MRO faces skills challenges

In Australia, workforce data shows the average age of most aviation engineers as older than 42 and that the availability of potential workers to replace them is rated as scarce. The industry also has a high, expensive annual turnover rate of 10 per cent.

In Queensland, an ambitious 170-hectare aerospace park has been proposed for a site adjacent to Amberley Air Force base in the hope, according to one local leader, of having a Seattle-sized aerospace industry employing up to 70,000 highly skilled people.

The skilling question, let alone other critical issues, arises forcefully here.

The Ipswich ambition somewhat outshines what already exists in what would be a major competitor and international aerospace centre of excellence, Singapore.

Singapore has a massive aerospace industry with almost all of the OEMs on the ground and big complementary enterprises totalling 100 companies, growing at 13 per cent per annum since 1990 and providing 19,000 high-tech jobs. Aerospace delivers Singapore $7.5 billion a year.

Singapore, which has a very close relationship between government and aerospace (unlike Australia), is highly unlikely to easily give up any business.

In parallel internationally, there has also been a rapid increase in the number of third party MRO businesses, and demand for skills, as airlines scramble either to cut engineering costs by outsourcing to them, or to attract others’ outsourcing to their own workshops.

In a review of global MRO released earlier this year, US consultancy TeamSAI estimated that MRO sector income in 2010 would be down 7.5 per cent, to $US42 billion, over 2009.

Engines had 43 per cent of the market, heavy maintenance and modifications 21 per cent, and line and components about 18 per cent each.

However, TeamSAI estimates the value of world MRO will grow from $42 billion this year to $65.3 billion in 2020, with the Americas, Europe and Asia Pacific dominating regionally with almost one-third of the business each.

The push to grow is already underway, as is the need to get skilled people.

Regionally, the MRO industry’s heaviest hitters, Lufthansa Technik and SIAEC, have moved to lower their costs and become even more competitive by setting up bases in countries such as the Philippines.

SIAEC is also looking westward, setting up a joint venture in Bahrain with Gulf Air’s MRO offshoot.

Singapore is expanding with construction now begun of its Seletar aerospace complex, at which Roll-Royce alone is spending $SG700 million on its first Trent engine manufacturing plant outside the UK and an advanced turbine blade-making facility.

Likewise, up the peninsula, Malaysia Aerospace Engineering, which has successfully transformed itself from being an inefficient, high cost operation to being regarded as one of the best in Asia-Pacific, has turned its sights to the sub-continent. It is building a joint venture MRO at Hyderabad airport that it expects to become a large-scale service hub for India and neighbours.

Malaysia’s government has also announced that it has set a national goal of winning 15 per cent of the world MRO business by 2015.

To do so it is offering huge tax breaks for investors, has launched an ambitious skills training program and is coordinating this through industry, government and academia.

There is also the massive airline growth in China that must be supported now; let alone what is to come.

The big OEMS already have significant presences; China’s COMAC is rapidly moving to local airliner construction; and the MROs are rapidly expanding, often hand in hand with other big industry players, be they OEMs or MROs.

Even this snapshot indicates powerful demand for skilled people, and that that demand will only grow.

 

Raising appeal of aviation careers

Concerns that the industry is not attracting and retaining enough critical people have been voiced recently by leaders such as the Chairman of Rolls-Royce, Sir John Rose, and the chief executive of SIAEC, William Tan.

Rose has said that the aerospace sector must find ways of making itself attractive to young people who might otherwise choose careers in sectors such as IT.

He said that industry must recapture the sense of excitement about science and technology that existed in the past.

“Science is at the heart of all the biggest issues and advances of the 20th and 21st Centuries. If that is not an exciting message to convey to young people, I don’t know what is. But they also need to believe they can make a career out of the opportunity,” Rose said.

“If you examine where Rolls-Royce locates its new investments, we are increasingly attracted to countries with high educational standards and strong vocational training such as the US, Germany, Scandinavia and Singapore.”

Tan told a technical conference before this year’s Singapore Air Show, “There is an ageing population and loss of the aviation workforce. Becoming a LAE is less attractive than other university study. We must embrace change: economic and technical change – redeployment after retraining and re-skilling. There must be greater productivity, optimal processes: cheaper, better, faster.

“We already use senior engineers in regulatory affairs, safety and planning. This assists closer coordination between aviation, education and regulatory authorities.”

SIAEC is ramping up trainee numbers in its workforce from the present 140, well down on the usual 600. International

financial conditions and lower work flows forced the reductions, but the company said it resisted the temptation of previous downturns to even more radically cut trainees.

