Supply-Chain Troubles No. 1 Talking Point at Farnborough Airshow

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Supply-Chain Troubles No. 1 Talking Point at Farnborough Airshow

(Bloomberg) -- Production bottlenecks were the key talking point at the aviation industry’s equivalent to speed dating -- flurries of meetings held at elaborate temporary chalets erected at Farnborough International Airshow, where executives took the opportunity to connect face-to-face once again.

“It’s topic number one in every meeting in every chalet I’ve been,” said Chris Calio, chief operating officer for Raytheon Technologies (NYSE: RTX ) Corp., having huddled with some of his company’s biggest customers, including Boeing (NYSE: BA ) Co.

Boeing’s commercial chief Stan Deal described the contrast between the US planemaker’s sales bonanza and its struggles to get thousands of companies to deliver parts on time as a “tale of two worlds.” 

Read more: As Farnborough Air Show Sizzles, Airbus Makes Expo a Slow Burner

The pain is being felt industrywide as companies grapple with labor shortages, high inflation and disruptions in parts shipments worsened by China’s Covid lockdowns and Russia’s invasion of Ukraine, Calio said in an interview in Raytheon’s chalet at the top of a hill overlooking the show. “We’re seeing and feeling it acutely,” he said.

A major US defense contractor and manufacturer of Pratt & Whitney jet engines and other aircraft components, Raytheon (NYSE: RTN ) was bracing for a bumpy ramp-up after laying off employees and slowing its plants to withstand the pandemic. It didn’t anticipate that workers would be reluctant to return to the factory floor, or the geopolitical turmoil that would roil its operations.

Raytheon, which owns Pratt & Whitney Engine Services Inc., has sent hundreds of its employees out to suppliers to help them work through the log jams, and is peering deeper into its suppliers -- and their suppliers -- for signs of “fragility,” Calio said. The company is also focusing on choke-points in its own factories and maintenance and repair shops, he added.

Pratt & Whitney Delay

Pratt & Whitney meanwhile, one of the two engine makers for the best selling Airbus SE (OTC: EADSY ) A320neo series of aircraft, expects to meet the European planemaker’s monthly target of 75 jets a year later than planned. Airbus is in the midst of severe supply disruptions that have left it with so-called gliders -- fully built aircraft sitting on the tarmac without engines.

Rick Deurloo, president of Pratt’s commercial engines, said on Tuesday at the air show that the company may meet the ramped-up rate by 2026, 12 months later than when Airbus plans to raise production.

Embraer SA (NYSE: ERJ ), the Brazilian maker of smaller, regional planes, echoed the theme, saying earlier this week that a shortage of components, along with the dearth of manpower in the US, are hurting the most currently.

Embraer has already seconded more than 20 employees to work with suppliers and some sub-suppliers covering the most critical points of the supply chain to make sure the company gets the parts it needs, Chief Executive Officer Francisco Gomes Neto said. 

(Updates with Pratt & Whitney delay in 7th paragraph.)

©2022 Bloomberg L.P.

© Bloomberg. Propeller blades on display on day two of the Farnborough International Airshow in Farnborough, UK, on July 19.

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