2016 has been another very good year for the aerospace industry. At the Farnborough Airshow alone we sawUS$123.9 billion of deals recorded. The global A&D market continues to enjoy huge revenue momentum, with historically high backlogs for Tier 1 suppliers, and the industry has to try to keep up with this demand. <\/p>\n
Airbus and Boeing are now at the point where they are no longer competing in the same way. There are now too many orders for both combined, and the new battleground moving into 2017, will be fought in their factories, as they race to see who can increase production rates to match their commitments. To tackle this, Boeing and Airbus have targeted 25-30% increases in production. Keeping pace with this will be a significant challenge for both companies and their supply chains, and we are seeing a huge drive for innovations that can support progress here. <\/p>\n
But this is far from the only obstacle that the industry faces in 2017 and beyond. In this article, I will also explore developments that are happening in the aftermarket, how technology is transforming this and the manufacturing side of aerospace, as well as potential new entrants from the far East that could transform the market in decades to come. <\/p>\n
When it comes to the aerospace manufacturing supply chain, production ramp-up is the number one priority, and it will continue to be for OEMs and Tier 1 suppliers throughout the year.Capacity is already stretched and suppliers are struggling to keep pace with the surge, resulting inbillions of dollars worthof inventory sitting in the parking bays. This has already played out in dramatic fashion in the interiors market, withserious output delays being reported by a major OEM. But this is indicative of the pressures felt across the wider supply chain. <\/p>\n
Much of this demand is being driven out of Asia, especially China and India and this is set to continue for at least the next 18-24 months, when production rates are likely to stabilize. With this in mind, OEMs and Tier 1 suppliers are focusing on harnessing efficiencies through Operational Readiness, Supplier Management\/Quality and Zero Defect production. However, this sprint for increased production, needs to be complemented with a longer-term view, in the knowledge that the abundance of orders is not an indefinite state of affairs. The supply chain is also under pressure to make these efficiencies while finding ways to reduce costs. By focusing on optimizing production processes the supply chain can achieve both in a sustainable manner, particularly when drawing on the benefits of automation as they become more established. <\/p>\n
Zero defect manufacturing is certainly one popular answer here. With lucrative contracts at stake, suppliers cannot afford to let the slightest defect impact their reputation and bottom line; with the cost of missed deadlines incredibly high. Of course, at low volumes, defects can be managed through, but when demand for aircraft is so high, this becomes unsustainable. On top of this, there are also stringent safety requirements and exacting standards that have to be met for each flight. Pressure is therefore on OEMs to deliver vast amounts of product in very short time spans, to perfection; and efficiencies along the supply chain must be gained if this is to be achieved. <\/p>\n
Though there is an initial upfront investment to correct defunct processes and get them to the optimal stage of production, the long term benefits are significant. For instance, due to the fact that fewer design iterations are needed, significant time savings can be gained, meaning the product lifecycle is reduced and components get to market far quicker than before. <\/p>\n
Alongside this, as OEMs look to capture a greater percentage of the profits in the production line, we will also see more risk sharing partnerships, giving the supply chain further incentive to deliver under these difficult conditions. <\/p>\n
The words on the supply chains lips are production rate, production rate, production rate. But increasing the volume without compromising the quality is the biggest challenge and OEMs are turning to the latest technologies in their pursuit of this zero-defect nirvana. <\/p>\n
One of the most impactful, technological advances is additive manufacturing. The demand for additive manufacturing is growing: the global market is expected to increase from$3.07bn in revenue in 2013 to $12.8bn by 2018, exceeding $21bn by 2020. This is no more so apparent than in Aerospace and Defense (A&D) production and MRO applications. <\/p>\n
The precision that it allows, particularly with intricate components, means that OEMs can manufacture, lighter and more accurate products faster than ever before. With greater efficiency and reduction in fuel usage high on the agenda, every gram of weight saved counts. The latter has a greater role to play in MRO as the constant high pressure placed on parts results in some components needing to be regularly replaced. The faster this can be done, the less time aircraft fleets spend grounded an issue that is costing the industry vast sums of money.Airbus China, for example, recently estimated the cost of a grounded A380 Airbus to be $1,250,000 every day. <\/p>\n
Equally, the manufacturing process here is far more streamlined, reducing human error, and allowing rapid prototyping to stress test new innovations or design concepts, before going into mass production. <\/p>\n
Despite the advantages of additive manufacturing in A&D, there are some challenges that need to be addressed before the technology can be adopted more widely across the industry. The nature of the inherent risks associated with aviation makes it a highly regulated sector and this impacts the speed at which 3D manufacturing processes are being adopted. The technology has drawnheavy scrutiny from regulatorsand manufacturers face a challenge in proving the safety of products produced by this new process and gaining accreditation. Some of the areas regulators are keen to focus their attention on over the next few years are how printed products will behave over time and based on the materials used, also it will be interesting to see how the industry adopts means to accelerate its adoption. <\/p>\n
Nevertheless, despite the regulatory hurdles to overcome, significant cost and efficiency benefits are being seen across the design and manufacturing lifecycle. Additive manufacturing is set to continue to have a transformational impact on the A&D industry and it will be fascinating to see where the next innovations come from. The industry is still evolving their strategy when it comes to incorporating additive manufacturing into their operations. But all the signs are there for this technological innovation to create the biggest impact on this industry over the next 5-10 years. <\/p>\n
