|
EADS, a Franco-German Adventure
.
EADS, a Franco-German Adventure
By Richard Labévière and Joël-François Dumont
(*)
 
Louis Gallois, CEO of EADS meets the
international press and comments the results for
2008 at Newport (UK) on January 13, 2009
Ever since its creation in 2000, the European group EADS has been in the news
more often than necessary, with the result that a controversial image has been
created that is very different from reality. The reality is a group that, in a
period of nine years, has become the European champion in aeronautics and
defence, the only one capable of competing with the large American groups and
establishing its position in the top rank worldwide in aircraft construction, a
fast-growing group that has created 15,000 jobs over the past seven years!
Without going back over the now well-known history of the emergence of this
new giant, it is necessary to consider the position it holds in the four major
domains – aeronautics, space, helicopters and defence – in order to demonstrate
that the foundations of this construction are solid enough to guarantee the
future.
This success, however, rests first and foremost on a pillar, the Franco-German
pillar, which was built up long before the EADS adventure through a series of
successful cooperation programmes, some of which go back a long way, in
missiles, aeronautics and space. It is this long-standing binational cooperation
that has allowed EADS to take root, in spite of the ups and downs of Franco-German
political relations.
All the more so, at a time when the drive towards European defence industry
integration, triggered by the Letter of Intent in 1996-97, a drive that gave
rise to the EADS group, seems today to have lost momentum with a return towards
what is not yet chauvinism but in any case national susceptibility in the main
European countries, it is truly the Franco-German axis that through EADS has
survived all these criticisms and whose solidity is standing up to the current
economic crisis.
There can be no denying that the success of Airbus is the success of four
countries closely united on civil aeronautics programmes – Germany, Spain,
France and the UK. It was their union within the Airbus economic interest group
(GIE) which made it possible to pursue the successful but isolated cooperation
programmes such as between France and Britain on Concorde, a futuristic
programme that came to an end notably because of the barriers created to the US
market and which prevented the programme from achieving the level of commercial
success which one could have expected from a plane combining so many
technological accomplishments.
The Airbus GIE, less spectacular to start with, represented a massive
investment by the German aeronautics industry, which wanted to become a major
player in the aeronautical industry again, which it had been prevented from
doing in the aftermath of 1945. After a modest start with the single-aisle
family (A300, A310, A320), the Airbus product line gradually expanded and made
its mark in the widebody segment, which was dominated by US firms in the process
of merging at that time (Boeing, McDonnell Douglas, etc.). A330, A340, right up
to the A380 super-jumbo, known as the A3XX when EADS was created in 2000 before
receiving its definitive designation.
In an unintentional swipe at Boeing, Airbus signed “777” new orders in 2008,
retaining the number one position with 54% of the market and an order book of
3,715 aircraft, which is exceptional in spite of the uncertainties hanging over
these orders due to the crisis.
The Airbus A380 at the Berlin International
Airshow
(ILA). 1.3 million passengers already transported since October 25, 2007...
Criticised as unrealistic, accused of all kinds of defects, including
financial and legal inquiries currently ongoing, the A380 programme is
nonetheless today one of the most successful, the most promising and the most
popular members of the Airbus range: with 13 aircraft already in service with
three airlines (Singapore, Emirates and Qantas), including 12 delivered during
the 12 months of 2008, a total of 900,000 passengers have already travelled on
this unique aircraft, which is still flying with full loads because demand is so
strong!
In 10 years, Airbus moved from a 19% world market share to more than 50%
today, in a fast-growing and ultra-competitive market. Over 12 years, production
rates have increased three-fold.
 
Pierre Bayle, Head of Corporate
Communications, EADS group
“The keys to Airbus’ success are simple,” explains Pierre Bayle, director of
media relations at EADS, “For each aircraft type, production is distributed with
no overlap between the countries (wings in the UK, tail assembly in Spain, nose
section in Méaulte, fuselage sections in France and Germany, and always a single
final assembly line, in Toulouse or Hamburg).”
From the Tower of Babel represented by the initial GIE, the dynamics behind
Airbus shifted with the integration of the French, German and Spanish components
within EADS, followed by the purchase of the BAE Systems share, finally allowing
the creation of an integrated Airbus company. The last step in this integration
process is the merger announced at the end of 2008 of the Military Transport
Aircraft division within Airbus, so that all military activities will now be
grouped together within Airbus Military, in particular the A400M and the A330
tanker. It should be underlined that this integration comes at the perfect time
to get the immensely complex and very ambitious A400M military transport
aircraft programme back on track.
 
