Story ID: 
Covid Pandemic Risks Supply Chain Squeeze
By: Kerry Lynch
Caption: AIN webinar spotlights concerns of potential supply chain disruptions in coming months and potential opportunities.
Word Count: 610
Industry executives remain concerned that an already vulnerable supply chain will become even more distressed in upcoming months as a result of the Covid-19 crisis. But the MRO and component manufacturer executives, who spoke during an AIN webinar, “Keeping Business Aviation’s Supply Chain Moving During Covid-19 and Improving It Afterwards,” on Thursday, also see an opportunity for growth in the supply chain and new ways of doing business.

First Aviation Services CEO Aaron Hollander said even before the Covid-19 pandemic, the supply chain could be described as “fragile” and in a fair amount of distress, some of which comes from the practice of relying on single sources. Aircraft have fairly reliable and predicable needs for MRO components, he said, yet shortages continue to crop up. Factoring in Covid-19, “We don't see how this is going to do anything but probably make it worse,” Hollander said. “We see this as going to be fairly disruptive, and we may not see it for a number of months into the future.”

Marc Drobny, president of StandardAero Business Aviation, agreed, pointing to problems that surfaced on the engine side last year when the supply chain for basic materials was disrupted. “There are only so many suppliers and really due to demand, they were all pretty overwhelmed. That dynamic continues and it's certainly not going to get any better quickly,” he said. “I think there have been spots of under-investment in terms of single sourcing supply…and that really has exacerbated risk.”

The executives see particular vulnerabilities further down the supply chain, in particular, at smaller companies that might be under-capitalized and struggling during the restrictions or might have to close down temporarily from Covid exposure.

“We have been in very close contact with our supply chain,” added Todd Winter, president and CEO of Mid-Continent Instruments and Avionics. Currently, most of its chain is not having issues or seeing only slight disruptions. “But we see that possibly changing in the future. So, as we go out another 60, 90 days, we can see that some additional issues could be coming up,” Winter said. Particular concerns surround raw materials that are used for mechanical components or casings. Ball bearings, which was a big pinch point during World War II, can once again become another problem in upcoming months.

With so many electronic components coming from Asia and with the globalization of the supply chain, problems may come obtaining materials from international suppliers with ongoing travel restrictions, he said.

The executives see issues not only with materials but with people – having to ensure safe working environments as well as getting the right people to the right locations when necessary. Hollander said when his company needs to get an executive to a given location, “normally we just get on the plane and go. We're thinking really through that from a safety standpoint.”

But while concerns arise surrounding the vulnerabilities, the companies see possibilities. This includes a scenario where companies begin to diversify their supply base. This is no easy task, Drobny said, adding it “takes quite a long time to get into the supply chain” with the requisite approvals and quality checks.

It also includes growing inhouse capabilities. “We generally see it's going to be a challenge, but we do see this is an opportunity because we make a very large percentage of the parts that we need in MRO ourselves and we have very a good portfolio of PMA Parts for our repairs,” Hollander said. “When that supply chain breaks, it's an opportunity for us to make up the gap.”