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Home Airways

OPINION: Supply chain faces difficult decisions

1st June 2015
in Airways, Europe, News
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To John Leahy, consultants who warn of a perilous orders bubble are the equivalent of armchair generals, spouting sceptically on an army’s military achievements from the comfort of their firesides while the real generals do the hard work of winning the war. “They don’t know what they’re talking about,” he scorns.

Colleagues of Airbus’s top salesman may have a harder job convincing the supply chain. While a ­bubble-burst would be a headache for the airframers, it could be fatal for small firms that have spent heavily on machinery, buildings or staff to meet the ramp-up, as they would find themselves with unsustainable costs.

But without investment from the supply chain, ­Airbus admits it cannot raise output to meet current ­demand – to a rate of 50 and beyond on the A320 alone. Persuading suppliers the airframer is serious about its ambitions is the job of chief operating officer Tom ­Williams. He says Airbus’s transparency, in happily disclosing orderbook details to suppliers, and credibility – it claims a flawless record in meeting production targets and not building whitetails – will win the day.

While the ramp-up represents a huge opportunity for the global supply chain, from mom and pop firms making specialised sub-components to big integrators, some wariness is inevitable when it comes to betting the business on an orderbook that cannot keep growing exponentially. But when to apply the brakes?

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