HM King Juan Carlos in Sevilla on June
26, 2008 -- Airbus A400M in Sevilla (SP)
Only France and Germany had risen to the challenge of producing a dual (strategic
and tactical) military transport aircraft capable of carrying large payloads
over long distances and landing on unprepared runways. The Transall, born 30
years ago out of a fruitful Franco-German cooperation, is still in service, even
though the German partner did not follow France in developing a successor, the
Transall NG (New Generation).
The A400M comprises the same ingredients for success: a rugged and tactical
aircraft with large capacity, but with much more ambitious specifications: speed
of Mach 0.7, capable of flying (and air-dropping) at high altitude, increased
payload, civil and military navigation standards, capable of flight and tactical
landings in zero visibility, countermeasures, etc. The initial contract, signed
in 2003, brought together from the outset France, Germany, Spain, the UK, and
also Belgium and Turkey.
Managed by OCCAR, the programme, which was unfortunately launched as a civil
programme with an overly rigid contractual framework, has become bogged down by
additional, diverging specifications from different military customers, to the
point where the financial balance has been completely overturned. In addition,
the difficult development of an all-new powerplant has resulted in a series of
delays which have obliged EADS to make financial provisions, with more to come.
All of this has prompted EADS CEO Louis Gallois to comment that “the complexity
of the programme has been completely underestimated,” adding: “we collectively
bear much of the responsibility; nobody in the world has ever built a military
aircraft in less than 10 years. We wanted to do it in six and a half, and quite
clearly the difficulty was underestimated.”
 
Tom Enders, CEO von Airbus in
Farnborough -- KC-30 Tanker Refueling B2. Northrop Grumman © Computerized
Picture.
Airbus CEO Tom Enders, who is responsible for the programme now that it has
been fully integrated into Airbus, says: “to say that we want to abandon the
A400M is nonsense; but it would be irresponsible to continue on the current
contractual, financial and technical bases.”
And so the contractor is on the point of convincing its customers and
industrial partners that the problem is not so much to find out who will pay
penalties for the delay, as to ascertain whether everyone is not linked by the
same desire to complete the project by reaching agreement “on a realistic
approach”; today there is no alternative product, and all the interim solutions
that have been mentioned only meet the strategic transport requirement, for
which a freighter aircraft is sufficient, without meeting the tactical transport
specifications. Once again, beyond the public expressions of impatience on the
political level, it is probably the Franco-German axis (expanded to include
Spain) that will guarantee the success of this exceptional aircraft.
Another example of success, and once again with a big lead over Boeing, the
launch of the Extra Wide Body (EWB) version of the A350, completely redesigned
in this new version, an enormous amount of work which has frozen the design and
effectively launched development, while stabilising production through a process
of outsourcing aerostructures activities on the programme to new subsidiaries.
This has involved the creation of Aerolia in France (Méaulte and
Saint-Nazaire-Ville) and Premium Aerotech in Germany (combining the Airbus sites
at Nordenheim, Augsburg and Varel): once again the Franco-German dynamic, the
Franco-German symmetry in successes and in extra efforts.
In presenting the programme on 14 January in Toulouse at a ceremony to lay
the first stone of the final assembly line (FAL), Tom Enders, the head of
Airbus, Fabrice Brégier, COO in charge of programme management, and Didier
Evrard, in charge of the A350 programme, gave a two-sided image: a visibly
united and dynamic Franco-German team, and a programme presenting the future
configuration of an entity focused on its core business.
The production work-sharing arrangements show the complementarities between a
certain number of subcontractors, including Spirit of the USA, Aerolia of
France, Premium Aerotech of Germany and Britain’s GKN (which has recently
purchased the Filton site of Airbus. This is a very faithful implementation of
Vision 2020, launched by Louis Gallois with the aim of balancing the group’s
Euro/Dollar production activities and focusing on core business.
A350 © Airbus SAS 2006 - Computer
rendering by Fixion - HCSGM
For this new aircraft, which is positioned in the widebody twin segment,
demand for which is estimated at 5,700 new aircraft over the next 20 years,
success is written in the genes: although the first aircraft (in the A350-900
version) is not due to enter service until 2013, Airbus has already logged 478
orders from 29 different customers in two years! Which prompted Tom Enders to
present it as “the fastest-selling plane ever”. As proof of its confidence in
the aircraft’s market potential, EADS has financed A350 development investments
out of its own resources, i.e. almost 140 million euros for the facilities in
Toulouse.
Franco-German cooperation in space has a long history. In satellite
programmes, the merger of Matra Marconi Space with the activities of DASA
(Germany) and Casa Espacio (Spain) created Astrium, which brought together the
activities of Aerospatiale, builder of the Ariane launchers for Arianespace.
Successive mergers and the creation of Astrium have created this space giant
which, although it is not the only space player in Europe (there is also the
Thales Alenia Space group), is the only one to have capabilities in all sectors
of the space business: launchers, manned space stations, satellites and
satellite services. Without going back over the well-known success of the Ariane
5 heavylift launchers, where France exploited the know-how gained under the
ballistic missile programmes for the nuclear deterrent, Germany has made a major
contribution to the success of Astrium with the ATV spacetug and its
participation in the Columbus programme. However, we must not forget flagship
programmes like Helios, Spot or, on the military side, the M51 strategic
missile, which has successfully completed its most recent tests.
Spot 5 satellite in orbit : A fantastic
success
EADS Astrium, which is on the cutting edge of development and marketing of
satellite services in secure telecommunications and navigation, has established
itself as the central and only access point for military satcoms services. EADS
Astrium Services, well known as the key partner in the consortium selected to
lead the deployment and operation of Europe’s Galileo satellite navigation
system which is due to enter service at the end of the decade, has satisfied the
communication requirements of military customers in several countries: framework
contract with the French MoD to supply secure satellite telecommunications
services to the French armed forces (ASTEL-S agreement), and the SATCOM-BW
programme in Germany, which will be operational in 2009. Astrium Services
provides secure military telecommunications to the British armed forces, NATO
and the armed forces of Portugal and Canada through its fully owned subsidiary
Paradigm Secure Communications.
Astrium is a truly global space
industry leader with extensive prime contractorship experience and an
international reputation for excellence across all sectors of the space
business.
 
