Paul Lewis/SEOUL & SINGAPORE
Asia's embattled aerospace industry will likely reflect on 1998 with utter dismay. Once-bold Asian aeronautical ambitions to be a global player have been confined to the scrapheap after a series of setbacks. The focus is now on a post mortem examination to determine if and what can be resurrected.
The region's economic implosion has dealt a crippling blow to local aerospace manufacturers from Bandung to Beijing. The casualty list reads like a "who's who" guide to Asian aircraft planning, encompassing the Chinese AE31X and and MD-90 TrunkLiner, Indonesian N250 and N2130, Japanese YS-X and South Korean K100 programmes.
While Asia's financial crash has served as the coup de grace for many of these developments, their failure to get off the ground can be traced to more basic flaws. For Ryozo Tsutsui, Kawasaki executive vice-president and one of Japan's most experienced aerospace executives, "-it's a matter of market and viability of the business."
This realisation prompted the Japanese Government to abandon finally the long-running YS-X project in July. This was not before the Ministry of International Trade and Industry (MITI) had spent close to ´6.4 billion ($44 million) since 1994 on the 100-seater airliner study led by Japan Aircraft Development (JADC).
Samsung Aerospace executive senior director Bang Un Chung tries to offer a fuller explanation for the region's failures to date. "You have to look at this realistically," he says. "A lack of marketing power, name value and core design and manufacturing technology has prevented us from being a major player and this is something which is common to all of Asia."
South Korean efforts to overcome these hurdles by initially proposing a K100/AE100 Air Express partnership with China, and a subsequent planned take-over of bankrupt Fokker, have all proved fruitless. With the country now in debt to the Inter-national Monetary Fund (IMF) to the tune of $60 billion, an earlier state promise to underwrite 50% of any future national project now appears remote at best.
Seoul, having been jilted at the altar by would-be suitor Beijing, could be excused for having little sympathy for the recent demise of Aviation Industries of China's (AVIC) planned AE3IX tie-up with Airbus Industrie. Long-running negotiations were dogged by disagreement on workshare and technology transfer, but ultimately the project succumbed to doubts about its financial feasibility and a major shift in Chinese economic priorities.
Fiscal austerity and a shake-up of state-run enterprise AVIC has also grounded the Boeing TrunkLiner programme. Plans to licence-build the twinjet in Shanghai have been curtailed from 40 aircraft to 20 and finally just three, mainly because of AVIC's inability to successfully market and sell the aircraft to home users.
CASH-SQUEEZED IPTN
An even tighter cash squeeze has thrown Indonesia's IPTN into a virtual state of paralysis. "We are now having to face what we would like to do and what we really can do, because the Government is no longer in a position to give us any money as a result of their commitments to the IMF," explains company executive vice-president Ilham Habibie.
The state-owned manufacturer has again delayed local certification of the 64/68-seat N250-100 turboprop, to late 2000, and is fighting a rearguard action to complete pre-development of the even more ambitious 100/ 130-seat N2130 regional jet. IPTN is pinning its hopes on finding partners or raising fresh financing, but time is clearly running out. "The final nail is not yet in the coffin, but the fat lady is certainly tuning up to sing," observes one locally-based Western official.
BACKING FOR N250
IPTN's immediate priority is to secure initial backing to complete development of the N250, before looking for a "strategic partner" to put the aircraft into production either locally or overseas. "There is not a lot of money needed to finish the project, but if we were to stop now we would not see a single penny back.I'm confident we will find partners in the next three to six months," predicts Habibie.
IPTN has approached fellow Asian manufacturers, as well as Western companies, for support. Asia's track record on cross-border aerospace co-operation is none too encouraging, however. Aside from periodic platitudes, little progress has been achieved. The region's historic suspicion and prejudice, deep-rooted cultural differences and nationalistic self-interest present major obstacles to an Airbus-type Asian consortium. The only real effort at promoting meaningful dialogue has been an initiative on the part of the Society of Japanese Aerospace Companies (SJAC). Its MITI-funded Asia Community AirPlane (ACAP) concept is based around small, cheap and economical commuter-type aircraft, purpose-designed for the region.
Since the SJAC's ideas were first broached in February 1997, a joint marketing and definition study has begun, with a variety of Asian nations participating, including Indonesia. The discourse appears to be open-ended and, as yet, has not touched on any technical issues. "The ideal approach would be a joint collaboration among Asian countries, if possible. ACAP efforts are continuing, although the environment is very difficult," admits Kawasaki's Tsutsui.
