Research Based Position Paper

Daviada Harris

University of Maryland Global Campus

UCSP 615

Dr. Mouras

January 19, 2021

MEMORANDUM

TO: Terry Lewis

FROM: Daviada Harris

DATE: January 19, 2021

Trends in the Aerospace Supply Industry

Aerospace Supply is comprised of Original Equipment Manufacturers (OEM) companies that provide a service to the military, the airlines, and private airline companies. While conducting research, I have uncovered what is currently trending in the aerospace supply arena. The top three trends of concern are financial performance, restructuring and cost production, and decline in the workforce. Additionally, the pandemic has also impacted the manufacturing facilities across the aerospace supply chain (PR Newswire, 2020). The pandemic made the industry change in so many areas, but what is currently trending is provided below.

Three Trends

Most of the aerospace supply industry had a financial contingency plan in case of a situation like COVID-19. Although there was a plan, some companies' solutions were to merge with other big-name companies. An example is the three companies that now fall under Raytheon. Financially speaking, most companies took a huge hit. There is an uncertainty in the financial performance of the industry. The aerospace supply industry has lost close to $475 Billion. In order to stay afloat, most companies are using current stock before producing or buying new materials. Companies are saving money by not wasting materials like in the past. Using a cheaper version of a product instead of the high component can also save money.

Restructuring and Cost Reduction

Restructuring and cost reduction has been a savior for the aerospace supply industry. Positions were downsized within the industry to save costs. Did the company offer incentives? The incentives cut will help to preserve cost. An example is taking employees out to lunch as a reward. Rewards reduction is essential to cost. Employees in charge of regional areas can no longer do frequent travel, which is a quick fix to saving the company money. Supply and demand for high dollar valued items changed to smaller more mobile items.

Decline In Workforce

All of the high profiled companies had a decline in the workforce. Those companies decided to terminate 200-700 employees in order to save money. In my own experience, the company laid off well over 1,000 employees. At the beginning of the pandemic, the immediate plan was to cut any manager's pay and above. The pay cut did hurt because it helped to save some of the employee's job. Most companies cut incentives such as matching the 401K program. In order to reduce the workforce, companies laid off senior employees and cut management positions. Instead of doing direct hire, companies can use a temp agency to provide employees with lower costs.

Conclusion

Due to Covid-19 we know the aerospace supply industry took a major hit. Companies looked at financial performance, restructuring and cost production, along with a decline in the workforce. The decline in the workforce is a major priority for the aerospace industry. All of the mentioned trends are an integral part of keeping the aerospace supply companies in competition with other businesses. My employers and some others have started using overseas personnel to help keep aerospace supply moving in the industry.

References

PR Newswire. (2020, July 2). Commercial Aircraft In-seat Power System Market - Growth, Trends, and Forecasts (2020 - 2025). PR Newswire US. Retrieved January 20, 2021, from http://ezproxy.umgc.edu/login?url=https://search.ebscohost.com/login.aspx?direct=true&db=bwh&AN=202007021010PR.NEWS.USPR.NY52830&site=eds-live&scope=site

Hailey, R. (2020, October 22). Reuters Events: Supply Chain & Logistics Business Intelligence. Retrieved January 20, 2021, from https://www.reutersevents.com/supplychain/technology/state-supply-chains-aerospace

Brady, G. (2020, July 9). Aerospace trends 2020: How commercial aerospace can recover from COVID-19. Retrieved January 20, 2021, from https://www.pwc.com/gx/en/ceo-agenda/ceosurvey/2020/trends/aerospace.html