Farnborough Air Show

Forecast International Report Warns Of Supplier Bottlenecks

 - July 9, 2012, 7:05 PM

Forecast International is questioning whether component suppliers will manage to keep up with the demand from Airbus and Boeing as they prepare to raise production rates of commercial airliners over the next 10 years. Forecast’s newly released report, “The Market for Large Commercial Jet Transports,” projects that 14,655 large commercial airliners will roll out over the 10-year period 2012-2021.The U.S market research firm estimates the value of the production at $2.04 trillion.

“Airbus and Boeing, the two dominant manufacturers in the market, are implementing production increases and are considering additional increases for the future,” said the consultancy.“However, determining how fast and high to increase production is a tricky proposition for the two companies. In addition to the vulnerability of their supply chains, another concern is the overall health of the airline industry.”

The desire of Airbus and Boeing to expand production is putting a considerable strain on their suppliers, especially in light of ongoing global economic sluggishness and uncertainty, said the report. More pressure has come from the desire by Airbus and Boeing to outsource more design work and production responsibilities.

“The potential for bottlenecks among suppliers means that Airbus and Boeing need to tread cautiously when it comes to future production increases,” said Forecast International senior aerospace analyst Raymond Jaworowski.

A second major concern involves the health of the airline industry, said the report. Although air traffic continues to grow and the industry as a whole remains profitable, many individual airlines are experiencing financial difficulties, including some carriers that hold orders for hundreds of new airplanes.

At the same time, Airbus and Boeing have considerable incentive to keep production rates high and growing. The two companies hold large numbers of unfilled orders, resulting in long waiting times for customers to take delivery of their aircraft, which often translates into considerable frustration for customers. A lack of early delivery slots could also tempt potential buyers to take a serious look at new aircraft emerging from manufacturers outside of the Airbus/Boeing duopoly, the report suggests.