A new Global Aerospace Maintenance, Repair & Overhaul (MRO) study by HTF Market Intelligence was just published that is forecasting “huge” growth by 2025 of the MRO market. This conclusion did not surprise me. I have seen previous economic downturns. While there are certainly unique aspects of how the coronavirus has changed our world, common wisdom can be extracted from what history has shown us. I too expect the MRO market will emerge first. It would be a good idea to plan accordingly.
Hamburgers and Steaks
In lean times appetites change. Hamburgers start to look like a better choice than a steak (at least for those not vegetarians). Companies behave the same way. Most will be hesitant to lay out large sums of capital investment on new equipment today, given the uncertainty now present in the market. For the Aerospace and Defense industry, add the fact that many of the aircraft have literally been parked, given the dramatic drop in airline travel. With such a shift, leadership teams are now strategizing how to best weather this storm. Greater focus will be placed on maintaining existing assets for longer time periods, as opposed to replacing them with newer aircraft.
This type of thinking will manifest itself both internally within the organization, and externally on how new purchases and alliances are determined. Internally, hardware, systems, and processes are likely to need attention. This is even more the case if they have been sitting idle for many weeks with maintenance actions reduced, dependent on the particular maintenance plan. When operations resume, there will an increase in maintenance activity depending on the length of time the aircraft has been in storage.
In tough times, management will be hesitant to invest in a new aircraft (e.g. steaks) but would consider upgrading existing systems and putting more time into extending the life of their aging fleet and components.
On the external front, operators may not be quite ready to open their checkbooks for new orders. But they would be more willing to invest in aftermarket services and maintenance of their existing assets. The last thing that is needed is unscheduled maintenance or the loss of a vital asset due to a sudden breakdown. This challenge is especially acute when operating with inventory levels that are running at 10 percent capacity.
The MRO market, therefore, is set to see better days – and soon. Companies across the aerospace supply chain will engage in maintenance, repairs, and urgent overhauls to better utilize what is already in place. Many are likely to conduct a thorough review of maintenance programs. Therefore, a review of internal maintenance practices is likely to be high on the agenda. Especially in the execution of MRO activities, with an emphasis on decreasing hangar and shop Turn-Around -Time (TAT) to get a longer life out of existing assets.
The Risk vs. Reward of Critical System Failure
Here is where critical decisions will be made by those engaged in the maintenance of long-term assets, such as aircraft, components, engines, and other notable assets. There will be a need to maintain repairs and overhauls. Even when things are operating smoothly, there is still a risk of a critical system failure. Your strategy must remain the same. Investing in systems that can accelerate or minimize downtime will pay big rewards by contributing to a productive TAT, getting aircraft back in service as quickly as possible. A low-risk decision for MRO operations and execution is to extend the lifespan of existing aircraft, engines, components, and machinery with appropriate investment.
This article may be of interest to those interested in how to reduce the risk of an MES deployment by thinking like a venture capitalist.
Now is a great time to invest more heavily in items such as MRO execution systems, digital migration, paper removal, advanced analytics, or Industrial Internet of Things programs. Each of these investments will reduce future expenditures, increase productivity, and extend the asset’s life.
Internal resources might not be operating at full capacity, so “special” or exploratory projects could be started, such as investigating the full benefits of launching a new or upgraded digitalization initiative. The full strategic value of transitioning to becoming a digital enterprise might be easier to see today, which would help in responding faster to change, easing future process improvement, and unifying the entire supply chain on one integrated digital thread.
How well did you adapt to this recent change of events? If there was room for improvement, then you might be interested to attend an upcoming webinar, presented by Patria / BEC, that details their ongoing journey to upgrade both their MRO and ERP systems simultaneously – and the success that has already been achieved.
Today might be an excellent time to take a close review and assessment of your MRO. Given the high likelihood that part of the business will recover first, taking full advantage of this expected outcome could be quite beneficial to your bottom line as our economy begins its journey back to full performance.