How Small Aerospace Suppliers Can Seize Big Opportunities in Commercial-Aircraft Manufacturing

How Small Aerospace Suppliers Can Seize Big Opportunities in Commercial-Aircraft Manufacturing

Pool your talent and resources with other suppliers, and leverage emerging fields such as green aviation and UAVs, suggests Donald Majcher of the Ohio Aerospace Institute.

In the March issue of IndustryWeek, I talked about the production ramp-up in commercial-aircraft manufacturing, and how some industry experts -- and suppliers -- are very concerned about the supply chain's ability to keep pace.

On the flip side, of course, the surging demand predicted for commercial jets over the next 20 years could be a huge opportunity for aerospace suppliers that have the wherewithal to scale up in lockstep with the OEMs.

I recently spoke with Donald Majcher, vice president of technology and innovation partnerships for the not-for-profit Ohio Aerospace Institute, about some of the ways that suppliers -- especially smaller ones -- can seize those opportunities.

IW: How can small and midsize suppliers position themselves to get a piece of this $4 trillion commercial-aircraft market that Boeing (IW 500/15) is predicting?

DM: There are two ways to answer that.

On the one end, it's about understanding the trends, understanding where the scale-up is coming from and creating partnerships with other suppliers in the supply chain that might be willing to partner so that you can share components or share capabilities.

You might be able to find places where there's excess capacity and share that with people in the supply chain.

The second thing is to share the development risk with partners on new things, so that you're not taking all the risk yourself. And by doing that, you can raise the capital to be able to go after [those opportunities.]

There are probably about 10 areas that we've tracked where there is brand new technology going to market where there's not capacity. And so if you can actually highlight those and partner with people that could help develop product in those areas ... for small manufacturers that's a real opportunity.

Emerging Technologies

IW: What are some examples of opportunities in emerging technologies that suppliers can use as a springboard for getting into the commercial-aircraft space?

DM: One of the biggest opportunities for Ohio is going to be the coming [unmanned-aerial-vehicle] industry. That could be $25 billion over the next five years. Yet today, all UAVs all over the world have been mainly built for military markets.

The future [UAV] growth is going to be in law enforcement. It's going to be in farming. It could be in cargo. It could be in other areas. Imagine being able to take out cost of shipping or cost of surveillance or cost of distributing chemicals or seed to farm. You can fly these things with GPS; you can fly them in the airspace.

... So if you can build these type of products, which don't have the human rating that you have with regular aircraft, you might be able to get some of that market more quickly than you normally would get with large aircraft.

Another one is green aviation.

In Europe today, starting in January, there's a 15% surtax on any aircraft landing from overseas that doesn't meet their emissions compliance [standards]. And they've gone to a carbon-trading scheme, and it's going to be heavy on some of the companies here.

So we've been working with air carriers. We've been working with manufacturers that want to do biofuels, that want to get into new areas.

But you could imagine around an airport that there are opportunities to get into this space -- not first on aircraft [manufacturing], but by making the airports greener, by putting in place fuel-cell-powered tugs or equipment handling, things that are clean -- and then taking it to aircraft over time.

... Composites is another one.

With the 787 being all composite, that's going to fuel innovation not just in composites but also in the metals companies looking to claw that [business] back. Airbus just announced $1 million they're putting into [an R&D consortium at the National Composite Center in Dayton to develop advanced materials for commercial jets], and that looks like it could really have promise to grow these small-business footprints into something that could scale up.

Also, Alcoa just announced a few weeks ago that they're putting in a state-of-the-art aluminum lithium plant in Indiana, which will be a cast house that will be really second to none and allow them to expand into this new market.

So those are some examples of how you could kind of get into new space.

Suppliers

IW: So the idea is that a supplier gets involved in one of these allied fields -- such as UAVs or green aviation -- and leverages that to get into aircraft manufacturing?

DM: Exactly. And some of those larger companies might want to be development partners with you as well to help you get away from the capital issue.

IW: How can organizations such as the Ohio Aerospace Institute help suppliers seize some of the opportunities in commercial-aircraft manufacturing?

DM: There are a variety of ways.

One is to get clearer information about what's going to be required and when. And to help bridge those communication gaps, we've held supplier summits where we bring in large companies, and then we have them meet one-on-one with suppliers so they can talk about what some of their needs are.

Better communication will definitely help with this.

OEMs

IW: Does that mean that OEMs such as Boeing and Airbus have to do a better job of communicating, or everyone involved?

DM: [Better communication] between Boeing and Airbus, their Tier 1s, and then the supply base.

The other way we help is by, believe it or not, connecting people who might have been selling into one market or another to other suppliers.

And as they make those connections, they're able to find these market opportunities and then be able to go get capital to go make further investments.

IW: So you're talking about companies that previously weren't supplying to the aerospace industry?

DM: Or they had been, but only in a limited way, and they have the ability to go buy additional tooling machines or equipment if the market is there. So we can help with that as well.

The other way we've been helping is by working with the House [Armed Services Committee] and helping perhaps drive changes in terms of government contracts, eliminate the 3% holdback on contracts, and speed up the contracting, so that you get the revenue coming in more quickly -- changes that help the small business.

On the commercial side, the other thing we're doing is we're teaching companies how to be better exporters.

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