Numerous pressures have led to a prolonged, inefficient production cycle for new aircraft builds.
Key takeaways
Companies must be proactive in optimizing inventory to address changing demands.
Strategic planning now requires integrating the higher cost of capital into decision making.
Manufacturing trend #1: The impact of aging aircraft in modern aviation
From vintage to vital: The impact of aging aircraft in modern aviation
Challenges emerge for the aviation industry as the global aircraft fleet ages.
Challenges are emerging for the aviation industry as the global aircraft fleet ages. Despite a sharp rebound in post-pandemic travel, with a record number of air travelers expected in 2024, the supply chain is taking longer to recover, with disruptions and production issues continuing to plague aircraft manufacturers.
The backlog for new aircraft continues to set record highs, and labor shortages, scarcity of critical components and an increasingly complex geopolitical landscape have contributed to a prolonged and inefficient production cycle for new aircraft builds. Quality control issues among the world’s largest aircraft manufacturers are also contributing to operational delays, rising costs and regulatory pressure. As a result, older aircraft will be expected to fly longer to meet travel demand, which brings a distinct set of challenges for aerospace parts suppliers, as well as for the maintenance, repairs and overhaul (MRO) market.
Manufacturing trend #2: Priorities for manufacturers adapting to the new economic environment
Industrial companies face a shifting economic landscape, with higher costs of capital, long-run inflation, continued risks of supply shocks and globalization evolving into regionalization. The emergence of this new regime, alongside softer demand in certain manufacturing sectors, is forcing businesses to rethink how they create and sustain enterprise value.
Even though conditions may be improving, companies need to adapt to the new norm of higher rates, higher inflation, constrained resources and an overall higher level of economic uncertainty. These factors have led to persistent margin pressures, even as supply chain challenges and materials costs have eased. Strategic planning now requires integrating the higher cost of capital into decision making, emphasizing the need for more disciplined capital allocation, smart investment choices and increased focus on operational strategy and excellence.
Priorities for manufacturers adapting to the new economic environment
Operational strategy and execution will be key for manufacturers driving enterprise value in the new economic environment.
Manufacturing trend #3: Aerospace manufacturing adapts to California’s GHG rule
Aerospace manufacturing adapts to California’s GHG rule
New regulatory standards underscore the need for more effective deal-making in aerospace manufacturing.
The aerospace sector is navigating the shift toward carbon neutrality and an increasingly stringent regulatory environment against a backdrop of concerns surrounding recent aircraft safety failures during flights.
Aerospace manufacturers have faced escalating costs arising from labor shortages, IT investments and the need for higher-quality materials. Now, they have the added burden of adapting to regulations such as new California greenhouse gas emission rules and the Securities and Exchange Commission’s new climate-related disclosure requirements. This confluence of factors is exerting unprecedented pressure on the sector, setting the stage for a period of intense transformation.
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