MRO spend will approach US $80 billion in 2022 and come close to matching pre-COVID levels in 2023, but the industry faces significant challenges, says Oliver Wyman's Annual MRO survey. "The MRO industry has displayed remarkable resilience during the past...
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MRO spend will approach US $80 billion in 2022 and come close to matching pre-COVID levels in 2023, but the industry faces significant challenges, says Oliver Wyman's Annual MRO survey.
"The MRO industry has displayed remarkable resilience during the past two years, but it may not be enough as it faces a new set of challenges around labor, inflation and sustainability," said Brian Prentice, a partner with Oliver Wyman.
The lack of adequate number of technical staff has been cited as the top disruptor for the MRO industry over the next five years. Some 80% of North American respondents said that finding mechanics and technicians has become challenging, with Europe (65%) and other geographies (79%) feeling a similar strain. The challenge of securing labor has become critical, with more than half of survey respondents reporting that the lack of labor is already beginning to constrain growth – even with demand not yet fully at pre-pandemic levels.
Survey respondents ranked labor/material cost management as the second top disruptor facing the industry. Some 60% of respondents anticipate that materials costs will increase by more than 5%. North American respondents expect the largest inflation in labor costs, with 59% expecting increases of 5% or more.
"In an inflationary environment with a tight labor market, MROs over the next few years will be looking for any way to offset labor and material costs," said Derek Costanza, a partner with Oliver Wyman. "To complicate matters, the industry will be trying to do this when consumer travel demand is rebounding rapidly."
Almost all (90%) survey respondents indicated that sustainability is a priority for MRO-related activities. More than three-quarters expect sustainability to become an area of high focus and report that their companies have sustainability targets in place.
"At a time when the concept of how and where people work has radically changed, MRO leaders need to engage and attract a new generation of workers -- who value quality of life and are very concerned about climate change. It will be a tough sell," added Prentice.
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