It is easy to focus on demand more than supply. Salespeople at aircraft manufacturers get to drink champagne with clients while their colleagues back at the factory spend their days managing supply problems.
This time last year many people were optimistically predicting that supply chain issues would be better in 2023. So far, although the problems have changed, disruptions to manufacturers’ supply chains do not seem to be getting better. You can see this with deliveries. In the first three months of this year, business jet manufacturers delivered 117 jets. One fewer than in the first quarter of 2022. Turboprop deliveries rose to 117 from 110 last year.
“Today, it is worse than last year,” Éric Trappier, chairman and CEO, Dassault Aviation told Corporate Jet Investor (CJI). After the global pandemic, Dassault looked forward to ramping up orders and then came the tragedy of the Russian invasion of Ukraine. “We saw restrictions on materials and governance and an increase in the price of energy here in Europe and that has created more tensions for the supply chain.”
While Dassault acknowledged supply chain challenges, the manufacturer said it had anticipated and mitigated them by boosting investment at its sites around France – at Mérignac, Biarritz and Seclin in the north of the country. (Pictured is a Dassault hangar).
Boeing Business Jets singles out the impact of supply chain challenges on fleet renewal. “The post Covid recovery in the supply chain has not been as robust as we would have liked – that is well known in the industry. That’s certainly influencing near term deliveries,” Thomas Sanderson, Boeing’s director of Sustainability & Emerging Technology Product Marketing told CJI. “I know our competitors have indicated they are seeing similar challenges, as we share a lot of our supply chains.”
But Boeing’s guidance remains that the manufacturer will fulfil the delivery targets for 2023 set at the beginning of the year – albeit with summer phasing during the summer.
Gulfstream believes supply chain disruptions are improving. “I think it is modestly improving throughout the industry for the next six to nine months,” Mark Burns, president, Gulfstream told CJI. “I do see a level of commitment from companies we are dealing with to resource and have a forward looking plan. That allows us to increase our production rates as we would like.”
Initially the challenge was securing electronics and things used in jet construction such as adhesives and later evolved to mechanical systems, he said. Going into the pandemic the manufacturer adopted a just-in-case philosophy in place of just-in-time. “In some cases we have pre-ordered inventory from suppliers two years in advance, to make sure they feel comfortable, as they ramp up their supply base and hiring, that they have a long term commitment.”
Gulfstream amassed significant stock going into Covid of about $1.4bn for just aftermarket support, said Burns. “So, I think we weathered that storm a little better than most.”
Bombardier agrees that since the start of the pandemic the supply chain landscape has changed. The challenge has changed from moving large parts around to intervening with the manufacturer’s tier one, two and three suppliers to ensure the continuity of supply, said Mark Masluch, senior director, Communications, Bombardier. “We have deployed supply chain specialists and embedded them with our suppliers, so we are not at the end of the line [if problems arise],” he said. “That’s the first perspective: to understand supply chain issues early on and to support our suppliers.”
So, will supply chain disruptions grow worse or wane as the year wears on? Trappier at Dassault believes the industry has reached the point of peak disruption but is less clear about when the challenge will be resolved. “We are now in a phase that is the maximum and will we be back in a normal phase in the coming months or years? It’s too early to tell.” But he added that supply chain disruptions affect the whole aviation industry.
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