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OEM Report: Aerospace

Airborne ambition

By Gretchen Salois

Boeing’s new fabrication plant implies bright skies ahead

March 2012 - Combined with fluctuating fuel prices and an aging fleet, many airlines are strategizing future moves to stay in flight. Boeing Commercial Airplanes, North Charleston, S.C., recently opened the doors to its new 787 Dreamliner interiors fabrication facility. The steel structure plans to churn out the interior components for a new batch of planes being rolled onto runways, creating long-term jobs.

The 300,000-sq.-ft. building sits on 35 acres of land, employing approximately 140 employees, with 76 percent of those employees new to Boeing. While the new structure is for interior equipment for airplanes, Boeing is “ramping up production for all of its commercial airplane programs to meet customer orders,” according to Vicki Ray, spokesperson for Boeing public relations. “The Interiors Responsibility Center South Carolina will soon build interior parts for 787s assembled and delivered out of South Carolina.”

The need for a fabrication facility is a positive indicator for the overall industry, according to former pilot Bob Herbst, now consultant and analyst for Airlinefinancials.com. “I am very optimistic on the U.S. airline industry going forward,” Herbst says, adding he believes as airlines consolidate, consumer pricing will allow for consistent profits, stabilizing balance sheets of major U.S. airlines.

Out with the old
As optimism grows, so too does the need to replace aging airplane fleets, requiring skilled workers to fabricate new aircraft to meet demand. “I expect the next decade will see all U.S. airlines aggressively replacing their old or aged fleets,” Herbst says. “Due to the economic stress the airline industry has gone through since 9/11, virtually no airline had the financial strength to replace old aircraft that require more-and-more maintenance.” Herbst adds that relying on old aircraft also can hamper an airline’s scheduling reliability, because of maintenance issues.

Another major component airlines must factor into operations overhead costs is fuel prices. “New aircraft are 30 percent [or greater] more fuel-efficient than the older aircraft, [such as] MD80s or older 737s, 757s, etc. If an airline is going to compete and survive [going forward], airlines have no choice but to replace their old fuel-inefficient fleets,” he says. “With fuel expenses now compromising 30 percent to 40 percent of each airlines’ total operating costs, airlines have no choice but to trade in the old fuel guzzlers for the new, much more fuel-efficient aircraft.”

In September 2011, Boeing announced plans to produce an additional 10 787s per month through 2013. Boeing also reported it expected to grow 6 percent in 2011 and maintain that growth over the next few years, indicating positive growth for manufacturers and fabricators.

According to the 2010-2011 U.S. Bureau of Labor Statistics career guide to industries, the demand for new aircraft in both the civil and military segments of the industry should lead to a “substantial increase in production.” The report supports the notion that volatile fuel costs are prompting airlines to replace aging, fuel-inefficient aircraft.

An aging workforce also will need to be replaced. Job opportunities in the aerospace products and parts manufacturing industry also are affected by the “unique production cycles within the industry, which do not always follow general economic conditions,” according to the report. Job openings flourish when there is an influx of new aircraft or systems in development or production but can decrease after the initial production run.

Airlines such as Delta, Southwest and United Continental also plan on purchasing additional aircraft. According to Boeing’s long-term market outlook, passenger traffic rose about 8 percent in 2010, after decreasing about 2 percent in 2009. Despite pitfalls because of shifting fuel costs, political unrest in the Middle East and North Africa and countries unable to pay off debts, the industry has returned to its approximately 5 percent growth per year, a signal that industry trends are moving upward.

While commercial and military aviation needs are driving the industry, the large freighter segment will make up for more than half the demand for new airplanes, according to Boeing’s report. “The performance and reliability advantages of new, purpose-built freighters are significant for intercontinental cargo operations, where larger, heavier payloads and range are crucial,” according to the report, which notes of the 1,000 large freighter deliveries, 690 will be new airplanes. The need for new aircraft spanning a number of sectors is a positive indicator that both manufacturers of components needed for aircraft manufacturing, as well as the labor required to construct and assemble the airplanes is on the rise. FFJ

Sources

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