By Bryan Corliss
Sept. 18, 2023, © Leeham News – One of the continuing themes we’re hearing – at investor presentations and on quarterly earnings calls – is the shortage of skilled labor, which is disrupting deliveries up and down the aerospace industry supply chain.
The inability of suppliers to deliver parts on time – or to deliver correctly assembled parts – is hampering the OEMs as they attempt to ramp up production to meet high demand from airlines.
This is not just an issue affecting aerospace. There’s a general shortage of medium- and high-skill workers in the Western world right now, with shortages of every kind of worker from line cooks to truck drivers. Shortages existed prior to the Covid-19 pandemic, and there’s still strong demand, even with economies slowing as central banks move to tamp down inflation.
The issue is more pronounced in industries that rely on high-skill workers – like aerospace.
One outcome of this worker shortage is a rise in union activism. In aerospace, we’ve seen the strike by the International Association of Machinists against Spirit AeroSystems this summer, and the near strike by members of the same union against Boeing’s defense business in and around St. Louis last year.
Next year, both Spirit and Boeing will be back at the bargaining table; Spirit to negotiate with members of SPEEA, the union for aerospace engineers, while Boeing holds talks with IAM District 751, which represents hourly workers at the company’s plants in Puget Sound and Oregon.
IAM 751, in fact, is urging members to prepare for what it’s describing as a September 2024 contract vote that will “forever change the aerospace industry.”
The environment seems to be favorable to the unions, for reasons we’ve discussed before. However, with the OEMs and Tier 1 suppliers heavily in debt (and currently bleeding red ink), there’s going to be a limit to what the companies will be willing to offer in a bid to satisfy their labor forces.
The last article in a series of interviews with Lockheed Martin.
June 6, 2023, © Leeham News: The Lockheed Martin C-130 cargo plane entered production in 1954. The first flight was the same year and it entered service in December 1956.
The latest version, the C-130J, is still in production. Named the Hercules, the C-130 is operated by armed services all over the world. Retired versions serve as aerial fire-fighting tankers. A small number of civilian versions, the L-100, serve as commercial freighters.
The C-130J, called the Super Hercules, extends the life of the C-130 series indefinitely. And production for its first civilian operator, a Texas cargo airline, is underway.
Attempts by Airbus with the larger A400M and Embraer with the similarly sized, jet-powered C-390 to compete with or replace the C-130 have largely failed. More than 2,600 C-130s have been produced in 69 years.
The larger A400M has been a technically challenging aircraft and a financial disaster for Airbus. Production began in 2007. The first flight was in December 2009. It entered service in 2013. Only somewhat more than 100 have been built and sales of less than 200 have been made. A host of technical problems marred performance and schedule.
Embraer’s KC-390/C-390, about the same size as the C-130, trades turboprops for jet engines. Production began in 2014. The first flight was in February 2015, and it entered service in 2019. The Brazilian Air Force was to be the largest customer and operator. But financial constraints and changing policies resulted in a reduction in the order. As of today, only about 70 have been ordered and only about a dozen are in service.
Embraer partnered with the US company L3 Harris to market the C-390, including to the US Air Force.
May 23, 2023, © Leeham News: Decisions by the US Air Force in Washington (DC) on whether to require competition for its next round of aerial refueling tanker aircraft are still months away.
But so far, the USAF technical group at the Wright-Patterson Air Force Base in Dayton (OH) is proceeding as if there will be a competitive battle. At stake is an order for more than 160 tankers.
Boeing thinks this will be a sole-source, follow-on order for its KC-46A, based on the commercial 767-200ER. Lockheed Martin Co (LMCO), partnering with Airbus, wants to see a version of the Multi Role Tanker Transport (MRTT), based on the commercial A330-200.
So far, the secretary of the Air Force publicly said he is leaning toward a sole-source follow-on order.
I visited LMCO last month to talk about the tanker competition. We also talked about the C-130J and its new commercial model, as well as other defense programs.