The company is campaigning to make aviation technical careers more interesting. It is working with Singapore’s five polytechnic colleges, through which LAEs qualify, to ensure that training courses are as streamlined as possible.

Australia’s Licensed Aircraft Engineers Association has concerns about the necessary continuing flow of people needed by the industry. It suggests that with shift work and seven-days-a-week service needed, it is set aside from other more comfortable industries.

However, it suggests the strong gender imbalance amongst LAMES – probably only about two per cent are women – there may be an opportunity: part-time work and job sharing to enable women to both work in a highly skilled industry that needs numbers, and to stay close to young families.

There can be some engineering demand relief for airlines from fleet replacement with new aircraft, which do not require as much time offline, and some maintenance outsourcing.

In fact, fleet replacement, especially where an airline is both an early adopter of new technology and has a closely related, highly skilled MRO company (such as Singapore Airlines and SIAEC), it can be beneficial.

Using the SIA-SIAEC model, SIA was the first to introduce the Airbus A380 and SIAEC was the first to have its engineers train on it, maintain it and gain saleable experience for its third party operation. SIAEC was greatly disappointed that it missed out earlier this year to great rival Lufthansa Technik for Qantas’ first A380 C checks.

Consultant TeamSAI noted than less maintenance-intensive aircraft are beginning to have an effect, with the average annual MRO cost per aircraft dropping from $US2.4 million to $2.1 million from 2008-2010. This will fall further as more technologically advanced aircraft come into fleets.

The sheer complexity, with new materials, heavily IT-based systems and new engines, of airliners such as the 787 and Airbus’ A350, may push more MRO back to the OEMs and their designates. This won’t please third party MROs, but it will offer the OEMs, with their multi-billion dollar investments in the new generation types, yet another strong revenue stream.

Just how much money it is worth is well illustrated by the A320s deal done by Jetstar earlier this year when it contracted with IAE for $US3.5 billion of V2500 engines and full fleet engine support.

The split was $1.5 billion for engines and $2 billion for MRO, provided mainly by Rolls-Royce and Pratt & Whitney.

Boeing is offering a GoldCare 787 package that seems to reflect closely the future airline operation model spelt out by consultant TeamSAI: the airlines will concentrate on their core business of flying and complementary support services, while their maintenance will increasingly be done by highly technically advanced, highly credentialed third party MROs.

For a predictable and competitive cost, Boeing says, GoldCare will allow customers/operators to outsource some or all of their engineering and materials, engineering and maintenance, or engineering, materials and maintenance operations to it.

Recently it appointed its first GoldCare MRO partner, London-based Monarch Aircraft Engineering, to carry out regularly scheduled A, B, C and D checks, but not line maintenance. Boeing’s GoldCare team also includes GE Aviation, Hamilton Sundstrand, Honeywell, Moog Inc., Panasonic and Rockwell Collins.

Rolls-Royce, like the other big engine companies, has been highly successful in selling its TotalCare package, to the extent that almost 100 per cent of Trent engines used in Asia Pacific are covered by it.

 

The next-gen aircraft challenge

Undoubtedly there is a great expansion of new, beneficial technologies into aircraft MRO.

But it will take adequate numbers of highly skilled men and women to ensure that full benefit is taken from them, and that the actual work is done to deliver the levels of reliability and safety expected by the industry and the public.

The first major application of new generation aircraft higher technology skills in Australia will come in mid-2012, when Jetstar begins taking delivery of eight Boeing 787s. Qantas’ 787s will begin arriving in 2014.

Qantas engineering sources acknowledge that the 787 is a game changer, quite different to the more evolutionary A380, and holding some significant maintenance challenges.

“Management of information about a 787 is a one of the biggest technical shifts, evolving from paperwork to items such as electronic log books, intelligent tools and aircraft health management systems,” they said.

“There is a major challenge for many people who may be working on the 787: in the past there was experience and skills – needed still of course, but additionally there will be the aircraft telling you what needs to be done and you have to action it.

“Some of the older engineers – who are above 50 – are struggling in that space,” the sources said.

“Younger people, who have grown up with electronic games for example, are more relaxed. The youngest almost do it intuitively. Our work force demographic is pretty good.

The sources said because the 787 is a composite aircraft, non-destructive testing will be highly important. There will be a great difference between examining, analysing and fixing an aluminium structure and going through the same processes with composites.

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