The aerospace and defense industry is grappling with dwindling supplies and rising prices for aerospace metals. Prices for materials like aluminum extrusions have risen and wait times have lengthened as aerospace manufacturers compete with other parts of the economy for supplies as the country recovers from the COVID-19 pandemic.
Lead times for multi-purpose aluminum extrusions such as the 6000 series are increasing, some as high as quadrupling their lead times, as well as raising prices. There have even been recent price increase announcements, particularly in the aluminum and steel industries. Despite these rising costs, market demand has not slowed down.
Demand has been so intense that many of the mills that make these parts will soon start closing their books for 2021 if they haven’t already. Their backlogs of orders and the sheer number of orders are large enough to carry them through the remainder of the year.
“Each of the presses that make the parts can only make so many per run, per week, per month, and per year,” explained Jamie Barron, Vice President of New Source Corporation. “Some mills have already scheduled shipments through Q4 of this year and will soon have commitments for the full year.”
Though demand for commercial aircraft remains soft as air travel remains well below pre-pandemic levels, some defense programs face cost increases and schedule delays, according to Deloitte’s 2021 aerospace and defense industry outlook.
Challenges could mount further if airlines accelerate the replacement of older passenger airplanes as Boeing projects. A massive infrastructure plan proposed by President Joe Biden could apply even further pressure to the production capacity for aerospace metals if it is passed and manufacturing and construction activity surges in the aerospace and defense sectors as well as other industries.
Some distributors of aluminum aerospace extrusions already struggle to obtain enough materials to fill orders as mills maximize the production of the most common products. Distributors of specialty aluminum aerospace-grade extrusions like those made with advanced technology could soon feel pressure as well.
But New Source Corporation continues to keep an extensive inventory of aerospace extrusions so that it can quickly fill orders for leading aerospace and defense companies. “We’ve worked proactively with many of our key customers and they have orders on the books with us through 2024,” Barron said. “If lead times double, they know we will keep them ahead because we’re staying on top of the latest trends in aerospace metals and ensuring that we remain proactive.”
New Source Corporation schedules shipments to customers months, or even years, in advance so that their production is not impacted by shortages. “With our Vendor Managed Inventory approach, they trust us to deliver on time, every time,” Barron said.
If the current trends in aerospace metals continue, supply chain pressures could push deliveries out further for many distributors of aluminum extrusions — but not for New Source Corporation and its customers.