By Scott Hamilton
May 22, 2023, © Leeham News: The US Air Force is moving slowly toward another aerial refueling tanker procurement. With hundreds of ancient Boeing KC-135 tankers still to replace, the procurement will be a big one: more than 160 jets.
The big question that is as yet unresolved is whether the Air Force will place a follow-on, sole-source order with Boeing, or seek a competitive bake-off. If it’s the latter, a bid by Lockheed Martin Co. (LMCO) will be the competition. (Others may submit a bid, but the Boeing-Lockheed face-off will be the one to watch.)
LMCO partnered with Airbus to offer the A330 MRTT (Multi-Role Tanker Transport). This sets up a third Boeing-Airbus contest that could well be as bitter as the two previous ones. Make no mistake: although Lockheed will be the company submitting the bid, Airbus will become the target. It already has. Boeing surrogates lost no time in attacking Airbus after LMCO announced it will submit a bid, using the same old tired illegal subsidies claims and adding some new ones.
One surrogate questioned Airbus’ safety record. This was an astounding line of attack, considering the Boeing 737 MAX history and all the scandals that emerged in its development; and the 2013 grounding of the Boeing 787 for safety reasons. Airbus has never had a fleet type grounded by regulators for safety reasons traced to the design of the aircraft. (India’s regulator grounded A320neos equipped with Pratt & Whitney GTF engines due to issues related to the engine durability.)
More relevant is whether it makes economic and financial sense for the Air Force to have two primary tanker fleets: Boeing’s KC-46A and the A330 MRTT. LNA visited LMCO last month in Marietta (GA), the location of much of its defense business. It’s where the LMXT, as Lockheed calls its offering, will be militarized after production at Airbus’ Mobile (AL) aerospace complex should LMCO win the contract—if the procurement is competed.
LNA tomorrow will discuss some of the history of previous procurements.
By Bryan Corliss
April 17, 2023, © Leeham News: The Boeing Co., which has talked of making significant production rate increases “very soon,” is offering bonuses of up to $10,000 as it recruits workers in touch-labor positions in both South Carolina and Puget Sound.
In Charleston, Boeing is offering $5,000 signing bonuses specifically for experienced painters and interiors installers as it tries to first stabilize, then increase, production of 787s. Boeing wants to reach a rate of 5/mo by the end of this year and 10/mo by 2025/26.
In Puget Sound, the company isn’t offering signing bonuses, but it is offering hefty payouts of up to $10,000 to current employees who refer experienced aerospace workers to openings in a number of job categories, including structures mechanics and general machinists.
The moves come as analysts continue to sound alarms about workforce shortages across the industry.
“We continue to remain cautious on the supply chain’s ability to support the planned production rate increases in 2H23 and into 2024,” wrote Ken Herbert, with RBC Capital Markets, in a report earlier this week. “We continue to see labor availability and training as the largest headwind facing the sector.”
Oct. 25, 2022 © Leeham News: A Lockheed Martin official said the company believes the U.S. Air Force will end up seeking competing bids for the next batch of aerial refueling tankers it will buy.
When that happens, the company is confident the Air Force will pick its proposed LMXT tanker, based on the Airbus A330 airframe, for the role, said Larry Gallogly, who is Lockheed Martin’s director for the tanker campaign.
Back in 2007, the Air Force outlined a plan under which it would replace its then-existing tanker fleet in three rounds, KC-X, KC-Y and KC-Z.
KC-X, after many missteps, became the KC-46 program. The Air Force now is looking ahead to KC-Y, but with the recent steps forward with Boeing’s KC-46, some are arguing that a full-blown tanker competition isn’t necessary because USAF could just tack on additional orders to the 179 KC-46s it now plans to buy.
But during a briefing from Lockheed Martin’s offices in Alexandria, Va. today, Gallogly said he expects the Air Force will announce its criteria for the next round of tankers after the first of the year. When it does, Gallogly continued, it’s likely that the Air Force will be seeking a more-capable tanker than the one it’s buying now.
“If we take all of the stakeholders at their word that the requirements are vastly different than they were 16 years ago, that takes you down a path where a competition is more likely than not,” Gallogly said.
