LAS VEGAS CHICAGO, Oct 15 - Reuters - Global shipping and supply chain disruptions make it harder for corporate planemakers and suppliers to meet resurgent demand for parts, according to industry executives and analysts.
Disruptions, which are also affecting commercial aviation, are beginning to drive up costs and risk slowing down the aerospace industry's recovery from COVID-19.
With private jet traffic above 2019 levels this year, several corporate planemakers and suppliers flagged warning signs at a flagship business jet show in Las Vegas this week about supply chain and labor hiccups.
Aerospace has, so far, avoided the scale of supply woes faced by auto manufacturers and machinery companies as planemakers Boeing Co and Airbus produce fewer jets than before the pandemic.
But supply chain strains are increasingly visible for the production of long-haul jets, which see a pick up in demand due to a recovery in short-haul trips, said Eric Bernardini, global co-head of aerospace, defense and aviation at consultants AlixPartners.
Easing travel restrictions and the lure of business flights have led to an unexpected surge in business jet traffic https://www.reuters.com com business Aerospace-defense business-jet-makers-look - tap-surging - corporate-travel - demand-demand-las-vegas-air-show - 2021 - 10 - 11, filling seats for private operators and expanding order backlogs for planemakers but straining supply of jets, parts and pilots.
Planes produced by Cessna business jet producer Textron Inc are flying around 20% more than in 2019, putting pressure on suppliers to keep up with the need to deliver replacement parts.
We are in a healthier position compared to what it could be, but we are starting to see some issues, said Ron Draper, chief executive of Textron Aviation.
Draper said Textron is managing the hiccups, but is still seeing some suppliers pop up with capacity constraints. Stirling Macfarlane, a segment manager in aerospace with PPG Industries, said at the show that the maker of aircraft coatings and transparencies has faced some delays in receiving needed components.
Aerospace companies are experiencing shortages of semiconductor chip and plastics, and doing far more for raw materials like steel and aluminum, Bernardini said.
The input costs are going up at a time when the pricing power in the commercial aerospace industry is restricted because of overall weak demand, making it harder for equipment makers and their suppliers to pass along the increased costs to customers.
The aviation industry paid on average 27% to 44% more for raw materials in the first half of this year compared to last year, according to data from AlixPartners.
Bernardini said: "Comparing profits margins is the number one concern for the industry," in his statement.
Companies are also struggling to find enough skilled workers to ramp up production and are battling shipment delays.
The CAPA centre for Aviation is necessary to meet anticipated production increases in 2022 and 2023, said Robert Martin, chief executive of lessor BOC Aviation at a CAPA event on Wednesday.
Embraer SA keeps more parts available for customers in its warehouses despite higher carrying costs, says Marsha Woelber, head of customer relations and aftermarket sales for the Brazilian planemaker.
We've updated inventory at international warehouses, because we know there is disruption when you look at local cargo flights or shipping containers, she said.
Some U.S. states are taking steps to help ease bottlenecks.
Oklahoma, for example, created a portal earlier this year to connect local suppliers with manufacturers, such as those in aerospace, which are looking to diversify their supply chain to help fill in the gaps.
Draper said the challenge would be greater if production by commercial airlines returns to the levels of 2019, which could be a year or two away.
If Boeing and Airbus can get back to the economy they absorbed and are suddenly losing a lot of capacity, we could face capacity constraints.