Boeing is getting rid of the suppliers. Part 1

Boeing is getting rid of the suppliers. Part 1

In the nearest future Boeing may start to manufacture important components for own airplanes. This will change aviation industry a lot and can cause huge consolidation.

At the beginning of the current week to big disappointment of many manufacturers of the components for airplanes management of Boeing Corporation has announced start of collaboration with Safran Company. Together with Boeing French Company will manufacture engine units.

It should be mentioned that Boeing is trying for a long time already to reorganize their supply chain. However this collaboration is outlandish turn of events.

At this point all efforts of the Company have resulted only in increase of the pressure on components’ suppliers that had to lower price of their products. Besides, Boeing Company has turned to insourcing of the absolutely inconsistent components for example, seats, wings and avionics, i.e. on-board electronic equipment.

According to the words of managing director of consulting company AeroDynamic Advisory Kevin Michaels Boeing management is updating supply chain. The extent of vertical integration will be only increasing.

Boeing is working over own production of the components and replacement parts for airplanes. They estimate each element of airplane construction upon the following criteria: Is this technology strategically important and should Boeing take control over its production? How profitable is to acquire such components from suppliers? Will own production of these components increase profits of the company in the area of after-sale service?

It is probable that Boeing will manufacture three groups of components.