Boeing and Airbus are headed up the production curve, and new aircraft from Bombardier, Embraer and Mitsubishi will be entering the market soon. About 70% of the supply chain for all airframe manufacturers consists of the same companies. Will these common aerospace suppliers be pressed so hard by simultaneous demand surges that the supply chain is threatened?
Quite possibly, but not for the traditional reason—high volumes. Aircraft production usually peaks along with, or a little after, economic and industrial production high points. Those hundreds of aerospace suppliers also make products for other sectors. When every sector is booming, shortages can occur in both crucial raw materials and specialized manufacturing capacity.
The aircraft boom this time coincides with a still sluggish world economy, with plenty of spare capacity. Below the top airframe tier, suppliers and raw-product markets will likely have plenty of slack.
This surge is largely to replace older aircraft with more fuel-efficient jets. And there's the rub. In an effort to cut weight and improve efficiency of engines and cut weight and drag from airframes, OEMs are pushing new designs and materials forward rapidly. That could be where problems develop.
In 2012, Boeing and Airbus ramped up production of aircraft by 29%, measured by value. “That is a pretty steep angle, they can do that,” summarizes Richard Aboulafia, vice president for analysis at the Teal Group. “Also, remember military capacity is coming off-line, so that will be available.”
Aboulafia argues that the real challenge is learning to build new kinds of jets and engines and to manage mass production of thousands of new subsystems and structures. “Boeing can build 40 or 50 787s a year, but can they do 10 or more a month?” Beyond the long-range 787, there are the Airbus A350, Bombardier's CSeries, the Mitsubishi Regional Jet and Embraer's EJets 2, plus geared turbofan and Leap engines (see page 42).
Moreover, some OEMs may be out of shape when it comes to commercial engine runs. “Pratt hasn't built its own new commercial engines in 20 years, since the JT8D,” Aboulafia says.