Aerospace parts manufacturers are not immune to the current madness around aluminum pricing and supply chain challenges. On a recent visit to New Source Corporation, one of the leading manufacturers told us they are subject to the same pressures as customers and that little relief is in sight.
Though metal pricing has remained relatively stable, prices for aerospace materials continue to rise and delays keep worsening due to the scarcity of production materials. Parts manufacturers are pushing prices ever higher and deliveries further out as they struggle to get the materials they need and to produce parts in a timely manner. As a result, materials that were taking 80 weeks to deliver just a few months ago now take 90 weeks or longer.
“It behooves our customers even more now to place their orders ahead of time. If they wait, lead times can go further out and prices may increase,” said Jamie Barron, Vice President of New Source Corporation.
Aerospace analysts expect suppliers to struggle to meet aircraft manufacturers’ increased production goals as the aerospace supply chain remains tight. For example, Boeing is increasing 737 MAX production rates, even though it faces supply chain challenges in both its defense and commercial businesses, like delays in receiving parts. Already strained aerospace suppliers say they may not be able to support jet output hikes, according to a recent industry survey.
Manufacturers have started to cut off certain customers and decline orders because they cannot keep up with demand, Barron said. Some have responded by raising prices so high that customers will not order or they will pay exorbitantly to do so. Manufacturers are pushing orders back as well, in some cases by two to four months for every order on their books.
Addressing Aluminum Price Increases and Supply Chain Challenges
Although market shifts have forced New Source Corporation to raise its minimum purchase order, as a leading aerospace materials supplier, it is helping customers mitigate the impact of demand planning and supply chain challenges by honoring the prices for advance orders, even if those prices increase later.
“Due to some shortages in extrusions and issues with supply chain challenges, prices have risen across the board,” Barron said. “We’re strategically mitigating any cost increases to our customers whenever possible.”
New Source Corporation has also developed relationships with new, alternative manufacturers. In some cases, the new manufacturers can deliver parts in 31 weeks to 32 weeks. Such orders could cost 40% to 60% more though because the manufacturers tend to be smaller and have a higher overhead than established suppliers.
Generally, New Source Corporation recommends planning two years out to account for aluminum and alloy shortages given the 90+ week lead time. Barron also recommended that customers use the company’s vendor-managed inventory capabilities, and let New Source Corporation package and ship materials as needed.
New Source Corporation communicates with its customers often so that they are aware of the latest developments in aluminum pricing and supply chain challenges, and understand how market changes can impact their orders. “We’re very customer-focused,” Barron said.
New Source Corporation is committed to being the leading supplier of aluminum aerospace extrusions. If you have any questions about an existing order or planning for future production, we encourage you to speak directly to your account representative. They will have the most up-to-date information on all existing orders and lead times for future orders. We value your continued partnership and understanding as we navigate aluminum pricing changes and supply chain challenges.
Read more in a letter from Jamie Barron, Vice President. 05-30-23 – New Source Corp – Notice of Delayed Mill Orders Lead Times Plan of Action Public