2021 Forecast

Features - Cover Story

Planning for recovery and the new normal.

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February 8, 2021

Airbus A220, A320, A330, A350, and Beluga XL taxi for formation flight. Credit: Airbus
Airbus A320 Final Assembly Line
Airbus

Recovery in commercial aircraft demand depends on controlling the coronavirus pandemic. Discretionary air travel drives most transport aircraft needs, and until people feel confident in traveling and governments allow it, the commercial aerospace supply chain must focus on survival. Despite federal plans to boost COVID-19 vaccination production, President Joe Biden says it will take until late summer to treat most Americans, leaving the possibility of some resumption of air travel demand later this year. Domestic air travel will lead the way, as demonstrated in Asia-Pacific nations and in the U.S. in late 2020.

Air cargo traffic volumes were down 12% through Q3 2020, due to fewer planes flying. However, Boeing analysts reported yields were up more than 40% and overall air cargo industry revenues were up more than 15%.

Defense and commercial space business offer alternative revenue for companies in those sectors. The U.S. Department of Defense and NASA continued to award contracts through 2020, and there are no immediate signs this activity will be curtailed under the new administration.

Airbus kept to its April 2020 production plan in response to the COVID-19 pandemic, delivering 566 commercial aircraft last year, 34% fewer than in 2019. The company reported 383 new orders, and after 115 cancellations, Airbus’ year-end backlog stood at 7,184 aircraft. The long-range single-aisle A321XLR garnered 37 orders, continuing its upward sales trend as wide-body orders shrunk. Airbus plans to gradually increase A320 family monthly production rates from 40 to 43 in Q3 and 45 in Q4 2021 – a slower ramp up from last July’s anticipated 47 aircraft per month. A220 production will increase from 4 to 5 aircraft per month from the end of Q1 2021 as previously foreseen. Widebody production is expected to remain at current levels, with monthly production rates of around 5 for the A350 and 2 for the A330. Airbus officials expect the commercial aircraft market to return to pre-COVID levels somewhere between 2023 to 2025.
Lockheed Martin’s Sikorsky and Boeing are developing the DEFIANT X helicopter for the U.S. Army's Future Long-Range Assault Aircraft competition.
Boeing

Boeing’s Q4 2020 results offered a path to its recovery as 737 MAX deliveries resumed in December following the plane’s ungrounding in November. In a vote of confidence, Alaska Airlines management announced plans to buy 23 more 737-9 airplanes, bringing the airline’s 737 MAX orders and options to 120 airplanes.

Cancellations far outnumbered gross orders for the year (net -454), but as of Nov. 30, 2020, Boeing’s unadjusted backlog stood at 5,053 aircraft, of which 81% were single-aisle jets.

On the defense ledger, Boeing delivered 71 new and remanufactured AH-64 Apache and 30 new and renewed CH-47 Chinook helicopters, 4 F-15 and 20 F/A-18 fighters, 14 767-derived KC-46 tankers, and 15 737-derived P-8 maritime patrol aircraft.

Forecast International reports Boeing will increase 737 MAX production to 31 per month by early 2022, down from 42 per month before production halted in May 2020. Boeing is reducing 787 production from 14 per month (at the start of 2020) to 6 per month throughout 2021 while also addressing manufacturing quality issues. Boeing plans to move all 787 production to South Carolina by mid-2021. Combined 777/777X production rate will decrease to 2 per month in 2021. No changes in production rates have been announced for the 747 and 767 programs.

This Embraer KC-390 was delivered to the Brazilian Air Force while observing COVID-19 protocols.
Embraer

Embraer ended Q3 2020 (the latest figures available) with a firm order backlog of $15.1 billion.

For the year, the company delivered 16 commercial jets and 43 executive jets (33 light jets and 10 large jets), compared to 54 commercial jets and 63 executive jets delivered during the first nine months of 2019. Boeing terminated its government-approved joint venture with Embraer early in the pandemic, leaving the Brazilian company to re-establish its global marketing efforts.

In its 2020 Market Outlook, Embraer Commercial Aviation President and CEO Arjan Meijer foresees global passenger traffic will return to 2019 levels by 2024 and a need for 4,420 new regional jets through 2029: 75% to replace aging aircraft.

