Reference:CGTN | Updated: 4 June 2020
The fallout from the coronavirus pandemic has gutted airlines and is now spreading to companies that make the parts and systems powering their planes, threatening to devastate a highly skilled workforce and hamstring the industry's eventual recovery.
About 1.2 million people around the world work in civil aerospace, including engineers, aircraft designers and factory workers, according to the Geneva-based Air Transport Action Group. Another 9 million work for airlines, airports and air navigation service providers.
These jobs depend on people flying and many are at risk as the global aviation industry suffers the worst downturn in its history.
Consumer demand for flights was suppressed during the pandemic by travel bans and shutdowns, and it is not expected to fully recover for several years after lockdowns are lifted.
Cash-strapped airlines have responded by canceling or delaying orders for hundreds of new planes, leading Airbus (EADSF) and Boeing (BA) to slash production and thousands of jobs. That has dried up orders for engines, wheels, brakes, computer systems and other aircraft components, leading to cuts at companies like GE Aviation and Rolls-Royce (RYCEF). Those cuts in turn are now reverberating through the supply chain, placing thousands of small businesses at risk of collapse.
"Everything is dependent on people flying. That's the driver for the entire ecosystem," said CEO of the US Aerospace Industries Association, Eric Fanning.
Boeing, for example, has more than 12,000 companies in its supply chain spread across all 50 US states and another 58 countries outside America. One of these suppliers is British aircraft engine maker Rolls-Royce, which expects to lose 9,000 roles from its global workforce of 52,000 as it adapts to cratered demand. The company said Wednesday that it is planning to shed over 3,000 jobs in the United Kingdom.
With fewer orders coming in, Rolls-Royce will in turn need fewer parts from its suppliers. The company typically spends about £7 billion ($8.8 billion) a year on such components.
Andrew Mair, the CEO of the Midlands Aerospace Alliance, a coalition of aircraft and parts manufacturers in the United Kingdom, estimates that for every person employed in Rolls-Royce's civil aerospace business, another three to four jobs exist in the company's direct supply chain around the world.
"Airlines no longer want to buy as many aircraft as they did and the change is a very sudden one, therefore the impacts are wholly unexpected and quite severe," he told CNN Business. Many of the companies further down the supply chain have fewer than 100 employees performing specialist activities such as machining and heat treatment. They take a long time to be trained, said Mair.
Based on discussions with employees already underway, ADS, the UK's aerospace industry association, estimates that up to 25,000 civil aerospace jobs are at risk in Britain.
That number could rise, however, as employees currently furloughed on the government's jobs retention program are made redundant when that support comes to an end in October.
"It's inevitable that because of a fundamental lack of demand, a lot of those people are going to be made redundant in the coming weeks and months," said ADS CEO, Paul Everitt. "That is going to be very painful."
In the United States, as many as 220,000 aerospace jobs could be at risk, according to the Aerospace Industries Association, which said that the pandemic has added pressure to an industry already stressed by the grounding of the Boeing 737 Max and trade tensions. Airbus and Boeing were "squeezing the supply chain for efficiencies," before the current crisis, said Fanning.
"Then the pandemic hit and people stopped flying," he added.
The cost to workers is already becoming clear. Several US airlines have received government support totaling $50 billion, which prohibits them from axing workers until October. But that too is only delaying the inevitable, with Delta Air Lines (DAL), American Airlines and United already warning that deep staffing cuts will be necessary.
Boeing announced plans in April to cut 10% of its jobs, about 16,000 positions, through a combination of buyouts, natural attrition and involuntary layoffs. More than 5,500 workers have already accepted buyouts and 6,770 have been laid off.
0 Comments
