A commercial arm of Avic plots its course in global aerospace manufacturing
In many ways, SACC typifies the Chinese civil aircraft industry. The company, the commercial spin-off of Avic's Shenyang Aircraft Corp., is expected to live by its wits, winning commercial contracts to meet the Chinese government edict that state enterprises make profits. But, as is true for the rest of the industry, SACC also has access to national aircraft programs designed to help it develop.
Like the industry in general, SACC's capabilities are rising with each program. The company has helped develop the parts it is making for theand . Following the policy of Avic's head office, SACC is aiming at integrating itself with the global industry, especially by focusing on specialities in which it believes it can excel. In common with its Avic siblings, it is battling rapid wage rises, doing its best to improve management and, as far as it can justify, increase automation.
With the separation of commercial and military sides of the industry, SACC is moving out of its parent's home. While Shenyang Aircraft makes fighters at its site in inner Shenyang, SACC has built a factory on the edge of the city's airport. The head office is still in town but will move to the new site. As part of the separation, SACC has been adopted by another relative, administratively sliding over to Avic Aircraft, the Avic group's large-airplane specialist, which is centered on Xian Aircraft.
SACC President Yang Lei sees the new factory as necessary, because defense and civil aircraft manufacturing do not mix well. “Civil aircraft production has its own special features, such as maintaining stable production rates, working with the rest of the world and managing an industrial chain,” he says.
SACC's successively deeper involvement in civil manufacturing—moving from small structures to large ones, and from following blueprints to helping to develop the parts—has naturally heightened its technical capabilities. But, asked what it has gained most from recent contracts, Yang says “we have learned how to cooperate and communicate with Western aerospace professionals.” SACC has come to understand the culture and interaction methods of such companies as suppliers to the C919, he adds. The idea of communication as a top skill may seem strange, especially when set against the technological complexities of aircraft manufacturing, but history has plenty of examples of programs suffering when two sides are not in sync. In particular, bringing together workers from disparate national and industrial cultures can raise huge challenges. For example, Chinese companies that have run into trouble in making parts, even major assemblies, have sometimes been slow to tell their customer, which has not realized how closely it needed to be involved.
The new SACC plant opened in 2009 and is now fully operational, meeting required volumes. Considerable investment was evident on a recent visit. Equipment includes three high-grade machining centers, a rubber-block press for forming sheet metal, a skin stretcher, a numerically controlled router and a deburring machine. The metal-centric company has also installed its first autoclave as a first step toward carbon-fiber reinforced plastic.
SACC has introduced automatic drilling and riveting to alleviate labor costs and to increase productivity. But it is clear that, unlike some parts of the Chinese industry, SACC is limited to buying equipment for profit; more automatic drillers and riveters will be bought only as production warrants.
The plant, designed by Avic, has inherited civil work from the Shenyang Aircraft military plant. SACC makes emergency exit hatches and wing leading edges for thefamily, the leading edge of the 's fin, and Section 48 of the .
Yang stresses the considerable price and cost pressure SACC is facing, which his predecessor, Pang Zhen, mentioned publicly more than a year ago (AW&ST June 4, 2012, p. 78). The new company president cites the problem of the rising yuan. And yet one of SACC's programs, manufacturing for the, shows the clearest evidence one could expect of a supplier doing well: The customer has given it more work. Beginning with a 2006 contract to build the Q400's forward and aft fuselages and tail, Shenyang Aircraft and then SACC are now manufacturing the mid-fuselage and wiring harness and, since 2011, assembling the whole fuselage.
SACC would not mind building the Q400 wing, too, should that contract be offered, says Yang, even though wings are not one of its chosen specialities. Areas of focus include fuselages, engine pylons, cable harnesses and cabin doors, based partly on its experience, he says. The list seems to be evolving. Last year Pang listed tails, doors and pylons.
The biggest single contract is for CSeries manufacturing, though SACC declines to discuss the work, which it does on behalf of Shenyang Aircraft. The latter is supplying Bombardier with forward, center and rear fuselage sections, the tail, tail cone, wing-body fairing and center wingbox. Bombardier has temporarily shifted some of that work to its factory in Belfast, Northern Ireland. During a recent visit, the CSeries production line was off limits. Next for SACC is extensive manufacturing for the C919, building the rear fuselage, vertical tail and engine pylons.
The ramp-up in CSeries manufacturing is probably a key issue in building up production volumes for SACC because Q400 production is slow and the C919 program is slipping (AW&ST June 17, p. 96). Work on the C919 has probably not come to SACC automatically, but the company had special dispensation to bid for it. Before allocating contracts, Comac officials said the structure would be made in China, but Avic units would have to compete for them.
The C919 work fits SACC's ambitions to specialize, and Yang says he hopes SACC will be able to secure work within its chosen focus when Avic Aircraft allocates contracts for the structure of the MA700 (AW&ST May 27, p. 36).
In common with other major suppliers, SACC is gaining more than technical and communications skills. Its customers are also helping it with management processes, which are probably most important when it comes to labor costs, which have been rising by 10% a year in the Chinese aerospace industry.
“We are also reducing avoidable waste by skills training and improving the efficiency of each worker,” says Yang. Ultimately, no amount of reorganization and training can sustainably match the pace of Chinese labor rates, however. “It is too hard,” says Yang. “So for us to survive, apart from improving management, we must also expand our market.” He gave few clues as to where that expansion may be, but adds that SACC has been talking with Airbus,and Bombardier.
Separately, Xian Aircraft, the core of the Avic Aircraft operation, has signed a $78 million contract for tooling from Electroimpact, a U.S. supplier of big robotic tools. The equipment will be used for the C919 in making flaps, ailerons and parts of the wing.
The order is unusual because Xian Aircraft did not insist on non-disclosure. Boeing and Bombardier usually do. Notably, the Chinese insisted that everything delivered under the contract be U.S.-made. Freight may have been cheaper if some of the fabrication had been done in China, but the customer preferred to pay extra. Electroimpact is due to deliver within a year.
Its British subsidiary will provide 20% of the components. The Chinese did not object to “Made in Britain,” either; it just did not want anything stamped “Made in China.” Sieve wonders whether Xian Aircraft believes it will be easier to certify the C919 if its tooling is Western-made.
—With Michael Mecham in San Francisco.