G Triumph talk.

 Everyone knows about the Triumph talk of closing down the contract for 747 parts. If the program was really coming to a close, then why is it, that we haven't heard similar calls from other subcontractors? Some of whom make some very complicated components indeed.

Well the answer is quite straightforward.

Every Airplane program has its own supply chain. In the case of the 747 there is quite a number of parts, but the most of these parts are spare parts that you can acquire, meaning that BCA is only one of several customers for that part, or component. The manufacturer of that part can sell them direct to the user, so a constant supply of orders is available for manufacturing to continue. This does not apply to large pieces like skin panels and cockpits etc. These are structural parts. There is only 1 customer and that is BCA.

So what is the gripe here?

Manufacturing depends a lot on volume. The more you can make on a given day, the cheaper the part, largely due to the division of overhead costs of all parts produced that day. Now for a subcontractor like Triumph, it would be the best case scenario for them to make as many shipsets as possible on a given day, that way the overhead is spread out over the number of sets being made.

However, with a rate of six per year, the cost to produce the shipsets might be higher because the overhead is not being divided sufficiently for them to make a reasonable margin on those parts. Add to that storage costs, because of the low rate and you can see why the ink might be turning red. The manufacturing rate of 2 per month, may have been a breaking point because at least 2 of the shipsets, would be becoming parts of a plane, and whatever shipsets being made would have a shorter waiting period before assembly.

High production costs and low turnover rates plus storage fees, hurt the bottom line are is the death rattle of any manufacturer. 

So what is the solution?

A higher rate of course. Increasing the rate to 2 per month, might bring the program end sooner, but also it would shorten the lead time to delivery. There is a longshot, but if the need was really dire, a few more frames made at 2 per month, with an order from a NEW customer might be the grace the will save the program. This could be a benchmark and even if the could only manage a handful of orders, the program could end on a higher note, rather than the confused dithering doldrums we hear coming out of the cavernously empty production hall.