China has upgraded and restructured its aerospace industry and is attracting new international production partners
Paul Lewis/BEIJING
China's modern-day aerospace industry can be traced to 1951 and the establishment of the first state-run factory at Nanchang. It has gone on to produce more than 10,000 aircraft over the past 45 years, ranging from reversed-engineered Russian bombers to indigenously designed crop dusters. China is now determined to address its one major aerospace omission - the successful development and production of a civil passenger jet - by 2002.
The provisionally designated AirExpress AE-100 programme forms the centrepiece of a three-stage "take-off plan", intended to transform China's aerospace sector into a world-class industry by early in the next century. To implement the plan, the Government scrapped the former Ministry of Aerospace in June 1993 and replaced it with a new state enterprise, Aviation Industries of China (AVIC).
AVIC inherited a 560,000-strong payroll and an industry struggling with large-scale cutbacks in military production after more than 30 years of spoon-fed defence work. "In the 1980s we experienced a difficult time and had to change. We had to re-organise our products and find new markets," recalls Tang Xiaoping, AVIC director-general of international co-operation.
The response has been to diversify into non-aerospace activities, while at the same time trying to develop civil-aviation programmes. About 70% of sales in 1995, were generated by non-aviation products, such as light buses, minicabs, motorbikes and textiles, and this is projected to rise to 75% by the end of 1996. Defence still accounts for some 60-70% of aerospace output, but AVIC is hoping to redress this balance in favour of civil aerospace.
China's take-off plan identifies three clearly defined stages towards meeting its goal. The first phase has already begun with the licence-production of 20 McDonnell Douglas (MDC) MD-90-30 TrunkLiners by Shanghai Aviation Industrial (SAIC), followed by the development of a 120-seat regional jet and, finally, expanding this into a family of aircraft.
The MD-90 programme builds on SAIC's previous experience of assembling 35 MD-82/83 twinjets between 1987 and 1994. "We hope we can do more than 75% of the structural components here in China. Through this project, we want to increase our manufacturing capability, especially in the area of quality control and certification," says Tang.
LOCAL LEADERSHIP
Development of the proposed AE-100 represents the next step for China, with AVIC for the first time taking the major stake in an international co-development effort. It will play a full role in the aircraft's development, from the outset of preliminary design through to its entry into service. The regional jet will be produced in China, almost certainly by SAIC, with other state-run manufacturers in Chengdu, Shenyang and Xian supplying major subassemblies.
"The emphasis will be on Chinese engineers participating from the start," explains Tang. "We hope this will give us a chance to enhance our design, development and engineering capabilities. We'll go through all these processes so that we can train more and more people who will form the backbone of the next generation of Chinese engineers."
AVIC, however, recognised early on that the development of a modern, competitive 100-seat jet would be a technical and commercial non-starter without the involvement of a major Western partner. It was originally intended to set aside a 20% stake for either a European and US player, but with the removal of South Korea as a participant, this has now grown to 39%, with the possibility that it may go still higher.
Of the four companies and consortia competing to partner China, AVIC quickly ruled out Daimler-Benz, deeming its bid to be little more than a lifeline for Fokker. MDC quickly followed, with its pitch clearly at odds with the company's already launched 106-seat MD-95 programme. AVIC finally settled for Aero International (Regional) (AI(R)) over Boeing.
"Only the European consortium did not have a 100-seat aircraft, and so they were easier to talk to," discloses Tang. "We chose the one that was really interested in developing the aircraft. AI(R) wanted to launch this project. It was not just talk, they were genuine."
With China provisionally set to take 45%, the remaining 15% interest in the programme will be held by Singapore Technologies Aerospace (STAe). While Singapore's direct industrial participation will be limited mostly to software development and integration, its presence is of strategic importance for both AVIC and AI(R).
STAe has a long history of aerospace collaboration with China and Europe, such as that on the Eurocopter EC120 helicopter, and is eager to further promote itself as an East-West go-between. Singapore also maintains close links with Taiwan, and it is offering to share 33% or more of its stake in the AE-100 with Taiwan Aerospace and the state-run fighter manufacturer Aero Industry Development Centre.
