EUROPE'S AEROSPACE leaders face a critical set of challenges as they try to establish a structure for their industry in the 21st century. Unusually for a major industry, there is already a very good (US) road map showing them how their restructuring should be achieved - but it appears that few of them recognise it.

A survey of top decision-makers in Europe's major aerospace manufacturers carried out for this magazine and US-based information technology giant Computer Sciences Corporation (CSC) companies reveals that most of them are aware of the challenges, but reveals a worrying lack of consistency in their views on how to meet them.

The survey holds much which is encouraging. Companies throughout the region clearly now acknowledge the need to make significant changes to the shape of the industry and the way that it does business. Yet the survey also raises some nagging doubts about the urgency and determination with which this change is being pursued.

While virtually every company in the survey accepts that European consolidation has to take place, there are signs of fundamental differences of opinion between the national industries about how the restructuring should be achieved.

French and German industrialists still appear to be hoping that consolidation will come through product collaborations and consortia, but in the UK and the rest of Europe more than 90% of companies believe that the answer lies in mergers and acquisitions.

The UK is probably right. Although collaboration may look like a good way to create large European projects without offending national sensitivities, it simply fails to address the fact that there are still too many companies with too much duplicated capacity. By contrast, the huge consolidations made by the US industry in the last five years have been marked by massive reductions in capacity and employment.

On other issues, such as the prospects for a single European currency or a unified defence procurement agency, it is a sceptical UK which is out of line. It is hard to see how European consolidation will work without centralised institutions of one form or another to rival NASA or the Pentagon. Yet, even in pro-European France and Germany, however, enthusiasm for such European institutions is hardly overwhelming.

There is a similar fear surrounding European views on streamlining the business process. Process re-engineering (a term originally coined by CSC) is something which has yet to make a real impact on the European industry, judging by the results of this survey. The overwhelming majority (88%) believes that the maximum reduction in the time to market of new products for their organisation in the next five years is 30%. Almost half (44%) believe that the maximum reduction they can achieve is 20%.

Their US competitors are much more ambitious. Boeing has already achieved a cut far greater than that with its 777. Not only does that make it more difficult for the Europeans to compete with the USA, it may also make it much more difficult to supply them with components. If European equipment manufacturers cannot match their US rivals' lead times, they will not get places on US programmes.

That progress in setting shorter lead times on new products is reflected by the reduction in cycle times once those products are in full production. Boeing, again, is already well on the way to cutting cycle times for existing models from 18 months to as little as six. Neither is Boeing alone in setting such radical targets.

The goalposts keep moving in front of a European industry which is locked in a real struggle to modernise itself while keeping alive its competitiveness with other areas. Unless Europe's aerospace leaders can find extra reserves of imagination and commitment, their efforts at modernisation, though laudable in isolation, could prove to be too little, too late.

Source: Flight International