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Aviation History
2001
2001 - 0063.PDF
with that of the cockpit, for example?" Turner says Airbus was also conscious of the renewed threat presented by a leaner Boeing - a threat more easily countered by a single compa ny than a consortium. "Boeing has warmed up to the competition. They know they can't sit back, and they are reducing costs and improving productivity, and we in turn need to respond." The only solution was to "put the assets in", he says, and to create an AIC in which the part ner companies would be 'merely' shareholders, allowing Airbus executives to make decisions based on the airframer's interests alone. He concedes that the process was eased greatly by the creation of EADS, reducing the four Airbus partners to two and making the negotiation of terms for the transition to an AIC far simpler. "Previously we could not agree between four on corporate governance - whether we had sufficient vetoes, for example - let alone the valuation of assets." The final agreement was hammered out between Turner and Jean Louis Gergoran on behalf of EADS, who, says Turner, typified an important change in "the French mindset" that came when privately-owned Matra Hautes Technologies merged with Aerospatiale. That change was important, given that sever al previous attempts at transforming Airbus foundered because of the cultural differences, business and otherwise, between the partners. Turner says the most recent of those bids failed in late 1998 because of French nervousness over the planned merger between BAe and Dasa. Turner claims that Aerospatiale president Yves Michot "said he was not prepared to play any more". Even with the coming of the "Matra boys", Turner says: "I don't think we would be where we are now if BAe-Dasa had gone ahead." Why? "Because of French pride," he adds, claiming that for BAE, pride was not an issue, just "control over corporate governance issues". With the AIC in place, Turner says Airbus should deliver greater efficiencies from chief executive Noel Forgeard down - although he accepts there will be some compromise. "Though we say it's the best man for the job, you can't do that because they'd all be Brits," he says, tongue only pardy in cheek. Airbus expects to deliver €350 million ($3 08 million) in annual savings from the AIC by 2004, although Turner says there are few opportunities for eliminating obvious duplica tion. "The Airbus structure did not have a lot of duplication because we were centres of excel lence, and it's not like Eurofighter, with a num ber of final assembly sites." Turner nevertheless maintains that there are Airbus Integrated Company management structure FLIGHT Noel Forgeard Chief Executive GARETH BURGESS 01 (Team of five) Integration & Organisation Development Eckhard Roelen e. business Gustav Humbert Operations Andreas Spert Finance Gerard Blanc Programmes Philippe Delmas Government Relations, Communications & External Affairs Dr Peter Kleinschmidt Genera! Counsel Company Secretary Ray Wilson Procurement John Leahy Customer Affairs Erik Pillet Human Resources Jean-Claude Chaussonnet Airbus France Hans-Joachim Gante Airbus Deutschland Francisco Fernandez-Sainz Airbus Espana Tom Williams Airbus UK The former partners will be fully integratt over the next three years, says Humber "although we're already operating as a single entity.. .We have all fought for this over the last two years. There's no going back now". According to Humber, the three main ways in which the new company will achieve its com mitment of €3 SO million of savings by 2 004 are: • grouping all procurement activities under one banner, bringing the power of a single large organisation to bear on suppliers; • improving management efficiency by elimi nating transnational lines of command; and U aligning processes in several areas such as engineering, manufacturing, quality assur ance and certification. . lical directors will now report directly rbus technical director Alain Garcia instead of to their own management. "The Airbus GIE had no real power before," Humbert adds. '^We could only cajole, threaten and convince. But there was no authority and that tended to lengthen decision making con siderably." , There will be "no brutal restructuring", says Humbert. The present system of "centres of competence" has already led to an efficient pro duction setup, with minimal duplication, and the forthcoming production ramp-up also means that all available resources will be need ed. "We will still look for margins where they exist and take them out," he says. "a few nonsenses of allocation of work under die old system", citing widebody wing assembly as an example. "A320 family wing assemblies goto Toulouse or Hamburg from BAE fully equipped, but the A330/A340 wing goes to Bremen to be equipped. Only one of those solu tions can be optimal, but we have got Hamburg and Toulouse so we have to make the best of it. And we can live with two assembly lines - we need them both, and we have to manage any downturn sensibly." As a shareholder in the AIC, Turner - one of two BAE representatives on a board likely to be seven-strong - says he would like to see savings from the new structure turned into profits, but accepts that this will depend on how Boeing reacts. "They are more competitive now, but they are losing their monopoly position on 747. They therefore have a lot to make up, and hope fully they will not want another single-aisle price war." Turner is happy with the 50% market share Airbus has carved out for itself. "In the early days, market share was a clear objective and a commercially sensible thing to go for because of the importance of building up residual values," he says. "But a few years ago we got to a situation where we were happy, and now we don't have to have 'strategic deals'. The last one we did was British Airways, which was the last big airline we had not penetrated, and it was worth offering diem an attractive deal." In the future, says Turner, the AIC's creation means that Airbus will also be more dynamic in embracing new strategies, such as service provi sion - including through-life support contracts, financing and possibly leasing. "Why can't Airbus do what the leasing companies do? It's not on the AIC agenda, but we will be raising it at a further stage." • challenge is t boom and bust" flow of orders that plagues a craft manufacturers. Production will only be increased beyond currently planned levels of about 400 aircraft a year by 2003 "if there is a business case", he says. "If there is a slump, we have measures in mind. The main thing is to be able to react quickly, and that means putting more work outside." Currently, Airbus puts 45 % of airframe work to outside contractors, a level Humbert says will increase to "at least 52%" by the end of 2003. This will involve a major effort with suppliers, he adds. "They have to be extremely reliable and able to submit to our standards as well as to meet our cost criteria." Further flexibility will also come from increasing the number of staff on temporary contracts, a figure he declines to give, explain ing: "It is very difficult because contract laws vary from country to country." Finally, Humbert says: "We intend to continue intro ducing automation because it provides instant flexibility." • FLIGHT INTERNATIONAL 2 - 8 January 2001 61
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