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Aviation History
1991
1991 - 3160.PDF
NEWSMAKERS AIMING FOB THE BIG LEAGUE Taiwan Aerospace's ambitions extend beyond the formation of a new civil aircraft consortium with McDonnell Douglas, says the company's president, Dr Denny Ko. Alittle more than a month ago, few observers could have predicted the impact that Taiwan Aerospace (TAC) was about to have on the future shape of the world's commercial aircraft industry. The recently formed com pany's audacious plan to estab lish a new commercial aircraft consortium with McDonnell Douglas (MDC) represents po tentially the most significant de velopment since the formation of Airbus Industrie 21 years ago. Although the shape of the proposed consortium is still far from certain, it appears that Taiwan Aerospace will buy up to 40% of MDC's commercial trans port business, with additional investment coming from compa nies in South Korea and Japan (Flight International, 27 Novem- ber-3 December). If consummated, the deal will propel TAC from a standing start into the top echelon of the world's aerospace manufacturers — in effect, acquiring a civil- aircraft manufacturing base for the Republic of China (RoC) virtually with the stroke of a pen. In doing so, the RoC will cut short the tortuous learning process which has delayed the advance of less-wealthy aspirants such as Korea and Indonesia. Yet, although its talks with MDC have captured the head lines, TAC's ambitions extend beyond becoming a part of the proposed "Asian Airbus". TAC is aiming to become the "...linchpin between local indus try, RoC Government program mes and foreign aerospace companies, to serve the needs of both global and domestic mar kets", says TAC president Dr Denny Ko. The company, established for mally on 27 September, aims to become a major Asian aerospace manufacturer in its own right by the year 2000, developing a ca pability in the RoC for aircraft, engines, avionics and materials. The RoC already has an im pressive domestic military capa bility at its Government-run Aero-Industry Development Centre (AIDC). Ko says that, although the AIDC and the Chung-Shan Insti tute of Science & Technology (CSIST) have largely fulfilled the numerous research papers on subjects like fluid dynamics, boundary layer control, re-entry physics, rarefied gas dynamics and remote-sensing systems. Ko says: "The aerospace in dustry will bring at least two contributions to our industrial Ko: "This will be the Airbus of Asia. Airbus has taken care of Europe, but there is no Asian entity." nation's military requirements, the secretive nature of the work has excluded civilian companies, inhibiting the development of a local industry. Ko contrasts this with the USA, where the defence industry is mostly civil-owned. The RoC Government began discussing the formation of a new commercial entity in 1988, but detailed planning did not start until the following year, when aerospace was designated one of the "ten most important strategic industries" for the RoC. David Huang, formerly of the CSIST, was appointed chairman of the steering group in 1990, and Ko, an associate of Huang, joined as president this year. Ko holds a PhD from the California Institute of Technol ogy and has founded and man aged companies in the USA and Taiwan, largely involved in in dustries such as micro-electron ics. Ko has also written base. One is quality control, which is exactly what Taiwan needs to bring its image to the next level, like Japan. The avia tion industry, by design and necessity, has to have more stringent quality control than any other industry." He adds: "The other area, which may be more nebulous, is systems integration. If you look at an aircraft, it's a complex piece of art which integrates many disciplines and everything has to work together to perfec tion. It takes discipline and inte gration and that discipline and integration is something which the aerospace industry will automatically bring to Taiwan's industrial base." The new corporation is 29% owned by the RoC Government, with the remainder held by a consortium of Taiwan's leading industrial companies. Start-up capital was $200 million, al though another $50 million is pending, and more money will be made available to finance the MDC venture. Assuming that the Govern ment agrees to TAC's proposals, the majority of the $2 billion required will be provided from Government sources, although Ko says there will be some privately raised capital. There are suggestions that state-run China Steel will invest up to SI billion in TAC, taking state own ership to 45%. He adds: "We can't possibly raise all the money by ourselves, and I don't believe that it's in our charier or our responsibility to do that". A holding company will be set up to acquire the stake in MDC, and TAC would participate as a shareholder. The new company, in which MDC will retain at least 51% control, will build a sub-assembly centre for the MD- 12 fuselage and wing in Taiwan. The centre, which may later handle work for other Douglas programmes such as the MD-80, MD-90 or MD-11, will be sepa rate from TAC's own newly ac quired factory in Taichung. Initial projects will probably include commercial offsets for civil and military equipment im ported by the RoC, although Ko has discussed co-production of the Super Puma and Ecureuil helicopters with Aerospatiale. Referring to the MDC consor tium, he says: "This will be the Airbus of Asia. Boeing is the dominant US company, and MDC itself can't quite compete. Airbus has taken care of Europe, but there is no Asian entity." Ko adds: "Asian countries would have a tough time working to gether as a team, because Japan would end up leading it, and not everyone would trust Japan to lead that, I believe. It has fallen to MDC to lead this strategy, and it makes sense, because this is where the business is going to be in the future." BY JOHN BAILEY a FLIGHT INTERNATIONAL 4 - 10 December. 1991
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