Washington State suppliers who want to do business with Airbus don’t have to open new shops in Alabama or elsewhere globally to support the European company, its top supply official in the US said last week.
We sat down with David L. Williams, vice president of procurement for Airbus Americas, following presentations of the first Airbus Suppliers Fair in this state, in a conversation in which he outlined Airbus’ goals to increase the State’s supplier business with Airbus. The fair was the culmination of more than three years of efforts by the Pacific Northwest Aerospace Alliance (PNAA), the Washington State Department of Commerce and this writer to arrange a fair.
This is part of a Beyond Boeing aerospace strategy we outlined in October 2009 before the Governor’s Aerospace Summit in Spokane (WA), a plan adopted by Gov. Christine Gregoire and the Commerce Department. Spurred by Boeing’s pending decision to put the second 787 assembly line in South Carolina and a clear strategy by Boeing to compete future airplane programs and supporting work outside Washington, it was obvious the State had to move Beyond Boeing in order to maintain a healthy and growing aerospace industry.
It’s been gratifying to see Commerce, Gregoire and her successor Gov. Jay Inslee ramp up efforts to broaden Washington’s aerospace reliance on Boeing to a more global view.
Washington is Airbus’ No. 2 US supplier by companies count and No. 6 by dollar volume, and it’s within a few hundred thousand dollars of becoming #5. Williams told us that Airbus uses around 25 Tier 1 suppliers in Washington and many more Tier 2 and 3 suppliers.
“Washington State is a huge aerospace hub, so for us as we look at the opportunities, as we look at the suppliers, the technologies of interest and the R&T (research and technology) office, clearly Washington State is going to be one of those strong focuses,” Williams told us. “We’ve come here every year, six or seven times, at the annual PNAA conference. We were at the Aerospace Defense and Suppliers Summit last year and we’re here today.
“I think I’ve been a bit more to Washington State than to any other part of the country.”
Airbus has a goal of doubling its US dollar-based cost structure to mitigate against the Euro-Dollar exchange rate.
“[We] have the plan to increase the spend to $20bn. When I first came here, it was $10bn,” Williams says. The creation of the A320 family final assembly line in Mobile (AL) is part of this plan, but it hardly stops there. And while Mobile will become an aerospace cluster supporting the FAL, suppliers don’t have to locate there.
“There is a need for certain supplier requirements around the FAL…but there isn’t a need for the machine shop to be 50 yards away, there isn’t a need for the composites to be on site. The vision is there will be an aerospace park providing the needs of the final assembly line, and if suppliers are looking to open up a shop in Alabama, it is an option but it certainly isn’t a necessity,” Williams told us. “We wouldn’t expect to, and we’re not telling suppliers, that if you want to do business with Airbus you have to be in Alabama. We’re looking for suppliers in Washington State who can support the business globally.”
What kind of suppliers is Airbus looking for on its sojourn to Washington?
“Areas of interest changes over time,” Williams says. “Areas of opportunities could be a whole new program, it could be a neo program, it could be the end of a contract, it could be the natural end of a contract or it could be brought to a halt because of poor performance. So far we have been focusing on machining very strongly. We can look at composite. We’ve been doing some work around super-plastic forming. More recently we’ve been looking at…aerostructures supplies. Maybe not the huge aerostructures assemblies like Spirit Aerosystems on the A350, but significant aerostructures suppliers who could add value to the supply chain. We looked for commodities.”
Dual sourcing—a topic of some sensitivity to Boeing’s labor unions and to Washington State, who want all the jobs and companies that go with production—is an emerging goal of Airbus.
“As the [production] rates go up, we’ve come to the realization that, No. 1, the single source policy we’ve had maybe needs to be re-thinked, particularly on the single-aisle, obviously. No. 2, the dollarization drive is still huge,” Williams says. “We’ve still got some room to go globally to get to where we want to be. No. 3 is a final assembly line that brings in the opportunity for more local suppliers to support that final assembly line. Why not, if they are going to support rate four into Alabama, or a rate four into China or 10 into Europe? You get your dual sourcing and there is a geographic logic to it as well. You take the risk out of it and you get the dollarization as well. You get the three legs of the strategy.”
Airbus Americas Chairman Allan McArtor raised the prospect of opening an engineering center in Washington State within 10 years. This is good news for Boeing engineers and IT personnel who have been laid off by Boeing as the Chicago-based company moves some of these jobs out of Washington to non-union locations. Airbus has taken advantage of Boeing’s similar actions in Wichita (KS), and has a growing engineer center there. But the bad news is, don’t expect an Airbus engineering center here any time in the immediate future.
“There aren’t any plans I’m aware of to move in sooner than later,” Williams said.
I think recent projects such as the 787 and A350 made clear which suppliers performed and who performed less then promised or started whining / overcharging after the point of no return. Leading to some reshuffling of preferred suppliers by both Airbus and Boeing.
This is about an entire state not making the same mistakes as Detroit, Michigan:
“RT @ProSyn: #Detroit’s fate should serve as a warning for China, and for the next generation of urbanizing countries. http://t.co/edfsEehhmd”
But, ultimately, this will be a boon for Boeing, the dual sourcing of supply will foster competition between suppliers, help lower the cost of doing business in Washington. Maybe not labour, from a Boeing vs. Airbus point of view. What lessons does Detroit’s failed auto industry have to offer the cities of Washington?
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