Opinion: Why Aerospace’s Love Affair With Low-Cost Suppliers Is Fading
"While visiting Bombardier's final assembly line for the CRJ and C Series, I was astonished by the low number of personnel, thanks to the C Series' automated riveting technology"
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Kevin Michaels | Aviation Week & Space Technology
In the early 2000s, a new metric entered the lexicon of aerospace leaders: employees in low-cost countries. The aerospace supply chain was globalizing and transitioning manufacturing activities to locations with lower land, labor and facility costs was viewed as a means of ensuring competitiveness. OEMs reconfigured their value chains to embrace low-cost countries, and new aerospace clusters were created in locations as far flung as Mexico, Morocco, Poland, China and Malaysia.
Has the trend of expanding operations in low-cost countries continued?
To answer this question, AeroDynamic Advisory analyzed publicly disclosed aerospace manufacturing investments for new facilities and major expansions in 2000-16 for 150 major aerospace companies. Nearly 450 investments were identified, including organic growth and joint ventures. Although it was not possible to pinpoint the value of every investment, the pattern of where they took place is telling.
Our conclusion is that aerospace manufacturing investments in low-cost countries peaked in the 2008-13 time frame and declined significantly in the last three years. China and Mexico, two favored locations during the boom, experienced the largest declines of this group. Investment also dried up in the United Arab Emirates (UAE). In contrast, investments in Morocco and India grew.
Meanwhile, investments in high-cost countries grew 30% for 2014-16 compared to the prior three years. The U.S. was a major beneficiary, capturing nearly 60% of these investments. France, Germany and the UK also benefited.
One explanation is that new manufacturing processes are becoming less labor-intensive. And the recent new aircraft introductions, including the Boeing 787, Bombardier C Series and Airbus A350, were catalysts for change. While visiting Bombardier's final assembly line for the CRJ and C Series, I was astonished by the...
Bombardier CSeries dual assembly lines at Mirabel airport YMX
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