A published report indicates that Boeing is experiencing specific on-time supplier delivery challenges in supporting delivery of newly announced 737 MAX aircraft, resulting in the need for more parking spaces for aircraft.
In our ongoing coverage of the aerospace commercial aircraft industry and its associated supply network, we have highlighted recent significant weak links being major aircraft engine suppliers. New, more sophisticated fuel-efficient aircraft engines have presented their own unique challenges regarding the ability to scale to volume production and delivery needs of airline companies and lessors.
Up to this point, the most visibly impacted commercial aircraft manufacturer has been Airbus, which over a good part of this year, has had to resort to parking high numbers of mostly assembled A320 neo aircraft on factory runways, awaiting engine manufacturers Pratt & Whitney or CFM International to make good on overdue completed engines. At one point in Q2, Airbus reportedly had upwards of 100 assembled aircraft parked on factory adjacent runways and parking areas.
Visibility and supply network visibility impact has now placed Boeing in the looking glass.
The Wall Street Journal reported this week that unfinished Boeing 737 MAX aircraft are poling-up at its factory facilities in Renton Washington. The WSJ exercised a public records request to ascertain that the City of Renton’s Public Works Administrator penned a late July letter to City Council members indicating: “They (Boeing) have encountered an emergency production challenge that threatens to interfere with their ability to keep their airplane production line running.”
According to the report, (Paid subscription or metered view) the Renton airport has parking spaces to accommodate 35 parked 737’s. In late July, the FAA approved plans under which large aircraft taking off from the Renton airport have to provide two hour’s notice to allow Boeing employees to move certain aircraft on taxiways. The report further cites sources indicating that assembled aircraft less engines are being parked between airport buildings and in one Boeing factory employee parking lot. Boeing is further flying 737’s with temporary engines to nearby King County Airport (aka Boeing Field) for parking, while shuttling the temporary engines back to the factory in order to mov
e additional aircraft to this airport.
A Boeing spokesperson indicated to the business media publication that the specific request for added parking space was part of a “recovery plan” to get deliveries to match production rates.
Somewhat similar to Airbus, late delivery of completed fuel-efficient engines from CFM International is one of the challenges, with an additional weak link in fuselage airframe manufacturer Spirit AeroSystems. With a current planned monthly production volume of 50 of model 737 aircraft assembled each month, reportedly only 29 were delivered in July. No delivery numbers are yet published for August.
Both of these suppliers acknowledge that some of their suppliers have been struggling to scale up to current volume production support needs. Spirit indicated to the WSJ that supply problems have been resolved and on-time shipments have resumed. CFM International indicated plans to eventually catch-up with aircraft delivery schedules, which were characterized as several weeks behind.
Both Airbus and Boeing remain committed to their 2018 year-end aircraft delivery plans. Thus, the pressures on suppliers will remain as will the extraordinary added logistics and coordination required to continually place and move assembled aircraft without engines or certain components from various parking areas.
During the recent Farnborough Air Show, Boeing CEO Dennis Muilenburg commented to industry press and analysts that ongoing supplier disruptions are on the company’s radar each and every day, and that the company has further invested in technology to enhance supply chain and individual supplier visibility. The visible signs of ongoing supplier disruptions are now more visible after the WSJ information digging.
As Supply Chain Matters has declared in many prior aerospace supply chain focused commentaries, the looking glass on commercial aircraft supply and demand networks has intensified, and it will only loom larger as both major manufacturers continue their needs to step-up customer deliveries in the months and years to-come.
Having nearly ten years of order backlog comes with its unique set of challenges. The expression that: “A rising tide raises all boats” implies that the overall supply chain has to invest in scale-up needs. Singular global OEM attempts to maximize short-term profits and investor returns at the expense of a key supply network partner can have consequences, not only for large but also for smaller suppliers.
A further looming threat is the ongoing global trade and tariff tensions involving the U.S. and the United Kingdom with other major trading regions. Thus far, aerospace industry impacts have been in spare parts, but that can change in the coming months.
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