By Bjorn Fehrm
September 15, 2022, © Leeham News: Last week, we looked at how Pratt & Whitney’s JT8D turbofan came to dominate short-haul airliners while the JT3D had the long-range market.
The introduction of the widebody jets in the 1970s with Boeing 747, Douglas DC-10, and Lockheed Tristar brought GE and Rolls-Royce into the market. It was the start of the high bypass turbofans.
By Vincent Valery
June 20, 2022, © Leeham News: New airplane programs used to come to market in four years. Now, the launch-to-entry-into-service period has been seven years or more. (Chinese and Russian programs take even longer.)
Boeing launched the 787 in December 2003. EIS was October 2011. Airbus’ A350, launched in response to the 787 in 2004, went through several iterations which added time to the program. Delays added more time. EIS was in January 2015.
Bombardier’s C Series was launched in 2008. EIS was in July 2016. The Boeing 777X was launched in 2013. EIS is now targeted for 2025. Boeing launched the 747-8 in 2005. EIS was in 2011. The Boeing 737 MAX was launched in July 2011. EIS was May 2017. Airbus’ A320neo was launched in December 2010. EIS was in January 2016.
Boeing has been discussing the New Midmarket Airplane (or whatever it was called throughout changing nomenclature) since 2012. It still hasn’t launched the program. Once it does, how long will it take to enter service?
Any new program is a multi-year, multi-million investment that, in the worst case, can take decades before recovering the initial development and production ramp-up expenditures.
Several recent programs, notably the 777X, have faced significant delays between the envisioned and actual start of deliveries to airlines.
Boeing claims that advances in manufacturing techniques will reduce the time required to develop the next aircraft program. However, regulatory scrutiny is higher nowadays and the aircraft built are more complex than in previous generations.
LNA analyzes how the time between the program launch and entry into service has evolved since the beginning of the Jet Age. The goal is to find whether there is a trend and in what direction. The analysis focuses on Airbus, Boeing, Lockheed, and McDonnell Douglas.
Now open to all Readers
By Scott Hamilton
March 21, 2022, © Leeham News: Lockheed Martin Co. (LMCO) plans to submit a proposal for the US Air Force’s KC-Y aerial refueling tanker procurement. So does Boeing. LMCO joined with Airbus and will offer a tanker based on the existing Airbus A330 MRTT (Multi-Role Tanker Transport). Boeing will offer a follow-on purchase of the incumbent KC-46A, based on the 767-200ER.
These two aircraft faced off in the KC-X competition. Airbus initially teamed with Northrop Grumman and was awarded the contract. Boeing protested the award on procurement procedural grounds and prevailed. Northrop dropped out of the recompete, which Boeing won in 2011.
The two aircraft will be offered again, but this time, one party doesn’t view the aircraft as competitive. LMCO sees the Airbus airplane, which it brands the LMXT, as complementary to rather than competitive to the KC-46A. Lockheed explains why here.
Boeing, on the other hand, isn’t convinced the USAF will even seek a competitive bid—or that LMCO’s belief that the service wants a larger airplane than the KC-46A to fill a “gap” is correct.
Mike Hafer, senior manager of KC-46A Business Development, explains why.
Part 6: The KC-X competition from Boeing’s perspective
Feb 21, 2022, © Leeham News: Jim Albaugh, the former president and CEO of Boeing Commercial Airplanes and of Boeing’s defense unit, retired from the company in 2012. He oversaw the first competitive bid at the defense unit for the US Air Force KC-X refueling tanker. That was lost to Northrop Grumman-EADS (Airbus) in 2009.
As CEO of BCA, he oversaw commercial efforts to get Boeing’s cost down on the 767-200ER, which formed the basis for what became the KC-46A tanker. Defense won this round against a solo EADS bid. Boeing’s winning price was about 10% below the EADS bid for its A330-based MRTT.
Years removed from Boeing but nevertheless an interested observer with experience on the losing and winning bids, Albaugh has some observations and advice as Boeing prepared to compete against Lockheed Martin-Airbus for the KC-Y campaign that already has unofficially begun.