What have you always wondered about the economy? Tell us

Boeing and Airbus share same suppliers, same headaches

Christopher Werth Sep 28, 2011
HTML EMBED:
COPY

Boeing and Airbus share same suppliers, same headaches

Christopher Werth Sep 28, 2011
HTML EMBED:
COPY

Steve Chiotakis: Boeing’s first new 787 Dreamliner landed in Tokyo earlier today to take its place in the fleet of All Nippon Airways. The Dreamliner’s three years late — and that could be an indication of delays to come as Boeing and its European rival Airbus prepare to fill a record number of new orders for airplanes.

From London, here’s reporter Christopher Werth.


Christopher Werth: Boeing and Airbus are fierce competitors. But here at this factory in Scotland, wing sections for both companies’ planes are hammered out side by side.

Conrad King: The two largest commercial aircraft companies are our biggest customers.

That’s Conrad King of Spirit AeroSystems. It’s a company that’s just one piece of a global supply chain that Boeing and Airbus will depend on to churn out more planes — a lot more planes. This year alone, new orders have totaled over $90 billion.

King: One of the, if not the most, critical issue facing our industry at this time is how do we grow our production rates?

Airbus has publicly warned that that supply chain — which provides everything from jet engines to the overhead compartments for your carry-on bag — may not be able to ramp up production fast enough. Joseph Lampell, an aerospace expert at London’s Cass Business School, says both Airbus and Boeing face serious bottlenecks. And he says a big reason is because manufacturers make parts for both companies.

Joseph Lampell: For Airbus and Boeing, their supply chain overlaps so much that they come to the same supplier and basically make the same demands for components.

New aircraft like the 787 rely on cutting-edge materials, such as lightweight carbon fiber. That means component suppliers have to secure financing for expensive new machinery. Graham Chisnall of the U.K.’s aerospace trade association says that’s difficult when banks aren’t lending.

Graham Chisnall: That’s one of the bottlenecks: Can these companies get the cash to actually fund the expansion that’s necessary?

Back at Spirit AeroSystem’s factory, the company says it’s on track to expand production just fine. Even then, airlines will have to wait years for the planes they’ve ordered. The backlog for the 787 Dreamliner, for example, is at 820 planes. If the airlines have to wait too long, they may start to cancel their orders in droves.

In Scotland, I’m Christopher Werth for Marketplace.

News and information you need, from a source you trust.

In a world where it’s easier to find disinformation than real information, trustworthy journalism is critical to our democracy and our everyday lives. And you rely on Marketplace to be that objective, credible source, each and every day.

This vital work isn’t possible without you. Marketplace is sustained by our community of Investors—listeners, readers, and donors like you who believe that a free press is essential – and worth supporting.

Stand up for independent news—become a Marketplace Investor today with a donation in any amount.