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programs may emerge from other developing regions. related to the changed pricing and volume expectations,
These new entrants may face challenges including parts shortages, defects, unplanned overtime and
obtaining sales orders from established large carriers, investment requirements.
possible budget and schedule over-runs in product
development and delays in establishing a track record of It is likely that the aerospace supply chain will continue
reliable, safe and trouble-free operation which takes time. to transform and will likely consolidate further. Some
However, given the demand for new aircraft over the next smaller companies may not be able to afford investment
20 years, new entrants are likely to eventually experience in the industry going forward. The trend to consolidate by
some level of sales and production success. part family (i.e. components, aero-structures, electronics,
interiors, etc.) may continue for the next few years in order
Supply Chain Challenges to gain economies of scale and to provide the required
investment in people and tooling. As consumer demand
Another challenge faced by the aerospace supply chain for lower airfares ripples through the value chain from
is the ability to keep pace with OEM customers which OEMs to tier-one suppliers and further down, competitive
requires them to dramatically increase production rates pricing in the supply chain is anticipated to be an ongoing
of components, systems and services. Over the past challenge in 2016.
decade, many aerospace suppliers have successfully met
customers’ challenges by changing their business models. Despite these challenges and given the increases in
Examples include investing in non-recurring research and production rates, it is estimated that 2016 will experience
development for new aircraft production programs, hiring 3.4% revenue growth in the commercial aerospace
design engineering staff to produce detailed designs for subsector based on forecasts of the aircraft manufacturers
parts, investing in tooling for manufacturing and directly and several investment analyst reports.
managing a cadre of lower tier suppliers. However, many
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ENQUIRY NO. 102 598

October - November 2016 19