Sunday, August 1, 2021

Aircraft and mass production

 Planes aren't like cars--there aren't millions of them, or even tens of thousands. Production costs get spread over a smaller # of units, so the hike is substantial, so the cost/unit matters a lot. A successful plane can go on for a long time, as increasing economies of scale result in lower cost/aircraft, even as technology moves on. In contrast, a reduction in the number of orders results in increased costs per plane, which can be enough to doom an entire production line. The doom loop is rising costs requires hiking prices, further reducing volumes and again increasing cost/unit. (F-16 fighter). Some of the cost is in development (including some R&D) and some of it in 'tooling' and setting up production lines to achieve efficiencies of scales manufacturing needs to be more than 'craft' production. 

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