Back to news

March 16, 2020 | International, Aerospace, Naval, Land, C4ISR, Security

How COVID-19 Could Change The A&D Supply Chain

Michael Bruno

The COVID-19 outbreak is the biggest punch to the gut commercial aviation has taken since the Sept. 11, 2001, terrorist attacks. And coming on the heels of the Boeing 737 MAX crisis, Airbus and Boeing widebody production rate cuts, U.S. trade wars and the flight-shaming movement in Europe, the coronavirus emergency is challenging the aerospace manufacturing sector and its global supply chain.

Is the historic upcycle of commercial aircraft orders over? Will orders be canceled and deferred? Will business aviation go out of favor? Only time will tell, but it has been interesting to hear what aerospace and defense (A&D) executives are worrying about.

First, lost revenue from disrupted operations in China is not among their worries. Practically no one in A&D manufacturing has revised their 2020 financial forecasts—provided in January or February—because of COVID-19 alone.

“To date, we have no reported cases of our employees having contracted the virus, and the direct impact to our trading activities has been minimal,” Senior Plc CEO David Squires said March 2.

Likewise, GE CEO Larry Culp did not change the company's financial outlook because COVID-19 was already cited in a forecast given last month. “In our view, in all likelihood it is going to be temporary, but it doesn't mean it is going to disappear tomorrow,” Culp said at a March 4 shareholder briefing.

To be sure, some OEMs and suppliers with Chinese operations had to shut down in recent weeks due to COVID-19. But those factories are back up, and the impact to revenue was limited. For instance, only 20 of Triumph Group's roughly 5,000 active suppliers are located in China or South Korea. All 20 remain operational, and no supply chain interruptions have occurred.

On the supply side, the glancing blow could have a lot to do with the fact that not much in Western aerospace is sourced in China. According to U.S. Commerce Department data, the U.S. imports just $1.1 billion annually in aircraft, spacecraft and related parts. What is more, that figure has been dropping since 2016—before the U.S.-China trade war—and was expected to fall off a cliff for 2019 and 2020 regardless of the “Phase One” trade deal truce.

China always was a twofold market for U.S. aerospace: Sell parts and services to existing Western-supplied fleets there, and partner for local production of nonproprietary parts and systems for emerging Chinese fleets. But China is ramping up efforts to get its own fleet into operation and is pairing with Russian suppliers more often. Any growth in overall aerospace trade likely would have to come from a jump in Chinese orders of Airbus or Boeing airliners, which was not widely expected in the wake of the Jan. 16 trade truce and is not anticipated now after the recent plummet in Chinese air traffic.

Although collapsing demand worldwide for air travel could have a devastating effect on A&D manufacturing and supply, executives do not consider it likely. COVID-19 quickly turned into a short, sharp shock to the system, but industry leaders see the same underlying macro conditions driving long-term growth. Chief among them: expanding middle classes worldwide that spend more discretionary funds traveling by air for leisure.

During the 2020 Aviation Summit in Washington, new Collins Aerospace President Stephen Timm was asked if the airliner-customer landscape could look a lot different in coming years due to the scare. “Frankly, we're going to see differences,” Timm said. “This will be a blip—a serious blip that we have to deal with today—but compared with the macro aerospace industry, we're in a really good place.”

Where do industry insiders see change coming to the supply chain? For one thing, COVID-19 could help deepen resistance to business travel, said some attending Aviation Week's Annual Aerospace Raw Materials and Manufacturers Supply Chain Conference on March 9-12. That would exacerbate the ongoing drop in demand for widebodies.

Still, the biggest change could come in accelerating a budding shift in A&D supply from globalization to regionalization. Executives and consultants at both the Wharton Aerospace Conference on Feb. 29 and Aviation Week's supply chain event discussed how COVID-19 cements a belief that just-in-time global supply chains are too risky and not worth the lower cost anymore.

