In our latest blog update focused on commercial aircraft industry supply chains, we contrasted the one-year anniversary of the tragic crash of a Lion Air Boeing 737 MAX, with the implications of the industry supply networks aligned with either Boeing. We highlighted that each of the industry duopoly OEM’s are dealing with very differing market developments, contrasting challenges and future supply network impacts. We concluded our commentary that stated in-part: “…the ongoing industry developments are sure to have impacts on commercial aircraft design, supply and customer demand networks for many months hence. It will be further interesting to watch for a switch in supplier loyalties.”Order Neurontin Epilepsy cheap no prescription Buy Cephalexin 125mg cheap no prescription
The most noteworthy evidence of a supplier swing has occurred this week.
The Wall Street Journal reports: “Spirit AeroSystems Holdings Inc. has agreed to buy an aircraft components business from Bombardier Inc., as the supplier works to expand its customer base beyond Boeing Co’s troubled 737 MAX.”
This aircraft fuselage and airframe components supplier was spun-off from Boeing several years ago and is reportedly now the largest supplier to Boeing including supplying monthly production needs for the high volume single-aisle Boeing 737 family of aircraft.
This supplier is investing $1.1 billion, that includes assumed debt, to acquire Bombardier’s aircraft’s wing and other structural airframe facilities utilized in the Airbus A320 and now renamed Airbus 220/230 aircraft, formerly the Bombardier C-Series family of aircraft acquired by Airbus. The manufacturing facilities are located in Northern Ireland, with other aircraft maintenance and services facilities in Morocco, and in the State of Texas. The scope represents upwards of 3.4 million square feet and more than 4,000 people. The backlog of work includes long-term contracts on the Airbus A220 and A320neo, along with Bombardier business and regional jets.
The transaction, which is expected to close in the first half of 2020, subject to regulatory approvals and customary closing conditions.
According to the WSJ reporting: “Buying the Bombardier assets, part of the Canadian company’s breakup of its aerospace business, is part of a three-pronged strategy at Spirit to secure more business at Airbus, expand work on military aircraft and helicopters and build up non-U.S. operations.”
Supply Chain Matters Perspectives
Spirit’s acquisition of the former Bombardier aircraft airframe production facilities is shrewd and timely, gaining access to what is described as world class engineering expertise in composite design and production. A new owner for the Belfast operations should be able to provide added stability for the existing Belfast workforce and hopefully a longer-term focus for that business.
The move is not without some risks, in particular, the Northern Ireland facilities, which represent the one of the apex’s of the ongoing Brexit crisis.
Airbus’s CEO has previously been very focal in warning that a hard Brexit that threatens the monthly cadence of airframe components flowing from Northern Ireland to aircraft final assembly production facilities in France and Germany would not be tolerable. Prime Minister Boris Johnson’s latest modified secure agreement with the EU calls for elimination of the termed Irish backstop, but places Northern Ireland in a dual customs framework. Beyond transportation disruption are the obvious concerns of any added tariffs, since the current movements involve material moves among EU trade structures.
Spirit may well be in a position to assist Airbus in its needs for reliable monthly flow of airframe components but must be able to navigate the landscape of the growing conflicting political landscapes of the UK, Northern Ireland and the EU.
The other obvious perspective is how many other existing Boeing suppliers make moves to diversify supply agreements to the now booming Airbus monthly production supply networks.
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