Paul Lewis/SINGAPORE
Asian ambitions of becoming a player in the international civil aerospace industry have received a major blow in recent months because of the region's financial crunch. State bankrolled proposals to produce Asian aircraft are taking a back seat as governments struggle to pull the region out of an economic nose dive.
Industry architects from Jakarta to Seoul are facing mounting domestic and foreign pressure to abandon their bold blueprints in the interests of fiscal austerity. The International Monetary Fund (IMF), in return for unprecedented multibillion dollar bail-outs, is looking for industrial austerity and economic reality, and big budget items such as aircraft appear to be luxuries few in Asia can now afford.
Indonesia's IPTN is high on the IMF's hit list and, as a quid pro quo for $43 billion in fiscal first aid, Jakarta has announced a halt to subsidies and tax breaks for the company. The Bandung based manufacturer is starting to feel the pinch, firing two-thirds of its expatriate workforce of 100.
A cloud of uncertainty hangs over Indonesia's indigenous N250 turboprop and its even more ambitious future stablemate, the N2130 regional jet. Questions had already been raised about the viability of the 64- to 68-seat turboprop (pictured below), as major US commuter carriers have been opting for turbofan powered alternatives such as the Embraer RJ-145 and the Bombardier Canadair Regional Jet.
The follow-on N2130 programme appears even more vulnerable. Despite assertions that the $2 billion development is privately funded and, as such, unaffected by the IMF agreement, it is clearly reliant on official patronage. Indonesia's President Suharto chairs a specially created fund-raising vehicle, the DSTP, and much of the money raised has come from state run or associated companies and agencies.
With the IMF insisting on Indonesia living up to its agreed reform obligations and IPTN's chairman Bacharuddin Habibie on course for promotion from the country's research and technology minister to Vice-President, the issue of state support appears far from settled. The company, meanwhile, is refocusing efforts on selling its CN-235 transport aircraft to generate more immediate work.
Financial realities have also begun to bite in South Korea. The local aerospace sector has put aside ambitious development plans in favour of more mundane supplier-type work from the likes of Boeing and Bombardier. "Launching a new aircraft programme is a sexy subject, but it doesn't give us any immediate cash," concedes a South Korean aerospace executive.
South Korean efforts to leapfrog Japan and Indonesia into the civil aerospace market have proved to be a disappointment since the country was first jilted by China in 1996. Samsung Aerospace's subsequent planned take over of bankrupt Dutch manufacturer Fokker Aircraft was undermined by a lukewarm response from Korean Air and Daewoo Heavy Industries. More recently, the collapse of the Aero International (Regional) Airjet 70 project has again left Seoul abandoned at the altar.
The situation has been exacerbated by pending defence cuts caused by the country's economic plight. Licence production of the Lockheed Martin F-16 winds down in 1999 and the planned KTX-II advanced trainer/light combat aircraft development is again at risk of going on hold. Local industry is now pinning its hopes on securing a risk sharing stake in the planned Fairchild Dornier 728Jet development.
Also competing for a place on the US-German 70-seat programme is Taiwan's Aerospace Industry Development (AIDC). Taipei, like Seoul, has been served a succession of aerospace non-starters, starting with Taiwan Aerospace's stillborn deal to purchase part of McDonnell Douglas and invest in the MD-12, followed by its ill-fated British Aerospace Avro RJ joint venture. Taiwan has since lowered its sights and a revamped AIDC has secured more structural work, including the Sikorsky S-92 nose section and Boeing 717 empennage.
AIDC had been hoping to secure a 5% share in the planned Airbus Asian AE31X regional aircraft, on the back of Singapore Technologies (ST) participation in the Sino-European development. Wider political considerations then scuppered this and there is doubt as to whether Singapore will join the collaborative effort.
Uncertainties about the future of the 95- to 115-seat AE316/317 are not confined to Singapore, but extend to a senior official level within Europe. There appears to be little consensus on the criteria for the programme. Whereas Singapore views the project in terms of a capital investment, observers suggest that Airbus' main motivation is to sell more aircraft to Chinese carriers, while Aviation Industries of China wants to acquire advanced technology.
BAe is now in talks with a Malaysian Government investment company interested in purchasing up to 50% of Avro and starting a components fabrication business with BAe's help, to support Kuala Lumpur's aerospace aspirations.
Japan's endeavours at aerospace leadership have proved to be the more enduring of any Asian nation, but the evidence suggests that even Tokyo is about to throw in the towel when it comes to leading projects of its own. State funding for Japan Aircraft Development's YS-X regional aircraft study is to be further cut, to ´165 million ($1.34 million) in 1998/9. In the absence of concrete progress, and with Mitsubishi pursuing an independent study with Bombardier, Japan had wanted to cut off funding for the 90- to 110-seat aircraft project. The allotted compromise represents little more than a job preservation exercise, suggest local industry officials.
Source: Flight International