Instead, they look to capitalize on aerospace manufacturing hubs in Asia, Europe-North Africa and North America to supply themselves. The trend could start with aerostructures for future single-aisle airliners, especially as composite materials are increasingly incorporated. “From a colocation strategy,” says one supplier executive, “you will see it in the next-gen airplanes.”

https://aviationweek.com/aerospace/manufacturing-supply-chain/how-covid-19-could-change-ad-supply-chain

On the same subject

  • In a future USAF bomber force, old and ugly beats new and snazzy

    July 28, 2020 | International, Aerospace

    In a future USAF bomber force, old and ugly beats new and snazzy

    Robert Burns, The Associated Press WHITEMAN AIR FORCE BASE, Mo. — In the topsy-turvy world of U.S. strategic bombers, older and uglier sometimes beats newer and snazzier. As the Air Force charts a bomber future in line with the Pentagon's new focus on potential war with China or Russia, the youngest and flashiest — the stealthy B-2, costing a hair-raising $2 billion each — is to be retired first. The oldest and stodgiest — the Vietnam-era B-52 — will go last. It could still be flying when it is 100 years old. This might seem to defy logic, but the elite group of men and women who have flown the bat-winged B-2 Spirit accept the reasons for phasing it out when a next-generation bomber comes on line. “In my mind, it actually does make sense to have the B-2 as an eventual retirement candidate,” says John Avery, who flew the B-2 for 14 years from Whiteman Air Force Base in western Missouri. He and his wife, Jennifer, were the first married couple to serve as B-2 pilots; she was the first woman to fly it in combat. The Air Force sees it as a matter of money, numbers and strategy. The Air Force expects to spend at least $55 billion to field an all-new, nuclear-capable bomber for the future, the B-21 Raider, at the same time the Pentagon will be spending hundreds of billions of dollars to replace all of the other major elements of the nation's nuclear weapons arsenal. The Air Force also is spending heavily on new fighters and refueling aircraft, and like the rest of the military it foresees tighter defense budgets ahead. The B-2′s viability suffers from the fact that only 21 were built, of which 20 remain. That leaves little slack in the supply chain for unique spare parts. It is thus comparatively expensive to maintain and to fly. It also is seen as increasingly vulnerable against air defenses of emerging war threats like China. Then there is the fact that the B-52, which entered service in the mid-1950s and is known to crews as the Big Ugly Fat Fellow, keeps finding ways to stay relevant. It is equipped to drop or launch the widest array of weapons in the entire Air Force inventory. The plane is so valuable that the Air Force twice in recent years has brought a B-52 back from the grave — taking long-retired planes from a desert “boneyard” in Arizona and restoring them to active service. Strategic bombers have a storied place in U.S. military history, from the early days of the former Strategic Air Command when the only way America and the former Soviet Union could launch nuclear weapons at each other was by air, to the B-52′s carpet bombing missions in Vietnam. Developed in secrecy in the 1980s, the B-2 was rolled out as a revolutionary weapon — the first long-range bomber built with stealth, or radar-evading, technology designed to defeat the best Soviet air defenses. By the time the first B-2 was delivered to the Air Force in 1993, however, the Soviet Union had disintegrated and the Cold War had ended. The plane made its combat debut in the 1999 Kosovo war. It flew a limited number of combat sorties over Iraq and Afghanistan and has launched only five combat sorties since 2011, all in Libya. The last was a 2017 strike notable for the fact that it pitted the world's most expensive and exotic bomber against a flimsy camp of Islamic State group militants. “It has proved its worth in the fight, over time,” says Col. Jeffrey Schreiner, who has flown the B-2 for 19 years and is commander of the 509th Bomb Wing at Whiteman, which flies and maintains the full fleet. But after two decades of fighting small wars and insurgencies, the Pentagon is shifting its main focus to what it calls “great power competition” with a rising China and a resurgent Russia, in an era of stiffer air defenses that expose B-2 vulnerabilities. Thus the Pentagon's commitment to the bomber of the future — the B-21 Raider. The Air Force has committed to buying at least 100 of them. The plane is being developed in secrecy to be a do-it-all strategic bomber. A prototype is being built now, but the first flight is not considered likely before 2022. Bombers are legend, but their results are sometimes regretted. A B-2 bomber scarred U.S.-China relations in 1999 when it bombed Beijing's embassy in the Serbian capital of Belgrade, killing three people. China denounced the attack as a “barbaric act,” while the U.S. insisted it was a grievous error. The Air Force had planned to keep its B-2s flying until 2058 but will instead retire them as the B-21 Raider arrives in this decade. Also retiring early will be the B-1B Lancer, which is the only one of the three bomber types that is no longer nuclear-capable. The Air Force proposes to eliminate 17 of its 62 Lancers in the coming year. The B-52, however, will fly on. It is so old that it made a mark on American pop culture more than half a century ago. It lent its name to a 1960s beehive hairstyle that resembled the plane's nosecone, and the plane featured prominently in Stanley Kubrick's 1964 black comedy, “Dr. Strangelove.” More than once, the B-52 seemed destined to go out of style. “We're talking about a plane that ceased production in 1962 based on a design that was formulated in the late 1940s,” says Loren Thompson, a defense analyst at the Lexington Institute, a Washington think-tank. Rather than retire it, the Air Force is planning to equip the Boeing behemoth with new engines, new radar technology and other upgrades to keep it flying into the 2050s. It will be a “stand off” platform from which to launch cruise missiles and other weapons from beyond the reach of hostile air defenses. In Thompson's view, the Air Force is making a simple calculation: The B-52 costs far less to operate and maintain than the newer but finickier B-2. “They decided the B-52 was good enough,” he says. https://www.airforcetimes.com/news/your-air-force/2020/07/26/in-a-future-usaf-bomber-force-old-and-ugly-beats-new-and-snazzy/

