Industrial Mechanical – Airliner FAR Maintenance Facilities Under Stress

Federal Aviation Regulation Certified Repair Stations have been a great business model that has been quite successful over the years. This is because airlines would rather outsource their maintenance to other companies that specialize in certain types of airplanes and certain FARs.

After oil prices hit their peaks a couple of years ago, Jet Fuel was so expensive that airlines were under extreme stress to cut costs, and most of them decided one of the best ways to cut costs was to outsource their maintenance facilities.

This caused the certified repair stations to ramp up quickly and hire as many airframe and power plant mechanics as possible, along with airframe inspection mechanics. You would think with the economic global slowdown that airlines would continue to outsource to all these facilities. And they do, however airlines have also cut out quite a bit of capacity taking airliners and parking them in the deserts.

Why the deserts? Due to the hot dry conditions that make it less corrosive on the aluminum fuselages and wings. But with fewer airplanes in the system, less maintenance is needed.

With the incredible growth of these types of companies, they have also been forced to lay off individual mechanics. Although, as the economy returns we can expect these FAR certified aircraft maintenance facilities to ramp back up to full force.

The temporary slowdown, or slow growth of profits in this sector should not be thought of as the death nail. Just like the entire travel industry, airlines, and auto industry this global slowdown and economic crisis hit every industry. This one included. Please consider all this.

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An Upside for Industrial, Mechanical, and Manufacturing Sector

It seems there is a lot of talk in the United States about quality manufacturing jobs. But, to compete with other countries and their low cost of labor, many manufacturing companies are buying robotic systems, and putting forth robotic mechanized assembly lines. It’s a lot cheaper to invest in a robot, amortize the cost of that equipment over a period of time, rather than paying for union workers, their pensions, and health care benefits.

Yes, I know that sounds like a mean-spirited thing to say in this day and age, but as a businessperson anyone that wishes to make a profit, maintain shareholders equity, and grow a business has to be thinking here. Luckily, there is some good news for industrial, mechanical, and manufacturing corporations right now the United States. Orders are up, and the global economy appears to be recovering. That means there are products to be made, and buyers waiting.

The supply chain is coming back to life, and things are looking pretty good. But before you jump up for joy and assume that this means more people will go back to work. Perhaps you should consider what I have to say. Most of the manufacturing equipment being bought up right now is high-tech equipment, the kind that operates with fewer employees, not more. Indeed, there will be people who will have to run many of these machines, but they will not need the hundreds, or even thousands of people on the line to produce the same amount of goods as before.

In fact, there was a great little article recently in Industry Week titled; “Manufacturing Technology Consumption Up 138.1% – February Consumption Totaled $329 Million” written by the IndustryWeek Staff and posted on April 11, 2011. The article stated in the teaser paragraph: “February U.S. manufacturing technology consumption totaled $329.43 million, according to AMT — The Association For Manufacturing Technology and AMTDA, the American Machine Tool Distributors’ Association. This total was down 10.9% from January but up 99.3% when compared with the total of $165.31 million reported for February 2010.”

The labor costs in China are also creeping up, along with inflation there. No longer will people work for 18 to 20 hours a day, 6 to 7 days per week. That sort of slave labor isn’t going to happen anymore. Rather than one dollar a day, these folks wish to live in the middle class, and that means they need to make twelve hundred dollars per year (which will increase after China’s currency is properly reevaluated). Already, that is an increase from one dollar a day to nearly 3 dollars per day. Even China is buying more automation equipment for their factories to become more efficient. In many regards this will level the playing field for manufacturers worldwide, but it doesn’t do very much good for employment in any country.

So on one hand this is very good news for those in the manufacturing business, but for many of the union employees who have pushed very hard to increase their salaries year after year, this doesn’t mean that they will automatically be returning to work to those once previously high-paying jobs. Indeed I hope you’ll please consider all this and think on it. If you have any comments, questions, and/or concerns please shoot me an e-mail.

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