Those are the options for Tier 2 and Tier 3 suppliers in the aerospace industry today, according to noted aerospace analyst Richard Aboulafia.
“ Unless you are‘ special and unique,’ you won’ t be able to go it alone in the current environment.
In one sense, nothing’ s changed,” said Aboulafia, Teal Group vice president.“ It’ s just sped up because of what the OEMs are doing.”
Aboulafia, who annually gives the keynote address during the Pacific Northwest Aerospace Alliance’ s annual conference, talked exclusively with Northwest Aerospace News before the event about the challenges facing the Northwest’ s smaller aerospace companies.
What the OEMs are doing is demanding more and paying less than ever before. Boeing, above all, is demanding much better pricing, while also insisting that suppliers pick up the tab for more research and development.
Airbus is doing it too, but is“ not nearly as vicious,” Aboulafia said. Smaller OEMs like Bombardier might like to emulate Boeing, but they don’ t have the market share muscle to make the kinds of demands coming from Chicago.
In an effort to boost its profits, Boeing also is going after the lucrative aftermarket parts business that for decades has been a key profit center for smaller suppliers, who have been offsetting narrow margins on sales directly to Boeing with fatter profits on sales of replacement parts to Boeing customers.
“ A handful of suppliers are thriving in this new environment,” Aboulafia said.“ There are some people that are very flexible and very agile.”
22 NORTHWEST AEROSPACE NEWS