Paris Air Show: Airbus, Boeing won big orders, but building the planes won’t be easy

Bloomberg: Airbus reigned supreme at the Paris Air Show this week, kicking off with a mammoth 500-plane order from low-cost carrier IndiGo. Now all it has to do is find enough workers to build them.

Lurking just beneath the spectacle of multi-billion dollar aircraft sales and aerial acrobatics on display outside the French capital is a shortage of parts and labour that threatens the aerospace industry’s ability to deliver on time to airlines hungry for more capacity.

From engine and semiconductor shortages to glitches with suppliers to disruptions caused by the war in Ukraine, Airbus and its US counterpart Boeing have had to dodge one calamity after another to stand up a global network of subcontractors laid low by the pandemic. While the crisis peaked last year, the frailty of the recovery was on display in Paris, where help-wanted signs were everywhere.

“Last year we missed the targets by very much,” Airbus CEO Guillaume Faury told analysts at a meeting in Paris on Wednesday. “This year we’ll deliver on performance.”

At the heart of the challenge is a shortage of workers. Aerospace companies typically lay off employees in a downturn and then seek to hire them back, with a success rate of about 80 per cent, according to Airbus procurement chief Juergen Westermeier. During Covid-19, many workers gravitated toward other areas of manufacturing that weren’t as hard-hit as aerospace, or left the industry entirely. These days, Westermeier said, aerospace employers are lucky to rehire two out of 10.

This year alone, Airbus wants to bring in 13,000 new recruits globally. About halfway through the year, it’s filled 7,000 of those positions, in what the company called “a challenging labour market”. Boeing grew its staff by 15,000 people last year and has its sights on 10,000 hires in 2023.

“When you pull the thread through almost everything, it almost invariably ends with labour,” said Mike Kauffman, the supply chain chief at engine-maker GE Aerospace, in an investor event this week. “The ability to attract it, retain it, train it in time.”

While Faury remains optimistic about this year’s goal of 720 aircraft deliveries, the company fell short last year, first lowering and then missing its reduced target. As of May, the company had fulfilled about one third of this year’s delivery target, suggesting the European planemaker faces yet another race to meet the deadline in December.

Last year’s setbacks sent shudders through the network of some 13,000 Airbus suppliers who provide 70-80 per cent of parts by value in a typical airliner. While some contractors couldn’t keep up last year - forcing Airbus to scale back its ambitions - others that had stretched to deploy capital suddenly found that they had over-ordered parts from their own suppliers.

Part of the purpose of Airbus’s Wednesday presentation was to overcome any lingering doubts. “We have firm horizons for at least six months,” said Westermeier. “You can tell the banks that the ramp-up is real.”

Boeing has faced its own hurdles as it works to restore its output to pre-Covid levels. They range from an exodus of seasoned engineers and mechanics early in the pandemic, to shortages as suppliers grapple with turnover and hiring issues. Dave Calhoun, the aviation giant’s CEO, has made stabilising production a top priority in a chaotic environment.

Work has progressed in fits and starts as Boeing dealt with tiny structural imperfections that halted 787 deliveries for more than a year, and more recently supplier defects in the tail sections of the Dreamliner and 737 Max.

Smaller suppliers have felt the brunt of the talent shortage, often finding themselves in competition with their larger customers. Clayens NP, a French manufacturer of composite parts for Airbus, engine-maker Safran SA and others, is looking to hire about 50 workers in Europe across manufacturing, sales and administrative roles to replace older workers who are retiring, said Jean-Charles Faure, a key account manager.

Since the pandemic, it’s become much harder to find staff, and candidates - especially younger workers - are demanding flexibility in their work hours, more days off and the ability to work from home.

“It’s difficult,” Faure said, “but we manage with the workers that we have.”

The problems are particularly acute in the US, where financial setbacks have added to the labour shortages at key suppliers. Spirit AeroSystems, a former Boeing unit that makes 737 fuselages and other major assemblies for Airbus and Boeing aircraft, needed advances of $280 million from its former owner and other customers this year.

Lockheed Martin Corp. is finding it tough to staff up on mechanics and technicians, especially when the generation entering the workforce hasn’t experienced shop class - or turning a wrench, said Greg Ulmer, who heads aeronautics at the world’s largest defense contractor.

When Lockheed moved its F-16 assembly line to Greenville, South Carolina, it helped set up vocational training programs at area high schools and community colleges where students learn basic technical skills like how to drill holes and cut sheet metal. It’s taking the approach to other locations like Marietta, Georgia, and Palmdale, California, Ulmer said in an interview.

For Airbus, it’s important to deliver on its output goals this year, Faury said. The company already has enough orders to keep it busy for 10 years, putting the focus squarely on output.

“We want to do with ‘24 and ‘25 what we did in ‘23,” Faury said, so suppliers “can trust that what we do is consistent with what we say”.