Assembly of the Airbus A380 is set to bring further business to Hamburg, already the world's third largest civil aviation city
In late March, Airbus Deutschland celebrated the departure of the first complete forward fuselage section for the Airbus A380 from the company's facilities in Finkenwerder, outside Hamburg, en route to Toulouse for final assembly. But many of Hamburg's small- and medium-sized enterprises (SME) engaged in aerospace activities are saving their celebrations for the return of the assembled super-large aircraft, set for late next year, and the cabin interiors work it will bring.
The wisdom of Airbus in siting A380 final assembly in Toulouse but completion in Hamburg has been questioned. Aside from politics, however, there are practical reasons for the 1,500km (810nm) journey, the company insists. First, the flight to Germany frees up space in the French plant, which is expected to be running at full capacity by 2008. Second, Airbus has established its international centre of competence for cabins in Hamburg, harnessing the expertise of some of the region's 300 SMEs.
For these SMEs, there is a challenge in remaining close to Airbus but not letting the multinational dictate terms or dominate their business. In this, Hamburg and northern German aerospace companies share the experience of SMEs in Toulouse and elsewhere as Airbus has outsourced increasingly large sections of its work. Unlike Toulouse, many of the aerospace SMEs in Hamburg have been in business since the 1930s, when shipyard Blohm & Voss used third-party parts for its seaplanes.
Blohm & Voss successor Messerschmitt-Bolkow-Blohm offered to build the fuselage when the Airbus consortium was being formed and Hamburg has since grown to become the third-largest civil aviation city in the world after Seattle and Toulouse. Lufthansa Technik, the world's largest aircraft maintenance, repair and overhaul provider, is based in the city and the airport is the third-busiest in Germany.
Hamburg's state government recognises the clear opportunities aerospace brings to northern Germany and has recently launched the Luftfahtstandort Hamburg (Hamburg - the place for aviation) initiative aimed at attracting further aerospace investment. A pro-aviation government has been a constant in Hamburg since the 1950s, and is credited with overturning planning objections to the refilling of the Mühlenberger Loch for Finkenwerder's expansion. But according to local companies, the Luftfahtstandort Hamburg plan risks failure unless the state government acts to help reverse some of the challenges local firms face from global competitors in the forms of bureaucracy and the burden of risk-sharing.
For SMEs, the largest challenges are not specific to aerospace, says Klaus Ardey, chairman of Hanse Aerospace, a grouping of 80 companies from Hamburg and the neighbouring states of Bremen, Lower Saxony, Mecklenburg-West Pomerania and Schleswig-Holstein, established seven years ago. The first hurdle is tax law, says Ardey. Because German firms are taxed on assets as well as revenue, owned capital is low compared with other countries, which leads to less innovation, he says. The second is the complexity of legal contracts in Germany, often difficult for SMEs to draw up without expensive lawyers.
Third in Hanse Aerospace's list of barriers to entry are airworthiness rules on components. Having worked for several years on agreeing a rulemaking procedure for small components with the German agency LBA, Hanse Aerospace is now trying to convince the new European Aviation Safety Agency to adopt a European technical specification order for parts manufacturers.
Innovint Aircraft Interior is a typical small company benefiting from Airbus orders. The 19-employee firm supplies small interiors components to the airframer as well to Boeing and to airlines. Managing director Uwe Gröning says it is far from easy to match the international nature of the aerostructures business. Innovint supplies 130 airlines, but its aim is to double this to almost all major airlines, he says.
Innovint faces a threat from copyists, he says. Despite holding patents for many designs, there are companies in South-East Asia, particularly China, producing unlicensed versions of parts for around one-sixth of the Innovint price, making it impossible to compete and to recoup development costs. Instead, Innovint works to certificate each niche product it develops, such as 16g baby baskets and lightweight wheelchairs, selling the airline fully approved products.
This approach brings its own problem, however. "In the case of the child seat we had certificated last year, it had taken us three years to get it approved as we had to write the rule book where previously there was none," says Gröning.
For large component suppliers, the difficulties are usually more financial. Comtas Aerospace has a turnover of around €11 million ($13 million) and employs 130 people, making it one of Hanse Aerospace's largest members. It won a contract on the A380 to supply carbonfibre cross-beams for the upper deck. Before the A380 contract, its largest customer was Switzerland's Pilatus, for which it made interiors structures and wingtips, among other parts.
Comtas had initially attempted to avoid supplying Airbus, fearing the finance required to share risk with the manufacturer was beyond its reach, says Wilhelm Lengen, Comtas general manager. Having lost €10 million-worth of orders for interior and exterior parts production for the defunct Fairchild Dornier 728 regional jet programme, it revised its strategy. "It was a hard time for Comtas, so we took the decision to chase Airbus parts contracts," says Lengen.
However, the company's funding fears were realised - it had to raise €2.6 million to develop the beams. There are other costs too. Comtas has to guarantee a higher quality threshold as direct supplier than it did previously, necessitating the installation of a €1 million quality-control laboratory with clean room. Like other suppliers on the A380, Comtas only receives payment 90 days after delivery of each aircraft. Once all costs are taken into account, Lengen says break-even is not expected until 2010.
There is a positive side: the price for the parts is fixed until 2009, allowing Lengen to focus on cost-cutting. "When you know the price is $600,000/kg then you can analyse where to increase your margin," he says. Also, on the back of the investment undertaken for the A380 contract, Comtas has won additional orders from NH Industries for the NH90 helicopter, as well as with other Airbus suppliers for subassemblies.
The large order has enabled Comtas to automate the lay-up line, partially with local government grants. This assistance is typical of the city's leaders, even where it reduces manual involvement in the process. A survey carried out by Hanse Aerospace and fellow industry body the Hanseatic Engineering and Consulting Association showed that, despite automation, 60% of aerospace companies have retained the same number of employees as 10 years ago, while the other 40% have increased employee levels. Similar to Finkenwerder, which is leased to Airbus from the state government, Comtas is expecting to expand into new city-owned facilities soon.
A further challenge for all Hamburg aerospace SMEs lies in the near future. As Airbus increases its push to dealing with fewer suppliers, there may be a formalising of the "applied clustering" philosophy of mutual assistance within Hanse Aerospace companies, perhaps forming a single entity to deal with Airbus cabin contracts, says Ardey.
The expected surge in work once the A380s start arriving in Hamburg from Toulouse next year is likely to provide impetus for such a move.
JUSTIN WASTNAGE/ HAMBURG
Source: Flight International