Frankfurt 75 – this number brings beads of sweat to many Airbus suppliers. This is the number of A320 Family jets that the Group intends to produce every month from 2025 – more than ever before. In the supplier industry, there are growing concerns that the predominantly medium-sized companies will not be able to keep up with this pace.
“The supply chains are extremely tense,” warns Markus Nolte, head of Montana Aerospace, a manufacturer of wing structures: “The planned ramp-up of production at Airbus or Boeing is a real challenge for the entire industry.”
The problems are manifold. There is a lack of material and personnel. Companies have used up their financial reserves in the month-long crisis in which there was significantly less production. Even with Airbus’ goal of increasing the production rate from 40 jets to 64 A320neo per month by 2023, some suppliers fear that they will be overwhelmed.
Many still remember the pictures of new aircraft that were parked en masse in front of the factories in 2018 because engines were missing. Managers from Raytheon Technologies, who supply the engine specialist Pratt & Whitney, or from Safran, a partner in the CFM engine joint venture, have warned against overly “ambitious” plans on several occasions.
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But Airbus is sticking to the number 75. Although it is currently only a scenario, which is based on the expected demand, Marketing Director Christian Scherer told the Reuters news agency a few days ago. Airbus expects that almost 48,000 commercial aircraft will be on the road in 2038, more than twice as many as before.
The rival Boeing estimates the need in the next 20 years at 44,000 jets. According to forecasts, three quarters of these aircraft will be short- and medium-haul A320 or Boeing 737 aircraft.
The experts at the consulting firm McKinsey therefore assume that the monthly production rate of these so-called single-aisle aircraft – jets with one aisle – will have to increase across all manufacturers from 44 in the crisis year 2020 to 132 in 2025. And they also warn of the associated problems. “A clear majority of executives are concerned about the readiness of their own supply chain,” the authors write in a recent study.
Airbus in particular has a very complex supply chain. The most important suppliers (tier 1) have their own suppliers, who in turn have upstream suppliers and so on. Industry experts estimate that Airbus has around 10,000 suppliers.
“I see the biggest problem in the fact that the individual members in the complex value chain are moving at very different speeds when restarting, partly due to company-specific warehousing,” says Nolte from Montana Aerospace: “The entire supply chain system is not yet synchronized.”
Some suppliers have reoriented themselves during the crisis
Nolte describes one of the causes: “That makes planning difficult for these upstream suppliers.” Other companies have their liquidity reserves in the Crisis heavily burdened. In some cases, there is now a lack of money to ramp up production and, for example, order the necessary raw materials.
“Still others have reoriented themselves during the crisis, for example in the direction of the automotive industry,” said Nolte. These capacities would now be missing because the companies no longer wanted to make themselves as dependent on aviation as they were before the pandemic. “We get inquiries as to whether we cannot take over production volumes from other companies,” reports the manager: “But this is often not so easy in the short term due to the tense supply chains.”
In addition, there is sometimes irritating communication from Airbus. There are no systemic problems in the supply chain, according to the corporate headquarters in Toulouse. There are individual cases of suppliers who have problems with staff or purchasing raw materials. You have mechanisms to record this and take countermeasures.
At the same time, Airbus CEO Guillaume Faury warned a few weeks ago that managing the supply chain over the next twelve to 18 months would be the “hardest part” of the post-crisis recovery. And Marketing Director Scherer recently caused further confusion when he said that Asia would be because of the continued closed borders significantly fewer new jets are required than expected.
The Airbus boss believes supply chain management over the next twelve to 18 months will be the “hardest part” of the recovery.
(Photo: Reuters)
This is unsettling the suppliers, reports Michael Santo from the Munich-based management consultancy H&Z, which focuses on the aerospace industry. The result: “Basically, significant parts of the supplier base are very reluctant to order raw and input materials,” says Santo: “This is partly due to a lack of confidence in the Airbus forecasts for production rates and partly to the statements made by Airbus itself.” Many suppliers would have the impression. that Airbus would already cast doubt on its own forecasts.
In addition, the necessary transparency along the supply chain is lacking, complains Santo. Beyond the large components such as complete engines, landing gears or entire fuselage segments, these do not exist. “Today, neither Airbus nor the decisive tier 1 suppliers can really say where material buffers or bottlenecks exist. This is only possible through intensive individual analyzes, but not through digitized solutions. “
Wave of consolidation is expected
Because of the tense situation, almost everyone in the industry is expecting a wave of consolidation. “For many companies, the financial endurance test is just ahead of them when they ramp up,” predicts Nolte from Montana Aerospace: “I assume that we will see a few more market exits in the coming months.”
It is precisely for this reason that Airbus’ considerations to radically rebuild the Group’s own production of components and parts are causing concern among some aviation managers. Airbus wants to split up the German subsidiary Premium Aerotec and is looking for investors for the production of individual parts.
After fierce resistance from employee representatives, the plan to implement the project at the beginning of next year was abandoned. Now the management wants to talk to IG Metall again on November 9th about how to proceed.
Nevertheless, some in the supplier industry are wondering why Airbus wants to bring further unrest into the fragile delivery system now, of all times. In Toulouse they try to take away such worries. “We are preparing our own industrial system for the future start-up and also the arrival of new products on our production lines,” says Airbus.
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