{{cite journal|first1=John| last1=Lehman |first2=Stephen |last2=Brooks|year=2000|title=Rapid Escalation: An Overview of Private Equity Investing in the Aerospace and Defense Industry|journal=The Journal of Private Equity|url=https://www.jstor.org/stable/43503167 | access-date=October 7, 2020|volume=3|issue=2|pages=7–11| doi=10.3905/jpe.2000.319955 | jstor=43503167 | s2cid=154809631|url-access=subscription}}{{rp|8}} Those four companies were Adel Fasteners, Aero Products Component Services, Controlex Corporation and Wiggins Connectors.{{RP|221}} Once the acquisitions were completed, TD Holding was renamed to TransDigm, Inc. and based in Richmond Heights, Ohio.{{RP|490}}

Originally, TransDigm manufactured and marketed a small group of aircraft components, such as batteries, pumps and fuel connectors.{{RP|490}} TransDigm expanded its range of aircraft component products over time through acquisitions of other aerospace component manufacturers,{{RP|492}} growing in revenues by about 25% per-year from 1993 to 1998.{{cite book | last=Thorndike | first=W. | title=The Outsiders: Eight Unconventional CEOs and Their Radically Rational Blueprint for Success | publisher=Harvard Business Review Press | year=2012 | isbn=978-1-4221-6267-5 | url=https://books.google.com/books?id=psSLKgV8IO4C&q=transdigm | access-date=October 7, 2020| page=34}} In 1998, Odyssey Investment Partners, a private equity firm, acquired TransDigm from Kelso & Company. After the September 11th attacks, the aerospace industry declined temporarily, resulting in losses and layoffs for TransDigm.{{RP|491}}

By 2002, TransDigm had grown to $300 million in annual revenues, up from $131 million in 1999.{{RP|491}} TransDigm was acquired from Odyssey Investment Partners by another private equity firm, Warburg Pincus, in 2003 for $1.1 billion. In 2006, the company went public on the New York Stock Exchange.{{cite news | last=Cowan | first=Lynn | title=TransDigm Climbs 15% in IPO, Hitting Middle of Expected Range | website=The Wall Street Journal | date=March 16, 2006 | url=https://www.wsj.com/articles/SB114247079737399589 | access-date=October 7, 2020}}{{cite book|title=Lessons from the Titans|first1=Scott|last1=Davis|first2=Carter|last2=Copeland|first3=Rob|last3=Wertheimer|publisher=McGraw Hill|date=2020}}{{RP|220}} By the following year, TransDigm had grown to $593 million in annual revenues.{{RP|492}}

=Acquisitions=

TransDigm focuses largely on acquiring other aerospace component manufacturers for expansion and growth.{{RP|492}} The company acquired more than 60 businesses in its first 25 years of operations,{{RP|228}} 49 of which were completed after TransDigm's initial public offering in 2006.{{cite news|url=https://uk.reuters.com/article/us-esterline-tech-m-a-transdigm-group/transdigm-dives-deeper-into-aero-spare-parts-market-with-esterline-buy-idUKKCN1MK1NQ|archive-url=https://web.archive.org/web/20181010200128/https://uk.reuters.com/article/us-esterline-tech-m-a-transdigm-group/transdigm-dives-deeper-into-aero-spare-parts-market-with-esterline-buy-idUKKCN1MK1NQ|url-status=dead|archive-date=October 10, 2018|publisher=Reuters|quote=in its biggest-ever deal|first=Arunima|last=Banerjee|title=TransDigm dives deeper into aero spare parts market with Esterline buy|date=October 10, 2018|access-date=October 7, 2020}}

In 2010, TransDigm acquired competing aftermarket aerospace parts company McKechnie Aerospace Holdings for $1.27 billion.{{cite web | title=TransDigm to buy rival McKechnie for $1.27 bl | website=Reuters | date=September 27, 2010 | url=https://www.reuters.com/article/transdigm-idUSSGE68Q0JB20100927 | access-date=October 7, 2020}} In 2016, it bought Data Device Corp., a power, networking and electronics company, for $1 billion.{{cite news | title=TransDigm to Acquire Data Device Corp. for $1 Billion | newspaper=The Wall Street Journal | url=https://www.wsj.com/articles/transdigm-to-acquire-data-device-corp-for-1-billion-1464095259 | access-date=October 7, 2020|first=Tess|last=Stynes|date=May 27, 2016}} Two years later, TransDigm purchased a competing parts manufacturer, Esterline, for $4 billion.{{cite news|title=Aerospace supplier Esterline sold for $4 billion|date=October 10, 2018|first=Dominic|last=Gates|url=https://www.seattletimes.com/business/boeing-aerospace/aerospace-supplier-esterline-sold-for-4-billion/|access-date=October 7, 2020|newspaper=The Seattle Times}} This was the largest acquisition in TransDigm's history.

