Inside Track A Talk With SuppliersReveals ‘Pain Points’Aviation Week & Space TechnologyMarch 21, 2011, p. 16By: Michael MechamPrinted headline: From Ohio to Arkansas
Ohio is the No. 1 U.S. supplier toEADS/Airbus($4.3 billion in annual sales) and No. 2 toBoeing($4.8
billion), after California.General Electric’s engine works in Evendale and Peebles account for much of that, but there are thousands of other suppliers spread across the state, some dating to World War II,when the government pushed aircraft production inland to make it less vulnerable to attacks. We recentlyvisited with Ohio’s suppliersat a roundtable in Cleveland hosted by Aviation Week and the OhioAerospace Institute. Not surprisingly, workforce topped the list of today’s pain points.
Alcoa Forgings and Extrusions President Eric V. Roegner reports having to compete with banks andconsulting companies for top college graduates. He’s honed his pitch to include topics that will appeal toyoung professionals, such as green and sustainability. Stephen P. Johnson, director of process technologyat Timkin Co., has had two senior technical positions open for two years. He also worries about how hewill replace his company’s aging baby boomers. And Fred Lisy, the president of tiny Orbital Research,laments that he spends time and money training young engineers, only to lose them after a few years tobigger companies.
Lisy and other small suppliers also complain about their difficulty in finding sufficient financing tosustain them through the program delays that are endemic in aerospace. Financing worried larger contractors, too. With cuts in U.S. and European defense spending, how can they take a chance on long-lead R&D investments for next-generation products that may not be funded?
Then there’s China, whose aerospace market the group views with a mixture of excitement andapprehension. “If you’re an engineer and you’re interested in working in China, we’d be interested inspeaking with you,” says Christopher Farage of Parker Hannifin,a major contractor on China’s newComac C919 jet.
But Ohio’s suppliers worry that the Chinese government’s push to create a domestic aerospace anddefense (A&D) base could one day squash them. Roegner points to Chinese investments in new forgesthat could compete with Alcoa. If Boeing and Airbus find viable suppliers in China, “the game is on,” hesays. Is the challenge China poses to U.S. technological leadership being taken seriously enough? “Youkind of wish that the U.S. government would wake up,” says Roegner.
But China is not the only challenge for the Ohioans. Across Lake Erie, Canada has instituted a tax creditof up to 48% for companies creating R&D jobs there. Then there are competitors springing up in lower-cost, non-union southern U.S. states. Farage says higher tax and labor costs push his company’s costs40% above some of his competitors. “Ohio is not cost competitive,” he complains.