In less than 10 years, the aerospace industry
has gone from bust to boom-or, perhaps more accurately, a
superboom that has catapulted plane orders into the
But when something soars that quickly,
turbulence is sure to be felt. That's been especially true for
aerospace-grade fastener manufacturers, who have been
struggling to meet demand.
Analysts that follow the fastener market say
a number of factors converged to created these shortages.
Manufacturers consolidated operations
following the steep fall-off in orders that began in 1999 and
that intensified after the Sept. 11, 2001, terrorist attacks.
This left airplane makers with fewer suppliers and less
products to tap when orders started rebounding in 2004.
Boeing Co., keen on getting its 787
Dreamliner off the ground, also had to deal with the logistical
nightmare of having many of its subcontractors spread out all
over the place, many of which were unable to produce the type
of fasteners the aircraft maker needed most.
"I think that combination of lack of
investment on behalf of fasteners, the big surge in orders and
supply chain-type difficulties all kind of got wrapped up into
one and created, to use a great movie title, the perfect
storm," Dave Petina, industry analyst at Cleveland-based
Freedonia Group, said. "It all kind of hit."
Pat Meade, aerospace manager at the
Industrial Fasteners Institute, Independence, Ohio, said
another part of the equation was that Boeing wasn't sure on the
exact lengths of the fasteners it needed for the Dreamliner.
The new airplane is made from composite material, with a
thickness less precise than traditional aluminum structures.
"That results in them waiting a little bit in ordering
fasteners," he said.
The more serious problem right now, though,
isn't a lack of capacity in producing the fasteners but in
finding the labor to do the work, Meade said. "They would put
additional people on a second and third shift if they could
find them, but they can't find them," Meade said, citing
conversations he had recently with some manufacturers.
If not for the labor problem,
Pittsburgh-based Alcoa Inc. and other producers could have the
product shortages resolved in six months to a year, Petina
said. But now it's anybody's guess when supply will catch up
"The problem is still the shortage of
manpower, and there's no quick way to train skilled personnel
to be fully productive in manufacturing," Meade said, adding
that new training programs are being initiated to train more
people in the intricate skills needed to make fasteners.
Unlike the aerospace industry, there is no
shortage of fasteners in the automotive industry. That has
spurred discussion that some automobile-grade fasteners could
be reconfigured for use on planes. But analysts said that's a
difficult proposition and it'll take time to work out.
"Some automobile fastener manufacturers are
indeed talking to Boeing about becoming approved to produce
Boeing hardware," Meade said. "But it will mean new
quality-control systems and new training and some new
equipment. The earliest you could expect this is one year from
now. And that is only when the automobile manufacturers can
produce a product that Boeing has a shortage of."
The tremendous growth in demand for fasteners
isn't expected to come to an end anytime soon. According to
Petina, aerospace-grade fasteners accounted for about $1.7
billion of the overall $11.1-billion fastener market in 2006.
He expects the aerospace fastener market to see compound annual
growth of 6.2 percent from now until 2011.
With many aircraft orders coming from
overseas carriers, most analysts don't expect the U.S. economic
downturn to put a big dent in Boeing's backlog. A bigger issue,
Petina said, might be consolidation among U.S. airlines-say if
a merger comes to fruition between United Airlines and
Continental, or Delta and Northwest.
"Those kinds of industry realignments could
potentially slow new plane purchases by surviving entities,"
Petina said. "That may give Boeing some wiggle room in
Rising oil prices could increase ticket
prices and cause some passengers to rethink flying to holiday
destinations, but airlines will still likely order the new
plane models because of their greater fuel efficiency, Petina
And while prices for raw materials used to
make the fasteners have been surging amid strong global demand
for metals, analysts don't see this as an obstacle in producing
Aerospace fasteners are mostly made up of
titanium and high-strength nickel alloys, such as Inconel, an
alloy trademarked by Huntington Alloys Corp., Huntington,
W.Va., and Meade said those raw materials are still widely
"I'm hearing lead times today on raw titanium
material is six to eight weeks. So that is not a problem,"
Meade said. "Price increases for the most part are being offset
by increased prices for the fasteners."