In March 2022, TransDigm acquired the Montreal-based helicopter mission equipment company, DART Aerospace for approximately $360 million in cash.{{Cite web |date=2022-03-16 |title=TransDigm Announces Acquisition of DART Aerospace |url=https://helihub.com/2022/03/16/transdigm-announces-acquisition-of-dart-aerospace/ |access-date=2022-03-16 |website=HeliHub.com |language=en-GB}}

In May 2023, TransDigm acquired aviation and transportation research company Calspan for $725 million.{{cite news |last=Glynn |first=Matt |date=March 14, 2023 |title=Calspan to be acquired by a Cleveland-based company |url=https://buffalonews.com/business/local/calspan-to-be-acquired-by-a-cleveland-based-company/article_c985a5c4-c294-11ed-bde6-cf020c47da1d.html |work=The Buffalo News}}{{cite press release |url=https://www.prnewswire.com/news-releases/transdigm-completes-acquisition-of-calspan-corporation-301818206.html |title=TransDigm Completes Acquisition of Calspan Corporation |date=May 8, 2023 |website=Cision PR Newswire}}

In November 2023, TransDigm acquired Electron Device Business of Communications & Power Industries for $1.39 billion.{{Cite web |title=TransDigm Acquires Unit Of Communications & Power Industries {{!}} Aviation Week Network |url=https://aviationweek.com/defense-space/supply-chain/transdigm-acquires-unit-communications-power-industries |access-date=2023-11-09 |website=aviationweek.com}}

Products

TransDigm's subsidiaries manufacture engineered aircraft components.{{RP|490}} These components include items like pumps, valves and avionics.{{RP|217}} Most of the aerospace parts the company sells are proprietary products where TransDigm is the only manufacturer that currently makes the part.{{cite book |title=Hoover's Handbook of Emerging Companies 2008: Profiles of America's Most Exciting Growth Enterprises |publisher=Hoover's |page=345 |date=March 2008 |isbn=978-1-57311-123-2}}{{RP|223}} As of 2016, about half of its revenues are from aftermarket parts and half are from OEM parts.{{cite web | title=DDC to sell for $1 billion; joining TransDigm commercial and military avionics component supplier | website=Military and Aerospace Electronics | url=https://www.militaryaerospace.com/computers/article/16715065/ddc-to-sell-for-1-billion-joining-transdigm-commercial-and-military-avionics-component-supplier | access-date=October 7, 2020|first=John|last=Keller|date=May 27, 2016}} As of 2008, about three-fourths of its revenues were from commercial aircraft parts and one-fourth was from military aircraft parts.

TransDigm's products fall into three segments. Power and control products, such as pumps, valves and ignition systems, account for about half of TransDigm's revenue.{{citation|title=Company Profile: TransDigm Group|url=https://www.rationalwalk.com/company-profile-transdigm-group/|publisher=The Rational Walk|access-date=October 7, 2020}} Airframe products like latching and locking devices, cockpit security components and audio systems, account for most of the other half of TransDigm's revenues. A smaller portion of the company's business is from non-aviation products, such as restraints, space systems and parts for heavy industrial equipment.

