Airbus Renews Tough Talk with Suppliers

 - February 20, 2018, 10:17 AM
Airbus is considering raising A320-family production rates to 70 per month. (Photo: Airbus)

As Airbus accelerates production rates to record highs, it has a clear message for suppliers: Keep up and cut costs—or risk being left behind.  The airplane maker cannot risk delays as it eyes delivering more than 800 aircraft this year, said Giuseppe Marcheshi, head of strategic procurement for Airbus Americas. “That foot is still stuck on the gas pedal, and we haven’t seen it come back up,” he quipped.

Airbus has collected orders for more than 6,000 airplanes in its single-aisle A320 family, enough to keep its final assembly lines in France, Germany, China, and the U.S. busy for nine years at current production rates. The jetmaker plans to take A320 production rates to 63 airplanes a month. One hundred percent on-time delivery and quality are the baselines, not aspirations, Giuseppe Marcheshi said during a presentation at the recent Pacific Northwest Aerospace Alliance (PNAA) annual conference in Lynnwood, Washington. If every one of Airbus’s more than 12,000 suppliers registered a 95 percent on-time delivery rate, it “would mean we would have total chaos,” he said. “Can you imagine? There’d be shortages every single hour on the assembly line. It’s absolutely unacceptable where we’re going with the rates.”

Too many Airbus suppliers in the U.S. do not properly manage their supply chains, he said. “Sometimes we see failures from you, but really the failure is not at your level," explained Marcheshi. "It’s at the level below or the level below that.” Airbus has managed to raise production of its A320neo despite ongoing problems with engine suppliers Pratt & Whitney and CFM International. As a result, the A320neo program has “been in permanent crisis management for the last two or three years,” Airbus CEO Tom Enders said during a conference call earlier in February.  Suppliers need to drive down costs, Marcheshi said at the PNAA conference on February 15. 

“Airlines demand flexibility; they demand that we incorporate changes rapidly. They demand that we reduce lead times,” he said. “And we need to pass that on to you. So you need to plan for that.” Airbus and Boeing have pushed aggressively for price cuts from their supply chains in recent years, cutting into suppliers’ profits. So far, many suppliers have compensated for those price concessions on production contracts with lucrative work in aftermarket sales. Both airplane makers plan to move into the aftermarket, potentially putting them at odds with many of their suppliers.

Airbus’s Services By Airbus aftermarket division has seen double-digit growth, in part driven by the company’s Skywise open data platform. Marcheshi did not directly address that conflict. Rather, he told suppliers at the conference to look out for news coming in the near future. At the Singapore Air Show in early February, Airbus announced a new customer services center at its Airbus Asia headquarters located at Seletar Aerospace Park in Singapore. “You’re going to see in the next year or two a lot more news about Airbus getting involved in the MRO field,” he said. “We’re going to be looking at the United States and Europe, and setting up the right bases to support our aircraft.”