Andrew Doyle/TOULOUSE


Airbus Industrie's efforts to drive down production costs are being hampered by the failure of the partner companies to agree on restructuring the business into a single corporate entity (SCE).

Though the consortium made record sales of $13.3 billion last year, huge amounts of cash are being tied up due to production inefficiencies. No improvement is likely until the SCE is established, according to Airbus chief financial controller, Ian Massey.

The key figure of "stockturn" - sales divided by the value of parts inventory and work-in-progress - for the Airbus production system has improved from an "abysmal"1.7 in 1994 to a "semi-abysmal" 2.9 last year, says Massey. He has set a stockturn target of 4.0, which he says would free $1 billion in cash.

"We're not achieving that and I don't believe we'll achieve that without a restructuring of Airbus," says Massey. "I would rather see that cash freed up and earning money in the bank."

Aircraft lead times - the period between customer specification and delivery - have come down significantly since 1994, but Massey sees further room for improvement. The A320 family lead times have fallen to nine months from 15.5 months, while the A330/A340 line is at one year compared with 17.5 months in 1994.

"Frankly we're not getting there," says Massey. "I don't believe we'll drive this down any further without the SCE."

Massey blames the shortcomings not on the factories themselves, which he describes as among the most efficient in Europe, but on the rigid constraints governing engineering, purchasing, integration and final assembly imposed by Airbus' Groupment d'Industrie Economique status.

Rising production rates, however, have led to a healthy 68% increase in revenue sales per employee between 1993 and 1998, to $358,000. The number of staff employed by Aerospatiale, British Aerospace, DaimlerChrysler Aerospace and CASA in their Airbus operations was 37,000 last year, 4,000 fewer than in 1993.

Negotiations to create the SCE have become mired in the wider controversy over restructuring in Europe. This has worsened since the scheme to set up a single aerospace entity led by Aerospatiale, British Aerospace and DaimlerChrysler Aerospace fell apart with the BAe's decision to merge with GEC-Marconi.

No agreement on an SCE for Airbus us expected before early next year.

Source: Flight International