The takeaway: Boeing is re-working supplier contracts to shave costs and generate more aftermarket revenues, especially on so-called build-to-print parts for which it owns the design data but farms out for production.
Boeing’s drive to pull in more work to streamline its supply chain and gain aftermarket share continues to gain momentum, analysts at Canaccord Genuity believe.
“We continue to hear pressure from Boeing on suppliers is increasingly focused on capturing volume from build-to-print suppliers that Boeing can then capture aftermarket economics on,” the analysts wrote in a research note.
The most recent publicly acknowledged move came last month, when Boeing announced plans to open factories in Sheffield, U.K. and Portland, Ore. that will build 737 and 787 trailing-edge actuation systems. The company called the moves “part of a broader plan…to enhance production efficiency and reduce” supply chain costs.
While details on companies affected by such moves aren’t usually made public, Canaccord listed seven–Spirit AeroSystems, Triumph Group, Moog, Curtiss-Wright, PPG, Kapco, and Parker-Hannifin–that have likely been affected. The change at Spirit, which will supply all spares to Boeing rather than directly to the marketplace, was discussed publicly last year.
“The next step to watch out for from Boeing is it is looking at trying to aggregate common structures parts,” Canaccord said. “Boeing is looking for a flatter supply chain, and no longer believes it will have structures suppliers do as much integration as they did in the past, such as on the 787.”
Boeing is on track to set up a dedicated services unit that will integrate commercial, military, and space aftermarket efforts into one. The unit, Boeing Global Services, is slated to be up and running by the third quarter.