Andrzej Jeziorski/SINGAPORE
The current tensions between mainland China and Taiwan threaten to make life increasingly difficult for Aerospace Industrial Development Corporation (AIDC), Taiwan's main aerospace manufacturer.
AIDC does not publicly acknowledge that the situation is having any effect, but its future depends too heavily on foreign relations for it to maintain realistically that it is unconcerned by the posturing across the Taiwan Strait. The company has long struggled to attract a foreign investment partner to help carry through its privatisation plans, as well as hoping for approval from Washington to export US-derived military technology.
But, early in July, Taiwanese President Lee Teng-Hui declared that the island of 23 million people - considered a renegade province by Beijing - had dropped its diplomatic "one-China" policy and wanted "special state-to-state" relations with the mainland. Beijing's reaction to this de facto declaration of independence has been furious, saying that it would "smash any attempts to separate the country", announcing that China had developed the neutron bomb, and conspicuously increasing military activity in the region.
"Prosperity and development are associated with unity, while war and conflict come with separation," Chinese foreign minister Tang Jiaxuan pointedly told a regional security conference in Singapore, just one day after meeting US Secretary of State Madeleine Albright to discuss the stand-off.
US position
The USA, theoretically obliged to support Taiwan in times of crisis under the vaguely-worded Taiwan Relations Act, has been less than supportive of Taipei's stance. Anxious to repair damaged relations with China, Washington has reiterated its commitment to the one-China policy.
Against such a fraught political backdrop, it is unlikely that AIDC could count on US backing for export efforts, while potential investors will be more likely to keep their distance until the current storm blows over.
Under these circumstances, it is AIDC's curse that it relies so heavily on military business. Its biggest aircraft programme this decade has been the fly-by-wire Ching-Kuo Indigenous Defensive Fighter (IDF), the last of which is to be delivered to the Taiwanese air force next year.
This $6 billion programme began in 1982, after the USA blocked Taiwanese efforts to buy the Northrop F-20 Tigershark or the General Dynamics (now Lockheed Martin) F-16. US manufacturers provided substantial support during the development of the new aircraft: General Dynamics assisted with the airframe design, Garrett helped with engine development and GE Aerospace (now Lockheed Martin) supplied much radar know-how.
The aircraft has a conventional single-seat, twin-engined configuration. It is powered by two TFE1042-70s built by International Turbine Engine (ITEC) - a joint venture between AlliedSignal (which took over Garrett's engine production) and AIDC - and generating up to 9,440lb thrust (42kN) with reheat. The fighter's radar is the Golden Dragon GD-53, a modified version of the Lockheed Martin APG-67, incorporating some features of the Northrop Grumman APG-66. The primary armament is the beyond-visual range, radar-guided Tien Chien (Sky Sword) TC-2 air-to-air missile, and the short-range, infrared-guided TC-1.
The first flight by one of four prototypes took place on 28 May, 1989, and AIDC began to manufacture its first preproduction batch of 10 in October 1990. Initially, the air force required 250 aircraft, but this was reduced in 1993 to 130, including 28 two-seaters, when Taiwan was allowed to buy F-16s. The first three Ching-Kuo squadrons - numbers 7, 8, and 28 of the 3rd Tactical Fighter Wing at Ching Chuan Kang, numbering 70 aircraft - were operational by 15 April, 1997.
The second three-squadron wing, which will number 60 aircraft once the air force production order is complete, is based at Tainan.
AIDC says it is seeking permission from the Taipei Government to offer a military jet trainer for export. "It will either be an upgraded AT-3 [Tsu-Chiang trainer/close-support aircraft] or a downgraded IDF," says AIDC. Given that the twin-engined, tandem-seat AT-3 is no longer in production, however, the more modern Ching-Kuo is the one credible candidate.
AIDC says it is talking to the Taiwanese Ministry of National Defence on the issue, although the amount of US technology in the aircraft makes Washington's support for such an export as crucial as it is unlikely. "I know our vice-chairman is talking to Lockheed Martin at the moment," says one AIDC official, adding that the subject is also being discussed with the USA at the political level.
But US analysts point out that Lockheed Martin is involved in the only comparable supersonic trainer programme - South Korea's Samsung KTX-2. The US manufacturer is therefore unlikely to give further backing to a potential competitor, even one which was developed using Lockheed Martin technology.
