Home / Increasing aircraft production: a supplier‘s timebomb?

Increasing aircraft production: a supplier‘s timebomb?

2020-09-09 / 3 min
Locatory.com platform

At the end of June 2004, Airbus and Boeing shared a little more than 2 400 orders combined. So far in 2014, the two giants have a backlog that exceeds more than 10 600 aircraft, with Airbus’ orderbook for the A320neo alone heading towards 2 800. However, as more and more new generation aircraft are nearing their introduction, the real question is whether the suppliers are equipped enough to support such an expansion, given that both manufacturers are determined to push their manufacturing rates even further.

Currently Airbus and Boeing together are producing around 1000 narrow-bodies per month, and have announced plans to push the manufacturing rates even further. On the one hand, it seems that so far their suppliers are comfortable with such plans. However, while such attitude might be encouraging, according to Canaccord Genuity, the suppliers also express concerns that anything beyond could put too much pressure on the supply chain or even weaken the demand after a few years.

The survey found that currently the crucial higher-tier suppliers are confident that current and planned production rates are sustainable as well as aligned with the demand. For instance, structures firms believe that rates exceeding 100 per month are feasible, – optimism that is also echoed by material suppliers. Nevertheless, many others are in fact reluctant to invest in supporting further increases in manufacturing rates, as they fear that they would be capitalizing for a rate that is not sustainable.

Despite becoming more and more active in the aftermarket, aircraft OEMs still make most of their profit from production

“Despite becoming more and more active in the aftermarket, aircraft OEMs still make most of their profit from production. Therefore, higher production rates contribute to reduced unit costs and provide a broader base for investment amortization. As a result both, Boeing and Airbus, are currently accelerating the relevant processes. An added benefit of such a strategy is that it makes life difficult for such new aircraft as Bombardier CSeries, Mitsubishi MRJ and Comac C919, which will soon be entering the market. However, about 70% of the supply chain for all airframe manufacturers consists of the same companies. This means there is a possibility that common aerospace suppliers will face too much of the simultaneous demand pressure, resulting in a threat to the supply chain,” explains Zilvinas Sadauskas, the CEO of Locatory.com

According to Teal Group, such scenario is indeed quite probable, but not because of high volumes per se. For instance the consultancy agency argues the real challenge is learning to build new kinds of components, as well as to manage mass production of thousands of new subsystems and structures. Currently, interiors suppliers are one of the most concerned, since they face both record production rates and increasing demand for retrofits as carriers capitalize on innovations such as “slim-line seats” and new premium cabin offerings.

“At the same time, rising OEMs production rates provide opportunities for more suppliers to enter the supply chain. Even back here in Lithuania we have small manufacturers which produce parts for Boeing aircraft,” shares the CEO of Locatory.com. “But still, the pressure is constantly rising. This is also true of wide-body aircraft. For instance, while planning the transition to the new generation models, Boeing is producing its 777s at a rate of 8.3 per month, with almost a 100 to be delivered this year. In the meantime, the manufacturer doesn’t have a clear position on whether it will reduce the rates before transitioning to the 777X. So the real challenge for the supply chain is producing a massive number of newly designed parts made of innovative materials on budget, on time and at the very high-quality levels, and only time will show if the players can handle it,” concludes the CEO of Locatory.com.

Share this article:

Recent articles

Celebrating Our Ongoing Partnership with GA Telesis

2024-03-25 / 2 min

At Locatory.com, for some time already, we have been thrilled to have our ongoing partnership with GA Telesis as a truly exciting experience for all of us. We are delighted to have them as a part of our family. It is a true pleasure to partner with one of the most well-known names in the

Taking Flight with Caution: Suspected Unapproved Parts

2024-03-15 / 5 min

Imagine the unsettling scenario: you’re boarding a plane, excited for your trip, unaware that a crucial component within the aircraft might be a dangerous imposter. This is the chilling reality of Suspected Unapproved Parts (SUPs) in aviation, a growing concern that casts a long shadow over the very foundation of air safety. Unlike a faulty

Ascending or Stalled? The European MRO Outlook for the Next Decade

2024-02-29 / 4 min

The European MRO (Maintenance, Repair, and Overhaul) industry has weathered a storm like no other. From pre-pandemic highs to COVID-induced turmoil, the past decade has been a tumultuous ride. As the industry looks towards the next decade, challenges are clear – but virtually every forecast leaves space to be filled as a lot of doubts