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The Air Current is the exclusive media partner of The Aerospace Event. The discussions at the event were conducted under the Chatham House Rule, allowing publication but not attribution of information shared to facilitate more candid and valuable conversations at the annual event in Beverly Hills, California. A defense focused edition of The Aerospace Event will be hosted in Washington, D.C. on Oct. 13-14, 2025.
Geopolitics is top of mind. One sliver of the rapidly shifting global dynamic is a lack of clarity about how new U.S. tariffs on goods coming from Canada, Mexico and China will be paid as aerospace parts cross borders, sometimes multiple times, on their way through the manufacturing or aftermarket sales process. No one is clear about who will pay, where and when they’ll pay, what they’ll apply to or if those new tariff costs (which are determined by the declared value of the import) can be passed on to customers or suppliers, but fundamentally it means an inflated cost of doing business for someone in the chain. More importantly, no one knows what will stick and for how long and this makes planning and investment during a period of production acceleration even more challenging as manufacturers weigh the impact on demand for air travel and the need for defense products. Even if demand does come down, retirements of older airliners will likely occur first before deliveries of new aircraft are deferred (a la United), but suppliers are prioritizing changing defense postures for future industrial capacity.
Just-in-time manufacturing is dead. There was a time in aerospace when ultra-lean factories and supply chains were the focus. Low inventory and timely delivery of only what was needed, when it was needed, were the main objectives. Unencumbered transport, free(er) trade, experienced labor, mature designs and plentiful material inputs made all this possible. The 2020s will be remembered as ushering in the shift to a new era of buying and storing parts and raw materials, strategic inventory, utilizing multiple supplier sources and a strategic posture that assumes scarcity and prioritizes deeper, longer-term and less transactional relationships between customer and supplier. The most successful large-scale manufacturers (Airbus and Embraer) in the 2000s and 2010s did this then.
The supply chain has PTSD. Five years ago this month, the world was shutting down under the weight of the COVID-19 pandemic. That exogenous event laid bare the fragility of the supply chain after nearly a decade of acute pressure to cut costs. The demand began to rebound as quickly as it disappeared and the “bullwhip”2 meant demand disruption at the OEM level and greater reverberation and amplitude deeper into the supply chain under the pressure of a ramp-up with scarce labor and global inflation. While sentiment toward Boeing is trending more positive, skepticism about Airbus, its transparency, and its own ramp-up progress was palpable at The Aerospace Event and reiterated across multiple supplier tiers looking at other suppliers as points of persisting vulnerability. A new disruptive black swan is always possible, as evidenced by the Feb. 17 fire at SPS Technologies in Pennsylvania that destroyed a major source of the industry’s fasteners.
Forgings, forgings, forgings. Deep in the supply chain and long before parts reach final assembly, metals of all types are pressed and shaped to become complex parts for wingboxes, bulkheads, pylons, landing gear beams and engine discs, hubs and shafts. There is not enough industrial capacity to meet the current ramp-up plans, and all 33 large hydraulic closed die presses worldwide are either aging or have access restricted by geopolitical limits ranging from regulatory restrictions and tariffs all the way to open conflict. One view presented puts worldwide single-aisle production rates at a 130 per month cap due to these capacity limits, while Boeing, Airbus and Comac are collectively aiming for 163 single-aisle airplanes per month. Addressing the shortage won’t be a matter of capital, as the return for creating such specialized and expensive equipment with protracted permitting, construction, qualification and process development requirements is around a decade and a half, far beyond the typical time horizons of private capital, likely necessitating governmental strategic investment.
A new airplane is very far away. There is little incentive for aircraft and engine manufacturers to immediately go down the new clean-sheet product development road: Massive and delayed backlogs are the priority for airlines. The supply chain is only just regaining its footing, still struggling in key sectors (engines and interiors), and the first tier aerostructures business (largely considered a failed experiment) remains in strategic flux. Right now 737 Max 7, 10, 777-9, -8F and A350F will round out the decade for airline service. There’s no clarity on propulsion, especially as GE Aerospace, Rolls-Royce and Pratt & Whitney want to monetize their maturing fleets with coming engine overhauls for new generation engines and additional overhauls for mature turbines, giving the aftermarket a major tailwind in the years to come. The airline world may want a large narrowbody class aircraft from Embraer (or JetZero), but is that because of a true need for a third player or a desire for leverage against Boeing and Airbus?
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