Airbus unable to compete in current market

In the U.S., compensation trends for working people have been going down since the 80’s. Very few “cushy” union jobs left for folks with only high school educations….the days of 40 years and a gold watch (and a company funded retirement program) are over. On the one hand, jobs have been outsourced to other countries, on the other hand, illegal immigration has provided a huge influx of cheap workers. The average guy’s job gets squeezed in both directions. Meanwhile, mainland Europe (mostly France and Germany) continue with cradle to grave goodies for everyone. I guess they think they can just stick their head in the sand and the global economy will go away. Of course, BAE saw all this and sold their shares. Airbus is in trouble, indeed all of mainland Europe is. The U.S. has a 25 year head start on pay and benefit cuts for the rank and file.

Airbus is only offering to assemble their tanker entry in the U.S. because U.S. labor is cheaper than Europe.

Consider the auto industry. Count the Toyotas on the Champs Elysee, and then count them on mainstreet U.S.A. Mainland Europe is not only socialist, its protectionist too boot. Yes, its true that Toyota and the other Japanese car companies are building plants in the U.S., but their people have to work (a full shift!) and their contracts aren’t nearly as lucrative as the U.S. automakers. And their managers only make 4 times what the workers do while the U.S. companies managers make 10 times what the workers do. One american manager is not worth two and half times more than the harder working, dedicated, Japanese manager.

One last item, more geopolitics. Japanese carriers held off ordering A380 because they know Europe will never protect them from Chinese agression. Hell, France won’t even defend herself, let alone anyone else. Meanwhile, the U.S. Sixth Fleet is still based in Yokosuka. An attack on Japan is an attack on America, and everyone knows it.

I basically agree, except I don’t think the US would refuse to defend Japan if a Japanese airline bought from Airbus! US would defend Japan for it’s own reasons and ultimately to protect itself.

In the U.S., compensation trends for working people have been going down since the 80’s. Very few “cushy” union jobs left for folks with only high school educations….the days of 40 years and a gold watch (and a company funded retirement program) are over. On the one hand, jobs have been outsourced to other countries, on the other hand, illegal immigration has provided a huge influx of cheap workers. The average guy’s job gets squeezed in both directions. Meanwhile, mainland Europe (mostly France and Germany) continue with cradle to grave goodies for everyone. I guess they think they can just stick their head in the sand and the global economy will go away. Of course, BAE saw all this and sold their shares. Airbus is in trouble, indeed all of mainland Europe is. The U.S. has a 25 year head start on pay and benefit cuts for the rank and file.

Airbus is only offering to assemble their tanker entry in the U.S. because U.S. labor is cheaper than Europe.

Consider the auto industry. Count the Toyotas on the Champs Elysee, and then count them on mainstreet U.S.A. Mainland Europe is not only socialist, its protectionist too boot. Yes, its true that Toyota and the other Japanese car companies are building plants in the U.S., but their people have to work (a full shift!) and their contracts aren’t nearly as lucrative as the U.S. automakers. And their managers only make 4 times what the workers do while the U.S. companies managers make 10 times what the workers do. One american manager is not worth two and half times more than the harder working, dedicated, Japanese manager.

One last item, more geopolitics. Japanese carriers held off ordering A380 because they know Europe will never protect them from Chinese agression. Hell, France won’t even defend herself, let alone anyone else. Meanwhile, the U.S. Sixth Fleet is still based in Yokosuka. An attack on Japan is an attack on America, and everyone knows it.

ok…

I still think the politicians are in charge!

I agree, this isn’t the mean reason that things are going downhill for Airbus, but it is a contributing factor. If the Euro-Dollar exchange rate is going to change so will the position of Boeing. It isn’t something anyone has any control over. I seem to remember that the Dollar rate was one of the main factors in the downfall of Fokker.

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Well if you have an offer from Boeing which is significant less because of the Euro-Dollar exchange then you are more likely to choose for the American product, even though you are in Europe and your hole business cost structure is in Euro’s.

No argument, but my point was more that some customers would prefer to deal in EUR for political reasons.

Well, yes and no. You are diverting the problem to subcontractors. If they are in Euro zone all their cost will be in Euro’s so that subcontractor might go bust, and that is not in the interest of Airbus either.

But that’s just business, you pass risk on to somebody else. There’ll always be suppliers.

? Well R&D = cost no revenues. R&D is at the core of the business so you want it to be done close to home. And you have to move all the current employees to America.

