GE Aerospace says shortages involve over a dozen suppliers
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General Electric Co. said more than a dozen suppliers are involved in the disruptions that have slowed delivery of its jet engines and resulted in renewed headaches for planemakers and airlines.
“The shortages that cause us to be late on deliveries really come from about 15 different suppliers across our supply chain,” Larry Culp, chief executive officer of the manufacturer known as GE Aerospace, said in an exclusive interview on Monday. “We have 550 engineers going in to work with those suppliers to identify bottlenecks, identify constraints and really solve those problems.”
“Really for us it is all about making sure we’re the best possible partner, the best possible collaborator with our suppliers,” he said.
Globally, airlines’ near-term expansion has been thrown off course as the world’s two key planemakers – Boeing Co. and Airbus SE – struggle to keep pace with record demand for new jets. One of the main reasons the duo can’t raise output has to do with component shortfalls. Staffing is also an issue, particularly for Boeing, whose ongoing labor strike in the US means it can’t produce its cash-cow 737 Max.
Culp, speaking to Bloomberg TV from Singapore, wouldn’t be drawn on the time required to fix supply chain issues, noting that “not many people appreciate that what we do is not only manufacture engines, but we support those engines for 20, sometimes 30 years over their entire life cycle.”
“So the services, the parts, the repairs that we provide in the after-market are a critical part of what we do for the airlines. And we all need to make sure that there are no counterfeit parts in that supply chain,” he said, adding that tackling the scourge of fake parts was a “high priority.”
His comments come as GE, Airbus and a coalition of aviation heavyweights earlier this month proposed a package of reforms to strengthen safety in aerospace supply chains after the discovery of spare components allegedly backed by falsified records, first reported by Bloomberg News, set off a frantic global search last year.
However, Culp, who now leads a slimmed down company focused on aviation manufacturing, was upbeat about the outlook for the aviation industry as a whole, saying he was more optimistic now than at the start of the year. That’s despite GE Aerospace last week reporting sales for the third quarter that fell short of Wall Street’s expectations. The company did boost its profit and free cash flow guidance for the full year.
“We’re seeing the airlines work their assets, and fly those planes like never before,” he said. “And at the same time, we’re seeing airlines around the world, but particularly here in the Asia-Pacific region and in the Middle East, looking to expand their fleets of both narrowbodies and widebodies.”
Asked about Chinese planemaker Comac, the would-be rival to Airbus and Boeing, Culp said doubters and naysayers would be “very foolish, I think, to bet against Comac.” China’s big three airlines ordering some 300 of Comac’s C919 jets is “the beginning of the market acceptance” for the aircraft, he said.
GE Aerospace, through its joint-venture with France’s Safran SA, produces CFM International Inc.-branded LEAP engines for Comac’s C919 planes as well as for the Airbus A320neo family and the Boeing 737 Max.
GE Aerospace employs nearly 700 people in Indiana, primarily at its Lafayette and Terre Haute manufacturing plants. However, it was not clear how those facilities are being impacted by the shortage.
But it will take Comac a lot of time to build out its supply chain to produce more C919s, as well as secure the regional and global network to support its future in-service aircraft.
“That’s going to be a serious undertaking,” Culp said. “Comac understands that clearly and will do everything they can to master that challenge.”