Aerolia is aiming to create a local supply chain based on just-in-time logistics
Since an almost-bloodless uprising, Tunisia has thrown open its doors to tourists and - more importantly - business investors
The poster depicting the remains of a stunning Roman temple has the telling slogan: "They say Tunisia is nothing but ruins." It is part of a controversial campaign by the country's tourism authority to play on popular misconceptions of a nation in turmoil after Tunisia's revolution earlier this year. The uprising - which triggered the Arab Spring throughout the Middle East - was not bloodless, but the transition was swift, with long-time dictator Zine al-Abidine Ben Ali ejected and a provisional government formed, ahead of elections in October for an assembly whose task will be to create a new constitution.
The "new Tunisia" message of tourism chiefs, keen to entice visitors back to some of the Mediterranean's most popular resorts, is one being echoed by other industries, including aerospace. Tunisia, along with Morocco, has since the late 1990s been a beneficiary of inward investment by European aerospace companies, with the French leading the way in their former colony.
Despite its corruption, the Ben Ali regime had begun to open up the Tunisian economy, with a low-cost base, a highly-educated workforce, well developed transport infrastructure, duty-free access to Europe and low taxes all proving attractive to investors. EADS-owned Aerolia is one of the newest businesses to set up shop in the region around the capital Tunis, where French companies Zodiac and Latecoere also have factories. Italian aerostructures manufacturer Dema is another new entrant. Tunisia too has its own home-grown aerospace companies - most are small workshops supplying the big names, but an exception is Telnet, a thriving design engineering house which works across a number of sectors and is Tunisian-owned.
Gaby Lopez is the general manager of Zodiac Aerospace's factory in Soliman, a short drive from Tunis, and is also a founder and, since May, president of the Tunisian aerospace association GITAS, which represents 33 local and foreign-owned concerns - more than half the sector. Zodiac has been in Tunisia since 2003, originally producing air bags for cars, but moving into aerospace products shortly after. Its current main factory - where it produces an array of equipment, from landing-gear harnesses to oxygen masks - was opened in 2008. "There are a number of advantages of operating here, but the main one is probably the level of skills we can draw on," says Lopez. "Labour costs are lower, but this means careers can progress quicker."
Many Tunisians educated in Europe or North America choose to return to the country because of the opportunity to work in an expanding business and with a shorter route to management, he maintains. "The best people get a good wage, but we also give them the keys to their own career. In Europe higher salary costs make that difficult."
Another benefit of Tunisia is the proximity of key markets. A truck can leave this factory on Saturday morning and be in Marseilles on Sunday night," says Lopez. London and Paris are just over 2h flight away, and Rome can be reached in little over 1h. While French is the national language, alongside Arabic, English is also widely spoken and many educated Tunisians can get by in other Mediterranean languages, such as Italian and Spanish. Tunisia is culturally - as well as geographically - the Arabic country that is closest to Europe.
With 1,800 employees, due to rise to 2,500 in two years, Tunisia is the biggest of four "competitive cost" country implants Zodiac runs, along with Mexico, Morocco and Thailand. Although everything produced at the factory is delivered to the parent facility in France, the Tunisian plant has developed capabilities in a wide range of activities, including manufacturing cabin seating, cockpit panels, fuel tanks and electrical components. "We can pick up new processes very quickly, getting clearance from customers to deliver," says Lopez. The subsidiary has also begun to develop its engineering capabilities, designing a number of prototypes in-house, such as cabin lighting and electrical motors.
Latecoere's wiring division Latelec has had an operation in Tunisia since 1998, and has since opened two more production sites in the Tunis area. The workforce has been growing by about 100 people a year and should reach 800 by the end of 2011, explains country manager Christian Bonnet, with recent growth driven by the ramp-up on the Airbus A350 XWB, for which Toulouse-based Latelec is the supplier of wing and cockpit wiring harnesses. Latelec is also involved in Airbus, ATR, Dassault and Eurocopter programmes, as well as engines from CFM International, General Electric and Rolls-Royce.
Although Bonnet is an expatriate Frenchman, virtually all the managers in the factories are Tunisian. "We have been here a long time and have developed a strong local culture," says Bonnet.
Most of the employees piecing together the harnesses at benches on the shop floor are female. Although the reason for this is practical - smaller hands are needed for many of the more delicate manual tasks - women are a familiar sight in Tunisian factories.
Aerolia is one of the newest names in aerostructures, having been spun out of Airbus along with German counterpart Premium Aerotec in 2009. as a semi-autonomous supplier. It is also one of the most recent aerospace arrivals in Tunisia. It began operations in a 10,000m2 (107,639ft2) factory on a new 20ha (49 acre) aerospace park in December last year - just before the revolution - with a workforce of 180.
