Legacy businesses facing huge challenges
Amongst the rising number of innovative new businesses in the private and commercial space industry, legacy companies have struggled to remain relevant. Even Boeing, the world’s largest aerospace manufacturer, is no exception. Aerospace upstarts already offer satellite construction at 1/100th of Boeing’s standard pricing, so it goes without saying that these big businesses are under immense pressure. In the face of such serious competition, legacy aerospace manufacturers need to alter their strategies in response to the changing market. But how can they do this, and how will it disrupt the industry itself?
A changing industry…
Prior to the threat from new players, the aerospace industry belonged to a small number of successful companies who were able to capitalise on the market. Recently, this all began to change. Various new startups have entered aerospace, challenging the traditional manufacturing and production techniques championed by established firms. SpaceX, Elon Musk’s union, is responsible for one of the most disruptive developments so far – the Falcon 9 rocket. These reusable rockets can carry multiple satellites into space at a fraction of traditional costs. In 2012, it cost SpaceX $57 million to launch one Falcon 9. If you think that’s a lot, it cost established French company Arianespace over double. The issue for legacy companies is to deploy rockets and satellites for the same price – and at the same rate – as their young competitors. But as well as getting products into space, manufacturers also have to create them. Paul Rusnock of Boeing has stated that the company now uses 3D printing where possible, and favours multi-purpose parts over expensive, specialised ones. Via automated processes and simulated testing, Boeing is navigating the transforming sector. It’s not all about flashy tech, either – the company is also building a new facility in the UK which will enable access to European talent.
How will new production methods disrupt the aerospace industry?
Innovation in production and deployment will disrupt both private and commercial aerospace companies. The industry is clearly no longer the premise of a handful of manufacturing giants, as the influx of startups has widened the market and made it more competitive. Unsurprisingly, SpaceX’s reuseable rockets have inspired an emerging trend. Legacy company Arianespace, for example, plans to launch their answer to the Falcon 9 in 2020. As well as rethinking deployment, legacy companies are now employing innovative tech in the manufacturing process. Automation and 3D printing have already been adopted by industry leader Boeing, and others are sure to follow their lead. In order to compete with new players, legacy companies need to change the way that they do business – all business. The danger, of course, is compromising on quality. A simulated test may well save millions of dollars, but when it comes to hugely complex and expensive machinery, sometimes tried and tested methods are the better option. With automated methods comes potential unemployment, too, although Boeing has promised that it will continue to employ human workers instead of replacing them. Potential barriers aside, the more satellites that can be sent into orbit, the greater connectivity will be. Ironically, Boeing’s decision to innovate could give competitor Elon Musk exactly what he wants – ubiquitous Internet access. This ambitious plan is already unsettling telecommunications companies, and by forcing the aerospace sector to change, innovative companies will also disrupt (and potentially destroy) telcos.
Thanks to new technology and ambitious challengers, the aerospace industry is under complete transformation. Established businesses are abandoning their traditional strategies in favour of the automated production and innovative methods demonstrated by emerging startups. These older companies have the resources and influence to ride the wave of disruption, and firms like Boeing and Arianespace certainly seem to be exhibiting the right attitude towards change. As far as startups go, SpaceX seems to be leading the way concerning development. However, the new private and commercial space sector is receiving increased attention across the globe, so even Musk’s unicorn should not get complacent. If all goes according to Musk’s plan however, then disrupted aerospace could facilitate one of the greatest changes to global society to date – connectivity, everywhere.
Will Boeing and other legacy companies survive in the changing aerospace industry? Which other innovative technologies could be adopted by established businesses to drive down production costs? Will mass satellite fleets kill off existing telcos? Share your comments and opinions.