Credit: USAF


As many as a fifth of lower-tier suppliers in aerospace and defense (A&D) could exit the sector over the next 18 months as COVID-19 disrupts the commercial aviation market and hurts the defense industrial base, seasoned supply chain experts have told Aviation Week.

无论是通过合并还是减员你可能会看到接近20%的比例新合并的Aero PrecisionKellstrom Defense高级执行官、私募股权投资者的长期合作伙伴Chris Celtruda说。你越是深入了解供应链群体你会发现压力水平、流动性挑战越大。”

 “Either through consolidation or attrition you’re probably going to see a number closer to 20%,” said Chris Celtruda, a senior executive at the newly merged Aero Precision and Kellstrom Defense and a longtime partner to private equity investors. “The stress levels, the liquidity challenges grow the deeper you go in the supply base.”


Using the 2013 federal sequestration as a forerunner, when there was a similar, sudden softening of long-term business plans, 10-15% of smaller suppliers exited the business in the aftermath, Celtruda told an Aviation Week webinar May 12. But this downturn is worse.


 “I don’t think we’ll see a snapback. I think we’ll see something similar to after 9/11,” which took five years for airlines to get back to precrisis capacity levels.


Tier 1s and OEMs will provide financial lifelines to certain Tier 2-4 providers, especially those with intellectual property and who are critical parts providers. But Celtruda expects bankruptcies and asset sales, such as inventory or manufacturing capability, while others elect to go into other markets completely. 

AeroDynamic Advisory的常务董事兼知名行业专家Kevin MichaelsCeltruda的冷静态度表示认同。

Celtruda’s sober outlook was shared by Kevin Michaels, managing director of AeroDynamic Advisory and another recognized industry expert. 

“我们特别关注二级、三级和四级供应商,”Michaels在网络研讨会里提到。“供应商真的面临着一连串的事件。在空客,Success 1.0及2.0,Scope-plus的合作也发生了供应链挤压。然后,供应商被要求合理调度资本支出,以便在单一通道中实现大规模增长。之后我们遭遇MAX停飞,现在又遇到了新冠肺炎危机。所有这些都大大削弱了供应链。”

 “We’re especially concerned about the Tier 2, 3 and 4 suppliers,” Michaels told the webinar. “Suppliers have really faced this whole litany of events that have happened. We had the supply chain squeeze from the Partnership for Success 1.0 and 2.0, Scope-plus at Airbus. Then suppliers were asked to deploy capex for a massive ramp-up in single-aisles. Then we had the MAX shutdown, and now we have the COVID-19 crisis. All of this has significantly weakened the supply chain.”


Celtruda and Michaels said it is not only a commercial aerospace issue, but also a defense industrial base issue, as evidenced by recent Pentagon concerns, and acknowledgment by F-35 provider Lockheed Martin that the Joint Strike Fighter program has been affected.


Half of the defense supply chain is seeing cash concerns, they said. There has been “massive” idling of Northeast U.S. suppliers, home to engine-making ecosystems, and also in Washington state, Wichita, Dallas-Fort Worth, Arizona and California hubs for both aerospace and defense suppliers. 


Liquidity remains the overarching concern. In a live survey of Aviation Week webinar participants, 70% of respondents listed cash and credit as their leading concerns. Another 15% surveyed said unrealistic expectations from airframers, OEMs and airlines. More than 12% said sector consolidation and just 2.5% cited labor availability and expectations as an issue.


 “For the first time in a long time, every element in the chain—from the manufacturers to the lessors to the airlines, and then the manufacturing and MRO supply chain—is seeing liquidity risks,” according to Celtruda. Problems range from OEM production rate cuts to ongoing reduction in demand for MRO and repair parts, along with a wave of parked aircraft that will be parted out—and all of this coming on the heels of supply chain squeezes and a run-up to higher build rates. “There is definitely distress in a number of layers of the supply chain and there is distress at the top of the chain.”


Compounding liquidity concerns is a lack of experience with bad times. “There is a whole generation of leaders and operators in the supply base that really haven’t gone through an inflection point,” Celtruda noted. “Yes, we had the [2008] financial crisis and the [2013] sequestration on the defense side. But Sept. 11, 2001, was a long time ago, and the aerospace layoffs of the late 1990s were a long time ago. So, there has been some changes at the rate in which different businesses have responded,” he added.


Ultimately, for many lower-tier suppliers who remain in A&D, the question becomes “whether you are a buyer or a seller.” They expect consolidation to pick up significantly, but also interest from outside investors who still see A&D as an attractive long-term investment—and now at better deal prices.

这条消息是Michael Bruno在 Aerospace Daily & Defense Report 发表的文章。《Aerospace Daily & Defense Report 》是航空及国防领导人了解每日市场简报的主要渠道。获取有关国防、军事和民用航天类项目、预算及政策的最新重要情报。点击此处查看有关 Aerospace Daily & Defense Report 更多消息。