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Scott Hamilton
October 17, 2022 © Leeham News: Aerospace supply chains are facing new strains due to rising energy costs, Airbus CEO Guillaume Faury said last week.
bloomberg news Foley reports that some suppliers have closed due to high costs.
“As a result of the skyrocketing energy prices, some suppliers have tried to adapt, sometimes halting production and waiting for the situation to normalize,” he said. “This is very low in the supply chain, but probably new,” Bloomberg wrote. He reported that Faury appeared before the UK Aviation Club.
At another event last month, two of the top U.S. suppliers said their supply chains continued to struggle financially. There is a nature.
ongoing pain
Tom Gentile, CEO of Spirit Aerosystems, says labor, materials, utilities (i.e., energy), logistics, and supply shortages combine to create cash flow problems. Spirit is a major supplier to Airbus and Boeing.
“It’s putting pressure on cash flow. In fact, we’ve seen more bankruptcies in the last six months than we’ve seen in the pandemic as a whole. I am nervous.
“I think there will be more bankruptcies. I think there is a problem in our industry right now. Most contracts are long-term and fixed. Prices don’t go up, but costs go up. Margins are under pressure and I think that will continue. It’s happening on the defensive side and the commercial side. “
Paolo Dal Cin, senior vice president of operations and supply chain at Raytheon Technologies, agrees.
“Certainly the financial difficulties are there. But I think that is what we have been trying to stay very close to during the pandemic. I prepaid a payment to a supplier during
“On the commercial side, we really have a very good program to monitor the health of our suppliers, engage with them in different ways, and help with the cash cycle. We have made a lot of purchases of ,” he said.
“When they deliver, they choose. I agree with you. Some suppliers will struggle with that and we’re looking at it.”
deep in the chain
Dal Cin said Raytheon digs deep into its supply chain to monitor financial health and quality.
“Suddenly, you’re literally dealing with a supplier that’s six layers down, and the problem with the product they produce is actually impacting us at Raytheon Technologies, our Airbus customers, or our defense department. They are now able to understand.
“It’s something we didn’t have to do. I think you have to be very good at increasing and clarifying.
it is the weakest link
As the above shows, the challenges facing Airbus, Boeing and top-tier suppliers go beyond high-profile engine, parts and manpower shortages to meet on-time deliveries and production ramp-ups. This is the weakest link in his entire chain of supply. It’s not just a question of the person who made the widget. Airbus’ Mr. Foley was talking about European energy costs that were minced meat on energy costs and energy supply in the Ukraine war. In some regions, when the war began, European energy costs skyrocketed far beyond expectations.
Airbus’ ambition to ramp up production to a record high and get Boeing back to normal means they’ll have more than enough aircraft over the next decade, not to mention delivering the ambitious number of aircraft envisioned in the 2022 market outlook. target will be difficult to achieve.
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