The aerospace industry was one of the most affected by the pandemic and experts expect its recovery to be “long and turbulent”. Machine tools manufacturers serving the sector are currently dealing with a number of challenges including: the significant backlog of aircraft orders; the historically low production and new order levels; as well as the pressure arising from ambitious net-zero targets, to name a few.
To combat these challenges, manufacturers would benefit from accessing agile technologies and machinery that can react to shifting market demands. Such technologies tend to be digitalised and automated offering greater oversight and flexibility during production processes, even when disrupted.
Industry 4.0 and its applications
The practical applications of leveraging digitalisation and Industry 4.0 processes are truly endless. For example, aerospace manufacturers would have the ability to model components and test assembled systems without having to create physical prototypes, thereby shortening the time to discovery while accelerating the product development process.
Of course, the sector has always been an early adopter of new technologies to reduce both the weight and cost of aircrafts as well. Additive manufacturing – the 3D printing process of creating an object by building it one layer at a time, is just one example of this. The advancement of 3D printing in aerospace is driving efficiencies in the value chain and solving problems in manufacturing making it popular with OEMs and suppliers.
With additive manufacturing, aerospace engineers are able to easily design and create complex parts that wouldn’t be possible using traditional machining methods. Using traditional methods, the assembly of intricate parts would require the welding or brazing of multiple pieces. However, with additive manufacturing the same part can be constructed as a single piece which makes for greater strength and durability.
This enables the production of light, weight-saving parts through geometrical designs that would be too difficult to produce using old-fashioned methods. The digital process means that alterations to the design can be done quickly and efficiently and with little wastage, leading to a significant cost reduction for high value parts. The end product is a lighter aircraft with slashed carbon emissions that is cheaper to operate due to the subsequent reduction in fuel consumption.
This decentralisation of the production process enables significant optimisation of the supply chain. With additive manufacturing, parts are constructed when and where they are required, as opposed to centrally producing individual pieces and paying the cost to ship them to the place of construction. Additional benefits to the supply chain include an improvement in tracking and procurement through the use of a shared database with suppliers and partners, improving validation of supplier performance and reputation, and time-stamping records to reduce fraud and improve supply chain security.
Likewise subtractive manufacturing techniques such as Computer Numerical Control (CNC) milling machines enable more efficient production processes. Not only do these machines offer high cycle times but they can also be operated with minimal-to-no supervision. One skilled operator is all that is needed to run several machines at one time, and the accuracy of these machines ensures consistent quality in the end product, reduces errors and eliminates unnecessary waste.
Smart finance and the post-COVID recovery
Due to the impact of the pandemic on customer demand, the recovery is bound to bring opportunities for smart manufacturers to capitalise on. OEM production rates are expected to increase following the global distribution of vaccines leading to higher levels of international travel as restrictions are eased. Higher demand for new aircraft is inevitable and is expected to recover to between 85% and 90% of 2019 levels in 2022, and innovative digital technologies could be a significant driver of success.
While the benefits of digitalisation for machine tools manufacturers are widely known, the costs of starting investment – particularly at a time when businesses in the sector are struggling – may be off-putting for some. However, historical studies have shown that companies who continued to intelligently invest in technology during previous challenging economic times have survived, thrived and ultimately gained long-term competitive advantages.
This is especially relevant to the aerospace industry, where despite an almost universal recognition of the benefits of digitalisation, only a quarter of manufacturers are taking steps to implement digital technologies, according to a global survey conducted by Deloitte. The report cites the pace of technological change and a lack of know-how as key strategic barriers behind the decision not to pursue a process of digitalisation, fortunately, these two problems are easily solved through smart finance.
A specialist financier is able to use their expert industry knowledge to offer financing packages that can accommodate the specific requirements of a manufacturer. If the pace of technological change is a cause for concern, then a specialist financier can offer options to upgrade during the financing period, whether to replace with a newer model or retrofit enhancements to the main technology platform.
Increasingly, manufacturers are turning to smart financing techniques to maintain momentum. These solutions are designed by specialist providers specifically to enable investment in technology, equipment, retrofits and digital transformation. This provides a financially sustainable journey through a low economic period, along with the agility and resilience to navigate the medium-term difficulties, so that manufacturers can ultimately emerge ready for growth as the markets recover.
The important role played by smart financing can be evidenced by the growing number of technology and machinery solution providers that now offer integrated financing options as part of their overall customer value proposition. This makes it possible for their manufacturing clients to access a wider range of possible technology options because they can also use financing methods that make the investment affordable and financially sustainable. Effectively, the manufacturer’s investment in technological solutions is enabled through financing which takes the expected commercial benefits of the investment into account.
Business take-off through smart finance – a case study
In order to fulfil an order from a new customer, a UK aerospace manufacturing business urgently needed a new computer numerical control (CNC) machine. However, the aerospace sector was among the most disrupted by the pandemic, causing a negative impact on the company’s credit rating and thus its access to finance.
The manufacturer approached Siemens Financial Services (SFS) via its supplier Kingsbury. Given their longstanding relationship with SFS as well as our unique sector expertise, the team at Kingsbury was confident that SFS would devise an ideal solution. SFS recognised the urgency of the manufacturer’s need and worked with the business and Kingsbury to supply a tailored operating lease with a residual value (RV) element. The solution enabled the manufacturer to acquire the machinery fast and the RV facilitated lower monthly payments as well as future flexibility to extend the lease or invest in new machinery as required.
Access to equipment and finance has bolstered the manufacturer’s resilience at a time when many aerospace businesses are closing following the impact of COVID-19. Thanks to SFS the manufacturer can now fulfil the new customer order, while opening the business up to a range of future projects and opportunities.
The aerospace sector has been particularly vulnerable to the challenges of COVID-19 and is currently en route to recovery. Investment in new automation and digitalisation technologies can help ease the pressure by making production more efficient and adaptable for machine tools manufacturers in the sector – both now and in the future. With access to traditional lines of finance restricted for many businesses, smart private sector finance is enabling investment even during the low economic period and keeping manufacturers on course.
About the author
Kirsty Talmage-Rostron – Business Development Manager, Siemens Industrial Markets
Kirsty has worked as a Business Development Manager for Siemens industrial markets for the past 5 years. She has over 20 years’ professional experience in the finance and marketing industries. Her longstanding background in sales originates at the University of South Africa (UNISA) where she earned a Bachelor of Commerce.
In her current role, she is responsible for promoting financial services directly to Siemens partners and OEMs, as well as working with various stakeholders within Siemens to offer financial solutions to all customers.