An #Innovation Amatuer’s Opinion: “Global Aircraft Manufacturing, 2002-2011”

Global Aircraft Manufacturing, 2002-2011 is a case study honed into an influential time for the aviation industry. Outliers amplifying the procedural and engineering triumphs of the ten years consist of the 787 and A380 achievements. Boeing dedicated nearly ten years of resources to ensure a successful maiden voyage of the 787 “Dreamliner” aircraft, which finally occurred on October 26th, 2011, after countless setbacks and unforeseen challenges. In addition, the record-breaking A380 Airbus was on the market as the superjumbo with the highest passenger capacity. Headlines throughout the decade speak to the invention enabled through the Asian-Pacific and additional regions thriving economically, which drove an increase in demand, thus creating a perfect storm of accelerated progress. ?

A genuine appreciation for this noteworthy decade derives from a thorough understanding of the contributing processes that comprise the commercial aircraft industry synergetically. Consecutively listed in chronological order are the design and development, manufacturing, and drivers of profitability. Each phase envelops varying degrees of risk, but the interdependence generates a uniform execution standard of perfection.

The design and development process is arguably the most resource-intensive, hemorrhaging time and capital assets addressing complexities. Using the Boeing 747 as an example, the accumulated time allocated from initial research to the final testing totaled ten years. Additionally, the capital investments were estimated to exceed 13 billion dollars. Sticker shock from the design and development investments subsides when contrasted with the completed price point ranging between 20-300 million.

The manufacturing process also requires substantial time and capital asset allocation. Airplane assembly is highly labor-intensive, creating a natural dynamic between cost control measures and workforce management. Unionization of workers added pressure with the threats of strikes and labor shortages. Costs heavily skewed towards the procurement of engines, offering several options with purchasing a single plane.???

Internal key performance indicators can measure the design, development, and manufacturing processes against controllable metrics to scale achievement. On the other hand, drivers of profitability are external variables within the marketplace, inclusive of demand, logistics, procurement, and regulations. Demand inconsistencies forced almost 200 airlines into bankruptcy between 1978 and 2011; however, the economic growth during the focal decade stimulated opportunities for expansion and new service models. Airline route structure, or logistics, impact the profit margin through efficiencies and opportunity costs. During the influential timeframe, the hub-and-spoke model transcended into a point-to-point network. The point-to-point infrastructure was mutually beneficial to the airlines from a cost perspective and the customer as an added convenience. Procurement objectives steered the strategic decision-making process to secure a return on investment. During the affluential decade, the static ratio transformed into an elastic cost of ownership formula. Government regulations, the last profitability driver, functioned as an industry roadblock from the disparities and ambiguity. Treaties and agreements in the 21st century opened the doors to accelerated innovation and collaboration.

Global aircraft manufacturing revolutionized the industry intelligence surrounding internal processes and external derivatives for profitability within a narrow timeframe. Within the whirlwind decade, disruption welcomed competition, which in turn instigated innovation. Before the transformative period, Boeing and Airbus comprised approximately 60 percent of the commercial aircraft industry, but in 2011, Bombardier, Embraer, and the Commercial Aircraft Corporation of China surfaced as notable adversaries.

As the battle over market share commenced, new aircraft models with record-breaking attributes emerged with the intention of brand differentiation. Airbus began production in 1967 of the A300, with non-threatening iterations added over the subsequent years; however, in 2000, Airbus announced their superjumbo jet, the A380, the first equivalent opponent to challenge the 747. Momentum exponentially compounded, leading to Airbus surpassing their rival in 2003. As a new aircraft model, the Airbus A380 was described as the “solution for 30 years of overwhelming growth in the air transport industry.”

Bombardier, originally a snowmobile manufacturer, pivoted into aerospace through acquisitions in the 1980s and 1990s. Turboprops, short-haul planes, were overshadowed by regional jets allowing Bombardier to dominate the niche by introducing the “Q-Series” model. As jet fuel prices surged, interest in the Q-Series turboprops exploded as a cost-efficient alternative. New Bombardier aircraft generation focused on green technology, labeled the CSeries family, which became a fresh benchmark within the field.

Embraer and the Commercial Aircraft Corporation of China originated as military affiliates, with responsibilities extending from research to production. Embraer, motivated by the transaction with Continental Express, developed the “Embraer Regional Jet,” the market leader for jets with 120 seats or less. Success in China occurred when their strategy shifted to focus on part assembly. The Commercial Aircraft Corporation was responsible for aviation becoming a strategic industry for country growth. New aircrafts spawning from the two entities include the E-Jets, a joint venture between Embraer and China.

Unlike the various new aircraft models inspired by competition, the Boeing 787 Dreamliner leveraged supplier relationships and manufacturing changes to achieve notoriety. Boeing outsourced more than 60% of the production process to partners, reducing costs and diversifying risk.

Global aircraft manufacturing accelerated between 2002-2011 through internal adaption to satisfy shifts in external expectations. Categorical periods of meaningful change, with granular consideration such as an industry or broad implications such as a culture, require the following key elements: the demand or need, the available resources, and the accommodating environment. Future outlooks indicate repeating the same patterns: glacial-paced success until the economy provides a conducive culture for rapid accelerant.?