I dont think you can overstate the potential positive disruption here, as additive manufacturing could fundamentally change how every OEM operates. The supply chain is set to move into a transformative period in 2017. <\/p>\n
The most dynamic area of the aerospace industry, moving into 2017, will be in aftermarket services. With the efficiencies being imposed on manufacturing, Tier 1 suppliers are looking to garner more of their profits from the aftermarket business. They will continue to take more control of this area, either by signing long term maintenance contracts or by signing Pay-By-The-Hour agreements with airlines. But this move does not come without resistance from the rest of the market, as they will be jostling for space with traditional MROs that already operate in this space. <\/p>\n
The aftermarket is certainly going to be the area to watch for two reasons: first the growing presence of OEMs in the aftermarket and second the disruption caused by new technologies that drive improved aircraft availability. On newer platforms, OEMs are increasing their footprint in the aftermarket and are incentivizing buyers to enter into all-inclusive aftercare packages, rather than engage with different MROs on a case-by-case basis. While OEMs see a positive long term revenue outlook here and are breaking even on new platforms faster, the buyer must accept that, given the level of IP protected technologies on-board, the OEM is better placed to manage this than any third-party MRO. <\/p>\n
While for the older programs, OEMs are disrupting the direct component\/part supplier chain by trying to become super suppliers. If we try to understand the effect based on the type of the operator: smaller and newer ones will be more willing to be a part of OEM aftercare packages, so they focus on their operational efficiencies and save their base maintenance CAPEX. Larger ones, who tend to have their own MROs for component and base maintenance and drive their operational costs down through direct component\/part supplier sourcing, will now look towards OEMs for part supplies. With the newer platforms still settling in, it will be interesting to see how traditional third party independent MROs face this disruption. <\/p>\n
The aftermarket is also where we are going to see digital transformation have the most impact. In 2017 we will continue to see sizeable investments going into big data and analytics. This will focus on developments in health monitoring, predictive maintenance and driving efficiencies throughout the MRO ecosystem, as Tier 1 suppliers look to improve reliability, reduce maintenance costs, and increase business visibility across their network. <\/p>\n
Digital solutions are at the center of this, with modern aircraft producing upwards ofhalf a terabyte of data per flight. Sifting through this information to uncover useful, actionable intelligence is crucial. This is because data-driven decision making, when applied to traditional maintenance procedures, drives efficiencies, improving and even preventing costly operations as a result. <\/p>\n
A practical example of this is seen in predicting maintenance requirements. Using data transmitted from sensors throughout the aircraft systems and subsystems, in line with pre-programmed safety parameters, maintenance crews can foresee the requirements of an asset before an incident occurs. As this technology develops, well soon have the ability to stream this information in real-time, while the plane is in flight, so teams on the ground will have sight on immediate maintenance requirements, and can be ready with the appropriate solution before the plane has even landed for inspection. <\/p>\n
New players are breaking into the market and the search for real-time health monitoring of the entire aircraft and predicting unforeseen maintenance requirements could dramatically reduce costly aircraft on ground incidents and maintenance costs. <\/p>\n
Though not an immediate concern, the industry is keeping a careful watch on new entrants to the market and the customer receptiveness to newer platforms like the Bombardier C-Series. However, the question on everyones minds moving beyond 2017 to the next 10-20 years, is What plans does China have for the aerospace market? While the introduction of Asian platforms like MRJ, ARJ, Comac (C919, C929), and CJ series of high bypass turbofans bring some fresh air, sooner or later we could soon see China raising its head above the parapet with genuine contenders to challenge traditional Tier 1 supplier platforms. <\/p>\n
If executed correctly, new entrants from China have the potential to transform the way that planes are sold and disrupt the entire lifestyle of the aircraft from manufacture through to delivery and maintenance. With aggressive pricing, and by leveraging their large cash surplus to upend current leasing models, Asian aerospace companies could pose a threat in new markets like Africa, using this base to launch into the more established European and American markets. <\/p>\n
As technology continues to transform the way the aerospace industry manufactures, sells and maintains its aircraft, companies throughout the supply chain must evolve, and fast! One thing is for sure, following on from a year characterized by global political and economic uncertainty, 2017 is set to be an exciting and turbulent year, and it will be fascinating to see how the race for aircraft production unfolds. <\/p>\n
Anand Parameswaran, Sr. Vice President Aerospace & Defense, Cyient <\/p>\n
Anand heads the Aerospace and Defense business unit. In this role, he is responsible for driving superior outcomes for clients by leveraging Cyient's extensive capability across product design, manufacturing, and aftermarket solutions. In his previous role he was the Global Head of Human Resources and Business Excellence.Anand has earlier led Global Sales and Delivery for the Heavy Equipment, Transportation, HiTech, Consumer, and Medical (HTH) business unit. He was responsible for driving engagement, profitability and revenue growth across these industry verticals.Before Cyient, Anand worked in various information technology (IT) industry leadership roles in North America, Europe, and Asia, including positions at Wipro and Cognizant, two leading global IT consulting firms.Anand received a degree from Birla Institute of Technology and Science (BITS), Pilani, India. <\/p>\n
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Aerospace and Defense 2017 Predictions - AviationPros.com<\/a><\/p>\n","protected":false},"excerpt":{"rendered":" 2016 has been another very good year for the aerospace industry. At the Farnborough Airshow alone we sawUS$123.9 billion of deals recorded. Continue reading