As EADS gears up for the presentation of the Power8 restructuring plan on which it is relying to reverse the fortunes of its troubled susidiary Airbus, the dissenting voices are growing louder and more numerous.

First came the unions, with protests at Airbus sites in France and Germany at the possibility of job cuts. German employee representatives estimate that job losses may total as many as 8,000 and called on employees to protest against the Power8 strategy.

Now politicians have entered the fray, with questions being raised over the prospects for defence contracts in two of EADS's key defence markets - Germany and the UK.

Germany's economy minister Michael Glos did not pull any punches when he told Germany Sunday newspaper Bild am Sonntag: "We insist that Germany remain a high-tech location for Airbus, especially where the manufacture of fuselages is concerned. If that isn't the case, Germany would have to reconsider its weapons orders at Airbus parent company EADS. We will not put up with the planned cuts to jobs and high-tech know-how in Germany under any circumstances."

EADS's defence revenues are firmly overshadowed by the contribution of Airbus (see graph), but that is not to say that the cancellation of any one of its defence contracts would not have a significant impact on the company.


But is the German minister's threat a serious one? "I don't see it as a real threat. I believe that on the one hand, the German government wants to send a message to the Airbus management to say 'we will have a look at what you will do and we won't let you do anything against our interest'," says one analyst.

He adds: "From a political point of view, it is normal to see the German government protest or at least say it will control the process when a company announces a reorganisation plan that may have social consequences."

If the threat were to be carried out, cancelling defence contracts, or not renewing them, would harm Germany itself just as much as it would harm EADS. The company employs around 40,000 people in Germany, of which 12,000-15,000 have defence-related jobs, EADS says, although as many employees work on a variety of programmes in both the civil and military sector, it is impossible to pin the figure down more precisely. But "German contracts are worked on in Germany - all the workshare is here," EADS says.

EADS argues too that the German budget committee's recent approval of a further €1 billion ($1.3 billion) of funds for the development contract of the Eurohawk signals intelligence-gathering system, and the service life extension of the Sikorsky CH-53 Super Stallion transports demonstrate Germany's commitment to EADS. Besides, cancelling a contract would not be a simple procedure - most of the programmes are already in production or being delivered.

The German government may have realised that Glos's declaration was a little over-agressive, as it later qualified the minister's statement: "The comments by economy minister Michael Glos have been overinterpreted a little. We're expressing clearly our interests, but we're not making any threats." Nevertheless, the direct involvement of a senior minister in the debate demonstrates what a contentious issue the Airbus jobs are.

Meanwhile the UK, another stakeholder, although no longer a shareholder through BAE Systems, is making similar noises over the possibility that the A350 XWB wings will not be manufactured at Broughton.

The only group of people reacting calmly to the Power8 developments is investors, perhaps indicating that despite the vociferous complaints from all other quarters, EADS is succeeding on getting Airbus back on track. "The stock market has been suitably sanguine, recognising the comments as rhetoric," says analyst Sandy Morris of ABN Amro.

What is more, while 8,000 jobs may technically be lost at Airbus, in reality, it could simply be that 8,000 workers will have a different employer, Morris points out. Either way, Airbus has no alternative but to make Power8 work. "Power8 is far more than a financial restructuring - if it is done right, it will be a cultural restructuring too."

It is obvious that the current business model is not working, and by now senior management must have decided how to go about tackling this, even if they have not yet shared their plans with employees. At least as a big a challenge will now be getting national governments to see beyond the short-term implications to the undoubted benefits that an efficiently operating supply chain will bring, and ensuring that, even if all the nations with a vested interest in the success of Airbus and EADS have to face up to some harsh realities, at least they consider them to be evenly distributed.

Source: Flight International