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Aerospace Challenges In 2023

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    The aerospace industry, like most manufacturing verticals, has faced significant challenges over the past couple of years. Considerable supply chain disruption, a global semiconductor shortage and an increasingly widening skills gap are just some of the obstacles aerospace firms have had to contend with in recent times.

    But what is the outlook for aerospace companies in 2023? Will we see these hurdles overcome next year, or will it be more of the same?

    Here’s our take on some of the challenges aerospace businesses can expect to face in 2023.

    Continued supply chain disruption

    Global aerospace companies continue to be impacted by shipping delays, raw materials shortages and sporadic pricing; and it does not look as though the situation is going to improve for at least the next year, according to one aerospace industry boss.

    Speaking to the Financial Times in July 2022, Guillaume Faury, chief executive of Airbus, the world’s largest aircraft maker, said he expects the supply chain issues the industry has witnessed to last well into 2023.

    According to Deloitte’s 2023 Aerospace and Defense Industry Outlook, in the face of continued supply chain disruption, aerospace and defense companies “will likely emphasize supply chain diversification, including local sourcing and nearshoring, to avoid concentration risk.”

    Ongoing talent troubles

    EY’s 2022 Aerospace and Defense Workforce Study highlights that the talent shortage in the aerospace industry is real. Indeed, as the report outlines, “workforce and talent concerns remain top of mind for aerospace and defense (A&D) companies.”

    It’s a view echoed by Deloitte’s aforementioned report, which cites how aging workforces are causing a broadening skills gap. Replacing the vast experience that is lost when older workers leave represents a significant recruitment challenge. This is exacerbated by the recruitment rebound that has occurred following the historic slump in air travel during the COVID-19 pandemic.

    As 2023 unfolds, aerospace businesses can expect the skills shortage to bite even harder. The need to attract and retain the best talent will be at the top of most corporate agendas.

    Obstacles on the road to net zero

    In October 2022, the International Air Transport Association (IATA) released a target to achieve net-zero greenhouse gas emissions by 2050. However, the aerospace industry is one of the most challenging sectors to decarbonize.

    While we have seen amazing advancements on the road to net zero, including hydrogen- and electric-powered aircraft, the biggest obstacle is range. Liquid hydrogen needs to be kept at -253C or it boils off, which means heavy tanks are required to store it. Meanwhile, even the best lithium-ion batteries currently available contain around 30 times less energy per kilogram than jet fuel.

    Nevertheless, aerospace companies remain dedicated to reducing emissions, and this is something we will see continue into 2023.

    [Related reading: How To Establish Sustainable Manufacturing Practices]

    Elevated and volatile fuel prices

    Russia’s invasion of Ukraine in February 2022 sent global fuel prices soaring, and few industries felt the effects as hard as the aerospace sector. In April 2022, the cost of jet fuel rocketed to its highest price since 2008, according to US Energy Information Administration (EIA) figures.

    While jet fuel prices have dropped somewhat, they remain both elevated and volatile. Indeed, the same EIA figures referenced above show the cost of jet fuel in November 2022 was 3.16 dollars per gallon – almost two dollars per gallon higher than in November 2020, equivalent to a 179 percent increase.

    With fuel accounting for up to 35 percent of airlines’ operating costs, more funds being channeled to power planes means less for overall growth, and that’s a reality that will inevitably impact demand for aerospace companies’ aircraft.