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DASA in talks over Korean 328 deal production

Andrzej Jeziorski/MUNICH

DAIMLER-BENZ Aerospace (DASA) and South Korea's Daewoo Heavy Industries are discussing South Korean assembly of the Dornier 328 33-seat turboprop.

Senior executives at Daewoo say that the talks are focused on establishing a new production line at its aerospace division's Changwon factory.

DASA confirms that its Dornier Luftfahrt regional-aircraft unit has had talks with the Korean Company on "the idea of establishing a second final assembly line in South Korea for the market in Asia". This depends on a strong-enough demand for the aircraft in the region, says DASA.

Daewoo already produces fuselage panels for the aircraft, now assembled at Dornier's Oberpfaffenhofen site in southern Germany. The Korean Company's present work-share amounts to some 20% of manufacturing time.

Senior sources at DASA parent company Daimler-Benz say that the idea of Korean production arises from DASA's concern over the impact of a weak US dollar on profitability. High German production costs, with expenses in deutschemarks and income in dollars, have combined to leave DASA's aircraft division with a 1994 loss of DM398 million ($284 million).

The Dornier 328, while generally admired for performance and comfort, has proved a large financial burden on DASA, with a loss being made on every aircraft sold, say German industry sources. The aircraft have been sold at below cost from the start - priced at around DM12 million - with a current loss of some DM600,000 on each aircraft sold.

Despite the continuing losses, Daimler-Benz is understood to be contractually obliged to the Dornier family - from whom it purchased a majority stake in Dornier in 1985 - to maintain aircraft production at Oberpfaffenhofen.

Manfred Bischoff, recently appointed president and chief executive of DASA, earlier forecast that the German company will face 1995 losses of "hundreds of millions of deutschemarks" if the dollar exchange rate does not rapidly climb back to DM1.6 from DM1.40. DASA working groups are now assessing possible responses to the situation, "including relocation".

DASA is also considering reviving plans for a stretched version of the aircraft, albeit slightly smaller than the formerly planned 50-seat 328S.

The company says that it is engaged in market studies for a 40- to 45-seat version, although "...this is not a priority. We are thinking whether it's possible that a 328, with about 40-45 seats, could be interesting for the airlines," says DASA.

DASA has built up a respectable order book for the aircraft, with 76 firm orders and 75 options for 17 customers. Deliveries to date total 32 aircraft. The latest was handed over to Lone Star in the USA in early June.

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