Honeywell Aerospace signals deeper push to pull outsourced production back in-house

Honeywell Aerospace is weighing further efforts to repatriate manufacturing work it farmed out to suppliers, part of a broader industry retreat from the heavy outsourcing models that dominated aerospace before the pandemic.

Chief executive Jim Currier told investors at a Morgan Stanley conference on 15 September that the company had pushed too many “core” capabilities outside its own walls between 2011 and 2019, when it operated as part of the wider Honeywell conglomerate. He said some of those technologies have already been brought back over the past two years, but “is there more to be done relative to that? Absolutely.”

According to Currier, the original outsourcing drive was aimed at maximising supply chain efficiency and productivity, and it delivered early financial benefits. But after cost-cutting during the pandemic, the company found itself more constrained than peers once demand recovered. He separately noted on 9 September that production is held back by shortages of four part categories: bearings, machined parts, and cast and forged components — inputs for its gas turbines, including turbofans, turbojets and auxiliary power units.

An industry-wide reversal

Vertical integration — the practice of bringing outsourced work back in-house — has gained momentum across the sector. On 8 September, GE Aerospace announced it will acquire Consolidated Precision Products, a supplier of complex engine blades, vanes and other airfoils, with the deal expected to close in the second half of 2027. GE says the acquisition supports expanding capacity for mission-critical castings.

Airfoils are among the hardest engine parts to produce, demanding skilled labour and tightly controlled processes — which industry consultant Kevin Michaels of AeroDynamic Advisory described as “the ultimate black art.” Their scarcity is a key bottleneck limiting engine manufacturers’ production ramp-up.

Boeing offers a prominent precedent: after decades of shifting major component production to suppliers — including the 2005 divestiture that created Spirit AeroSystems — it moved to reacquire Spirit in December following years of 737 quality issues.

Shares of Honeywell (HON) traded at $206.54, down about 1% from its prior close of $208.63, while GE Aerospace (GE) traded at $325.48, down roughly 2.98% from $335.49.

Source: original release

What to watch

• Details on which specific capabilities Honeywell Aerospace may insource next, and over what timeline
• Progress updates on easing shortages of bearings, machined parts, castings and forgings
• Regulatory and closing milestones for GE Aerospace’s acquisition of Consolidated Precision Products ahead of the expected second-half 2027 close
• Honeywell’s upcoming earnings and any guidance commentary on supply chain investment