When I tell people I grew up in West Los Angeles and Beverly Hills, they instantly begin talking about the movie business.
I always find that somewhat amusing, because when I was growing up I always thought of L.A. as an aviation town.
Santa Monica airport was the birthplace of the modern airliner, home of the Douglas DC-3. Lockheed, Hughes Aircraft, North American, Rockwell, Rocketdyne, McDonnell-Douglas in Long Beach, Northrop, TRW, and General Dynamics were more real to me than the dozen major (and dozens of minor) movie, television, and music production studios within equal proximity.
That was probably due to the fact that my mom had spent most of her career in aviation (first in the secretarial pool at North American, later as an executive assistant at Hughes), and my dad owned an aerospace subcontractor in Santa Monica (he made turbine parts alongside golf club heads.) They met at a coffee shop at the foot of the runway at Santa Monica airport. So jet fumes are kind of in my blood.
A+B ==> A+B+C+E+J+R
So as much as I would like to think that aviation is a high-technology business that America will forever dominate, the reality is far different. China is on a path to become an aviation powerhouse in the next couple of decades. If you don’t believe me, believe Steven Udvar-Hazy, CEO of International Lease Finance Corporation (IFLC), Boeing’s largest customer and despite his last name one of the smartest straight-talkers in the business.
He says the days of the Airbus-Boeing duopoly are numbered, and that challengers from China, Russia, and Japan will emerge within the next 15 years.
Now, before you choke on your coffee, thundering in protest that China has yet to keep in mind that the world’s #3 manufacturer of commercial jets, Embraer, is Brazilian.
And think about a couple of things:
Is It Really About Innovation?
Sure, there are still advances, but not of the kind the industry saw in the quarter century between 1945 and 1970. We went from the DC-3 to the 747 in that period. In the 37 years since, we’re still flying 747s as mainline aircraft. The fundamental technologies – the turbofan engine, the swept wing, the cigar-shaped hull, and the like have all been in place for years. Airplanes tend to get replaced because they’re old, not obsolete. Great comfort to those of us who are white-knuckle flyers, but scant support for the idea that civil aviation is still a fundamentally innovation-driven business anymore.
Outsourcing Rules the Skies
Three or four decades ago, most of the fabrication of an airliner was done in facilities owned by the primary manufacturer. Major sub-assemblies, like engines, interior fittings, and avionics may have been made elsewhere, but the plane maker made the plane. That’s not the case anymore.
Case in point: Boeing’s newest airliner, the state-of-the-art 787 Dreamliner, is being manufactured in pieces around the world, by 48 companies in 7 countries, then assembled at Boeing in Seattle, including:
• Italian firm Alenia/Vought is building the horizontal stabilizer, center fuselage, and aft fuselage.
• Mitsubishi Heavy Industries and Fuji Heavy Industries are building the wing box.
* Kawasaki Heavy Industries is building the landing gear wheel well, main wing fixed trailing edge, and part of the forward fuselage
• Hamilton Sundstrand is building all of the electrical and hydraulic system.
• Rockwell Collins is making the Avionics
• Smiths in the UK is developing key control systems.
• Messier-Dowty in France is building the Landing Gear.
• Panasonic is doing the inflight entertainment system.
• Saab is building the cargo doors.
• Korea is building the raked wingtips.
• Dassault Systems in France is providing the software to help put it all together.
Essentially, Boeing develops the aircraft, sells it, manages the overall program, and manages integration and assembly. That’s still a lot, but it’s a lot less than what it did in the days when it was cranking out the first 747s.
China Could Fly
At some point, most of the worlds airlines are going to come to the conclusion that they’ll be able to buy an aircraft entirely adequate for their purposes from someone other than Boeing or Airbus. In reality, it’s already happening – Embraer and Bombardier have all but chased The Big Two out of the business for airliners with less than 90 seats. But it will happen in earnest when the differences between Boeing, Airbus, and, say, a Chinese aircraft manufacturer become esoteric enough that a large percentage of customers can ignore them.
Sure, maybe Southwest and Singapore won’t be lining up to buy Chinese airliners all that quickly. But in places like sub-saharan Africa, South Asia, and Central Asia there would be a market for a Chinese airliner that offered 10 year old technology in a new aircraft at the right price.
Most of the components could be purchased from companies that currently supply Boeing, Airbus, Embraer, Bombardier, and Tupelov.
In other words, all China needs to do is put together a company capable of superb project management, careful assembly, smart design, and savvy marketing, and they could become a real player in the business.
Of course, that last little bit will be a challenge. Which is why it won’t happen overnight.
And fortunately, China has a willing accomplice in teaching them the tools of the trade: Airbus, who is building an assembly plant in China for the A320 series and setting up a 500-desk design lab filled with Chinese engineers working on the A350.
TD-SCDMA With Wings
I was going to write something snarky about China’s current high-profile jetliner project, the ARJ-21, but I want to reserve judgement. The thing has yet to even fly, but when it does I’m not going to count on its builders (Shanghai’s ACAC consortium) or its local certification authority (CAAC) to tell me how well (or poorly) China has done in its latest effort to build a jetliner.
Instead, I’ll wait to hear from airlines, pilots, and other credible third parties. China has a steep learning curve on it’s way to becoming a global player in the airliner business, and I’m not sure how far along it will be two years from now.
Fifteen years from now, on the other hand…