Aircraft Manufacturing Industry - Report Example

Aircraft Manufacturing Industry

From the perspective of a product manager, there is a challenge in the development of new products. Identifying an opportunity in the market, defining a concept for the product, and managing the development of the product are all tasks deemed as significant. This has especially been true for companies dealing in commercial airspace and their suppliers. The expected blooming pushes the market for aircraft in air traffic. In a historical point-of-view, every 15-years air traffic has doubled, with the trend forecast to continue in the future, with an estimated annual escalation rate of 4.7% (Rotaru, 2013). The commercial sector of the aerospace industry companies anticipates challenging business conditions in the near to medium term. Long-term projections by the industry giant Boeing are positive, however. According to Boeing, 29,000 new planes will be needed by airlines in the period 2009 to 2028, all at a total value of $3.2 trillion. Additionally, Airbus which is worldwide renown market player has regulations and foreign trade policies governing it which serve a pivotal role in its business venture. This plays a vital role in the development of new products as well as the remarketing of used aircraft. This shows that the industry is still a vibrant one and will for a long time continue to be one of the most important in the economy of the United States. The industry is also among the best regarding technological development and innovation (Napolitano, 2012). There has been significant investment done in research and development with the aim of improving performance efficiency and cutting down on the production cost of production. This paper explores the aircraft manufacturing industry in the United States. It intends to look into the various aspects surrounding this industry concerning product development and innovation management. Besides this, it also provides a general overview of the sector and its different aspects. This includes the industry’s workforce, the economic impact of the industry, the technological development of the industry and the trade aspect of it.

The primary objective of the paper is to look at the technical development in the industry and the innovations that continue to be incorporated in the manufacturing processes. The industry is one of the most innovative given its nature of high technology application and the sensitivity of the end product. As a secondary objective, the paper explores the business aspect of the industry to determine the health of its present and prospects. This majorly touches on the business aspect of the industry

Literature Review

Technology Aspect

One of the technologies that have found immense application in the aerospace manufacturing industries is lean manufacturing. According to Baxter, Gao & Case (2008), the application of this concept has the aim of automating production. In their 2014 paper on the proper framework for aircraft design and production system using principles of lean manufacturing with a focus on automation, they argue that there has been quick technological development in manufacturing processes in the industry. This is necessitated by the challenges involved in coming up with better-quality final products, minimization of manpower labor, cycle terms and production wastes with the aim of boosting global market competitiveness.

Automation of the manufacturing processes provides a way of technologically innovating the manufacturing business and modernizing it, which makes it more attractive and competitive (Rotaru, 2013). The result is better quality and cheaper products. Based on the aerospace market driver, manufacturers of aircraft have given considerable attention to the manufacturing process design. This makes the deployment of various automation processes easy. In their work, Gao & Case (2008) provide a comprehensive analysis of the principles of the lean manufacturing process as applied in the construction of aircraft. They bring out the importance of the concept of contribution towards the competitiveness of the manufacturing process. They also show the gains that innovation brings into the industry regarding quality improvement, lower cost, waste handling, ergonomics and health issues.

Seth and Gupta (2005) investigated state variable modeling in integrated engine dynamics for aircraft. They explored the dynamics and characteristics of combined aircraft-engine systems based on state variables general theory for both non-linear and linear systems. They provided details leading to separate formulations of lateral and longitudinal models of state variables. They then merged the engine and aircraft models into one state variable model.

In their findings, they established that faster thrust responses in aircraft systems can be obtained in a couple of ways. These are the redesigning of regulators for increased closed-loop bandwidths and the relaxing of protective limits on the variables that tend to peak with faster thrust responses. They also advocated for the use of software codes in studying the behavior and performance of systems. The argument forwarded for this was that for aircraft engines, experimental validation would be costly, and as such the simulation of virtual models is the best way to study system relations and dynamics.

In another study, Sakhr and Horak (2012) examined the development and use of ultrasonic pulse echo technique. This is a technology developed to combat icing when aircraft operate in conditions that are cold enough to cause challenges in the ordinary operation of the plane. In the study, the technique was developed and calibrated before being used in the measurement of the thickness of water films that were wind-driven. The feasibility of the technology was investigated by measurements of the variations in the thickness and flow of water films. A three-level analysis of the technique revealed important physical phenomena. To start with, for time-averaged thickness distribution situations, with wind speeds increasing at every flow rate, thickness distributions came to be thinner. Also, the time-averaged distribution in thickness seemed to have greater uniformity at higher wind speeds in comparison to that at lower speeds. Despite the seemingly great importance the technique may have for manufacturers, this study did not, however, dwell on the application part of the technique. It only provides a theoretical analysis with no explanations on the applicability in practice.

