Suppliers are increasingly convinced that growing OEM emphasis on product support is a long-term play that will lead to a structural shift in the aftermarket, new Canaccord Genuity research shows.
More than 65% of respondents in a supplier survey conducted by Canaccord said that pushes by Boeing and others will fundamentally change the aftermarket.
"It is too early to determine how successfully Boeing, for example, will be,” Canaccord said in an April 10 research note. "But it is clear that Boeing plans to make a major push here as part of its margin expansion strategy and to better leverage its position to capture more aftermarket economics."
Boeing’s focus of late has been pulling work back in-house, largely from parts producers licensed to use Boeing’s designs, or intellectual property (IP). Earlier this year, Boeing announced plans to open factories in Sheffield, U.K. and Portland, Ore. to make 737 and 787 trailing-edge actuation systems. Boeing termed the moves “part of a broader plan…to enhance production efficiency and reduce” supply chain costs.
Among survey respondents, about 15% said that they own enough of their own IP to keep their aftermarket business safe. For many others, Boeing’s supply-chain-streamlining effort is hitting home.
“We continue to hear pressure from Boeing on suppliers is increasingly focused on capturing volume from build-to-print suppliers that Boeing can then capture aftermarket economics on,” the analysts wrote in a research note last month.
“The next step to watch out for from Boeing is it is looking at trying to aggregate common structures parts,” Canaccord added. “Boeing is looking for a flatter supply chain, and no longer believes it will have structures suppliers do as much integration as they did in the past, such as on the 787.”
Boeing last week announced Plano, Texas, as the headquarters for its new Boeing Global Services (BGS) business unit. BGS, which will combine some 20,000 employees who support commercial, military, and space aftermarket efforts, is set to be formally operational around mid-year.