Tunisia was chosen not just because of the lower labour costs it offered, but because it presented Aerolia with a chance to create a local supply chain based on just-in-time logistics, according to Aerolia chief executive Christian Cornille. "Aerolia had just been created, which meant that we had considerable freedom to innovate by bringing together on the same site suppliers and customers. This was in January 2009 and, on the strength of agreements signed with Tunisia, we created our subsidiary Aerolia Tunisie," he says.
Aerolia is being joined in the aerospace park by eight, mostly French-owned partners: Figeac Aero and Aeroteam for machining, composites specialist Corse, Mecahers for sheet metal working, Mecanyvois for jigs and tools, Mecaprotec for surface coatings, aluminium supplier ThyssenKrupp Aerospace, and Blondel for logistics. Aerolia expects the units to employ 1,500 people once fully operational, and to bring together "every aspect of our activity, including surface treatments".
Encouraging the creation of supply chains within the country is part of GIFAS's role, says Lopez. Zodiac already uses seven local manufacturers and "I would prefer to buy more components in Tunisia if I could", he adds. That is why the organisation, together with the government, is keen to encourage more small producers to set up in the country alongside their customers, in much the same way as Aerolia's suppliers have. Likewise, larger companies can set up knowing there is an existing base of local small manufacturers to buy from and outsource to. "It is more about speed of delivery than price. It's all about efficiency," says Lopez.
While Tunisia slowly beds in its new democracy, GIFAS is confident of attracting more foreign investment. During the short revolution - which was sparked by anger over unemployment and corruption - no businesses announced they were quitting the country, says Wassim Srarfi, the organisation's youthful secretary general. Already by the Paris air show in June, posters on the Tunisian aerospace stand were proclaiming "new opportunities in a new country", with brochures full of photogenic young Tunisians in lab coats and working at computers. Srarfi has spent much of 2011 spreading the message in Europe - and not just France. "There is a perception that as a French-speaking country we prefer just French investors, but we treat everyone equally," he stresses.
Although Tunisia's transition to a fully open society and flourishing economy after decades of dictatorship may not be as easy as the publicity implies, the small country of 10 million people has much going in its favour. With its well-developed tourism sector and without the immense social challenges faced by its immediate and larger neighbours Algeria and Libya - but also lacking their hydrocarbon resources - the country has a foot in Europe as well as in Arabia. Tunisia today is still a country finding its way. But it is peaceful, under the rule of law and determined to re-energise its economy by encouraging foreign investment.
TELNET GOES IT ALONE IN TECHNOLOGY
While most companies in Tunisia's aerospace sector are foreign-run, Telnet is an example of a home-grown technology start-up. It provides engineering services for several European and US manufacturers, and has grown in 17 years to a workforce of 600 - the majority engineers - with four sites in Tunisia and offices in France, Germany, the USA and Dubai.
Mohamed Frikha - a former executive with French telecoms company Alcatel, who had run its Tunisian subsidiary while still in his twenties - founded Telnet in 1994 with seven employees. The business won its first major contract - with Sagem - a year later (successor company Safran is still its biggest customer), and has gone on to develop software and components for clients in the automotive, smart card and security, telecoms and aerospace markets. Telnet makes no branded products of its own and rarely owns the intellectual property to any technology. Instead, explains Mondher Makni, chief marketing officer, its added value comes with the expertise of its engineers - almost all Tunisian nationals - who work at computers in Telnet's futuristic-looking head office near Tunis airport. Project teams for different customers are on separate floors or buildings.
The company floated on the tiny Tunisian stock market in April (it had planned to list in February, but the political upheavals forced it to postpone), the first technology business to do so. Next year, it plans an initial public offering in Paris or London. "That will be the ultimate test," says Makni. "We are taking the group more and more on to an international level, and the plan is to be more visible."
Tunisia's university system provides a steady supply of recruits, although Makni admits finding graduates with "the right avionics profile" is more difficult. It tends to take on those with more general engineering degrees and provide "rigorous internal training". Many of those joining are Tunisians who have studied or even emigrated abroad and are keen to return home, and Telnet has attended job fairs for this purpose in Canada, Germany and France. About a quarter of its engineers are female.
"Telnet is a Tunisian success story," says Wassim Srarfi, head of aerospace association GITAS. "It is the model we need to follow. Technology is the future of our country. The country needs to develop other companies to make Tunisia an economy of science and technology.
"Every time the country receives an important international visitor they take him to Telnet. We are very proud of them."