Barbosa and Carvalho (2013) also analyzed the design of aircraft based on the concept of Design for Excellence (DFX) and composite material use in orientation to automated processes in manufacturing. In the study, design analysis models that used DFX concepts and composite materials for certain aeronautical design and automation were developed. The primary goal was to drive engineers working on the product development phase on the benefits that automation can achieve when this analytical model is implemented.

Organizations are always constantly pursuing excellence in business with a focus on improving quality, productivity, and innovation for them to remain relevant in the competitive market of today. As such, they search to upgrade their product designs every day. Automated solutions in assembly and manufacturing industries lead to better quality and reduced production costs. Rotaru, Arghiropol, and Barbu (2008) define Design For Excellence as "a knowledge base to approximate the product design to the maximum of its desirable characteristics such as high quality, reliability, maintainability, safety, easiness of use environment requirement, reducing the lead time for sales, reducing manufacturing costs, and maintenance product." The methodology was created to establish rules, methods and procedures guiding designers on product conceptions that meet all requirements as per the market expectations. When creating new products, therefore, it has to be applied at the early stages of design so as to identify the needs that are to be met. Careful consideration of product specifications has to be incorporated in the design as this directly influences the definition of assembly and manufacturing process methods. The DFX methodology uses automation as the major attribute to design and contributes to the design of aircraft to be developed in agreement with automated system needs for production.

The paper explores the various trends in manufacturing within the aerospace industry concerning automation and product development. In the results, there is a high assurance in the application of analytical models proposed that base on the DFX methodology as oriented to design for automation and according to technological drivers.

Business and Economic Aspect

The aircraft manufacturing industry is one of the most vibrant sectors of the economy of the United States. In 2008, the industry directly supported more than 500,000 relatively well-paying private sector manufacturing jobs for high-skilled professionals nationally (United States Aircraft Manufacturing Industry Jobs & Wages Report, 2011). In the same year, the private sector’s workforce in the aircraft manufacturing industry made an average earning of $79,700, compared to the average annual manufacturing industry wage of $54,400. To work in the aerospace manufacturing sector, one needs to at least have a bachelor’s degree qualification in a specialized field of technology such as engineering. This largely explains the huge wage differential of about 47%. Collective bargaining agreements that resulted from negotiations with major aerospace unions like the International Association of Machinists and Aerospace Workers and the Society of Professional Engineering Employees in Aerospace led to enlisting into a union of 21% of all aerospace workers compared to 13% of all employees in the whole of the private industry.

The aircraft manufacturing industry in the United States is composed of major firms that include United Technologies, Gulfstream Aerospace, Boeing, Textron, and Northrop Grumman among others. Some of the most established centers for aircraft manufacturing are located in California, Washington state, Texas, Arizona, Connecticut, and Kansas. These centers have a combined workforce of that exceeded 305,000 in 2008, making up to more than 60% of the national aerospace workforce. There also exist aerospace manufacturing clusters in Alabama, Ohio, Missouri, Florida, and Georgia.

Some states, including South Carolina, have been expanding their production and manufacturing base for aircraft. Boeing announced in October 2009 that it would put up its second assembly line for final production in South Carolina at Charleston. This line is dedicated to the production of its modern 787 series mid-sized Airbus, dubbed the Dreamliner. Groundbreaking on the Charleston Boeing plant was done in November 2009; production operations started in July 2011 with the first plane being rolled out early 2012. Estimates by Boeing provide that the facility at South Carolina will add more than 3800 new jobs over a period of seven years after operations commenced (Daniel and Szirmai, 2010). This shows prospects of a significant spike in the state’s aircraft manufacturing industry that currently accounts for not more than five percent of the state’s manufacturing workforce.

Economic Impact of the Industry

The aerospace industry is cyclical in nature with industry-specific cycles that seem to occur in spans of approximately ten years (Hotakainen and McMillin, 2011). The industry is also highly susceptible to changes internationally and market forces that it cannot control. Sales in the aircraft manufacturing industry have a direct dependence on the airline industry’s health together. Several factors influence air travel demand, including increases in economic activity, terrorism, regional conflicts and disease outbreaks.

Sales statistics in the aerospace industry can be obtained from the government or the trade group of aerospace industry players, the Aerospace Industries Association (AIA). From the full-year 2009statistics, considerable evidence shows that the aircraft market is weakening, which has a high probability of reversing the market’s strong upturn and the aircraft manufacturing industry’s lucrative period that extended back to 2003. Unlike other sectors, the aerospace manufacturing industry entered the recessionary period while in a firm stance (Chelaru and Cernat, 2009). According to AIA, the industry was associated with a huge backlog of orders and with limited debt.

In its End-Year Review for 2008 and Forecast for 2009, AIA reported an increase in industry-wide sales estimated at $204.4 billion for 2008, in comparison to $200.3 billion for 2007. As of 2008, the aircraft manufacturing sales made up to 1.4% of the gross domestic product (GDP) of the United States. This was a drop from 1.7% in the late 1990s and 1.5% in 2000.