  • Can France Eventually Replace Its Single Aircraft Carrier?

    February 12, 2020 | International, Aerospace, Naval

    Can France Eventually Replace Its Single Aircraft Carrier?

    by Robert Farley Follow drfarls on TwitterL Key Point: Paris has a long history of building aircraft carriers, including their current nuclear-powered Charles de Gaulle. If France wants to remain a relevant great power, it needs to think about what comes next after its carrier reaches retirement. France's first carrier entered service in the interwar period, but for a very long time the French navy trailed behind international counterparts in naval aviation. This changed in the Cold War, however, and today France operates the world's most advanced carrier outside of the U.S. Navy. How did France build its naval aviation force, what does it do today and what direction will France take next? The History of French Carriers Soon after World War I, France joined the international carrier community through the conversion of the battleship hulk Bearn. Although large, Bearn did not carry many aircraft and never actively participated in combat, even during World War II. The construction of two additional large carriers was suspended by World War II, but after the war the French navy gained access to light carriers transferred from Britain and the United States. Four in total, these carriers helped the French navy develop its naval aviation muscles. The next step was big; France constructed a pair of CATOBAR aircraft carriers, Clemenceau and Foch. Commissioned in 1961 and 1963, the ships displaced 30,000 tons and could carry around forty modern aircraft. A third carrier, the much larger Verdun, was cancelled before being laid down. Clemenceau and Foch, operating the F-8 Crusader and later the Super Etendard, would form the backbone of the world's second largest carrier force for the latter half of the Cold War. After nearly forty years of hard service, the two ships were decommissioned in favor of France's next carrier, the nuclear-powered Charles de Gaulle. https://nationalinterest.org/blog/buzz/can-france-eventually-replace-its-single-aircraft-carrier-122231

  • Air Force grounds most C-130Hs due to cracked propeller barrels

    October 3, 2022 | International, Aerospace

    Air Force grounds most C-130Hs due to cracked propeller barrels

    It's uncertain how long it will take Air Mobility Command to replace all the defective propeller assemblies that have grounded most C-130H planes.

All news