Some Boeing, Airbus suppliers have cold feet about increasing production

Wed Feb 17, 2016 2:58pm EST
 
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By Alwyn Scott

SEATTLE (Reuters) - Some suppliers to Boeing (BA.N: Quote) and Airbus (AIR.PA: Quote) are putting the brakes on expansion plans, saying they fear that planned increases in production by the big plane makers may not be sustained in the face of slowing growth and low oil prices.

Consider AccraFab Inc, a precision manufacturer in Spokane, Washington, that produces parts for Boeing's 787 and other aircraft.

It recently spent $500,000 for high-speed punching equipment that can stamp complex metal cutouts used in housings for cockpit display screens, said President Greg Konkol.

"We're dragging our feet on two more investments," worth about $1.3 million, Konkol said. "We know we have to ramp up, but we're being conservative about investing too much and getting overextended."

The situation is similar at Tech Manufacturing, a maker of milled wing and airframe pieces that supplies Boeing, Airbus, Bombardier (BBDb.TO: Quote), Embraer (EMBR3.SA: Quote), Lockheed Martin's (LMT.N: Quote) F-35 Joint Strike Fighter and business jet makers.

"We're taking a wait-and-see attitude," said Frank Kimball, senior vice president of sales at the company, located in Wright City, Missouri.

Tech Manufacturing bought three new machines in the last five years, he said, but now is "looking very carefully at investing." Executives have priced other new equipment they want, he said. "But it depends on some of these bids coming in."

The comments, made in interviews during a supplier conference in Seattle last week, reflect growing caution among the thousands of companies that produce parts for plane makers.   Continued...

 
An Airbus A380, the world's largest jetliner, flies over a Boeing flag while landing after a flying display during the 51st Paris Air Show at Le Bourget airport near Paris, June 18, 2015. REUTERS/Pascal Rossignol