Airbus to outsource half its work
Thursday, 1 March 2007
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Half of all work on future Airbus programmes is to be outsourced to other companies as part of a radical restructuring of the aircraft maker involving 10,000 job losses across Europe, 1,600 of them in the UK.
The long-awaited Power 8 recovery plan will also result in the partial or complete sale of six of Airbus's 16 plants, the company said yesterday. The Filton site in Bristol, which carries out work on wing design and manufacturing, is one of three which will be put into a joint venture with an industrial partner.
EADS, the parent company of Airbus, said it would take a €680m (£458m) charge in the first quarter to cover the redundancy programme.
Speaking as workers demonstrated outside factories in France and Germany, Louis Gallois, the co-chief executive of EADS and also chief executive of Airbus, warned that compulsory redundancies could not be ruled out if there were insufficient volunteers.
The brunt of the cutbacks will be felt on the Continent, with 4,300 jobs going in France, 3,700 in Germany and 400 in Spain. Although the job losses in Britain are a little higher than expected, the UK has been named as one of four Airbus "centres of excellence", meaning that wing production at Filton, near Chester, and at Broughton in north Wales is guaranteed for the foreseeable future.
Alistair Darling, Secretary of State for Trade and Industry, said: "While the job losses here... are to be regretted, the long-term future for Airbus in the UK is a good one. We have fought our corner hard to ensure the most modern future technology of wing design, manufacture and assembly will be in this country. That is vital."
Airbus said that it had already received unsolicited approaches from potential industrial partners about Filton and the two other sites at Méaulte in France and Nordenham in Germany which will go into joint ventures. GKN, the UK engineering group, is the favourite to invest in a new composite wing facility at Filton, although Bombardier of Canada, Finmeccanica of Italy and Spirit Aerosystems of the US are also understood to be interested.
Starting with the new A350 wide-bodied jet, Airbus said that the proportion of aerostructures work done by outside companies would double to 50 per cent. It estimated that this would result in €2.4bn of the €10bn programme being financed by risk-sharing partners. The Power 8 programme is designed to generate €5bn of cash savings by 2010 and then annual cost savings of €2.1bn after that. M. Gallois said that national conflicts between the four member countries in Airbus had been allowed to "poison" the company for too long and greater integration and efficiency was now vital.
He said the main reason for embarking on the rationalisation programme was the weakness of the dollar, which had reduced the competitiveness of Airbus by 20 per cent. But he admitted that the immediate spur had been the huge problems the company has run into with the A380 superjumbo, which is running two years late and €3bn over budget.
The planned job losses will reduce Airbus's overheads by 32 per cent, cutting its costs by €900m. Other savings will come from improved procurement and leaner manufacture.
The three plants earmarked for outright disposal are the St Nazaire-Ville and Varel plants in France and Laupheim in Germany. Airbus said it would look at options ranging from management buyouts to sale to supplier companies.
