How a Fire Incident at SPS Technologies Sheds Light on Aerospace Risk Management

Photo Credits: Glenside Local

Serious devastation was caused by an explosion and the subsequent fire at SPS Technologies, a Precision Castparts Corp. plant in Jenkintown, Pennsylvania in February. The fire hampered the facility’s capabilities to produce highly specialised and high-strength aerospace fasteners, nuts, bolts and machined components for commercial and defense aircraft and engines. 

The damage that the fire brought on the supply of such high strength fasteners will no doubt have some of the effect felt by aircraft makers and engine manufacturers. While the SPS fire can be brushed off as an isolated incident, it draws attention towards a far more serious problem in the aerospace manufacturing industry: the risks of aging factories and sclerotic supplier situations.

Whenever there is a strong surge in demand within an industrial sector, it must respond accordingly by increasing the supply of materials, labor and services. The decreasing production capacity in the aerospace supply chain is a concern that needs serious attention. 

Industry must take serious steps to mitigate risks.   

Many plants have not seen any serious upgrades since the past three and a half decades, and many of the machines in the factories across the United States are as old as the 1950s. Capital expenditure is often the determining factor for the long-term success of a business. A report published at the start of the year by the New York University Stern School of Business stated that the ratio of net capital expenditure to sales in aerospace and defense averaged 0.7%. The ratios in the automotive, metals and mining and shipbuilding industries were 3%, 5.8% and 4.6%, respectively. 

Photo Credits: WHY

Companies in the aerospace industry must spend money on modernising their facilities and improve equipment by replacing the ones that have become obsolete. This will significantly reduce the chances of accidents happening, as faulty and old equipment that does not meet modern safety standards can be unreliable. 

The fire at SPS also brought to light the overly stringent qualification processes for fasteners and other critical components. The existing inventory may not be enough to cover the gap and will affect aircraft production, requiring airframers and engine OEMs to certify a new source rapidly. 

Relying on a single supplier with limited to no competition is appreciated for its cost-effectiveness compared with securing several qualified suppliers for critical components because of the cost incurred while onboarding new suppliers but having a single source can pose a serious risk. A singular disruption will create bottlenecks that can have damaging impact on production throughout the chain. 

Companies maintain their competitive edge through continuous improvement, enhancing competitive dynamics and reinvesting in their businesses and supply chain. The aerospace industry must adapt to meet rising demand.