Tulsa World: Aerospace leaders look to future at summit
-
June 08, 2011
Aerospace leaders look to future at summit
by: D.R. STEWART World Staff Writer
Tuesday, June 07, 2011
6/7/2011 7:13:24 PMEnergy prices, education and adaptability will determine whether Oklahoma’s aerospace industry continues to grow and remains a world leader, industry executives said Tuesday.
Speaking at the 11th annual Oklahoma Aerospace Summit & Expo at the Tulsa Convention Center, representatives of commercial, military and business aviation companies, government and educational institutions said the industry is dynamic, competitive and internationally oriented.
Hal Chrisman, an analyst with AeroStrategy LLC, said escalating energy prices and massive budget deficits in the United States and western Europe will pressure every aspect of federal spending, including defense.
“The pain in the military budget is going to spread,” Chrisman said. “There will be pain throughout the budget…resulting in a 6 percent decline or a $4 billion reduction in O&M (operations and maintenance) spending. The U.S. and western Europe face massive structural deficits that must be addressed, resulting in severe defense budget pressure.”
Chrisman said oil prices are approaching the high levels of 2008, which is affecting aircraft manufacturing and the attractiveness of some aircraft types. At $3 per gallon, older regional jets and 20-year-old MD-80s are prime candidates for retirement, he said.
AeroStrategy believes the most likely oil price scenario in the next few years are prices between $80 and $120 per barrel, 3 percent Gross Domestic Product growth, resulting in 5,600 aircraft retirements over the next 10 years.
“High fuel prices are moving aircraft into the desert (retirements),” Chrisman said. “It’s extending the negative bubble, slowing recovery, pushing it out to the 2012 timeframe. In the worst case, oil is above $110 and we have a W-shaped recession.”
Michael Sutherland, director of supply chain management for Spirit AeroSystems Inc. in Tulsa, said Spirit has increased employment and aircraft programs since the company was spun off as an independent company from Boeing Co. six years ago.
Spirit AeroSystems is a $4.2 billion company that employs 2,500 people in Tulsa and McAlester, 10,000 people in Wichita and15,000 people worldwide.
“We had no layoffs — in fact, we increased employment in Oklahoma by 350 people in the last three years,” Sutherland said. “In Oklahoma, we build wings and things for the (Boeing) 737, 777, 747 and 787. We provide over 16,000 parts numbers for these aircraft. Recent additions are the G650 and G250, for which we design, build and integrate flight-ready wings for the Gulfstream business jets.”
Spirit AeroSystems projects a 67 percent increase in current production rates by the fourth quarter of 2013.
“Business is good and getting better,” Sutherland said.
Cathy Stukel, American Airlines’ managing director of inventory management & distribution, said American flies to 250 cities in 40 countries and has 198 supply warehouses carrying 295,000 unique parts numbers worth $1.6 billion.
“We use almost 32 million parts in a typical 12-month period,” Stukel said. “Eighty-two percent of airline parts causing (aircraft) delays or cancellations have been required zero times in the previous 12 months at that station….Parts are chasing planes, which causes the inventory to be more decentralized.”
Airlines minimize disruptions to operations by borrowing or pooling parts in some locations, such as London, Shanghai, China, and Delhi, India, and various domestic cities, Stukel said.
Hally Cole, KC-135 program manager for the Boeing Co., said Boeing has 800 employees in Oklahoma City (see related article) and is moving programs from California to the state because state officials have worked hard to accomodate the company’s needs.
“Oklahoma’s aerospace future is very bright,” Cole said. “The cost of living is very low here. We just need to get the kids excited about aerospace.”
Several speakers said the industry’s potential in Oklahoma is limited only by the quality and number of aerospace engineers and technicians the state can produce.
“We (lose) about 500 folks a year so we need vo tech grads,” said Maj. Gen. Bruce Litchfield, special assistant to the commander, Air Force Materiel Command. “The needs of Tinker are growing, and I see this as a great place to be and a great place to grow.”
Gov. Mary Fallin reviewed the state legislature’s accomplishments that are making Oklahoma more attractive for aerospace investment: balancing the budget and cutting taxes; reinstituting the aerospace engineer’s tax credit; lawsuit reform; workers’ compensation insurance reform and the Governor’s quick action fund that will enable Fallin to close any deals with potential companies considering relocating or expanding in the state.
“It’s an exciting time for the aerospace industry in Oklahoma,” Fallin said. Fallin presented the Thomas P. Stafford Award to Carmine Romano, American Airlines’ former senior vice president of maintenance & engineering and a 42-year veteran of the airline.
The award, which is named for the former Gemini astronaut, Weatherford native and retired Air Force general Thomas Stafford, is given annually to a person who has made lasting contributions to Oklahoma’s aerospace industry. “I consider myself fortunate to have had such a long career and to work with many of you,” Romano said. “Thomas Stafford is a true living legend, and I am honored to receive this award.”
