The law of supply and demand is one of the most fundamental in economics. Record demand for its narrowbodies means Airbus – like its counterpart in Seattle – faces one of the biggest manufacturing challenges in the history of civil aerospace as it ramps up production from a current 42 aircraft a month to an unprecedented 50 by the first quarter of 2017 – and to a possible 60 or even beyond a year or two later, if the most bullish executives in Toulouse get their way.
Getting the supply side of the equation right is crucial. To meet a backlog that currently stands at around 1,350 current-model A320s and some 3,800 of the Neo, Airbus bosses must persuade a global supply chain, which ranges from multinational tier ones such as Pratt & Whitney, CFM International and Safran to family businesses employing fewer than 50 people, to take the risk of investing in new equipment, taking on staff and expanding their factories – and do it quickly.
At the same time, Airbus officials must have in the back of their minds that demand for its aircraft – surely – cannot keep growing exponentially. A catastrophic event – another 9/11 – or even a more rapid-than-expected cyclical downturn sparked by weaker Chinese and other Asian economies could leave Airbus and Boeing – and their suppliers – geared up to produce more narrowbodies than the market wants. Putting the brakes on suddenly could be harder than hitting the accelerator.
Airbus’s top executives, speaking at a briefing in Toulouse in late May, were confident both that the supply chain challenge could be overcome, and that the prospect of an orders bubble, ready to burst, was overstated. With characteristic bombast, chief operating officer - customers John Leahy laid into “consultants from Iowa” (he said he was not referring to any individual) who “don’t know what they’re talking about” by predicting an imminent collapse in orders.
“If one of these industry consultants says we’re going to see a downturn in production,” argued Leahy, “ask him what he thinks will happen to global GDP. If he thinks it will keep going up by 2%, then he doesn’t know what he’s talking about.” That level of growth, suggested Leahy, would be enough to keep orders coming in as fast as Airbus was producing. “All we have to do is keep the backlog level,” he said. “We have to make sure the supply chain can do it, but as long as we have a stable supply chain, the market can sustain it.”
Airbus is likely to take a decision this year on whether to increase its production rate to 60 a month, although, speaking at the briefing, chief executive Fabrice Brégier noted that it was more likely to be a question of “when rather than if”. In the meantime, ramping up to rate 50 remains the biggest challenge for the team led by chief operating officer Tom Williams. And to do that, he must convince suppliers that Airbus is serious about its commitments to increase output.
How does he plan to do it? “Transparency. We show them the orderbooks. They know we don’t build whitetails,” he says. Williams acknowledges that for some “mom and pop” firms, the investment required involves the sort of risk that could topple a business, and he says that to avoid the risk of suppliers themselves being unable or unwilling to deliver on time, Airbus will deploy stick as well as carrot, using more dual sourcing “to sharpen them up”.
Williams is also looking at new ways of moving components between Airbus’s network of aerostructures plants and final assembly lines. Consignments traditionally carried by the manufacturer’s “overstretched” fleet of A300-based Belugas are being moved to road to free up capacity on the outsized transports. In the final assembly line itself, Williams says improved ergonomics are creating an “automotive style flow-line”.
With a CFM Leap-1A-powered A320 joining two Pratt & Whitney PW100G-powered A320neos in flight test in the past few weeks, and assuming a one-year certification effort from first flight in the third quarter of 2014, deliveries will begin in the final quarter of this year. Around that time, production will have begun at Airbus’s new final assembly line in Mobile, Alabama, with officials expecting the Hamburg factory to produce half the 50 aircraft a month, Toulouse to handle 17 and the remaining eight to be split equally between Mobile and its Chinese plant in Tianjin.
“As long as John [Leahy] has left the building, and don’t tell him I said this, but I think 2018 is when we can reach rate 60 [on the A320neo],” said Williams at the briefing. That would give Airbus just over 18 months at most to add another 10 aircraft a month to an already ambitious output of 50 in 2017. Williams admits there are those within Airbus who might prefer a gentle jog than a sprint to the finishing line, but counters: “Whenever one of my guys complains about the hard work of ramp-up, I ask them if they would prefer to be managing the opposite problem?”
Source: Flight International
