Boeing eyes production rise, supply chain visibility
With part shortages popping up all over the world following the Japan disaster, most heavy manufacturers are slowing down production to ease supply chain concerns.
Not Boeing, as the worldwide leading aircraft manufacturer is planning on upping its production rate over the next few years. By 2014, Boeing is hoping to complete one commercial aircraft every 12 hours, which would deliver about 720 aircraft annually.
That number would be a record for Boeing and would be more than 40 percent higher than the 485-500 deliveries forecasted for 2011.
According to FlightGlobal.com, demand is on the rise.
“We’re sold out on the 737 through 2015; we’re sold out on the 787 through 2019,” Jim Albaugh, chief executive of Boeing Commercial Airplans told FlightGlobal.com “One of the biggest challenges that we have is having the slots for our customers, and that’s why we’re going up in rate.”
Two of Boeing’s most coveted aircraft, the 787 Dreamliner and the 737, have experienced massive supply chain woes over the past several years. To fix that problem, Boeing is seeking to add an unprecedented level of visibility across its supply chain.
Boeing hopes that added supply chain visibility can help push 787 Dreamliner output up 400 percent between now and the end of 2013.
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As for the popular 737 model, Boeing is hoping to up its current production of 31.5 units per month to 38 by the second quarter of 2013. Boeing is also modestly raising its production of 777s, 767s and 747s over the next two years.
"We've been very deliberate on how we've timed our production rates to allow the supply chain to absorb, let's say, a 767 rate increase and get a few months to stabilize and then put the next rate on," Larry Loftis, 777 vice president and general manager, told FlightGlobal.com
EU and US agree end to Airbus-Boeing supply chain tariffs
The EU and US have agreed to resolve a 17-year dispute over aircraft subsidies, suspending tariffs on billions of dollars' worth of goods that have plagued procurement leaders on both sides of the Atlantic.
Under an agreement reached by European Commission Executive Vice-President Valdis Dombrovskis and US Trade Representative Katherine Tai on Tuesday, the tariffs will be halted for a period of at least five years.
It will bring an end to punitive and disruptive levies on supply chains that have little to do with the argument, which became embroiled in the trade battle. Businesses on both sides of the dispute have been hit with more than $3.3bn in duties since they were first imposed by the US in October 2019, according the EC.
The US imposed charges on goods upto $7.5bn in response to a World Trade Organisation ruling that judged the EU’s support of Airbus, its biggest aircraft manufacturer, unlawful. A year later in November 2020, the EU hit back. The WTO found the US had violated trade rules in its favourable treatment of Boeing, and was hit with EU duties worth $4bn.
In all the tariffs affected $11.5bn worth of goods, including French cheese, Scotch whisky, aircraft and machinery in Europe, and sugarcane products, handbags and tobacco in America. Procurement leaders on both sides of the fence were forced to wrestle with tariffs of 15% on aircraft and components, and 25% on non-aircraft related products.
Boeing-Airbus dispute by the numbers
- The dispute began in 2004
- Tariffs suspended for 5 years
- $11.5bn worth of goods affected by tariffs
- $3.3bn in duties paid by businesses to date
- 15% levy on aircraft and 25% on non-aircraft goods suspended
Both sides welcome end to tariffs
European Commission President Ursula von der Leyen branded the truce a “major step” in ending what is the longest running dispute in WTO history. It began in 2004.
“I am happy to see that after intensive work between the European Commission and the US administration, our transatlantic partnership is on its way to reaching cruising speed. This shows the new spirit of cooperation between the EU and the US and that we can solve the other issues to our mutual benefit,” she added.
Both aircraft manufacturers have welcomed the news. Airbus said in a statement that it will hopefully bring to an end the “lose-lose tariffs” that are affecting industries already facing “many challenges”. Boeing added that it will “fully support the U.S. Government’s efforts to ensure that the principles in this understanding are respected”.
The US aerospace firm added: "The understanding reached today commits the EU to addressing launch aid, and leaves in place the necessary rules to ensure that the EU and United States live up to that commitment, without requiring further WTO action."
This week’s decision expands upon a short-term tariff truce announced in March this year. The EC says it will work closely with the US to try and further resolve the dispute, establishing a Working Group on Large Civil Aircraft led by each side’s trade minister.
Airbus last month signalled to suppliers that post-pandemic recovery was on the horizon, telling them to scale up to meet a return to pre-COVID manufacturing levels. “The aviation sector is beginning to recover from the COVID-19 crisis,” said Airbus chief executive Guillaume Faury, adding that suppliers should prepare for a period of intensive production “when market conditions call for it.”