That’s just being political. R&D should be done where it’s best and most cost effective. Airbus has, all its history, spread the action out over many different countries. Why has that been OK, but when you want to concentrate some work in the US that’s not OK? It cuts duplication and matches USD income to some USD expenses, reducing the exchange losses.

True. Let’s see what happens in 5 to 7 years time. Might still become a hit, we don’t know yet.

Yes. They should set up a more businesslike structure. A lot to gain there.

So that were my two cents :diablo:

I agree, this isn’t the mean reason that things are going downhill for Airbus, but it is a contributing factor. If the Euro-Dollar exchange rate is going to change so will the position of Boeing. It isn’t something anyone has any control over. I seem to remember that the Dollar rate was one of the main factors in the downfall of Fokker.

Hmm….the EUR/USD issue is a red herring.
Always be wary of people who offer glib bullet point solutions to complex industrial problems. But having said that this is my 2c worth:

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– Why must all sales be in USD? Some customers would like to pay in EUR (Iran!! Russia!! State owned EU airlines!!)

Well if you have an offer from Boeing which is significant less because of the Euro-Dollar exchange then you are more likely to choose for the American product, even though you are in Europe and your hole business cost structure is in Euro’s.

– Why must all costs be in EUR? Airbus has strength with suppliers and could pay them partly in USD.

Well, yes and no. You are diverting the problem to subcontractors. If they are in Euro zone all their cost will be in Euro’s so that subcontractor might go bust, and that is not in the interest of Airbus either.

– Why can’t some production or R&D be done in the US, meaning you match USD revenues and USD expenses (a natural hedge).

? Well R&D = cost no revenues. R&D is at the core of the business so you want it to be done close to home. And you have to move all the current employees to America.

Fact is the company stuffed up big time with the A380. That is nobody’s fault except Airbus’s and has nothing to do with exchange rates.

True. Let’s see what happens in 5 to 7 years time. Might still become a hit, we don’t know yet.

EDIT: Cost control can be improved. Sometimes suppliers are chosen for political reasons not commercial ones. I am not going to elaborate, but if you’re interested, do some public domain searching on Industrial Offset arrangements involving EADS. This goes above and beyond the issues caused by socialist owners insisting on work allocations etc.

Yes. They should set up a more businesslike structure. A lot to gain there.

So that were my two cents :diablo:

And I guess the whole situation is even more ****** up than officially acknowledged, otherwise British Aerospace would have kept its shares.

And Diamler-Benz also reduced its stake by a significant amount. Those shares are expected to be bought by German cities to insure significant German ownership “clout”.

Can’t really add anything here, just that I guess it was only a question of time till the “warped” structure caused by massive decade-long tax-money-infusions, politically motivated workshare distribution and 85% of sales in the low-profite single-isle market can’t be any longer sustained.

And I guess the whole situation is even more ****** up than officially acknowledged, otherwise British Aerospace would have kept its shares.

exchange rates

Hmm….the EUR/USD issue is a red herring.

It isn’t an excuse. Lots of companies have largely USD revenues, but other currency costs – especially oil companies and miners. They’re making record profits! Alright, the miners and oil companies escape a little because their USD revenues are inflated due to record commodity prices, calming the problem a lot.

Always be wary of people who offer glib bullet point solutions to complex industrial problems. But having said that this is my 2c worth:

– Why must all sales be in USD? Some customers would like to pay in EUR (Iran!! Russia!! State owned EU airlines!!)

– Why must all costs be in EUR? Airbus has strength with suppliers and could pay them partly in USD.

– Why can’t some production or R&D be done in the US, meaning you match USD revenues and USD expenses (a natural hedge).

Fact is the company stuffed up big time with the A380. That is nobody’s fault except Airbus’s and has nothing to do with exchange rates.

EDIT: Cost control can be improved. Sometimes suppliers are chosen for political reasons not commercial ones. I am not going to elaborate, but if you’re interested, do some public domain searching on Industrial Offset arrangements involving EADS. This goes above and beyond the issues caused by socialist owners insisting on work allocations etc.

Resistance to the proposed rationalization plan by segments of the French & German goverments and unions show that they consider Airbus to be more of a government “make work” organization rather than a legitimate business enterprise.

That has got to chnage, not only for the future good of Airbus, but if it expects to be taken seriously in it’s WTO issues vs. Boeing.