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OM in the News: Airbus Outgrows its European Supply Chain

February 19, 2018

Since it was cobbled together from a passel of national aerospace groups a half-century ago, Airbus has spread its operations across Europe in a delicate effort aimed at maximizing political expediency without sacrificing too much economic efficiency. There’s little industrial logic, after all, in shuttling airplane parts among 14 factories in a half-dozen countries, with some wing components crossing the English Channel 9 times before being mounted on planes.

The company’s airliner business employs more than 53,000 people across Europe, reports Businessweek (Feb. 12, 2018). And of the 11,000 passenger jets Airbus has built since it was founded in 1970, all but 400 have come out of the region’s factories. Europe, however, accounts for fewer than 1 in 5 planes in Airbus’s order book, and China, the U.S., and other countries are clamoring for a bigger share of production. A decade ago Airbus opened a plant in China, that’s expected to make 6 planes monthly by 2020, up from 4 now. Production is also ramping up at a factory in Alabama that’s been building Airbus single-aisle planes since 2015.

Airbus already has a global network of suppliers, ranging from Kansas-based Spirit AeroSystems, which produces the central fuselage of the A350, to a Korean Air Group that makes wingtip devices for the A330 widebody, to China’s Xi’an Aircraft, which manufactures wings for planes assembled at the Chinese plant. All told, Airbus has some 12,000 subcontractors in more than 40 countries from Finland to Sri Lanka.

As we note in the Global Company Profile that opens Chapter 2, Boeing also relies on vendors around the globe. The 787 Dreamliner, the first all-composite aircraft, uses components from such far-flung places as Japan and Italy, part of a plan to spread the manufacturing risk among partners.

Classroom discussion questions:

  1. Why is the aerospace supply chain so complex?
  2. What are the advantages and disadvantages of this approach?
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