Airplane makers woo suppliers at Air Show

Airplane makers plan to crank up production volumes as soon as the global economic crisis starts easing, and they are using this year’s Paris Air Show to convince suppliers that they can sell as many planes as planned.
Airplane makers including EADS unit Airbus and U.S. rival Boeing have cut production this year after some customers canceled or delayed their orders for new airplanes, Reuters adds.  
Suppliers still worry that delivery goals for this year are too optimistic and are reluctant to build up large inventories, threatening to scupper planemakers’ plans to ramp up output again as soon as the global economy starts recovering.
“We will use this year’s Le Bourget (Paris Air Show) to have particularly intense discussions with suppliers,” Airbus Chief Executive Tom Enders told journalists before the start of the world’s largest air show.
“Otherwise they start to make their own assumptions about deliveries and come up with production rates that are not in synch with our plan.
The fragility of an increasingly global supply chain was highlighted in 2007 when Boeing was forced to postpone deliveries of its 787 Dreamliner due to a shortage of bolts.
The plane is expected to fly this year, almost two years later than planned, after the company pushed back its delivery schedule several times due to production delays, risking order cancellations by angry airlines.
Now suppliers are telling airplane makers they will “make just-in-time (supply) your problem, not our problem,” said Richard Aboulafia, vice president at US aerospace and defense consultancy Teal Group, at the Paris Air Show on Thursday.
MTU Aero Engines, which makes civil and military aircraft engines, is also in talks with suppliers to ensure it can keep up with increasing airplane production once economic conditions start improving.
“We have to be careful when business goes up again that suppliers will be able to deliver,” MTU Aero Engines’ Chief Executive Egon Behle said.
Airbus’s Enders said his company tries to communicate planned production changes to suppliers as early as possible so that they can build up enough inventory in anticipation of demand for parts when they are needed for planes.
A poll found earlier this year that airlines, civil plane makers’ biggest customers, saw deliveries of Airbus’s A380 superjumbos falling short of a target of 18. Airbus said at the time it could reach its target but has since cut it to 14.
The A380 has a list price of $327.5 million, and as customers pay when they receive the airplane, the impact of fewer deliveries this year will have a significant impact on EADS’s revenues.
BHF Bank analyst Nils Machemehl said on Thursday he expected Airbus to fall short of its overall deliveries target of 483 airplanes for this year, estimating deliveries at 461 planes.
“There are uncertainties as to whether the financing remains in place” for 2009 deliveries, he said. So far, Airbus has said financing is in place for all planes to be handed over to customers this year.