Manufactured‐in‐house or subcontracted? finding the economic balance

THERE ARE technical, financial and other advantages to be gained by an aircraft manufacturer's management from making fewer detail components in house and from placing the majority of such components with the supplier industries. These advantages can also benefit the aircraft manufacturer's employees and customers, the passengers and the public. The example of a mechanical flight control strut is used to illustrate the arguments. A range of factors of interest to management are considered such as structural efficiency, reliability and safety; the costs of design, development, tooling and production; the administrative aspects, the cash flow aspects, working capital usage trends and the problems associated with fluctuating capital and manpower requirements of the industry. The article is in several sections; the debate, the advantages, the technical benefits, the direct cost benefits, the indirect cost benefits and the three balance sheets for each section of the industry.