The USM (used serviceable material) market has had an interesting couple of years.
Many thought the pandemic would drive part-outs to a new high. That didn’t happen for a number of reasons.
Fast forward and we see some interesting things in the marketplace.
Many USM companies were coming off a huge high in 2019 rolling into 2020 and they made big bets on inventory late in 2019. We all know what happened in Q1 of 2020.
While some players were well capitalized to weather the storm, others weren’t and as a result, new entrants came into an already fragmented market. These new entrants are always interesting until you find out whether they are just visiting or plan to stay a while.
The USM market has a love/hate relationship with the OEM’s. USM suppliers can’t support “everything all time.” The business is opportunistic by its nature.
Some airlines/end-users are good with that and exploit USM where they can. Others prefer the predictability of the OEM and rely on the USM market when they get in trouble.
There are always a unique set of challenges facing the USM market. Here are some of today’s challenges:
- Saturated market for airframe material on the 737 & A320
- Inventory obsolescence while holding substantial inventories
- Repair vendor turn times (driven by OEM material shortages and capacity constraints)
It’s not all gloom and doom as there were several USM providers that were highly focused and capitalized on opportunities during the pandemic. Strong leadership is critical in any crisis. Those leaders and their companies are the ones that came out stronger and better positioned for the future.
