Airbus and Boeing putting pressure on supply chains

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Forget building freighter aircraft – the future for logistics operators will be in serving the fast-growing passenger jet market, and in particular ensuring that the supply chains of Airbus and Boeing do not fall apart under the intense demand for newer aircraft from airlines. For first-, second- and third-tier suppliers to Boeing and Airbus – which represent a true oligopsony, (a market dominated by a small number of buyers) – soaring growth is proving to be mixed blessing. Many are finding that the increased power of the manufacturers has given them huge leverage over suppliers, according to this report from The Financial Times, “Executives at Farnborough also spoke of pressure from the big aircraft and engine makers to sign long-term supply agreements lasting 10-15 years, promising both regular price reductions and accepting unlimited liability should something go wrong.”