Limited market
Analysts also doubt that sufficient markets could be found for such a relatively high-performance trainer, as evinced by DaimlerChrysler Aerospace's continuing struggle to win support for its embryonic Mako trainer / light fighter. The only air force outside South Korea with a supersonic jet trainer requirement is the US Air Force, which has covered its needs well into the next century by upgrading its Northrop T-38 Talons.
In light of this, AIDC has been saying that it hopes to boost its involvement in civil sector manufacturing. This accounts for about 20% of the company's revenue, although AIDC points out that this will change at the end of this year once Ching-Kuo production winds down. But this is hardly a cheerful prospect, since the company will be faced with overcapacity and the question of what to do with its 4,000 staff.
For now, AIDC declines to say more on plans for its workforce than that there will be "a big change". It is still hoping to privatise by the end of the year, selling as much as a 40% stake to a foreign investment partner, with the rest held by the government and employees. It also says it will spin its production and maintenance capacity off into three separate subsidiaries. One will handle defence work, maintenance and avionics; one will deal with civil airframe production, and the third will encompass AIDC's engine production capacity - including non-aerospace industrial engines.
But, AIDC adds: "If there is no potential [international] partnership coming out, we will not privatise this year." Partnership prospects remain in question.
Talks have been held with potential partners, including AlliedSignal, Boeing, Bombardier, General Electric and Singapore Technologies. .
Two of the three companies that carried out due diligence scrutiny were AlliedSignal and Bombardier. AlliedSignal backed away early, but as recently as June, at the Paris air show, AIDC said Bombardier was interested. Bombardier has denied this.
"The issue from our perspective is that although the interest of AIDC and the Taiwan Government is to develop a civil aerospace industry in Taiwan, the fact remains that AIDC was established on the basis of military orders, and that's also the reason that Taiwan wants to maintain the capability," says Bombardier International president Pierre Lortie. "We are not in defence, as a rule, and it does not make a lot of sense for us to get into that area."
Lortie says that the Canadian manufacturer has "little interest" in the bulk of AIDC's activities, and does not think that Bombardier "would bring a lot of value added" to the company.
"Having said that, AIDC is interested in developing its commercial side to the extent that it is competitive in many respects there, and have quite a good pool of engineering resources. We have no objection to collaborating," says Lortie.
This has been proven by Bombardier's selection this year of AIDC as a partner in its new "super mid-size" Continental business jet: the Taiwanese manufacturer is to build the aft fuselage and empennage.
AIDC has had some success in gathering manufacturing subcontracts in the civil aircraft field. The company has been subcontracted by Singapore Technologies Aerospace (ST Aero) to build rear fuselage elements for the Eurocopter/CATIC/ST Aero EC120 Colibri light helicopter. It also manufactures the empennage for the Lockheed Martin Alenia Tactical Transport Systems C-27J Spartan aircraft and the tail section for the Boeing 717.
AIDC is a 5% partner in the Sikorsky S-92 Helibus medium-lift helicopter (above), which first flew in December last year. The Taiwanese company has built four out of five cockpits for the helicopter so far, and is waiting for the completion of what it calls some "engineering operations" changes to the design before it supplies the fifth cockpit. The four helicopters built to date are undergoing flight tests at West Palm Beach. The manufacturer says it expects a full production go-ahead for the helicopter "within a year".
The aircraft is intended primarily as a 19-seat civil aircraft, with a military utility variant to follow. AIDC estimates the market at 700 helicopters.
Czech partner
Another, perhaps more questionable, programme in which AIDC is involved is the much-delayed, Czech-designed Ibis Aerospace Ae270 Ibis nine-seat turboprop utility. The Taiwanese company is a 50-50 partner with the Czech Republic's Aero Vodochody in this programme, announced by Aero in 1990.
AIDC says the programme was delayed by the difficulty of achieving compatibility between the CATIA design software it uses and Aero's methods after Ibis Aerospace was founded in March 1997. The first prototype is on the assembly line, however, and AIDC predicts that it will have its maiden flight next year.
There is no doubt, therefore, that AIDC has won some significant global manufacturers over as a subcontractor, or minor partner, in aircraft manufacture and design. But the company will probably need substantial internal restructuring - as well as a settlement of the current political situation - before it begins to look like a truly attractive investment opportunity.
Source: Flight International