François Auque, CEO von Astrium --
The Automated Transportation Vehicle (ATV)
The reorganisation decided in December, whereby Astrium and the “Defence and
Security” division are now part of single coordination led by François Auque,
constitutes a new dimension which should further expand this binational
cooperation. There is one domain in which EADS offers top-level skills that are
not yet sufficiently developed – ground stations and satellite data reception
and interpretation systems used for mission preparation by air, land and naval
forces.
One of the longest-standing Franco-German cooperation initiatives, in
helicopters, is also one of the most successful: today Eurocopter is the world
leader, in financial results and above all in terms of technology, ahead of its
rivals in the USA (Bell, Sikorsky), Italy (Agusta Westland) and Russia, to
mention only the main ones. German know-how was initially developed through
production of Bell models under licence, helicopters in the 2-3.5 tonne class
(Be105 and BK117), before German engineers teamed up with their French
counterparts, who had built up even greater expertise producing helicopters from
2 to 15 tonnes (Super Frelon) developing the family of Alouette, Gazelle,
Ecureuil, Dauphin and Puma, from which the company has derived the very diverse
range of military, civil and parapublic products that it offers today. And so it
is not by chance that a German, Lutz Bertling, has taken over from Frenchman
Fabrice Brégier, following the latter’s move to Airbus to become Tom Enders’
right-hand man.
 
Lutz Bertling CEO of Eurocopter --
NH90 in testing
The Tiger combat helicopter was initially Franco-German before being adopted
by Spain and Australia. The NH90 is also a Franco-German cooperative programme,
extended to include Italy. The reputation of Eurocopter products worldwide today
is such that the company can boast of supplying machines to a very demanding
customer, the US DoD, with 50 Light Utility Helicopters (LUH) already delivered
to the US Army and around five machines scheduled for the US Navy, in addition
to the 50 EC725s ordered by Brazil at the end of last year.
From Donauwörth on the Danube to Marignane on the Mediterranean via La
Courneuve on the outskirts of Paris, the Franco-German axis is truly the source
of the dynamism of a helicopter builder which today is present on all
continents.
DS, which inherited the defence electronics activities of DASA, Matra and
Aerospatiale, today offers a range of services extending from conventional
military defence (the division is known above all for its lead role on the
Eurofighter programme, a combat aircraft shared by four European countries,
which has around 700 orders; 170 aircraft have been delivered by the
international consortium to date) to civil security systems (DCS), with
offerings adapted to different missions. For example, the use of unmanned
military reconnaissance aircraft for civil security applications, as was done
for the recent visit of the Pope to France. Major border security contracts have
also been signed with Romania, Brazil and Saudi Arabia.
At Newport Stefan Zoller, CEO of Defence and
Security Division provided the international press with someimpressive data :
“Indeed, 2008 was a record year for Defence & Security”, he said. “Our revenues
increased by 5.1% to € 5.7 billion. Both our return on sales (RoS) margin and
our EBIT have doubled since 2005: with an EBIT increase of 18% to €408 million
and the already stated RoS margin of 7.2% we were the most profitable division
within EADS in 2008. And in 2009, we will even do better...
We
do not expect major shortfalls in our business. As planned, that should lead us
to a further ramp up in our businesses also for the year 2009.”
 
