The Airplane Order Drought: How Supply Chain Woes Are Grounding the Industry
The recent Farnborough International Airshow, a renowned gathering of the aviation industry, was marked by a stark absence of the enormous aircraft orders that typically dominate such events. Instead, the focus shifted to the struggles faced by Boeing and Airbus, the industry’s giants, as they grapple with the aftermath of the pandemic, battling rising production costs and a shortage of skilled workers.
Key Takeaways:
- Order Drought: Both Boeing and Airbus saw a significant drop in aircraft orders at Farnborough compared to the previous year’s Paris Air Show, highlighting the industry’s struggle to meet growing demand.
- Production Bottlenecks: A combination of factors, including parts shortages, supply chain disruptions, and labor shortages, particularly skilled workforce availability, are hampering production efforts.
- Training Challenges: The pandemic led to a loss of experienced workers, and re-training new staff is proving to be a major challenge for both manufacturers.
- Cost Pressures: The shortage of skilled workers has pushed up wages, impacting suppliers and leading to potential job displacement.
A Supply Chain Hangover
The pandemic’s impact on the aviation industry continues to linger, revealing a complex web of challenges that are far from resolved. In the wake of widespread travel restrictions, both Boeing and Airbus drastically cut production, resulting in layoffs and a loss of skilled workers. This has left them with a daunting task of ramping up production while simultaneously contending with a severe shortage of parts and components.
"It’s a fair sentiment on the part of the supply base and the airlines to say that we failed our commitments to them in terms of being timely, in terms of predictability," said Ihssane Mounir, Boeing’s senior vice president of global supply chain and fabrication. "So obviously, people start doing their own planning and their own second-guessing."
Parts Shortages and Unforeseen Delays
The shortage of parts extends far beyond the obvious. From landing gear to engine components like high-pressure blades, even the seemingly mundane, like cabin interiors, have become sources of delay and frustration.
"What we don’t want to be seeing again in the future, whether we’re in an uplift or in a slowdown of this industry, is a situation where the supply chain does not believe what we’re telling them," said Christian Scherer, chief executive of Airbus’s commercial airplane business. "We have to earn that trust back."
The Labor Crunch and a Skills Gap
The pandemic also exposed a significant gap in the aviation industry’s workforce. Many experienced workers were either laid off or opted for early retirement during the downturn, leaving a void that is proving difficult to fill.
"I think it’s a three-to-five year issue," said Kevin Michaels of AeroDynamic Advisory. "Wages have to be reset to make the industry more attractive" for workers, he added.
The manufacturers are now faced with the arduous task of training new workers, a process that can take years to complete and is pushing up labor costs further down the supply chain. Boeing’s Mounir acknowledges that these smaller suppliers, essential to the aerospace ecosystem, cannot bear the burden of training alone.
"There’s no question about it," he said. "We have to do it ourselves at the higher level, again, leveraging our balance sheet. It will pay off."
A Global Shift in Production?
The labor crunch is a significant concern across the industry. Many experts believe that the shortage of skilled workers, particularly in the United States, could lead to a further shift of aerospace manufacturing to other countries with more readily available labor.
"In the case of the U.S., more aerospace work will eventually move abroad, to places where labor is available," predicted Michaels of AeroDynamic Advisory.
A Long Road to Recovery
The Farnborough Airshow has painted a stark picture of the challenges facing the aviation industry as it emerges from the pandemic. Supply chain woes, labor shortages, and rising costs are a significant drag on production and could potentially lead to a global shift in manufacturing. It is likely to be years before the industry is back on its feet and the long-term implications of the current situation remain to be seen.
The industry’s ability to overcome these hurdles will depend on a coordinated effort from manufacturers, suppliers, and governments to address the challenges head-on. Without a swift and decisive response, the aviation industry could find itself grounded for years to come.
