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A Franco-German Civil War at Airbus?

Posted by: Carol Matlack on June 23

Airbus’s parent company EADS, reeling from a setback in its fight for a lucrative U.S. Air Force refueling tanker contract, faces hostilities in its own back yard as well. Tensions between Airbus’s French and German operations are running high, with workers in each country complaining they are suffering disproportionately as the company restructures.

French employees are grumbling that 2,000 Germans — brought to Airbus’s Toulouse, France, factory two years ago as “temporary” workers to fix problems on the troubled A380 aircraft program – are still there.

The French also say they are bearing the brunt of the so-called Power 8 restructuring plan to slash $7.5 billion in operating costs by 2010. As of March 31, Airbus’s German operations had achieved only 23% of their cost reduction target, while the French operations had achieved 39%.

The Germans, meanwhile, are unhappy because some work on aircraft cabins, until now done at a factory in Hamburg, has been shifted to Toulouse.

Such bickering only deepens the gloom at Airbus and its parent, the European Aeronautics Defence & Space Co.

Last week the U.S. Government Accountability Office urged the Air Force to reopen bidding on a $35 billion refueling-tanker contract that it had awarded to EADS and its U.S. partner Northrop Grumman. EADS shares have fallen sharply since the GAO announcement on June 18, and they suffered an additional 4.9% drop on June 23. That puts the stock a sickening 77% below its high point in 2006.

“The social climate is not good,” Airbus boss Tom Enders acknowledged in an interview published June 23 in the French business newspaper La Tribune. “It’s impossible to change everything at the same time and at the same speed. To have a total, permanent equilibrium, as some of our unions want, is absolutely unrealistic,” Enders said.

Franco-German friction has never been far below the surface at Airbus. But it’s been heightened by the A380 production debacle, in which wiring assemblies built in Germany didn’t fit properly into fuselages built in France because engineers in the two countries were using different kinds of design software.

Enders told La Tribune that he understood the concerns in Toulouse about the large number of Germans working in the factory. “I asked the same thing when I arrived last year,” he said. “But the sad reality is, the lack of integration in Airbus, caused by an organization of work along national lines as well as different kinds of training and language problems, forced us to bring a large number of Germans” to complete the work that had been started in Germany.

As for moving some aircraft cabin work to Toulouse, Enders said, “It was a decision that went against the traditional division of labor, and it proves that the management is ready to make pragmatic decisions if necessary.”

Another cloud over EADS involves an ongoing probe of alleged insider trading by EADS executives. French prosecutors are investigating at least 17 present and former executives, after France’s stock market regulator questioned their exercise of stock options in the months before the share plummeted on news of the A380 production delays. Prosecutors filed preliminary charges last week against Jean-Paul Gut, the former EADS general manager; former Airbus boss and EADS co-CEO Noël Forgeard was charged earlier.

Enders, who has confirmed that he has been targeted in the probe, told La Tribune that he considered the charges “absurd.” But, he said, “It’s evident that this case is seriously damaging our reputation and that of the company.”

Reader Comments

Lagardere insider

June 24, 2008 02:54 PM

Enders bleating about the lack of integration at Airbus simply will not do.
Isn`t he supposed to be running the business? Didn`t Airbus top management tell the workforce back in 2001 that the logic of national workshares would be a thing of the past in the new integrated company ? The failure to reduce dependence on hugely expensive expatriated labor on the Final Assembly Lines is another example of Airbus Management`s failure to deliver on the
benefits of integration (Route 06 ,Power 8 ?)

123xyz

June 25, 2008 01:05 AM

It would be quite interesting to see the Germans, the French, our Alabamans and Northrup Grumman build a KC-45A. I will watch with amusement.

