2006-11-17 Nick Champeaux
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Airbus getting off the ground

Airbus A380 Taking of in FranceAirbus A380 Taking of in France
It’s been a good week for Airbus. The aircraft manufacturer’s star project, the A380 Super Jumbo jet, has taken off from France for its first round-the- world test flights. And Asia’s largest budget carrier said on Wednesday that it was considering ordering another 60 A 320 planes. But it’s the future that Airbus employees and suppliers are worried about. The A380 is facing costly delivery delays of up to two years because of wiring problems, consequently Airbus management has announced a cost-cutting restructuring plan, which could lead to job losses.... This week Prime Minister Dominique de Villepin went to Toulouse, southern France, where he pledged that the government would not let Airbus down. Radio France International’s Nick Champeaux reports from Toulouse.

“The delivery delays of the A380 Super Jumbo jet, are not a mega problem. We can, and will, overcome the challenges we’re currently facing”. That’s what Prime minister Dominique de Villepin told Airbus employees, at the assembly line of the A320 aircraft in Toulouse.

Airbus is back on the tracks, and I believe everyone has to be sure that Airbus will play its role, the company has a lot of ambition, and we are looking forward.

The A380 is behind schedule, at a time France’s economy is behind its European partners.

No, no, no. All companies run into difficulties at one point or another. What’s important is the company’s reactivity, the reactivity of the companies working for Airbus, and the reactivity of the countries that are supporting Airbus, so we’re here, and we are looking forward.

On his fifty third birthday, Villepin received a model of an Airbus plane from workers, and a trophy from one of the company’s suppliers. But Villepin also had his own gifts to hand out. He pledged a hundred and forty five million Euros, for the aeronautics sector. 80 million in reimbursable advances over the next two years, the rest would be allocated to boost Research and Development. The announcement has led to mixed reactions, among these young Airbus technicians.

I am not worried, we’re good at conception, manufacturing and we’re good in sales, we’ve been successful so far and there is no reason this should grind to a halt. I work for Airbus via a temping agency, my contract ends in February, I don’t know if they will renew it, if there is work, and we get more firm orders, yes, but you’re never sure.

Airbus A380 over SydneyAirbus A380 over Sydney
Villepin also encouraged Airbus management, to sign a partnership charter with sub-contractors, in which Airbus would promise to pay suppliers on time, which is not the case at the moment. But Airbus and the French government are taking a stick and carrot approach. The company has launched a vast, cost-cutting restructuring plan, called, Energy 8 Power 8, to make up for the costly production delays, of its A380 star project. Airbus no longer wants to work with the 3000 different suppliers it has in France alone. “There will be work for everybody, but we want our suppliers to work together, we want to speak to less people”, said Airbus CEO Louis Gallois. He warned that the board, would probably refuse to give the green light, to its new A350 jetliner, if these expectations were not met.

Power 8 is a programme designed to make the entire Airbus chain competitive, and that chain includes Airbus, and its suppliers. We will ask the Airbus board to give its go-ahead to the A350, only if we have guarantees that our Power 8 programme will be enforced, because Power 8 is partly why Airbus will remain competitive in the future. So there is a direct link between this programme and the launch of our new jetliner.

Interior of Airbus A380Interior of Airbus A380
The A350 was drawn-up by Airbus, as a competitor for Boeing’s popular 787 dream-liner. If it doesn’t see the light of day, suppliers as a result, will receive less contracts. Airbus sub-contractors said they would do their best, but they told Villepin that working in the euro zone, made it difficult to compete with American companies. François Junca is CEO of Latécoer, one of Airbus’s suppliers. He employs three thousand people.

80 per cent of our turnover is in US Dollars, thirty per cent of our expenses are in Dollars, so our activity depends a lot on the Euro/Dollar exchange rate. What’s costing us a lot of money, is that we pay our employees in Euros, but our clients pay us in Dollars.

Villepin took note of the remark, in fact he did more. He called on the EU, to adopt a monetary policy.

Europe needs a shield for its Euro. The difficulties of Airbus are partly the result of a Euro that is too strong against the dollar, which hurts our industry in the face of US competition. All the major powers have an exchange rate policy, sometimes even an aggressive policy. The European Union must provide itself with a real exchange rate strategy that combines the goals of growth, the protection of our industry, and the protection of jobs.

It’s unsure how directors of the European central bank will take this, they are often reluctant to modify rates. Villepin’s reimbursable advances are not likely to be well-received by Boeing managers in the United States either. But for the French Prime Minister, protecting Airbus, the pride of France and a flagship of the country’s industrial know-how, is worse a fight, even if it means taking on Frankfort, Washington and Brussels.

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