According to a report in this morning's Financial Times Deutschland (German) and later confirmed by Flight, Airbus will fully assemble the successor to A320, currently dubbed the A30X, in Hamburg. This news comes as the German government and Airbus are working out final terms for for €3.3B in A350 launch aid.
Currently, A320 family production is primarily based in Hamburg and Tianjin, while part of the A320-200 is built in Toulouse then flown to Hamburg for finishing.
Let us, for a moment look beyond the obvious - and ongoing - debate about the merits/legality of launch aid, and try to examine this deal through a different, possibly overlooked lens. This long term deal addresses key questions about the future growth and expansion of Airbus. It's not surprising that Hamburg would be the final assembly site, but the deal largely closes the book on any debate about final assembly operations at Airbus for almost a generation to come with A30X not set for service entry until at least 2020.
If we examine this through a broader strategic lens, with the involvement of national stakeholders, Airbus has gained labor stability and industrial predictability, with a distinct political subtext attached.
Yet, perhaps it's an appropriate point of juxtaposition to the relationship between Boeing and its stakeholders, the IAM and SPEEA. We are just months away from the selection of a second 787 final assembly line as Boeing weighs its options as perceived stability vs. perceived instability.
One viewpoint says that setting up a second line in Everett would introduce additional instability because of the risk of future strikes and delivery disruption. On the flipside, a native and experienced workforce with extensive widebody assembly experience is an asset not to be discounted.
For a site outside of Everett, stability would be
found in removing the labor obstacle by setting up a second
line in a right to work state. On the other hand, Boeing's own recent
history has demonstrated the challenges, and high cost, of setting up a
greenfield site.Ultimately, for Boeing and Airbus, steadily growing the business means the predictability of future costs, made all the more predictable by stability. Decision-making on issues like the location of aircraft final assembly operations will be driven by this motivation.
Yet does the push-pull dynamic between Boeing and its unions, vis-a-vis the selection of final assembly, add to the long term stability and predictability of Boeing's business? If Boeing is facing a potential forward loss on 787, then ensuring predictable future costs is essential to the future of the company. The question then becomes, how does Boeing define stability?
If both the mangagement of Boeing, as well as its unions seek stability and predictability for the future, then perhaps both sides should take a page from its competitor's playbook.
Recent Comments