Fly News, a portal specialized in aeronautical information, held a new edition of its forums on the current situation of the Spanish aeronautical industry during the month of October. Among the participants in this meeting was Domingo Ureña, CEO and General Manager of M&M – Mecanizados y Montajes Aeronáuticos.
During his speech, Ureña began by recalling that “if we talk about the supply chain, parts manufacturers are ultimately the backbone of OEMs and Tier 1 suppliers. The trend is indeed positive thanks to the market’s increasing demand, which is good for everyone after coming out of a severe crisis.”
However, the CEO of M&M Group highlighted the challenges currently facing small and medium-sized enterprises (SMEs) in the aerospace supply chain in Spain, especially in a post-COVID scenario. This transition went from tremendous growth and investments that increased production capacity before the pandemic to a 50% drop in revenue in the technical part.
In this regard, Ureña pointed out that supply chain companies with more than 20 million in revenue in Spain “can be counted on the fingers of one hand. Most of these supply chain companies are below 10 million, and the first problem they face is the increase in capacity: COVID led to a reduction in personnel, and now it’s difficult to find that personnel again. Additionally, the large companies are absorbing experienced personnel, which is logical, but small manufacturing SMEs face the problem of how to recapitalize human resources from the ground up.”
The second problem, according to Domingo Ureña, is the liquidity of these companies. “The government, through the ICO (Instituto de Crédito Oficial), temporarily helped alleviate the situation, along with other aids that prevented the destruction of many companies. Now, supply chain companies are faced with repaying all these aids. The situation is critical, and we are fighting to recover. I believe it should be considered whether these aids could be postponed a little further because 2024 will be a critical situation.”
“Another situation we face is that we don’t know how to absorb wage increases, the volatility of raw materials, especially in steels or titanium, and now it’s also affecting aluminum, which are basic materials in our industry. We also find potential investments with the increase in production rate; this is not a burden, but an opportunity that needs to be managed, albeit complex,” he added.
In summary, Ureña emphasized the need to be competitive, although the reality is that most of the supply chain consists of companies with less than 10 million in revenue, lack of liquidity, very small profit margins, and large debts, which have to find personnel and face price reductions because the market demands it. This is the current cocktail we find ourselves in.
Solutions to these challenges
Faced with these challenges and problems, the top executive of M&M Group presented the main solutions: “First and foremost, try to address the liquidity problem to pay salaries and make investments. However, the sector should recognize these increases that need to be absorbed. The supply chain is very fragile right now,” he commented.
“Is there anything we can do collectively? Without the supply chain, there will be no aircraft, no engines, or a cascading effect will occur: every time a supply chain company falls, you have to replace it immediately with all the time and cost that entails,” he added.
“We have to take care of the supply chain because, without it, the Spanish aerospace sector wouldn’t function. It’s as crucial as selling aircraft or investing in technology,” he concluded.
In this last meeting organized by Fly News with the Spanish commercial aeronautical industry, very clear messages for the future were launched. One of them: Administration and companies must work together so that aid is maintained over time to finance different programs, and this must be done now, before the European funds run out in 2026.
In addition to Domingo Ureña, Héctor Guerrero, director of the Technical Space Office of the Commissioner for the Aerospace PERTE of the Ministry of Science and Innovation; Jorge Caro, general secretary Airbus in Spain; Diego García Galán, director of Strategy of Aciturri; Begoña Rodríguez, Commercial and Programs director of CESA; José Evelio Jiménez, Country Manager Spain of CT Ingenieros; and Patricia Tavarés, head of Aerial of Demonstrators 1 of FIDAMC participated in the round table.
Watch the whole conference here (in Spanish):
