The aerospace industry continues to grapple with a fragmented and stressed supply chain, causing significant delays and headaches for manufacturers like General Electric. Despite the rebound in air travel, suppliers remain unable to keep pace, hamstrung by labour shortages and financial constraints.
The pandemic exacerbated this fragility. “Not every company is a big company with lots of financial resources,” says Rolls-Royce CEO Tufan Erginbilgic, as reported in Bloomberg. Suppliers face the daunting challenge of catching up with a “moving target” as demand continues to surge.
As a result, major manufacturers are being forced to rethink their entire supply chain strategy. Loaning out employees, offering financial aid, and bringing key components in-house are now commonplace. Boeing’s rumoured acquisition of Spirit AeroSystems underscores the urgency and highlights the failure of outsourcing critical elements like fuselages.
Suppliers face the daunting challenge of catching up with a “moving target” as demand continues to surge.
Vertical integration is a tempting solution, yet not necessarily a cure-all. GE CEO Larry Culp warns against integration simply to ‘fix a problem’, preferring to work collaboratively with suppliers. Rolls Royce, under the leadership of Erginbilgic, is focusing on building stronger, mutually beneficial partnerships with suppliers – a shift in focus from the previously combative approach taken by many aerospace giants.
Ultimately, a long-term solution demands a delicate balancing act. While boosting profitability is crucial for manufacturers to fund innovation, fostering healthy and resilient supplier relationships is equally vital for the industry’s overall health and success.
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