The maintenance, repair and overhaul (MRO) market is wrapping up another competitive year. AAV editor Matt Driskill was at the MRO Asia-Pacific conference in Singapore where up-and-coming industry players like Malaysia and India were showing off their skills and others said they worried about OEMs, cyber-security and disruptive technology like additive manufacturing.
One of the key presentations at the show was the Oliver Wyman 2018 MRO survey that showed the “escalating presence of original equipment manufacturers (OEMs) in the aftermarket as a top disruptor for the industry”.
“While last year’s survey participants were equally preoccupied by the rapid expansion of the global airline fleet, this year OEMs were seen as the number one disruptor (60 percent), followed closely by aftermarket industry consolidation (55 percent) – which in part is a result of heightened competition from OEMs,” Oliver Wyman’s report said. “That category moved up 26 percentage points from last year – the most of any – when it ranked sixth among important disruptors. Another category on the move is the impact of game-changing technology – up nine percentage points; fleet expansion dropped 22 percentage points to sixth place.”
The consulting firm said the MRO industry was increasingly concerned about the control that OEMS, mainly engine and component manufacturers, “are exerting over intellectual
property (IP) and the expectation that OEMs will leverage it to gain more market share”. Industry participants feel that continued OEM expansion in the industry will mean higher prices and more “IP-propelled OEM market expansion in the near future”.
“Seventy-eight percent of respondents expect OEMs to become the most dominant players in the industry over the next three years, and they also are convinced aircraft manufacturers will meet or approach their aggressive growth targets for aftermarket revenue within the next decade,” Oliver Wyman said in its report. The consulting firm pointed to the move by Boeing to triple its aftermarket sales to US$50 billion within a decade and Boeing’s move to create a dedicated global division that combined civil and military MRO services to elevate the activity within the corporate hierarchy.
In its presentation in Singapore, Oliver Wyman said managing materials and labour costs in the face of tightening supply also persists as a challenge and also said the industry is very concerned about a shortage of mechanics that poses “a serious risk to the industry and serves as the primary driver of labour cost pressures – twice as significant as any other factor”. “The retirement of maintenance technicians and a dearth of newly created ones to take their place are squeezing both ends of the workforce spectrum across the globe.
Conference participants also said cyber-security was a constant worry, but many seem more concerned than prepared to deal with the threat. The consultants said they found a “certain level of complacency, with many respondents unaware of efforts and investments by their companies in cybersecurity. The risk of breaches is real…and the threat is growing for the MRO industry as it strives to digitise”.
Meanwhile, Additive Flight Solutions (AFS), a Singapore-based joint venture between SIA Engineering Company (SIAEC) and Stratasys, was at the conference and said it plans to increase additive manufacturing adoption in the aerospace industry. Daniel Thomsen, deputy general manager of AFS, said one of the biggest hurdles to widespread adoption of the technology is a lack of qualified expertise in the industry. Thomsen said MROs lag OEMs in understanding the technology because OEMs have been using it for longer. Another problem is the lack of common standards across the industry.
Officials from Malaysia airlines and representatives from the MRO industry in India were also on hand to tout the respective benefits of working in their respective countries. Malaysia Airlines’ engineering group brought Airbus A380 C checks in-house this year and Eke Nazri Bin Rahim, head of airline engineering, said bringing this work inhouse is part of the airline MRO’s transformation process.
Officials at India’s GMR Aero Technic said for India to succeed in the MRO space it needs to develop greater industry cooperation and better workforce incentives to enlist more technicians in the industry. India’s MRO segment is estimated by Aviation Week to grow at 9.4 percent compound annual growth each year over the next decade, but a shortage of technicians could potentially hamper the country’s growth ambitions, according to Girish Deshmukh, GMR’s chief marketing officer.