Industry watchers

Accenture’s global aerospace and defense industry lead John Schmidt offers a few resolutions for the aerospace and defense industry.

Cash management – Companies must focus on their financial strategies. Data and analytics can provide models that can be updated in near real-time to explore scenarios and develop insights that guide optimal actions.

Supply chain resilience – Have 100% insight into the availability of critical components and parts to manage risk. New technologies can create a more resilient supply chain and provide a foundation for next-generation capabilities.


Future sustainability
– The pandemic is forcing the industry to accelerate its investment in technology. Be more data-driven, deploy more automation and artificial intelligence (AI), use the cloud, or create a collaborative culture – digital is the answer.

While commercial aerospace faces challenges in 2021, the defense sector is expected to remain stable and weather the pandemic’s disruption, according to Deloitte’s 2021 Aerospace and Defense Outlook. Robin Lineberger, Deloitte’s U.S. and Global Aerospace & Defense leader, notes the industry is likely to take advantage of the pandemic and drop in demand to transform supply chains, as well as pursue mergers and acquisitions (M&A) to build scale and capture greater value so that long-term growth prospects remain strong. Some highlights:

  • Global commercial aircraft deliveries are estimated at 900, a decline of 44% from peak year 2018. New orders will likely remain subdued this year.
  • The International Air Transport Association (IATA) expects passenger traffic to rebound but remain about 40% below pre-pandemic levels. IATA doesn’t expect a return to pre-pandemic trip length levels before 2025, potentially driving higher demand for narrow-body aircraft.
  • Industry is likely to shift toward transforming supply chains via onshoring, vertical integration, and increased cyber defenses. Original equipment manufacturers (OEMs) and suppliers should leverage digital tools, including automating internal processes and streamlining workflows, implementing smart management systems, and using data analytics.

Ethan Karp

CEO and President The Manufacturing Advocacy and Growth Network (MAGNET)

Consider what it will take to be competitive in 10 years.

Talent isn’t getting easier to come by. Getting people into good manufacturing careers is a systemic challenge that will require systemic investment. Manufacturers know Industry 4.0 is coming, but most have yet to invest in smart manufacturing and automation. Now is the time to make those investments.

To come out of COVID-19 stronger, manufacturers must form a technology strategy and invest in upskilling their talent. Automation and remote technology will keep people safe and keep production running through the pandemic, and they’ll also set manufacturers up for the future. When demand returns, we’ll need technology to meet it.

Richard Aboulafia

Vice President of Analysis, Teal Group

This is the worst commercial aviation market environment since people first flew. Jet delivery numbers have plummeted but seem to be stabilizing. There are four areas of positive news.

  • Defense markets are completely unaffected. This is true for the all-important U.S. defense budget and for export markets.
  • Returning Boeing 737 MAX to service, and to production, ensures some kind of single-aisle recovery this year. Some of this recovery will be due to deliveries of aircraft already built, but considering that only Airbus delivered single-aisle jets in 2020, we’ll see a respectable recovery this year.
  • The overall economic picture is surprisingly positive, and COVID-19 vaccines appear more effective than anticipated. This, coupled with the China air travel recovery experience, implies a very strong air travel recovery starting in the second half of this year. We expect a full recovery to the 2019 air traffic peak by Q4 2022.
  • Business jet demand seems to be recovering quickly, in line with business aircraft utilization. While deliveries have dropped significantly, we expect them to recover quickly starting in 2022.

UAVs to soar

Teal Group estimates that unmanned aerial vehicle (UAV) production will increase from worldwide production of $5.6 billion annually in 2020 to $14 billion by 2029, totaling $95.5 billion in the next 10 years. Military UAV research spending would add another $64.5 billion throughout the decade.


Patrick Dunne

Vice President Application Development, 3D Systems

Many aerospace designers and engineers have grown up in a world where 3D printing always existed and consider it to be a standard mode of manufacture, not some emergent novelty. Engineers at the cutting-edge of problem-solving are turning to additive manufacturing (AM) tools to problem solve and enable step changes in product and platform performance. The fundamental value propositions of AM are now widely known, understood, and appreciated. It’s fast, flexible, massively reduces part count, and by embracing the philosophy of design for additive manufacturing (DfAM), engineers can access levels of optimization that are capturing the attention of strategic leadership teams within many of the aerospace primes. Some of these initial expressions of advanced design engineering have triggered a surge in creative thinking that’s now energizing the aerospace community.

