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Aviation History
2002
2002 - 0081.PDF
Bombardier before it, EADS intends to award larger contracts to fewer companies, thereby passing on more responsibility - and risk - to its suppli ers. "So we will reduce the supplier number on the one side. On the other side, we are partnering in a group- wide approach, which gives the participating counterpart advan tages in the group," says Loewenstein. Details are vague about the precise ex tent of the toll that synergies, reorganisa tions, realignments and so-called "decen tralisations" across EADS will take on its workforce. Arendt emphasises that the diversity of work agreements within EADS and its member companies provide a healthy flexibility. They allow, he says, the use of "soft" measures to reduce employ ment such as shorter work hours or early retirement instead of enforced lay-offs on the scale of those by Boeing. As far as the next six months are concerned, Arendt says only: "At the moment, we are working on those figures and on those schemes. It is a bit difficult to say what the figure will be. Normal fluctuation is 2-3%, so I would say another 1% or 2% by 'soft' schemes." Common denominator In terms of its internal financial reoganisa- tion, the company is still refining and improving its systems. A catalyst in the process has been the challenge of reshap ing the company's finances and various corporate structures under a single set of accounting rules - the International Accounting Standards. "During the IPO [initial public offering], that was a con straint we had to overcome," says Arendt. "We first had to define what would be the common denominator for the whole com pany. We had to do all this in a sort of 'crash course'." Auditors scrutinised EADS' IPOs and awarded acceptable markings, "but clearly indicated that over time some issues would have to be improved which were not yet qualified as sufficient. So it is an ongoing process," Arendt says. Beginning this year, EADS' quarterly reports will include its EBIT figures. A new internal economic performance manage ment system will be introduced, becoming part of each EADS TET member's personal objectives in 2003. Arendt describes the system as "a cash-orientated, asset-orien tated approach". As Camus told the Seville participants: "It is not just another ratio NORTHROP GRUMMAN ALAN GEORGE / LONDON A mutually beneficial alliance Hertrich says dual leadership at the helm of EADS can work None of EADS' DaimlerChrysler collaborations has been more fruit ful than that with US aerospace company Northrop Grumman. Originating with an April 2000 Memorandum of Understanding between the US company and the German EADS founder DaimlerChrysler Aerospace (Dasa), the alliance has flourished. At last June's Paris air show, EADS and its US partner even shared a pavilion. Underlying the collaboration is the understanding that neither com pany, by itself, could gain full access to certain areas of its home market without the other. Without its alliance with EADS, for example, Northrop Grumman might not be as well placed as it is to secure a role meeting the unmanned aerial vehi cle (UAV) requirement for Europe's planned Rapid Reaction Force (RRF). EADS has made plain that it considers collaboration with well- established US companies to be crucial to its playing a bigger role in the USA - which will remain the world's largest aerospace market for the foreseeable future. Tom Enders, head of EADS Defence and Civil Systems (DCS), says that both companies believe that new industrial and operational structures are necessary to meet "evolving security requirements". Also needed is the capability to match new technology to such requirements. "Our two companies will take a leadership role in bring ing this vision to life," Enders says. The key to the relationship's suc cess has been a so-called building block approach. Rather than embarking upon a sweeping, multi- sector alliance, the emphasis has ben on identifying specific projects of clear mutual benefit. The initial MoU related to surveillance and reconnaissance projects and the first fruit, announced in June 2000, was an agreement to collaborate on the weather and navigation radar system for the European A400M military transport aircraft. In October, EADS subsidiary Sogerma signed an agreement with Northrop Grumman to form a new joint company for the repair, mainte nance and overhaul of Airbuses operating in North and South America. The new venture, EADS Aeroframe Services, based in Lake Charles, Louisiana, opened for busi ness in May. EADS has a majority 81% stake while Northrop Grumman holds 19%. During the last Paris show, the two companies announced two new joint radar projects: to develop an airborne ground surveillance system and a monopulse secondary surveillance radar for use in air traffic control. The field of UAVs has proved to be particularly fertile for EADS- Northrop Grumman collaboration. One key result will be the Euro Hawk, a high-altitude, long- endurance (HALE) UAV derived from Northrop Grumman's highly successful Global Hawk and incor porating an EADS sensor. The Euro Hawk's first major demonstration flight is planned for NATO exercises in Germany in the third quarter. The events of 11 September may eventually contribute to the collabo ration's long-term success. "Some people say the USA rediscovered the importance of having strong partners," Enders says. He believes there's "a good chance" transatlantic co-operation will even increase, provided that the major European governments stay on solid terms with the USA. "This is a partnership whose dimensions will be set by practical successes," says Ralph Crosby, head of Northrop Grumman's Integrated Systems Sector. "Right now, the prospects for success look very good." which will be introduced and then forgot ten. Every one of you will directly feel its impact in your day-to-day operations...a new type of economic behaviour will mark our way of working." Some business unit managers, con cerned about the current financial targets, complain that management fees imposed by the headquarters are too high, and the headquarters staffing too bloated. Head quarters staff numbers have been cut to about half the original 1,100 as the corpo rate headquarters takes on the role of EADS' "strategic architect". Many of the headquarters staff affected have been redis tributed among the business units. As far as the fees are concerned, there is no reduc tion on the horizon. EADS corporate hopes www.flightinternational.com FLIGHT INTERNATIONAL 814 JANUARY 2002 27
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