Industry Expects 12 More Months Of Supply Chain Pain

Skilled engineering staff are in particularly short supply as staff exit companies.
Credit: Hinterhaus Productions / Getty Images

Aerospace cost and supply chain difficulties will ease from mid-2023, according to a majority of respondents to an industry survey by equity research firm Jefferies.

However, a majority also predicted that bottlenecks would ease at some point this year when asked the same question 12 months ago.

Among the survey results—20% of which came from aftermarket providers—labor shortages were cited as the biggest headwind, followed by raw material prices.

Jefferies noted that skilled engineering staff are in particularly short supply, adding: “Workers are quitting their jobs at faster rates than any time in history as the move for higher wages and greater workplace flexibility creates a disconnect between job openings and applicants.”

Better wages and benefits to attract key talent will push aerospace labor costs up almost 9%, according to the weighted average response of the survey.

A fifth of respondents said they had no way to pass on price increases to customers, although others cited inflation-linked escalators and short-duration contracts as productive means of keeping up with cost increases.

Regarding new aircraft production, only 20% of respondents believe that the supply chain can keep up with Airbus’ plans to ramp up to 64 A320neos per month by the second quarter of 2023, while 40% believe Boeing’s plans for 40 737 MAX aircraft per month are compatible with the current situation of its suppliers.

Jefferies anticipates that deliveries will increase 35% in 2022 to 1,344 aircraft, roughly in-line with 2019 levels but down 22% from the 2018 peak. 

It predicts that deliveries will reach and surpass the prior peak in 2024, largely driven by narrowbodies being 15% ahead of 2018 .

Jefferies also forecasts that widebody deliveries will remain 37% below 2018, driven by a continued lag in international travel recovery.

Alex Derber

Alex Derber, a UK-based aviation journalist, is editor of the Engine Yearbook and a contributor to Aviation Week and Inside MRO.

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