State of Aerospace Industry in Global Supply Chain Challenges
Under current conditions, many industries have felt the harsh effect of global supply chain constraints, but few are enduring as much setback as the aerospace industry. Not only is this industry experiencing the same Covid-19 complications as the majority of others, but they also face a problematic semiconductor chip and skilled labor shortage. A true burden in the present logistical state that the supply chain is experiencing.
Without the excess impediments that the aerospace industry is undergoing, they would still be in for a massive headache and a costly one at that. Setbacks from pandemic regulations and labor shortages, coupled with a climbing demand that shippers struggle to meet, the global supply chain has become gravely impaired. With the obstacles and back-ups crowding up supply chains, prices naturally have risen and will continue to do so.
Though the impairment of the global supply chain was also caused in part by the excess issues that the aerospace industry has been experiencing. The limitation imposed by semiconductor chips and labor shortages, along with other various part shortages taking place, directly affects their ability to assist the supply chain disruptions. Planes are obvious channels for transporting needed supplies internationally, but when those planes are unable to get replacement parts needed, or enough skilled laborers to assess and repair issues, then they will ultimately be rendered out of commission.
Leaving the Aerospace industry in a state of trying to keep up with demand in all areas of business, not only attending to the global supply chain issue.
Factors Instigating the Supply Chain Disruption
Over a year ago the Coronavirus took the world by storm, leaving cities under strict and necessary regulations to prevent as much loss as possible. Though, of course, this left many industries that relied on the physical presence of laborers debilitated. In the beginning, many fields deemed non-essential were to essentially shut down until we reached a point where we understood the threat more clearly.
These times led to many losing jobs or even choosing careers that did not require a physical presence, hindering those fields in need of laborers on site. Such as the logistical forces that drive the global supply chain. Though this was a significant hindrance, it is not the only factor backing up shipments.
As time passed we made it out of the darker periods of Covid-19, but it had not completely passed yet and there continues to be the labor shortage in non-remote positions. On the other hand, many careers have had the ability to operate remotely. Allowing for the economy to keep growing. A growing economy means more spending and a pandemic that makes proximity a threat means more demand for shipments. Locally or internationally.
According to an interview done by the National Business Aviation Association in their blog “Overcoming Supply Chain Challenges“, shippers have been experiencing similar demand highs as Christmas time. For obvious reasons, Christmas time in the logistical field is known for high volume and so companies are able to prepare for the storm. Although, in this case, there was no warning to the high demand so early on.
The interview went on to illustrate that usually in preparation for times of increasing demand, shippers would hire more human labor and have more aircrafts ready to keep up. Though this sudden demand booms has come at a time when the global supply chain is in dismay, leaving shippers in a tight spot.
Global Supply Chain Crisis Poses Significant Threats to Aerospace Industry
With the current demand increase and lack of laborers reinforcing critical areas of the supply chain, the added parts shortage leaves the industry scrambling. In the same interview from the blog “Overcoming Supply Chain Challenges“, shippers commented that even certain components that were available and needed in aircrafts actually had no means of being shipped to them. According to the shipper, they began seeing issues securing parts almost as soon as COVID began.
Though the aerospace industry is currently facing shortages on parts, there are some that simply cannot make it from the supplier to consumer. The same issues these shippers have experienced is happening industry-wide, leading to the congestion across the global supply chain. Pushing back order deliver dates by months. Without improvement in the supply chain of the logistic field, this problem will surely persist.
To accompany the global supply chain disruption, COVID-19 hit the aerospace industry roughly since the beginning of the pandemic. The reduction in demand, supply delays, workforce shortage, and financial pressures exceeding what normally looms over every modern enterprise. According to a blog posted by Umlaut, “COVID-19’s impact on aerospace industry and its supply chain“, the effects on the aerospace industry this crisis has are as follows:
- Hard hit for airlines with passenger traffic decrease due to global and regional air travel restrictions.
- Airlines cancelling orders for new aircraft, OEMs Airbus and Boeing, reducing production forecasts up to 50%.
- MRO business reduced significantly, and (besides regularly scheduled maintenance) work is at a minimum.
- Challenges in restarting and ramping back up if supply chain comes to a complete stop.
- Suppliers with weak financials running out of funding, losing key personnel, and possibility not being able to recover.
- A higher demand in freighters, due to lack of transport capacity in Passenger Aircraft.
- Passenger Aircraft demand could benefit from early retirements during crisis; however, low oil price is a threat to replacements.
- Opportunity that downturn may increase airlines demand for FSA (Future single aisle) or NMA (New mid market), and away from Wide Body.
- We expect passenger growth to recover to pre COVID-19 levels, similar to the 9-11 crisis, after which only a few could imagine that passenger growth would return to old strength.
- It is yet to be seen how governments will respond and if so, what financial stimulus will become available in order to safeguard system-relevant players.
With these significant obstacles, the aerospace industry will be hard-pressed to get ahead on global supply chain complications. The best path to us getting back ahead of these issues is to clear up ports and allow available parts to flow to airliners in the position to make quick repairs. These quick repairs will exponentially help keep up with demand as more planes get back to taxiing across the runway.
Labor Shortages Don’t Only Apply to the Global Supply Chain
The aerospace industry does not only apply to the many airliners that have brought us to many of our favorite vacations, it also applies to those in the background getting planes in the air and repaired when needed. With that in mind, we are not able to forget that the entire aerospace industry took a hit with the pandemic. Meaning, many skilled laborers lost their positions and moved on.
According to an article posted by SkillSetGroup, “Skilled Labor, Engineering Shortages Looming for Aerospace Sector“, many of these skilled workers were able to secure positions in the comparable manufacturing of healthcare devices, which also turned out to be recession-proof. This same article further illustrated the setbacks seen in the aerospace industry by notating that 17,000 aircraft worldwide have been sent to storage. A figure that equates to %60 of the global fleet. That is a large chunk of revenue not being made.
This major decline in revenue is what led to significant layoffs, along with some early jumps on retirement. At this point, without skilled workers the predictions of 10 years until a revitilization of the aerospace industry may be accurate.
This prediction can be shortened if those with specialized skills, or even those with ambition to help push our economy forward, apply to positions that are repairing/refurbishing aircraft that will be vital to our logistical nightmare. Companies like Aero Marine Interior, Inc. have grand reputations for top-shelf service in refubishment/repairs of commercial or even private aircrafts. So, jump in and give a hand pushing along the global supply chain! Get your start with a position at AMI as a NDT tech, or even an Aircraft interior mechanic!