Eurocopter ready for battle

Chief executive sets out plans to cut costs and improve efficiency to maintain manufacturer's global dominance

"We're under attack in all segments of the business and we have to fight every corner of the market if we want to maintain our position," says Eurocopter chief executive Fabrice Brégier.

For a manufacturer that has achieved world dominance, doubled its orders in three years and holds a record order backlog - for more than 1,000 helicopters worth €11 billion ($13.9 billion) - this is a surprising comment. But the Franco-German manufacturer is undertaking the biggest reorganisation in its history to ensure it maintains its position.

Eurocopter's success is directly linked to its current product line-up of civil, military and paramilitary helicopters, which coincides with unprecedented global demand in these three categories. "We think sales will increase from 390 helicopters in 2006 to 400 or 500 for the next four or five years, possibly peaking at 600, then have a soft landing at around 500 for the next five years," says Brégier.

With parent company EADS looking over its shoulder as it deals with the troubled Airbus, Eurocopter is under pressure as never before to cut costs and improve efficiency. EADS is demanding far greater integration of group capabilities and reduction of the international cost base. This means reducing the supply chain and co-ordinating with EADS on procurement. "It is about the way divisions and business units work together," says Brégier. "We're all in the same boat."

Eurocopter's win of the US Light Utility Helicopter programme in June with its UH-145 was a landmark penetration of the US defence market, which will see production of 322 machines, most of them built in the USA. Brégier says Sikorsky is the "ideal" partner and hints at closer co-operation on other programmes, one of which may be the planned US/European Logistics Transport Helicopter.

Other major international agree­ments include the 50:50 co-operation with China to develop and manufacture the 6-8t EC175 and the partnership with Korea Aerospace Industries to develop South Korea's first military transport helicopter. Spain - now heralded as the "third pillar" of Eurocopter - is about to confirm its order for 45 NH90s on top of 24 Tiger anti-tank helicopters and will have final assembly lines for both aircraft as well as for the civil EC135. Australia, with orders and final assembly of the Tiger and NH90, is fast becoming one of Eurocopter's biggest international suppliers.

Eurocopter's commercial directorate is being reorganised to provide global packages covering mission requirements and to give each customer a single point of entry to the company. "This reorganisation is unique because we cover so many market segments," says Brégier. "It will give us the intelligent advance to stay ahead."

The two-year delay of the Airbus A380 has not been lost on Eurocopter as it sorts out the monumental task of bringing its NH90 military transport programme back on track. Although it is on nothing like the scale of the problems affecting A380, there is a worrying parallel in that both delay scenarios were linked to the desire to offer customers the most possible options, adding mind-boggling complexity. In the NH90, for example, there are no fewer than 25 versions for the 14 customers to date, produced in two basic variants on five production lines.

Thanks to robust management, the programme is now on track, and while conceding there were internal reasons for the delays, Brégier points to the "nightmare" of national approval and certification procedures. NATO management agency approval was awarded only in early October - clearing the way for delivery of the first machine to Germany - 18 months later than called for in the original schedule. "We really have to be a lot more rigorous in multinational programmes such as this," Brégier concedes.

The first of several major cost-cutting initiatives is seen in the EC175 programme with China, where the number of subcontractors is being slashed from 300 to less than 100, saving one-third in international procurement costs. "It means we'll be relying on a lower number of suppliers and getting better proposals from them," says customers senior executive vice-president Philippe Harache.

Brégier says it is time to "speed things up" on the supplier front. "We want to reduce the number of suppliers globally by 50% and encourage the stronger suppliers to take responsibility for some of the subsystems. We also want to gradually migrate into emerging economies such as India, where there are excellent education and technical capabilities."

Research and technology will be spared from cost-cutting, says Brégier, pointing to Eurocopter's introduction of fly-by-wire flight control on the NH90 and its history of advanced rotor design. "We actually want to increase R&T expenditure because this provides the fuel for our future success."

Source: Flight International