MRO Labor Cost Pressures Anticipated.jpg

MRO Labor Cost Pressures Anticipated

Growing demand will come with labor challenges, according to the vice president of Oliver Wyman’s Cavok division.

 

Oliver Wyman’s annual Global Fleet & MRO Market Forecast Commentary 2018–28, published in late-January, painted a generally promising picture of the MRO industry over the next decade. Overall growth rates are projected to stand at 4% during the 10-year period, with maintenance spend forecast to climb to $114.7 billion by 2028 from $77.4 billion this year.

Yet key to driving this demand increase, perhaps more so than any technology, is manpower. It is no secret that the commercial aftermarket labor shortage is one of the industry’s longest-running conundrums. Initiatives to attract new talent and help drive down the average technician age have been plentiful but often the outcomes have proved frustrating to date.

With technician numbers challenged, Tom Cooper, VP of Oliver Wyman’s Cavok division, told MRO-Network.com in a phone interview last week that this could lead to pressures on labor costs accelerating. He feels this will particularly occur in developed economies such as North America, a region that has seen airline profits increase and labor technician agreements come up for renegotiation in recent years but is still facing the prospect of a technician shortage.

Along with increasing the supply of manpower through training and partnerships, new technologies have been cited as a potential remedy for the problem, with devices and tools being looked at as a way of easing the manpower burden. However, Cooper doesn’t feel this will necessarily bring about all the answers the industry seeks.

“The supply of technicians is going to become significantly challenged in the next five years regardless of how much can be done to mitigate this through technology,” he says. “Technology will help, but the supply at this point doesn’t appear to be anywhere near sufficient to keep up with demand.”

Keeping up with demand may prove especially challenging to developing markets such as China, an MRO boom region forecast for 10.6% annual growth over the next 10 years. Asia-Pacific and India also face strong growth prospects.

In terms of material costs, Cooper predicts two factors will be prevalent. “OEMs will continue to control the material market on a number of platforms to a greater degree going forward,” he says. “At the same time, we will also see significant retirements of aircraft, which will free up a high volume of used serviceable material on older platforms, so there’s a little bit of a balance there.”  

TAGS: Workforce
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