By Tim Hepher and Alexander Cornwell
DUBAI (Reuters) – German aerospace suppliers have given broad backing to plans by Airbus to increase jet production but warn that growing labour shortages are the chief risk to the industry’s growth.
European planemaker Airbus, which sets the pace for some 200 suppliers in Germany, has said it is committed to its target of lifting production of A320 jets by some 50% to 65 a month by the summer of 2023, while exploring output rates of up to 75.
The planemaker unveiled more than 400 tentative or firm new orders at the Dubai Airshow this week. Bloomberg News reported that it could add to that with a new A350 freighter order as early as Friday.
“It is a good signal. We are not yet back to the good old times but it is starting back again,” Volker Thum, managing director of German aerospace association BDLI, said after meeting Airbus Chief Executive Guillaume Faury and others at the Dubai Airshow this week.
“We are still in a critical phase, there is no doubt about that, but the perspectives are there,” he told Reuters.
Thum said “only a handful” of suppliers still had doubts about the target of 65 A320-family jets a month, which is only slightly above its pre-pandemic output of 60. Further increases beyond that are only at the investigation phase, he said.
Airbus has asked suppliers to explore rates of 70 in early 2024 and 75 by 2025, but says it has not made a decision.
“60 to 72 is a 20% increase so it is not unimaginable. Suppliers had already planned to go to 60 or 65,” Thum said.
Engine makers have voiced concerns, however, about the 70-75 threshold, fearing it would harm the repair business for older jets, while some small suppliers are worried it would only be short-lived, leaving them with bills for unused new machinery.
HIRING CHALLENGE
Asked whether the supply chain could handle rates as high as 75 a month, Thum said: “It seems manageable if we keep the rates for a certain time. If Airbus goes up to 75 for five months, then you can forget it.”
Airbus’s Faury told Reuters this week that its latest forecasts implied that such rates could be sustained for some time, but stressed no decision had been taken.
Germany’s supply chain is one of Europe’s largest. It was kept intact by furlough schemes and a decision to keep producing 40 A320-family jets a month during the crisis, Thum said.
“It showed that Airbus is reliable and kept a minimum of (parts) orders and production,” he said, adding this had allowed many suppliers to absorb most of their fixed costs.
Hiring new workers may prove more of a headache, though, amid widespread labour shortages.
“The main concern is to get skilled people on board … especially due to the demographic effect of baby-boomers retiring,” Thum said.
Also vital for Germany’s largely family-owned small suppliers are actual contracts, rather than provisional targets.
“More than visibility you need orders (for parts),” Thum said. “If you go to the banks with visibility, you get nothing.”
(Reporting by Tim Hepher and Alexander Cornwell; Editing by David Clarke)
