How aerospace companies navigate obstacles as they pursue opportunities in emerging markets.
Sprawling global supply chains are fast becoming the norm in the aerospace industry, where aircraft manufacturers and the companies that provide their parts and services are under increasing pressure to enter new and emerging markets.
Some regions – like Southeast Asia and the Middle East – offer astounding growth opportunities. Aerospace companies that ignore those markets are at a distinct disadvantage to those who face the challenge head on. The barriers may be intimidating to some, but the rewards for penetrating emerging markets are worth it.
MRO Americas Conference – Dallas
I spent a few days last week immersing myself in the MRO (maintenance, repair and overhaul) world at the MRO Americas conference in Dallas. Upwards of 10,000 aerospace professionals attended the event. Representatives from UPS and UPS Airlines were among them.
Our team was on a mission to learn more about how aerospace companies navigate obstacles as they pursue opportunities in emerging markets. We also wanted to better understand key industry trends and the challenges our customers face in the aerospace business. Our ultimate goal is to help our customers become more competitive so they can better serve their own customers.
We’ve studied these topics for years and have published several white papers on our research. Our studies provided the foundation for a UPS-moderated panel discussion at MRO Americas titled Aerogistics: New Supply Chain Complexities with Emerging Markets. We took the opportunity to put some of our research questions to a panel of experts from Boeing, Delta Air Lines, VT Aerospace and GA Telesis.
“Our ultimate goal is to help our customers become more competitive so they can better serve their own customers.”
“What’s most important to us is to be able to be there with our customers in real time and to be able to support them in real time,” said Abdol Moabery, Chief Executive of GA Telesis, a commercial aerospace company that operates sales, leasing, distribution and maintenance facilities around the world. Moabery said that having supplies closer to the point of distribution is a big step toward streamlining MRO operations.
Barriers and challenges
We asked our panelists about the key barriers to expanding into emerging markets. The response was unanimous. Aero companies face stringent rules in the highly regulated aerospace industry, and missteps are costly. And compliance is a huge concern.
“The fact is compliance is a nightmare,” Moabery said. He noted that in China, the regulations can change from town to town, and fines can accumulate quickly for violating even minor regulations.
“ Investments in technology are key to overcoming obstacles related to compliance and customs.”
When asked about top challenges aerospace companies face in managing global trade, the panelists agreed that customs and duties regulations were a foremost concern.
“The biggest thing we face is customs duties regulations and their variability around the world,” said Jack Arehart, President of MRO Services, Delta TechOps at Delta Air Lines. He said standardized paperwork and protocol would make the process much more efficient.
“It’s not uncommon to find AOG (aircraft on ground) parts held up for some minor customs issue, and you’re having to cancel flights or ground aircraft,” Arehart said.
The panelists agreed that investments in technology are key to overcoming obstacles related to compliance and customs. It’s important to invest in technology that improves visibility and tracking of the countless aircraft parts in the supply chain at any given time.
It’s not easy for aerospace companies to crack into emerging markets. It’s a big, complicated world out there. The hazards are everywhere, and the rules are inconsistent.
But the demand is in emerging markets. The winners in this business know it. In our view, the solution to some of these challenges is strong logistics support.
UPS believes aerospace companies can ease their burdens and maximize profits by partnering with logistics providers who have expertise in the markets they wish to enter. It’s good to have a guide who has been where you need to go.
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