INGENIEUR
and simple data analysis type of work packages.
With increased opportunities of outsourcing work,
more engineering services players emerged in the
market which led the work to be commoditised
by prime manufacturers and their 1 st tiers. This
resulted in increased pressure for the cost of
services that impacted engineering service
companies’ profitability to be reduced further.
On top of this, customers now required their
engineering service suppliers to take on a larger
portion of the work packages and, as a result the
complexity of the work increased significantly.
More and more specialised aerospace roles came
into the work sphere as technical capability became
more important. This consequently increased the
need for more specialised engineering skills that
are difficult to acquire overnight as they require
years of on-the-job training and work experience.
Previous industry surveys showed that this was
the beginning of a trend (Figure 4) and now it has
become more apparent that this has become the
norm and will probably continue in the near future.
As with most industries, the majority of the
aerospace offshoring work currently in Asia is
currently centred in India. India has become the
central dominant powerhouse for engineering
outsourcing due to the relatively low labour
rates (compared to the West), the widespread
availability of skilled English speaking engineers,
and cultural compatibility with the West, having
a robust political and economic system and
relatively strong intellectual property protection 3 .
It is estimated that India will capture at least
25% to 30% of global engineering outsourcing
where the overall engineering outsourcing (in all
industries) is expected to exceed USD 1 trillion 3 .
Airbus, which already has a large presence in
India, has an annual procurement rate from the
country of more than USD 550 million worth of
services work for engineering, IT, aero structures,
material and cabin services providing more than
1,500 engineering jobs for the nation and this is
expected to increase in the future 6 .
How Engineering Services Providers
Support the Aircraft Programmes
As mentioned above, aerospace prime
manufacturers have outsourced a large portion
6
18
VOL
2019
VOL 80
55 OCTOBER-DECEMBER
JUNE 2013
of their engineering work packages and this is
expected to continue in the future with new
aircraft programmes. Airbus is forecasting
that new aircraft deliveries are expected to
reach 39,100 aircraft valued at USD4.9 trillion
(excluding regional jets) by 2038 9 . Airbus has,
as with past aircraft programmes, increased its
outsourcing work packages in aero structures
to risk-sharing partners for design and build
work packages. In the A350 programme for
example, at least 50% of the work is outsourced
to risk sharing partners 11 . Meanwhile, Boeing has
forecast more than 44,040 new aircraft, valued
at USD6.8 trillion, are needed by 2038 10 . Boeing
has in more recent years outsourced a large
portion of the work packages to external parties
for their latest aircraft programmes. For example,
in the Boeing 787 Dreamliner programme, Boeing
outsourced about 30% of the work to overseas
countries like Japan, the U.K and European
countries 4 (refer to Figure 5).
Using the aero structures outsourcing work
as an example, the first level of outsourcing
generally involves the design, manufacturing
and assembly work being delivered by 1 st tier
risk sharing partner organisations, as the prime
manufacturers prefer to streamline their supply
chain in a more manageable way. These 1 st
tier suppliers are typically responsible for the
research, development, and manufacturing
of sub-systems and assemblies, like the wing
leading edge or trailing edge structures, and are
involved in the overall design process with the
primes. These 1 st tier companies then outsource
some of the work to their lower-tier suppliers
(who form the 2 nd or 3 rd tier companies) which
are mainly in charge of engineering services
or production of the lower value components
that 1 st tiers add into their sub-assemblies, for
example, composite components for aircraft
control surfaces. These outsourced work
packages also include design and stress work
where design data and specifications and
requirements documentation are supplied for the
work to be done by engineering service suppliers.
The work can be done in the supplier’s facilities
(called Off-Site) or the at the customer’s facility
(called On-Site), where the supplier’s engineers
will work closely with their customer counterpart
to complete the work package.