Accusations of price gouging

In 2019, the Department of Defense audited TransDigm's pricing practices for government contracts.{{Cite web |last=Capaccio |first=Tony |date=May 15, 2019 |title=A Pentagon Contractor's 9,400% Profit on a Half-Inch Metal Pin Is Challenged |url=http://fortune.com/2019/05/14/transdigm-pentagon-costs/ |access-date=October 7, 2020 |website=Fortune |language=en}}{{Cite web |last=Capaccio |first=Tony |title=Pentagon Rips TransDigm for 'Gouging' Taxpayers With $4,361 Metal Pin |url=http://fortune.com/2019/05/15/transdigm-pentagon-gouging/ |access-date=October 7, 2020 |website=Fortune |language=en}} It concluded that the Pentagon was purchasing parts from TransDigm at very high profit margins, such as a 9,400% markup on a metal pin. According to the authors of Lessons from the Titans, this is because older aerospace components are not expensive to produce individually, but require keeping expensive dated manufacturing lines active for small-batch production.{{rp|224–225}} After a congressional hearing criticizing TransDigm's pricing practices, the company agreed to refund the Pentagon $16 million.{{cite news |date=May 24, 2019 |title=TransDigm to repay $16 million for overcharging the Pentagon |url=https://www.reuters.com/article/us-transdigm-group-pentagon/transdigm-to-repay-16-million-for-overcharging-the-pentagon-idUSKCN1SU2AP |access-date=October 7, 2020 |publisher=Reuters}}

TransDigm's revenues grew by 15-fold from TransDigm's IPO in 2006 to 2020.{{RP|226}} However, business declined in 2020 due to the COVID-19 pandemic's impact on the aerospace industry.{{cite news |last=Suttell |first=Scott |date=April 2, 2020 |title=TransDigm Group will cut up to 15% of its workforce as pandemic reduces demand |url=https://www.crainscleveland.com/manufacturing/transdigm-group-will-cut-15-its-workforce-pandemic-reduces-demand |access-date=October 7, 2020}}

In 2022, founder Nick Howley was again called to testify before Congress on accusations of price gouging.{{Cite web |last=Bogaisky |first=Jeremy |title=Meet The Billionaire Who Built A Fortune ‘Price-Gouging’ Customers Like The Pentagon |url=https://www.forbes.com/sites/jeremybogaisky/2023/08/07/meet-the-billionaire-who-built-a-fortune-price-gouging-customers-like-the-pentagon/ |access-date=2024-07-08 |website=Forbes |language=en}} A Department of Defense review alleged that the company charged $119 million for parts that should have cost $28 million,{{Cn|date=July 2024}} with an earlier 2021 report alleging that TransDigm made an excess profit of $20.8 million on 105 spare parts on 150 contracts.{{Cite web |title=Audit of the Business Model for TransDigm Group Inc. and Its Impact on Department of Defen |url=https://www.dodig.mil/reports.html/article/2871623/audit-of-the-business-model-for-transdigm-group-inc-and-its-impact-on-departmen/https%3A%2F%2Fwww.dodig.mil%2Freports.html%2FArticle%2F2871623%2Faudit-of-the-business-model-for-transdigm-group-inc-and-its-impact-on-departmen%2F |access-date=2024-07-08 |website=Department of Defense Office of Inspector General |language=en-US}}{{Cite web |last=Guest Columnist |first=cleveland com |date=2022-03-30 |title=TransDigm’s ‘excess profits’ on defense contracts reveal costly loopholes in the law: Scott Amey |url=https://www.cleveland.com/opinion/2022/03/transdigms-excess-profits-on-defense-contracts-reveal-costly-loopholes-in-the-law-scott-amey.html |access-date=2024-07-08 |website=cleveland |language=en}}

The company's practices and position have also reached the commercial aviation industry, ranging from employees to executives within the aviation industry. A former employee of AvtechTyee, a firm later acquired by TransDigm, commented on how airlines are stuck with TransDigm's parts with a refusal to utilize the company equating to an airline's plane not flying. Concurring on the situation was Abdol Moabery, CEO of the aircraft maintenance company GA Telesis, TransDigm's pricing practices have made it costlier for airlines to repair their planes, with aircraft manufacturers like Boeing and Airbus often caught in the middle when TransDigm acquires companies that Boeing contracted with to make its parts. TransDigm counterargues, though, that its pricing practices are justified when considering its efforts to ensure that planes always fly safely, and that the sting is necessary to continue providing quality service.{{cite news |last1=Chasan |first1=Aliza |date=21 May 2023 |title=How the Pentagon falls victim to price gouging by military contractors |url=https://www.cbsnews.com/news/pentagon-budget-price-gouging-military-contractors-60-minutes-2023-05-21/?ftag=CNM-00-10aab7d&linkId=215720704 |agency=CBS News}}