Commercial Sector Unable To Reach Airframer Ramp-Ups, Survey Suggests

FARNBOROUGH—Among more than 80 firms surveyed in the commercial aviation supply chain, 65% of suppliers indicated that their current production systems are inadequate to reach airframer ramp-up targets.

The findings from new research conducted by McKinsey & Company in partnership with Aviation Week suggest a gap in production, plant and equipment capacity, as well as a shortage of skilled labor. The shortfall appears to be most pronounced at engine and Tier 2 suppliers.

“The supply chain’s view on ramp-up is clear—the commercial aerospace sector is not yet on track to reach the airframer production ramp-up targets,” states McKinsey in its analysis. 

It’s a gap requiring collaboration with manufacturers as backlogs grow to historic levels. By the end of the first quarter, Boeing’s commercial backlog had grown to over 5,600 aircraft. The order backlog at Airbus amounted to 8,626 commercial aircraft at the end of March 2024.

“We are ramping up, and we will be ramping up the future,” says Delphine Bazaud, head of Airbus' industrial supply chain & digital operations, who was speaking on a panel at Farnborough Airshow. “What we really need to invest in is collaboration and transparency to be able to meet that challenge all together.”

Efforts at Boeing and Airbus to better engage with and support suppliers are ongoing, according to executives on the panel, describing key challenges as being availability of materials, components and workforce. In some cases, trust also needs to be rebuilt. A majority of suppliers responding to a separate longtime survey have pointed to Boeing’s 737 MAX production as the leading challenge for the sector.

“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 being predictable,” says Ihssane Mounir, senior vice president for global supply chain at Boeing Commercial. “Now, how do you mitigate that? You have to have good communication across the board with everybody, with all stakeholders.”

Suppliers have also been second-guessing Airbus production targets, and the OEM is now going “far deeper” into the supply chain than it traditionally has. In one example, the OEM created a steel taskforce to ensure it could source enough for all its production after discovering that some suppliers neglected to invest in sufficient raw materials during the pandemic, notes Bazaud.

In a similar vein, Boeing is steering an Aerospace Safety and Quality Forum to exchange views and experiences with suppliers, aiming to work to the highest common denominator in terms of quality, manufacturing and best practices. “I wouldn’t call it oversight because we're not looking over their shoulders, but helping them with what we know—we are a point of commonality across all suppliers,” says Mounir. He describes digital tools as an advantage yet to be fully tapped, seeing opportunity to simplify communication both internally and externally, and potential in AI for streamlining its processes, build plans and demand forecasting.

As even the smallest bottleneck can impact the whole industrial setup, trust in both directions will be key, as manufacturers rely on their supply base to be as transparent as possible, and suppliers warily eye production targets. Companies who emerge on top will be those who “are most transparent, treating their value chain as partners rather than solely customers and suppliers,” McKinsey suggests.

Weighing in as a Tier 1 supplier on the panel, Honeywell Aerospace describes collaboration and open dialogues as being a game changer in addressing the challenges that exist.

“We're all challenged and we’ve opened up lines of communication within the industry to help solve these challenges,” says Matthew Milas, president of Honeywell's defense and space business. “I think that's a big shift in what we've been seeing across the board. That's the only way we're going to get out of this—is get out of it together.”

Editor’s note:  McKinsey partnered with Aviation Week to survey 175 leaders across more than 80 firms ranging from airframe and engine OEMs to suppliers, MROs and operators on key questions as to how they will respond to the challenges of meeting current demand while tooling up (figuratively and literally) for future aircraft and technologies.