Aerospace suppliers respond proactively to the Coronavirus

Second MAA survey in the Midlands, 26th and 27th March.


To read the full report of the second survey 26 & 27 March) please click here.

To read the results of the first survey (19 & 20 March) click here.

Results of the second survey

The aerospace sector is one of the UK’s flagship manufacturing industries and the Midlands region is home to one of the world’s biggest aerospace business clusters. The industry has grown rapidly over the last fifteen years with output doubling and employment increasing by more than half. This growth has been fuelled by high-technology and precision engineering companies ramping up production to meet global demand for new, fuel-efficient aircraft.

However, in recent months, a number of uncertainties have been clouding the horizon, ranging from Brexit to the suspension of production of the best-selling Boeing 737 MAX aircraft.

By early 2020 these uncertainties were already placing strains on aerospace supply chain companies that have been making significant investments in order to grow their production capacities and R&D capabilities. The Coronavirus outbreak is therefore hitting an economically-healthy but financially-pressured aerospace cluster.

To gain deeper insight into the effects on businesses such as aerospace suppliers in the UK’s industrial heartlands, we carried out a second survey with our panel of aerospace suppliers in the Midlands region, companies with customers like aircraft makers Airbus and Boeing, and aero-engine makers like Safran and Rolls-Royce. The survey was carried out on 26th and 27th March. (Several of our panel were already gearing up to make hospital ventilator parts, which we will cover in a future survey.)

The six key survey findings are that:

  1. Some customers are still urging their suppliers to continue to produce parts while others are reporting temporary closures. Their requirements of aerospace supply chain companies are mixed but several continue to press for full supplier commitments to be delivered. Two-way communication has improved but a significant number of companies feel there has been too little of it from customers.
  2. Customers are monitoring their supply chains much more closely and requesting information to help gauge the accuracy of delivery forecasts. Focus areas are levels of output currently, the ability to deliver and the extensiveness of safety precautions within supplier factories.
  3. The Coronavirus is also having a mixed impact on lower-tier supply chains. Some companies on our panel are not yet feeling the effects while the majority have been informed of potential disruptions in their own supply chains, for example in Italy, or plans for temporary shutdowns.
  4. Aerospace suppliers are experiencing an array of other challenges, for example around reduced staff levels, morale, cashflow and uncertainties around Government announcements which can be interpreted in different ways and are sources of confusion.
  5. Companies are responding to the pandemic by adopting new working methods extensively, to enhance health and safety, while managing relationships with employees as flexibly as possible.
  6. The aerospace industry needs the Government to be clear and accurate when communicating, and to be making sure words are followed by corresponding actions. The industry also needs financial support beyond staff furloughs if it is to recover to robust health when the time comes, as businesses have many other costs they need to cover to survive.

To read the full report, please click here.

Stop press! The MAA’s own media searches have noted this relevant news from some big aerospace customers published in the last few days which provides useful context for readers less familiar with the aerospace sector.

  • Boeing said it expects to receive big emergency loans, around $17bn from the US government (CNN) while Airbus has previously announced it is not seeking Government support (Le Monde).
  • Safran Cabin has suspended 1,500 low-paid employees at its Washington State facilities without pay (Seattle Times).
  • Bombardier has suspended aircraft production until 26th April (Montreal Gazette).
  • Safran in France stopped engine production for four days last week to reorganise and has now re-started. It hasn’t reduced engine deliveries to Airbus and doesn’t intend to (Les Echoes de la Bourse).
  • Rolls-Royce has announced a one-week closure of its civil aerospace manufacturing facilities. “This would allow the group to confirm the effectiveness of safety measures taken to protect employees from the virus and allow it to ‘sustain modified operations and activities over a longer period’” (Financial Times).
  • Rolls-Royce revenue from its “power by the hour” aftermarket services has declined substantially as aircraft are no longer flying (The Telegraph).

These are unprecedented times and we are expecting many changes over the coming weeks and months. For this reason, we have also decided to set up two weekly webinars to keep you updated, share best practice and provide advice on a regular basis.

Look out for (on this website):

  • the "DRAMA additive hour" on Tuesdays at 11:30am for all things additive manufacturing

and the

  • "Aerospace Up! hour" on Thursdays at 10:30am for all things aerospace, Midlands, MAA and Coronavirus . . .

 

Our first "Aerospace Up! hour" is on Thursday 2nd April at 10:30-11:30am

Join Microsoft Teams Meeting

(you don't need special software, you can join on the web)

What's up for discussion? click here to find out

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