Ingenieur Vol 80 ingenieur 2019 octoberfinal | Page 20

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.