EADS has been building the A-400M transport for 26 years and it has yet to fly. And our Air Force gives them High marks for past performance!

http://www.latribune.fr/info/Tom-Enders--president-d-Airbus-SAS---Aucune-de-mes-decisions-chez-Airbus-n-est-motivee-par-des-ambitions-nationalistes--~-ID30A8DE475421F01FC1257471001AD063

Geroge Hanshaw

June 25, 2008 02:07 AM

Simply STATING that Airbus isn't a political animal doesn't stop it from BEING a political animal.

In a time of expansion/growth the fundamental national divisions could be fairly easily papered over. With record prices for Jet-A, and EADS on the ropes over insider trading, the A380 which will NEVER recoup its development expenses, the A400 which is the wrong aircaraft and way too late, and the A350XWB which is little more than wishful thinking on a CAD program (and let's hope everyone is using the same one this time) there is a very real possibility that despite the government support flowing to EADS and Airbus, the whole organization may just collapse, and the closer it comes to that, the less likely customers are to want to deal with EADS.

EADS may actually go away.

Oh Blah Dee Blah Dah

June 25, 2008 07:10 AM

RE: "engineers in the two countries were using different kinds of design software."

=====================
What is different about the software that was used?

Are they different versions of the SAME product? Are they completely different software products? Are they incompatible, but made by the same software company?

AllDayinVA

June 25, 2008 11:05 AM

Oh BDBD - They were using two different versions of the same software package - however - it was a bigger issue than that. The French were using a 3-d version of the package - the Germans used the earlier 2D version. That is a program management screw up of the highest order.

It is a shame that the effort being made by Airbus workers is being botched by management more concerned about political points than actually running an Aircraft company.

Correspondent Carol Matlack

June 25, 2008 11:35 AM

AllDayinVA is correct about the different versions. Airbus might have detected the mismatch if the specs had flowed into a single digital mockup for the A380 (something that Boeing and Dassault have been doing for quite a few years now). But they didn't set up a single mockup until the summer of 2006, too late to prevent the wiring mess.

johnroger

June 25, 2008 01:15 PM

Good question, Oh Blah Dee Blah Dah.
I think the author of the article was remiss in not going into a bit more detail on something so major. One would think that a project management function would be to look at software - especially critical design software - to ensure that everyone is using the same software, the same version, and everyone receives the same training. If management cannot perform this obvious responsibility, what else are they missing? For me, I will fly Boeing (disclaimer - I retired from Boeing but even if I had never worked there I would have the same position).

Mikolavic

June 25, 2008 05:28 PM

Stating the obvious, Airbus has failed to become a multinational and is still a melange of former national "champions".
Senior managers have behaved like politicians, avoiding the unpopular decisions not to be confronted by unions and hence stay in power, that is, until they all got cake all over their faces.
My humble advice to Mr Enders: that you don't want see it doesn't mean that it ain't coming your way, face your evils or step aside and leave chair for some other person with the guts to do the job.

Mark

June 26, 2008 04:05 AM

Its quite difficult to work together with the Germans, simply because they are a closed group. The communicate well only within themselves and when outsiders dont understand they blame it on them.
It is simply a cultural issue and i think the Germans simply overrate themselves.

bob_bc

June 26, 2008 09:55 PM

It's the old "bell shaped curve" of corporate culture. The only solution is dynamic leadership at the top. Boeing and EADS have both been involved in "dueling disasters." These internal issues have been softened by an excellent external climate. Will be interesting to see how both cope with external economic issues such as the rapid rise in jet fuel costs. If they don't handle the external problems well, then we just may see BOEADS becoming a reality. A merger for survival of the breed.

Bob

Bob Saltzer

July 17, 2008 01:22 PM

Boeing could put the issue to bed by offering the 787-1000 to be built on the current 767 production line. Doubling production rates of 787's, to include whatever airframes the Air Force requires, would satisfy all military requirements, plus have a large, positive impact on the environment. This would provide for the firm beginning of mass production of carbon fiber structures. Structures that range from windmills to buildings,
automobiles and other metallic constructs.

Bob

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