Alexander Cornwell and Tim Hepher

DUBAI, (Reuters) – German aerospace suppliers support Airbus’ plans for increasing jet production. However they warn that the main threat to this industry’s future growth is the growing labor shortages.

Airbus is the European planemaker and the leader in Germany for around 200 suppliers. It has stated that it will continue to meet its goal of increasing production by A320 by 50% to 65 jets per month, by 2023. They are also exploring rates up to 75.

At the Dubai Airshow, more than 400 firm or tentative new orders were unveiled by this planemaker. Bloomberg News reports that the planemaker could increase that number with an A350 freighter order, which it may do as soon as Friday.

“It’s a signal. After meeting Guillaume Faury, Chief Executive of Airbus, Volker Thum (managing director, German Aerospace Association BDLI), Thum said that while we aren’t yet back in the old days, it is beginning again.”

He said that while we are in a crucial phase of our lives, there’s no doubt that it is still a difficult one, the prospects are bright.”

Thum indicated that only a small number of suppliers were still unsure about Thum’s target of 65 A320/family jets per month. That is slightly less than the 60 it produced before the pandemic. Thum said further increases above that will only be possible during the investigation phase.

Airbus requested suppliers to look at rates for 70-years in the early 2024’s and 75-years by 2025. But, Airbus says they are still waiting on a response.

The increase from 60 to 72 is about 20% so it’s not impossible. Thum stated that suppliers had planned to increase their production to 60-65.

However engine manufacturers have expressed concern about the threshold at 70-75. They fear it could hurt the business of repairing older jets. Some small suppliers also worry that the threshold will be temporary and they may end up paying for unused machinery.

THE HIRING CHALLENGE

Thum answered a question about whether rates of up to 75 per month could be handled by the supply chain. He said that rates can be managed if rates are kept at a fixed rate for certain periods. If Airbus goes up to 75 for five months, then you can forget it.”

Faury, Airbus’s chief economist, told Reuters that the latest Airbus forecasts indicated that these rates can be sustained for some while but that no decision has been made.

Germany is home to one of Europe’s most extensive supply chains. Thum explained that the supply chain was preserved by furlough plans and a decision not to stop producing 40 A320-family planes per month during crisis.

Airbus was reliable, he stated. He also said this allowed for many suppliers to cover most fixed costs.

With widespread labor shortages, it may seem more complicated to hire new workers.

Thum explained that the main concern was to bring skilled workers onboard – especially given the demographic effects of retiring baby-boomers.

For Germany’s small, family-owned suppliers, actual contracts are more important than provisional targets.

Thum explained that visibility is more important than orders for parts. Thum stated, “If you don’t have visibility to go to banks you will get nothing.”