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  • Risky Business
    Posted by Tony Velocci 7:00 PM on May 13, 2012

    Is commercial aviation on the cusp of a “super cycle?” Maybe.

    The possibility cannot be dismissed. Think about it—orders for new, more efficient aircraft are continuing to build at a rapid pace, with major manufacturers planning to increase production rates for new-generation and legacy models substantially over the next 3-4 years. Driving demand is impressive capacity discipline among airlines in the face of healthy air traffic growth, fuel prices trending higher, and stringent environmental regulations that aren’t being so much as proposed as imposed.

    On the face of it, the combination indeed would seem to support the notion of a “super cycle.” But I would hope manufacturers and their network of suppliers are less consumed by now long the stream of potential revenues and profits will last as they are on the operational challenges.

    Simply put, it remains to be seen whether airframe makers and their suppliers will have the capacity, processes and skilled work force they will need to handle the build rates without the wheels coming off the proverbial wagon and short-circuiting this historic “up” cycle.

    Some lower- and mid-tier suppliers already are confiding they are experiencing a short of critical skills. Too, keep in mind that during the recent recession there was some reluctance on the part of many suppliers to invest heavily in future capacity to avoid getting burned, as has occurred in the past.

    These and other issues were major topics of conversation at Aviation Week’s recent Civil Aviation Manufacturing conference in Charlotte, N.C. Virtually all OEMs were represented. Of course, manufacturing is where materials, processes and skilled labor all come together. During the next few years, advances in materials and manufacturing techniques will be rolled out and help producers improve quality and efficiency, and lower costs.

    As promising as all of these advances are, none of them will substitute for the level of true partnering that will be required between OEMs and lower-tier suppliers to make this cycle all that it can be. In this order/delivery cycle, there are no givens; it will be OEMs and their suppliers who either make a fortune or screw it up form themselves.  


    Tags: AWEIC

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