Commercial aircraft producer Airbus is reportedly evaluating a dramatic ramp-up of the monthly production of new A320 aircraft. The European aerospace provider currently supports a monthly production cadence of 42 A320 aircraft per month. In February, the company indicated that it had plans to increase the monthly production rate to 50 aircraft by early 2017, but is now actively evaluating an even larger cadence.
With a current order backlog of over 5100 A320 aircraft, current indications are that Airbus is now considering upping the cadence to 60 per month, which would represent a near 43 percent increase from current production volume. The company is now in the process of assessing the impact among its global based suppliers and expects to make a final decision regarding timing by the end of this year.
Rival Boeing’s single-aisle monthly production volumes averaged 40 737 and 10 787 Dreamliner aircraft during the recently completed first quarter, with plans to increase the monthly production rate of 737 aircraft to 52 by 2018. Boeing continues with efforts to ramp-up monthly delivery volumes of its multi-year backlogged 787 aircraft.
Since key suppliers for Airbus also support production requirement needs of Boeing, this planned ramp-up has significantly broader implications for the entire commercial aerospace supplier ecosystem. The most significant suppliers involved in these ramp-up decisions are often aircraft engine suppliers, fuselage and airframe components suppliers as well as the myriad of avionics and electronic component suppliers.
Airbus is likely matching and/or upping the competitive pressure on Boeing’s competing single-aisle aircraft families in assuring its airline and leasing customers more timely and flexible delivery options relative to orders. Supply Chain Matters has recently called attention to a recent trend of airline customers exercising changed order preferences as the economics and business strategies of the airline industry become more dynamic due to the current dramatic reductions in the cost of fuel and in the rapidly changing competitive dynamics of the global airline industry. Global airlines themselves are much more savvy customers who constantly monitor industry dynamics and are not shy to exercise customer influence among the two major aircraft OEM’s.
The recent occurrence of high-profile aircraft tragedies involving discount airlines is further raising concerns as to whether the supply of experienced pilots, air controllers and air safety systems can support the addition of so many new aircraft over the coming decade.
As Supply Chain Matters has noted in a number of our previous aerospace supply chain focused commentaries, the realities of multi-year order backlogs are now reaching the point of all-in commitment. These are record-breaking production volumes and massive scale that this industry has never experienced at a regional or global-wide perspective. Technology will play a critical role along with people, since the aerospace industry is facing the same reality of highly experienced older employees about to retire. Processes, systems, risk mitigation, talent and supplier management practices are sure to be tested in the journey that is unfolding.
As a supply chain community, those directly involved, and those of us as outside observers, get the opportunity to observe the lessons, process innovations and accomplishments that lie ahead for the commercial aerospace supply chain industry.