Guest Article by Vince Pavlak
There have been numerous comparisons between the automotive and aerospace industries, and an October 2009 article from Aviation Week even asked, “Could Wichita become the next Detroit?” Many aircraft suppliers are learning from the automotive industry and some have recruited executives from the sector. Given the recent turmoil and challenges faced by the cyclicality of the automotive industry and its participants, the actions taken may provide valuable insights for the aerospace industry, which has historically also endured its share of volatility.
During the past 18 months, the automotive industry experienced one of the worst periods in its history. All industry participants, from original equipment manufacturers (OEMs) and suppliers, to automotive dealers, were affected. Suppliers experienced significant volume declines, immense liquidity constraints and a severe tightening of the credit markets. Few companies were adequately prepared, and all were required to adapt quickly to the new economic conditions and take significant actions to remain viable. This time period can truly be characterized as a fight for survival in which there were many casualties.
While the extraordinary government aid at the OEM level clearly helped to stabilize the industry, we have found that supplier survival came down to the following key factors…
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