Electronics has grown to be Hexcel’s second largest market and its largest non-aerospace source of revenue.

As a producer of electronic glass fabrics, the substrate for laminates used in printed circuit boards, Hexcel is a major contributor to the electronics market. As the electronics market continues its unrelenting expansion into every facet of life, demand will continue to grow for these products. Hexcel, in fact, is strategically positioned to benefit immensely from the current boom in electronics. With facilities in the US and Europe, as well as our CS Interglass and Asahi-Schwebel joint ventures, Hexcel has the world’s leading position in this market.

The high-tech companies gracing today’s headlines, AOL, Lucent, Cisco, Motorola, Dell and IBM, their markets, the Internet, communications and computers, and most importantly their growing range of products-modems, servers, cell phones, PCs and other electronic equipment-are booming. Similarly, the current movement emphasizing portability, encouraging handheld lightweight devices all indicate that "thin is in." Through our regional centers of excellence located around the world, we specialize in producing high-quality, lightweight fabrics that are required by US, European and Asian customers to manufacture the multilayer printed circuit boards that these applications demand.

Consolidation within the electronics field, however, continues to permeate the electronics supply chain. Coupled with the wave of new products currently being developed, this movement towards consolidation drives cost reduction which, in turn, drives further growth. The development-consolidation-growth chain also creates pricing pressure throughout the manufacturing process. Although pricing did not improve in 1999, product volumes did increase for Hexcel, particularly in our production of lightweight materials, consequently enhancing our profitability in relative terms for the second half of the year. Looking ahead, we believe that demand for lightweight, multilayer products will grow at a double-digit rate for the next several years and industry profitability will return to acceptable levels.