A small optimization in design can have a surprising impact on overall system performance. Ultra-advanced cooling architectures designed into the external skins of hypersonic systems enable capability previously considered impossible.

Letting recursive machine algorithms dynamically analyze and engage in structural design iteration is generating complex structures lighter and stronger than anything possible with traditional approaches. Exploratory side projects are becoming standard methods of design and manufacturing, and we expect to see AM become a primary go-to for state-of-the-art optimization.

Jim King

President and COO, Okuma America Corp.

It’s time to take inventory of what we’ve learned and what technologies will enable us to be more competitive in post-COVID manufacturing.

  • Virtual communication tools increase the speed of business. It’s not only possible to evaluate technology without sending staff on the road, it’s sometimes more desirable. Even machine runoffs can be accomplished virtually.
  • Artificial intelligence (AI) has a place in the machine tool industry. In early stages we’ll see some of the obvious applications becoming commonplace, such as predicting unplanned maintenance events before they occur.
  • The digital twin still needs development to achieve significant market adoption. This technology will have an impact in the not-too-distant future.
  • Blockchain for manufacturing will provide secure communications amongst teams in a world where cyber-attacks are becoming increasingly pervasive.
  • Automation will become a must in most shops. It can take many forms; it’s not just robots. Bar feeders, pallet pools, and flexible manufacturing systems are a few that increase productivity.
  • In times of accelerated change, it’s important to resist the urge to overcomplicate things. Get back to basics and ensure your foundation is sound. Control the things in your control.

Focus on where you are in the continuum of automation, using data, and understanding the drivers in your business. 2021 will be a transitional year, preparing manufacturing to once again lead our economy to prosperity.

 

Timothy Wachs

President, Hainbuch America

We are all in unfamiliar territory, meandering through the path of uncertainty together. Each of us is struggling with how we find common ground moving forward in our personal lives and within our unique business challenges to get to the other side of the COVID-19 pandemic. A recent survey of manufacturers and job shops throughout North America showed that their number one priority in 2021 is to improve “flexibility” to reduce non-cutting times.

Throughout 2020, the common theme is many companies saw an opportunity to evaluate their current processes to identify where they were still relying on outdated processes and where they could make improvements to increase productivity without major investments in new machine tools. The goal is to improve factory processes using the latest in artificial intelligence, automation, and advanced workholding to bring down costs.

The COVID-19 pandemic has brought to light the immediate need for manufacturers to build greater responsibility, flexibility, adaptability, and capability into their manufacturing operations and determine how well-positioned they are to respond to future disruptions.

The current disruption is an opportunity to learn, improve, and reshape manufacturing for the future. The result will be a more effective and efficient system operating at a greatly increased pace. 
 

Dr. Charles Krueger

CEO, BigLever Software

Digital twins, or virtual representations of physical systems, are emerging as a key trend in aerospace engineering and manufacturing. By having a digital rendition of each product deployed, organizations can further continuous engineering initiatives, improve efficiency and product quality, mitigate potential loss, and monitor deployed products.

Digital twins can be combined with augmented reality (AR) software to simulate product variations and put them through their paces to uncover potential incompatibilities or defects before a product is developed. Product line engineering (PLE) automates managing product variation and complexity across the engineering and manufacturing lifecycle. Feature-based PLE adds a model-based representation of the common and varying features shared across the product line with corresponding digital twins that include all the features and materials contained in each product. For example, a digital twin allows a manufacturer to identify the exact configuration of an avionics system to quickly identify which airplanes contain a particular feature to facilitate fixes and improve quality control.

With Internet of Things (IoT) sensors, manufacturers can track the status, use, and performance of each product and the overall product family. Continuous engineering can dynamically improve product families with updates and enhancements, as well as to effectively perform predictive and preventive maintenance.

About the author: Eric Brothers is AM&D’s senior editor. He can be reached at 216.393.0228 or ebrothers@gie.net