Three million little pieces
Comac may not look as amateur in front of domestic customers. Yet its challenges at home, particularly in its supply chain, match in gravity those it faces abroad.
The parts used in the jets, down to the interiors, are almost all outsourced to international companies that are partnered with Chinese companies on the mainland. The company’s policy mandates that its major international suppliers are partnered with domestic firms.
That’s great for Chinese suppliers. They will pick up much-needed expertise in the process. But for Comac, the fact that its planes are little more than the assembly of other companies’ parts could cause problems.
“There’s a great risk here, for example, in the fluctuation of prices,” said Neil Wang, managing director at consultancy Frost & Sullivan in China. “It depends too much on foreign suppliers.”
Planes such as the ARJ21 are composed of some three million parts, Wang noted. Without more control over this supply chain, making sure each piece comes together at the right price could affect Comac’s ability to keep the cost of the planes down, thus hurting its competitiveness.
Print-a-plane
Comac has great odds stacked against it moving forward with the ARJ21. Nevertheless, there is a glint of light on the horizon, “disruptive technologies” in Wang’s view that could put the company ahead.
For example, 3D printing could help it take better control of the supply chain, Wang said. The technology leapfrogs a heavy reliance on the technical exper
tise needed to manufacture parts by downloading a design and printing it out on a 3D printer. In the case of aerospace manufacturing, it could cut back on the need for the casts that many components are set in. Propellers for small planes are already being made this way.
Establishing the maintenance, repair and operation (MRO) networks that aerospace companies use to take care of their products is one challenge that can’t be fixed with a printer. But by partnering with international companies, Comac should be able to readily overcome its lack of a global MRO presence and serve foreign customers.
If the company has all this in order, when the jet is hoped to make its first commercial flight, underdeveloped marketing skills will still hamper Comac’s sales into the US and EU. But that problem isn’t unique to the Chinese brand. Airbus had similar difficulties when it first started marketing its planes in the US in the 1980s, Siena said. The European planemaker tackled this through cooperation with leasing companies that play a major role in the allocation of jets to airlines worldwide. Airbus aircraft were leased out to small airlines in North America, helping to build up the firm’s profile.
“I could see a similar strategy being successfully deployed by the Chinese eventually. Especially if the aircraft is efficient in its operating cost,” Siena said, adding that last week’s order for 20 C919s was placed by a Chinese leasing company.
The increasing numbers of orders show that Comac is garnering at least some confidence from Chinese buyers. Some of them were even placed by Southeast Asian and African countries that pay no mind to FAA certification.
To maintain that confidence, the company will need to show that it can cross out the many items on its to-do list between now and next year.
This article has been corrected: The government plans a 2017 entry into service for the C919, not the ARJ21.