Eurofighter from the 73th Wing "Steinhoff"
flying over Schönefeld during the ILA Airshow -- Stefan Zoller at Newport (UK)
on January 13, 2009
Another example: secure broadband communication systems to safeguard major
events such as the Olympic Games: EADS/DS, led by Stefan Zoller of Germany, was
officially congratulated by the Chinese authorities for the successful operation
of the secure radio telephone network during the Beijing Olympic Games (1.6
million calls handled on the opening day) and is preparing to offer its know-how
to the UK to safeguard the London Olympic Games in 2012.
Secure Communications Systems for the
Atlantic Alliance
The new site at Newport in Wales is a laboratory where DS engineers can
develop systems appreciated by the most demanding customers, such as NATO, which
recently awarded a £43 million contract to EADS/DS to supply the deployable
secure communication system for the NATO Response Force (NRF).
Born with a totally parallel and paralysing structure (two chairmen of the
board, two CEOs, two COOs, and a whole parallel hierarchy with multiple overlaps
and factors of inertia), the EADS management structure was radically modified
and simplified by a political decision on the part of the French and German
authorities in August 2007, at a meeting between Chancellor Angela Merkel and
President Sarkozy in Toulouse.
Since then, there has been a single CEO, Louis Gallois of France, a single
chairman of the board, Rüdiger Grube of Germany, and a single CEO of Airbus, Tom
Enders of Germany: all the overlaps disappeared one after the other.
The balance is visible in the distribution of operational responsibilities (a
German at the head of Airbus, another at the head of Eurocopter and a third at
the head of Defence and Security; a Frenchman at the head of Astrium, another
for strategy and marketing, etc.
 
EADS Headquarters in Paris -- Marwan
Lahoud Chief Marketing and Strategy Officer of EADS meeting the international
press at Farnborough (2008)
“The reality is that nationality is no longer the criterion for nominations,
and that within each division, nationalities are largely mixed up without any
notion of mathematical equality. In addition, we have the increasing integration,
including at management level, of the UK and Spanish components of the group,”
explains Marwan Lahoud, Chief Strategy and Marketing Officer.
Looking ahead to the future challenges of Europe, whether they concern
problems relating to the supply of raw materials or demographics, and whatever
the multiple rivalries (employment, finances, the economy, etc.), “EADS, based
on Franco-German resolve, has the great good fortune of being able to propose
and realise innovative projects in these sectors of activity thanks to creative
structures,” explains Georg Bucksch, who is responsible for management under
Marwan Lahoud. “We are convinced of this because we share the same common
destiny. So we must succeed by rising above our divergences, as in the past, and
transforming them into shared global assets.”
As the structures of the divisions move closer together, EADS continues to
advance in the direction of an integrated company. The CEO has launched the
project to create a company under European law, and the legal teams are at work:
“it will be the final phase in the integration of EADS to form a single company,”
explains Louis Gallois.
And, in comments on the 2008 results made to the press in Newport on 13
January, the CEO of the European group adds: “performance is remarkable; it
shows that the company has a strong capacity to react and I think that it is
wrong to have a vision of catastrophe: the crisis is also a means for EADS to
become more efficient, to better focus on its priorities and to come out of the
crisis stronger than we entered it.”
EADS is still a young group, built from companies whose historical and
cultural differences have proved to be an asset, which has had to handle
exceptional growth from its founding countries, as well as its industrial
integration. In EADS, Europe, and especially the founding countries, led by
France and Germany, has an industrial group on a par with Boeing. It is the most
successful example of European industrial consolidation, and it has rewarded
each of the founding States by becoming, in France, the leading employer for
young engineers. However, our nation, as Louis Gallois recalled, should think of
training even greater numbers in order to be ready to meet future challenges…
 
Louis Gallois : « Our nation should think of
training even greater numbersof engineers to be ready to meet future challenges…»
With more than 116,000 employees, including 44,000 in France, EADS, which owns a
share of the MBDA joint venture, the world leader in missile systems, is the
largest employer in the sector, ahead of Dassault and Thales combined and
represents almost 50% of net French aerospace exports. EADS reported revenues of
39.1 billion euros in 2007. Thanks to “extremely positive cashflow, we had no
need to borrow money”. For Louis Gallois, “this situation will not continue in
2009. Our customers and suppliers are going to be hit by the economic crisis,
not only the financial crisis… We are trying to offer them our support but we
cannot put ourselves in their place. We will increase financing for our
customers in 2009 and 2010. We have done it in the past, we will do it again; we
will do it cautiously. We are taking a very close look with our customers, one
by one, to see what their difficulties are, their needs, their expectations, in
order to adjust our production according to what we will actually deliver in
2009.”
(*) Auditors of the Institute for Advanced national Defense Studies
(Institut
des Hautes Études de Défense Nationale - IHEDN).
See also :
|
L'adieu aux armes du Transall "Ville de Kolwezi"