In the wake of international aircraft leasing company, Avalon, publishing their 2022 Outlook Paper in January, McGreevy Engineering’s Managing Director, Aaron McGreevy has spoken out to welcome the findings of the report in terms of estimated aerospace recovery rates but has also warned that elevated global steel prices and soaring energy costs may hamper recovery speeds.

Aaron writes… According to a recent report from Avalon, the international aerospace sector will rebound to 70 per cent of 2019’s levels by the end of the year.

What is a hugely promising statistic for a sector that has almost been crippled due to global lockdowns and travel restrictions, a large portion of credit must go to those behind the successful rollout of the COVID-19 vaccine, which has without question, played a significant role in the uptake of national and international travel and the consequent resurgence of aerospace sector demand.

Established in Belfast in 1980, McGreevy Engineering services tier one aerospace manufacturers and over the last few months, we have seen an increase in our order book from aerospace clients in a bid to match the current demand.

This uptake in demand can only be welcomed however, the industry is still grappling with elevated prices of steel, which is forecast to continue well into 2022, coupled with an unprecedented rise in energy costs. All of which will likely add up to slower aerospace recovery rates.

Elevated steel prices alongside greater demand on the sector will lead to challenges. The continuation of elevated prices will mean that raw materials will be more difficult to access and will affect the entire supply chain, from manufacturer right through to the end user.

Elsewhere, UK economists have warned that increasing energy costs will have a serious impact on the economy, affecting both households and businesses.

Gas and electricity prices rose by 50 per cent in early February with prices set to continue to soar during the next energy prices cap review later this year, if efforts are not made to mitigate the economic impact this will have.

Measures must be taken to ensure that our small to medium sized manufacturing companies can manage these inflated prices and that companies are not forced to pass the costs of energy bills to the customer.

If assistance is offered to businesses, they can better prepare to reach the UK’s Net Zero targets in the years ahead which is also critically important.

As a company, we are cautiously confident in the sector’s recovery in 2022 and as the global steel prices are expected to drop in the latter half of the year, this will help to ease pressures on the supply chain. It’s time to look to the future and do all we can to ensure that the aerospace sector can return to pre pandemic levels as quickly and efficiently as possible.

References:

https://www.avolon.aero/newsroom-and-thoughts/rise-above-avolon-2022-outlook-paper

https://mepsinternational.com/gb/en/news/global-steel-prices-forecast-to-remain-elevated-in-2022#:~:text=Reductions%20in%20steel%20selling%20values,and%20other%20materials%2C%20is%20anticipated.

https://inews.co.uk/news/rising-energy-prices-significant-impact-uk-economy-business-groups-warn-1417435