February 26, 2019
By Jamie Freed
AVALON, Australia (Reuters) – Boeing Co has been shifting spare parts between its distribution centers in the United Kingdom and elsewhere in the world in preparation for Brexit, an executive said on Tuesday.
Britain’s potential exit from the European Union without a deal has proven a headache for the global aerospace industry which relies heavily on integrated supply chains and parts distribution centers.
“We are having our spares positioned in the right place,” Ken Shaw, the head of supply chain management for Boeing’s services business, told Reuters at the Australian International Airshow.
“We are continuously looking at the demand signals because we didn’t have to worry about it before between the London distribution center and shipping a part to France. Now we are having to be more purposeful so we are redistributing inventory.”
Airbus SE said this month it had spent tens of millions of euros on stockpiling parts and securing IT systems.
Rolls-Royce Holdings PLC effectively moved the home for its best-known jet engine designs to Germany last month to avoid regulatory delays or sales disruption after Brexit.
Shaw said Brexit was not expected to have much of an impact on Boeing’s manufacturing because its parts from Britain were mostly shipped to the United States and elsewhere rather than continental Europe.
“The underlying supply chain to make it has been a relatively easy thing for us just because of the nature of our product flows,” he said.
“We are in pretty good shape but we have moved some parts around and we have done some redistribution to put things where we needed to just in case. We are about as ready as we can be not knowing what the outcome is going to be.”
Other challenges for Boeing include ensuring suppliers can keep pace with its rapid production expansion plans as it looks to overcome persistent delays on engines and other issues that have hobbled the 737 factory to varying degrees since last summer.
Boeing is currently building 52 of its top-selling 737 aircraft per month at its Seattle-area factory. The manufacturer plans to speed up to 57 planes per month in June if it can smooth out supplier delays, Reuters reported this month, with the potential to later move to 63 a month if suppliers can keep up.
Shaw said Boeing was taking a disciplined approach to production rate increases, both from an airline demand perspective and a parts supply perspective.
“You get to a point where you have to relax a bit and make sure you are at a good spot before you take that next step,” he said. “That is why we do these rate breaks where we will go to a rate and stay there.”
(Reporting by Jamie Freed; Editing by Muralikumar Anantharaman)