It is investing in automation, digitisation and data analytics to maintain its competitive edge.
20 Aug 2018
The Business Times
By Nisha Ramchandani
ST Engineering's aerospace sector is leveraging new technologies and growth areas to maintain its edge amid intensifying competition and a more challenging operating environment.
While the long-term outlook for the aerospace sector remains positive, fuelled by drivers such as an expanding global aircraft fleet, headwinds remain. Jet fuel prices have surged some 40 per cent year-on-year, eating into airline profits. In addition, new aircraft such as the Airbus A350 and Boeing 787, which are made of less corrosive composite materials, tend to require less maintenance work than older models and can go for longer periods without heavy checks.
Then there is intensifying competition from lower-cost markets, such as Thailand, Indonesia and Malaysia, which is seen by some analysts as a potential threat for local maintenance, repair and overhaul (MRO) players. In addition, planemakers such as Boeing and Airbus too want a bigger piece of the lucrative after-sales services pie.
"While there may be new entrants with their own aspirations, we too have our own goal which is to stay ahead of the competition," said Lim Serh Ghee, president of ST Engineering's aerospace sector.
"Having been in the industry for over four decades, we know what customers value - quality, safety, turnaround time and dependability. What sets one apart from the rest is how well one can provide the services, not just in setting up hangars or engines/ component shops, and we have the track record to prove that."
He added: "At the same time, we have an existing worldwide network of facilities across America, Asia Pacific and Europe, which we continue to grow. A good network offers flexibility and convenience to customers to get the maintenance or modification service they need, sometimes at a short notice and tight schedule." Earlier this year, the company added a new airframe facility in Pensacola, USA, to its network.
ST Engineering is also working to strengthen its core capabilities and enhance its services by investing in technologies. These include digitisation & data analytics so that aircraft operators can better plan their maintenance; automation to ensure quick turnaround time and consistent quality; and additive manufacturing.
"Going digital brings along with it a host of benefits," Mr Lim highlighted. "Other than improving workflow and efficiency at the operational level, it will allow us to better support airlines and operators when they have newer-generation, fly-by-wire aircraft or large-scale fleet replacements."
He went on to say: "Secondly, given that we support many different customers, whose aircraft types overlap, we can use the data collected from all the aircraft we service, analyse them and provide predictive maintenance solutions. We have a dedicated data analytics team working on this and engaging customers to see how we can meaningfully harness data analytics to create value for them."
Where additive manufacturing is concerned, the company has been conducting trials with select airline customers to create a virtual warehouse and develop 3D-printed, just-in-time cabin parts. These parts are both designed and certified by ST Engineering. It has received certification from the European Aviation Safety Agency for certain aircraft interior parts, and is working towards similar certification with other authorities to expand its parts inventory list in line with customers' needs.
In addition, it is increasingly introducing robotics into its operations to drive down costs while boosting productivity. For example, it has started using a robotic arm to manually polish airfoil surfaces, slashing the time taken to polish one set of airfoil from 2,800 minutes to 1,000 minutes.
Meanwhile, the use of composite materials in aircraft has resulted in more stringent processes for the inspection and repair of aircraft structures. This has prompted ST Engineering to invest in skills upgrading, training as well as new testing equipment and tools. Where training is concerned, it has a certified in-house training centre, enabling it to train its team of mechanics, technicians and licensed aircraft engineers.
Aside from this, ST Engineering is channelling investments towards adjacent business and new growth areas in order to add value to its MRO work and give it a competitive edge through intellectual property.
For example, with an eye on the growing air cargo market, it has invested in new passenger-to-freighter (PTF) conversion programmes such as the A330 and A320/A321. Mr Lim expected this will allow it to reap revenues of over S$400 million annually from the PTF business by 2022.
Mr Lim added: "We are looking to expand our freighter conversion offerings to include unmanned freighters. With an increasing global demand for air freight and growing shortage in air crew, we believe that unmanned freighters will provide a viable solution as well as benefits such as lower cost of operation. For a start, we will explore incorporating a single-pilot cockpit into our conversion solution."
As the industry evolves towards unmanned aircraft, ST Engineering estimates that a single-pilot solution can be commercialised within a four to five year time frame.
In recent years, it has also started entering into adjacent businesses to tap its engineering design and MRO knowhow. It has set up a joint venture, ST Aerospace Aircraft Seats, with Japan's Tenryu Holdings Co to expand its portfolio and offer aircraft seat designs.
And while the original equipment manufacturers (OEMs) such as Airbus and Boeing are gunning to secure more of the after-sales services market, ST Engineering can still serve as a strategic partner, Mr Lim stressed.
He pointed out: "They would need fulfilment centres, given that their strategy thus far has been to minimise the setting up of actual facilities and instead partner with MRO services providers. Similar to air operators, they look out for those with a good geographical footprint, as well as one that can consistently provide quality, high safety standards and fast turnaround time. This is where we have built extensive relationships with the OEMs over the years."
ST Engineering's notable partnerships include the Airbus Corporate Jet service centre network with Airbus, and long-term licence agreements with United Technologies Corp to provide component MRO support for Boeing's 787 aircraft.
It also has a joint venture with Airbus, known as Elbe Flugzeugwerke (EFW), which is the sole source supplier of floor panels for all Airbus commercial aircraft platforms.
Aside from the OEMs, ST Engineering has been partnering with other industry players to set up strategic alliances too.
For example, it entered into an MOU with Vietnam Airlines in April to set up a joint venture with the airline's MRO subsidiary VAECO to provide component MRO services. By leveraging their MRO network and facilities in Vietnam, ST Engineering gets access to Vietnam's high-growth aviation market.
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