Wichita aviation suppliers, subcontractors prepare for increases

Hien Bui assembles parts at Exacta Aerospace, Inc., Tuesday, Aug. 16, 2011. The Wichita aerospace supplier is gearing up for increases in Boeing and Airbus production.
Hien Bui assembles parts at Exacta Aerospace, Inc., Tuesday, Aug. 16, 2011. The Wichita aerospace supplier is gearing up for increases in Boeing and Airbus production. The Wichita Eagle

At Exacta Aerospace, which builds machined parts for the aviation industry, blue tape on the concrete floor marks where more assembly stations will soon be added.

In another area, concrete has been poured to prepare for two new high-speed milling machines — adding to five new machines already installed this year.

And in two weeks, the plant will be running 24 hours a day, seven days a week.

Exacta, 4200 W. Harry, is gearing up to take on new work it has won and for increases in demand for parts it produces for Boeing airliners.

"We love it," said Casey Voegeli, Exacta director of business operations. "We want to take it on."

Like Exacta, aviation suppliers and subcontractors are preparing for increases in production as commercial planemakers boost delivery rates and bring on new aircraft, such as Boeing's 787 Dreamliner and 747-8, Airbus' A350XWB and Bombardier's CSeries.

Spirit AeroSystems may shift some work to other facilities as it prepares for additional work from Boeing and others. For example, it's moving Gulfstream G280 work from Tulsa to Kinston, N.C., to make more room for Gulfstream G650 work.

"The supply chain is strained," Airbus executive vice president for engineering Charles Champion said in an interview in his office in Toulouse, France, after the Paris Air Show. "It will be even more strained by us, by Boeing, by Embraer and by Bombardier.... That's going to be a challenge."

Aircraft manufacturers took in more than $100 billion in new orders at the Paris Air Show in June. That includes Airbus, which announced orders for 730 aircraft at the show.

Last month, American Airlines announced an order for hundreds of Boeing and Airbus airliners.

Boeing and Airbus are incrementally hiking production rates of narrowbody airliners — the 737 and A320 respectively — to 42 a month each to meet increased demand.

Jim Albaugh, Boeing's head of its commercial aircraft division, has said the company could increase production to as many as 60 a month by the end of the decade.

'We are so busy'

Solid demand for commercial airliners is good news for Wichita suppliers, which have felt the pain in the economic downturn that has hit the city's business jet manufacturers.

"The message gets sent how bleak it is for Hawker and for Cessna and for Lear," Voegeli said. "But I think everybody forgets what Boeing is putting out."

Not all Wichita suppliers do work for Boeing or Spirit, which builds parts of all Boeing aircraft, but those that do are hiring, Voegeli said.

About 35 percent of Exacta's work is for Boeing. It also has won work as general aviation planemakers shift more work outside their own companies, Voegeli said.

As a result, Exacta has hired 50 employees this year and plans to add another 20 by the end of the year. It now employs 180, more than it did before the downturn.

"We are so busy," Voegeli said.

Triumph Structures in Wichita doesn't have a lot of Boeing work — about 5 percent of its work is for Boeing's 737.

But Boeing production increases are good for the company and other suppliers, said Triumph Structures Wichita president Marwan Hammouri, because it gives them a chance to get more business.

"It's very positive for us," Hammouri said. "The industry has a certain total capacity and as you fill a part of it, the other part has to overflow to other companies."

Mark Rehwinkel, a sales engineer for Makino, which builds milling machines, said business is robust.

"It is at the moment, phenomenal," Rehwinkel said.

Spirit and many machine shops are responding to production increases in 737, 787 and 747-8 jets.

"So everyone is having to respond to that with hiring people and adding new capital equipment to produce parts," Rehwinkel said.

With all the orders announced at the Paris Air Show, the shops will need even more capacity to do the work.

"The future looks very bright for aircraft manufacturing here in Wichita," Rehwinkel said.

Time to prepare

While some worry that increasing order books could overwhelm suppliers, some analysts and consultants doubt it will lead to a meltdown in the supply chain.

For one, the bulk of orders announced at the Paris Air Show are for delivery beyond 2016, giving suppliers time to prepare. And not all orders that have grabbed the headlines may get built.

The announced engine upgrades to Boeing's 737 and Airbus' A320neo are proving so popular that there's a risk airlines could delay orders for the current models to wait for upgraded ones, said Teal Group analyst Richard Aboulafia.

In addition, demand for military production, which has spiked in the past few years, could plateau or shrink. That would leave capacity for more commercial aircraft work, Aboulafia said.

At the same time, the industry is cyclical and could experience a downturn in the next few years, he said.

Airline Forecast CEO and chief analyst Vaughn Cordle agrees that not all aircraft on order will get built.

Demand for air travel may decline as consumers pull back spending in an uncertain economy. That would cause airlines to decrease the number of seats available.

Carriers also are likely to raise fares to meet higher labor, fuel and other costs, Cordle said, which would lead to a decline in travel.

And as jet fuel prices decline, as they have done recently, the need for more fuel-efficient aircraft lessens.

"Used aircraft that didn't make sense at the high fuel costs will stay in the system longer," Cordle said.

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