As the concept of an entire aircraft “Hecho en Mexico” continues to dazzle those imaging the country’s ascending aerospace industry, one thing appears set: Supply chain opportunities in Mexico aerospace continue climbing toward an ever-rising cruising altitude.
With suppliers across nearly a dozen Mexican states, Boeing appears to be going full throttle when it comes to development of its supply chain, that word from Jose Garza, Boeing Commercial Airplanes’ director of supplier management systems during June’s MEXICONOW’s Aerospace Industry Conference and B2B in Las Vegas:
Your presentation speaks of a strong near-term economic outlook. The industry will need 35,000 airplanes. What does this scenario mean for supplier management for the industry in general, Boeing specifically?
This is a time of great opportunity for both Boeing and its supply chain. The industry is strong, and airplanes are in high demand for the next two decades to come. We are working closely with our supplier partners to ensure that they have the capacity, expertise and stability to meet our planned production rate increases now, and into the future. That requires us to work closely with our suppliers to meet customer requirements for quality, reliability and cost.
You are now using suppliers in 10 Mexican states. You are spending more than $1 billion a year with them. To what extent do you see supply chain expansion possibilities in Mexico?
We have always relied on the best of the aerospace industry globally and we’ll continue to do that. We select our suppliers based on a range of criteria, including capability, capacity, integrity, financial health, product quality, delivery record, geographic diversity and relationship quality. We are impressed by the commitment of Mexico to developing the infrastructure and workforce required for aerospace manufacturing. We see opportunity to continue growing our supply base in Mexico.
Let’s take a closer look at the Mexican supply chain for Boeing. What components or subassemblies are these suppliers making for you now – Hecho en Mexico. There are more than 60 suppliers in Mexico who produce parts for Boeing airplanes, including engine components, propulsion, systems and electrical parts, landing gear components, seats, and wiring.
We have seen in Mexico a huge increase in aviation and aerospace university education. What types of educational qualifications or skills will a company such as Boeing look for as you work to meet future demands?
At Boeing, we generally seek employees who have an understanding airplane manufacturing and operations, familiarity with engineering processes, and are experienced with tooling processes.
In automotive, we have seen a more recent push for suppliers in Mexico to locate as close as possible from the OEM. As your suppliers look for the right location in Mexico, how sensitive must they be to an aircraft manufacturer location?
Boeing has always had a global supply chain. We work with partners around the world so we can ensure that we have the best suppliers contributing to Boeing airplanes. Sometimes that means that parts travel a great distance to our factories. Location is not as critical as quality, delivery, and affordability. We do see an opportunity for Mexico to start developing Tier 2 and Tier 3 suppliers to become more attractive to Tier 1 suppliers and provide better support.
What qualities must the Boeing supplier demonstrate? How does that fit with your statement concerning best value, flexibility and world class?
We look for suppliers who have the current and future capacity, expertise and stability to meet our planned production rate increases. As a starting point, suppliers must be ISO and AS9100 certified plus able to meet the Boeing Quality Management System. We look for suppliers who can produce first-pass quality parts on time and within budget. We also look for suppliers who can add value to our supply chain through innovation, manufacturing excellence or new technologies.
You paint a picture of more efficient aircraft. For the fleet owner, what does “more efficient” mean?
An airline’s largest cost, outside of personnel, is fuel. It is our job to respond to that reality by developing airplanes that fly further and use less fuel. Our 787 Dreamliner is 20 percent more fuel efficient than today’s airplanes (small twin-aisle sector), and requires 30 percent lower airframe maintenance costs and 10 percent lower operational costs. The 737 MAX will be 14 percent more fuel-efficient than today’s most efficient Next-Generation 737s and 20 percent more efficient than the original Next-Generation 737s when they first entered service. The 777X will offer 12 percent more fuel efficiency than its competition, a 10 percent lower operating costs.
Let’s go a decade or so ahead. We see new, more efficient planes. For the ticket buying customer, what is likely to change with the ride experience?
The ultimate customer is the passenger, and Boeing continues to incorporate features that enhance the flying experience so that our airline customers can offer their passengers world-class comfort and confidence. The 787 is a good example of changes designed to improve the passenger experience. For example: innovative environmental control systems that provide gaseous air purification and enhanced airflow; smoother ride technology, reducing the effects of mild turbulence and minimizing passenger air travel symptoms; advanced LED lighting and an open architecture to create a more comfortable and spacious travel experience.
One interesting point you made said that customers are expecting more for less. How does that thinking hold up when this industry needs to build so many more planes?
The dynamics driving the high demand include high fuel costs and environmental concerns. At the same time while the number of people who travel by air continues to increase, their sensitivity to ticket prices is also increasing. As a result, airlines are challenged by increasing costs associated with fuel and regulation as well as fierce competition for passengers. Affordability and efficiency are even more important to support production rate increases. Additionally, our competition is fierce. Boeing –and its supply chain—are committed to providing affordability and quality to all of our customers.
A final thought on Mexico: With all this forecast growth in the aerospace industry. What is the likelihood that a large commercial aircraft will be built in Mexico in the foreseeable future?
While anything is possible, Boeing is currently working closely with its supplier base and Mexican authorities to ensure a stable reliable growth of Tier 1 suppliers able to help meet the growing demand for our products.