The involvement of Japan raises the difficulty of balancing its advanced aerospace capabilities with the demands of other Asian potential partners for an equitable relationship. "There should be a basic understanding of capabilities, financing, technical knowhow, but the Japanese are far ahead and it's difficult to insist on fair and equal deals," says Korean Air (KAL) Aerospace executive vice-president Yi Taek Shim.
Therein lies perhaps the biggest barrier to a future Asian alliance. The Airbus Industrie consortium was established 28 years ago on the basis that the founding partners each possessed a similar level of existing aerospace capability. Airbus had the further advantage that it was built on the common political and legal bedrock of the European Union and commanded considerable commercial support.
"If you look at Asia now that is not the case," contends Habibie. "Many countries have different perspectives on what aerospace should be and where it could be in the future. That's something that needs to be resolved before a so-called Asian Airbus could be born in the future. I'm not saying it's impossible, but there needs to be a very strong will and a lot of compromise."
Meanwhile, Asia's hard-pressed manufacturers have lowered their sights and gone in search of Western subcontracting and risk sharing work to keep factories occupied. South Korea's three main manufacturers have all secured large new subcontractor deals in the last year.
Daewoo Heavy Industries is producing Boeing 747-400 fuselage frames, Airbus A320 upper fuselage panels and A330/340 wing ribs, KAL is the sole-source supplier of Boeing flap track supports and fairings, while Samsung is producing 747 frames and stringers. "We will never be a Boeing or Airbus, but instead we must look at the niche market and be a first or second tier player," explains Samsung's Chung.
The Korean Commercial Aircraft Development Consortium has also submitted bids to join the Fairchild Dornier 728JET and Israel Aircraft Industries AirTruck projects. South Korea is already heavily involved in the Boeing 717 programme, with KAL supplying the twinjet's nose and Hyundai the wing.
Competition is intense and the margins slim, however, as Hyundai has now come to realise with the 717 deal handed down by associate company Halla. "It's a very ambitious programme and we're going to have to make every effort to make money. If we had been negotiating with McDonnell Douglas [now Boeing], I would not have signed the contract at that price," reflects Hyundai Aircraft & Space's new president, Dong-jin Kim.
Boeing, as a backup, is seeking a second Asian 717 wing supplier should demand exceed the six shipsets a month contracted with Hyundai. Japan, however, has turned its nose up at the 717's labour-intensive wing design. Mitsubishi is instead supplying an advanced wing for the Bombardier Global Express large business jet and wants to apply this to a 90/120-seat regional jet now under study with the Canadian company.
MITI, at the same time, has unveiled a new, more flexible approach to Japan's aircraft industry in the wake of the stalled YS-X study. Future emphasis will instead be placed on development of components and subsystems, such as wings and avionics. The new policy no longer limits MITI support to industry-wide projects, reflecting an end to JADC cohesiveness, but extends to individual company programmes.
Airbus and Boeing, meanwhile, are now in talks with China to find substitute work for the now defunct AE3IX and curtailed MD-90 programmes. "The 717 is certainly a possibility," says Boeing Commercial Airplane Group president Ron Woodard. "They've decided not to do a 20-aircraft [TrunkLiner] programme and the question is what is there instead. We're looking at a whole range of possibilities and expect to have it resolved by the end the year."
Airbus, meanwhile, has offered proposals for future Chinese involvement in some of its mainstream programmes, such as the A340-500/600 growth derivatives and planned new large A3XX. South Korea has also signalled its interest in the A3XX, while Japan will almost certainly play a major role in the development of any future 747 or successor.
By the time these projects get off the ground, Asia's aerospace industry is expected to look a lot different. Economic reality demands an overhaul of state-supported and inefficient aerospace industries. As has happened in the West, the region's manufacturers are now having to face up to the prospect of privatisation, consolidation and downsizing.
There needs also to be a corresponding shift away from grandiose ideas to level-headed business thinking. "There now needs to be a voice of reason and moderation from which we can build up a real aerospace presence based on well-weighted and down-to-earth decisions. The one lesson to be learned from all of this is that a reasonable degree of conservatism is not a bad thing," concludes IPTN's Habibie.
Source: Flight International