In the aerospace manufacturing industry, the commercial and the defense markets are its two principal segments. Shipments of air crafts and parts for the business segment reached a total of $96.6 billion in the year 2008, which comprised of up to 63% of the industry’s total shipments. This was a 4% drop from 2008, indicating a directional change from positive growth recorded by shipments going back to 2003 in the commercial aerospace manufacturing segment. Also, in 2008, new orders for civil aircraft together with parts made the first drop since 2003. This decline was from $184.5 billion in 2007 to $124.1 billion in 2008, a 33% drop.

Defense makes up the smaller segment between the two and is dependent on the United States government for the better part of its sales share. Government agencies like the Department of Defense (DOD) and the National Aerospace and Space Administration (NASA) constitute the aerospace industry’s largest customers. Aircraft and parts for defense accounted for up to 37% of the total shipment of aircraft and parts at $152.4 billion in the year 2008. This was a 40% increase from 2007’s $39.7billion to 2008’s $55.8 billion. This segment’s strength brings about a substantial offset when there are downturns as aerospace companies often rely on the government business to cushion the commercial sector as it undergoes the cyclical periods of highs and lows.

Products and parts used in the aerospace industry, including aircraft engines by companies such as United Technologies and General Electric are manufactured at expensive production facilities. There are also hundreds of smaller manufacturers that supply components and parts to overseas and U.S. aerospace manufacturers (Rodney, O'Hare, and Moffatt, 2008). The industry’s leading suppliers include Vought Aircraft Industries, a privately held and significant subcontracting partner that deals with many military and commercial aircraft programs. Other firms dealing in supplies include Spirit AeroSystems, which is a major supplier dealing in industrial components and assemblies, and Crane Corporation, that designs and manufactures critical components and systems for the defense and aerospace markets.

Discussion

The most important thing that comes out in the study of aircraft manufacturing is that the field is dynamic and demands a high level of technological application. This is shown by the various research initiatives on automation and innovation. Continuous research and development that incorporates innovation are critical for this industry. To keep abreast in the competitive market of today, every aircraft manufacturer has to apply consistently new innovative developments in the design of his products (Steven, 2007). This has resulted in making the industry as one of the most technologically advanced.

In the current competitive aircraft manufacturing industry, every manufacturer seeks to beat the rest with the best products. Since innovation has been shown to be an important aspect that helps come up with the best the manufacturer has to offer, there is a great need for such manufacturers to protect the innovations they develop (Trott, 2008). The research and development sections of these manufacturers spend much investment in innovations that help automate their productions and products. As such, they can only get the best returns for such innovations by ensuring that the innovations are patented to prevent competitors from using the innovations without their prior permission.

The research and development sections of aircraft manufacturers are an important part of these organizations concerning the additions it makes towards making the industry more technologically advanced and better suited to satisfy the market demands. Many manufacturers have incorporated this aspect as part of their operations. This is an important way of ensuring knowledge in the organization is continuously applied in the development of new products.

In many instances, the main manufacturers have had to team up with other manufacturers who specialize in the production of specific parts and components (Gregory, 2011). A case in point is Vought Aircraft Industries that is a major subcontractor sub-contractor with bigger and main manufacturers. Another company is Crane Corporation that deals in the design and manufacture of critical components and systems for other enterprises in the aircraft manufacturing industry. AeroSystems also deals with suppliers in the commercial assemblies and components.

The relationships between the industry’s players show that companies are engaged in alliances among themselves in a bid to come up with solutions in the manufacturing and comfortable procuring of specialized parts. The alliances, either in the sharing of technological innovations, or supplies of parts and components, cannot be economically or conveniently produced by one manufacturer for a reason or another, majorly due to specialization.

For change to be incorporated in the design of an aircraft that is to be produced, there has to be extensive research in the technology or innovation, given the sensitivity of the airline industry. The tie duration has to cater for the rigorous testing procedures involve to ascertain the applicability of the innovation and to determine the profitability of including it in the current design. The alliances formed between different companies in the industry are important as a company can be saved the effort of researching in the development of a new component by sourcing the same from another.

Conclusion

The manufacture of aircrafts is among the most important parts of the economy of the United States and other countries that are engaged in the trade. This is due to the high returns the industry gets from this business. The economic benefit is majorly in the large numbers of employees that the industry offers employment. The high profit margins that the industry is another significant economic benefit of the industry.

Aircraft manufacturing incorporates a high level of technology application. As such, innovation is a crucial part of the industry. To facilitate innovation and technological advancement, companies in this industry have invested heavily in research and development for them to keep abreast with technology and to be able to satisfy the current market demands in the airline industry.

Despite global economic turbulence that led to a global recession, the industry has shown resilience albeit with slight reductions in profit margins. The prospects for the industry continue to remain bright given that there are few participants while the demand for air travel continues to increase.