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Airbus SE, which at the Paris Air show this week bagged one of the biggest order of 500-plane from low-cost carrier Indigo is now looking at ways to deliver the order on time to the airline that’s hungry for capacity.
Beneath the multi-million dollar deal, lurking just outside the French capital is a shortage of parts and labor that threatens the aerospace industry’s ability to deliver on time.
Airbus and its US counterpart Boeing Co. over the past few years have dodged one calamity after another from engine and semiconductor shortages to glitches with suppliers to disruptions caused by the war in Ukraine. While the crisis peaked last year, the frailty of the recovery was on display in Paris, where help-wanted signs were everywhere.
“Last year we missed the targets by very much. This year we’ll deliver on performance.”
Guillaume Faury, Airbus Chief Executive Officer told analysts at a meeting in Paris on Wednesday
At the heart of the challenge is a shortage of workers. Aerospace companies typically lay off employees in a downturn and then seek to hire them back, with a success rate of about 80%, according to Airbus procurement chief Jürgen Westermeier. During Covid-19, many workers gravitated toward other areas of manufacturing that weren’t as hard-hit as aerospace, or left the industry entirely. These days, Westermeier said, aerospace employers are lucky to rehire two out of 10.
In a Challenging labor market, Airbus this year alone wants to bring in 13,000 new recruits globally. About halfway through the year, it’s filled 7,000 of those positions. As per the company, Boeing grew its staff by 15,000 people last year and has its sights on 10,000 hires in 2023.
“When you pull the thread through almost everything, it almost invariably ends with labor. The ability to attract it, retain it, train it in time.”Mike Kauffman, the supply chain chief at engine-maker GE Aerospace, in an investor event this week.
While Airbus is optimistic on meeting their deliverables of 720 aircraft this year, the company fell short last year, first lowering and then missing its reduced target. As of May, the company had fulfilled about one third of this year’s delivery target, suggesting the European planemaker faces yet another race to meet the deadline in December.
Last year’s setbacks sent shudders through the network of some 13,000 Airbus suppliers who provide 70% to 80% of parts by value in a typical airliner. While some contractors couldn’t keep up last year — forcing Airbus to scale back its ambitions — others that had stretched to deploy capital suddenly found that they had over-ordered parts from their own suppliers.
Part of the purpose of Airbus’s Wednesday presentation was to overcome any lingering doubts. “We have firm horizons for at least six months,” said Westermeier. “You can tell the banks that the ramp-up is real.”
Working to restore its output to pre-Covid levels, Boeing had to face its own hurdles. Boeing has seen an exodus of seasoned engineers and mechanics early in the pandemic, to shortages as suppliers grapple with turnover and hiring issues.
Work has progressed in fits and starts as Boeing dealt with tiny structural imperfections that halted 787 deliveries for more than a year, and more recently supplier defects in the tail sections of the Dreamliner and 737 Max.
Smaller suppliers who often find themselves in competition with their larger customers are facing the burns of the talent shortage. Clayens NP, a French manufacturer of composite parts for Airbus, engine-maker Safran SA and others, is looking to hire about 50 workers in Europe across manufacturing, sales and administrative roles to replace older workers who are retiring, said Jean-Charles Faure, a key account manager.
Finding staff, has become much harder ever since the pandemic, as younger workers demand flexibility in their work hours, more days off and the ability to work from home.
“It’s difficult,” Faure said, “but we manage with the workers that we have.”
The problems are particularly acute in the US, where financial setbacks have added to the labor shortages at key suppliers. Spirit AeroSystems, a former Boeing unit that makes 737 fuselages and other major assemblies for Airbus and Boeing aircraft, needed advances of $280 million from its former owner and other customers this year.
Lockheed Martin Corp. is finding it tough to staff up on mechanics and technicians, especially when the generation entering the workforce hasn’t experienced shop class — or turning a wrench, said Greg Ulmer, who heads aeronautics at the world’s largest defense contractor.
When Lockheed moved its F-16 assembly line to Greenville, South Carolina, it helped set up vocational training programs at area high schools and community colleges where students learn basic technical skills like how to drill holes and cut sheet metal. It’s taking the approach to other locations like Marietta, Georgia, and Palmdale, California, Ulmer said in an interview.
For Airbus, it’s important to deliver on its output goals this year, Faury said. The company already has enough orders to keep it busy for 10 years, putting the focus squarely on output.