"AVIC has also had direct talks with Taiwan and, from our standpoint, there is no problem with them participating in this project. The problem is on their side," states Tang. "If they participate, either directly or indirectly through Singapore, they will not allow our people to visit their sites. For certification and co-operation, this is a big problem." STAe is now working towards a compromise.
China and Singapore are pressing AI(R)'s Aero International Asia (AIA) subsidiary to widen the scope of European industrial involvement in the AE-100 programme. "We've already chosen Europe as our partner and made it very clear that we hope that Airbus can join this project- as soon as possible," says Tang.
ROOM FOR AIRBUS
This now entails some restructuring of the European AE-100 team to accommodate AI(R) and Airbus. While Aerospatiale and BAe are members of both consortiums, Alenia is not part of the Airbus family and, similarly, Airbus partners Daimler-Benz and CASA have never joined AI(R). Talks are now focused on forming a new Airbus-led Asian consortium, encompassing all five companies (Flight International, 9-15 October, P6). An announcement from Airbus is imminent.
By bringing Airbus into the fold, AVIC and STAe clearly hope to see the AE-100 become an adopted member of the consortium's family of narrow- and wide-body passenger aircraft. The move is intended to broaden the aircraft's international appeal and, perhaps more importantly, integrate it into Airbus' worldwide marketing and after-sales support structure.
AVIC, however, faces some major hurdles before it will be in a position to bed down any joint venture with Airbus. It had originally been hoped to reach broad agreement on the joint venture's structure, general terms and conditions, and the transfer of technology, by mid-October. With the new European teaming arrangements still to be finalised, the pace of negotiations has slowed. The end of 1996, or early 1997, is viewed as a more realistic goal.
One of the factors that has attracted China to Europe was that continent's much-vaunted use of new technology in aircraft design and its apparent willingness to share it. As AVIC is now discovering however, technology transfer carries with it a price, in this case $250 million (Flight International, 23-29 October, P4).
In lieu of any real Chinese experience of managing large-scale civil programmes, or producing 50 or more passenger aircraft a year, Europe's input to the programme will be considerable. Local production sites and methods need to be overhauled, design and test centres brought in line with international standards and personnel trained.
Airbus at the same time is keen to avoid any overlap between the AE-100 and its A320 family and, in particular, the 124-seat A319. China is proposing a baseline development of a 115- to 120-seat aircraft, followed by a shorter 90- to 100-seater and stretched 135- to 140-passenger aircraft. This has prompted some calls from Europe for the baseline model to be shrunk.
AVIC's response has been to argue that the AE-100's five-abreast configuration and different target market makes it distinct from the A320. Tang says that, as the AE-100 family grows, there will inevitably be overlap, as there was with the Boeing 737, 757 and 767 ranges. "That's something we need to have a serious talk about - maybe in the future," he says.
COMMONALITY COSTS
At the same time as it is trying to distance the AE-100 from the A320, AVIC paradoxically is busy discussing system commonality between the two aircraft. Interest is focused on fly-by-wire (FBW) flight controls, cockpit displays and the possibility of extending Airbus cross-crew qualification (CCQ) to the new aircraft.
As far as AIA is concerned, the use of a FBW system is of "critical importance," but AVIC says it has still to be convinced. "If we produce an aircraft without FBW it might be out of date, but it is also a question of cost. We talk to our European friends and they think the cost is lower than we do. We want to get more detailed costings and think about it," says Tang.
Other major decisions which need to be made in the next 12-18 months include selecting an avionics suite and engine. Avionics vendors are beating a path to Beijing, with Honey- well, Rockwell-Collins and Sextant Avionique, all establishing a presence there. Any suggestions that the latter, as an A320 supplier, is favoured are quickly dismissed. "We need some commonality, but that doesn't mean it will be exactly the same supplier," cautions Tang.
The choice engine remains equally open, with the BMW Rolls-Royce BR715, General Electric/Snecma CFM56-9 and Pratt & Whitney PW6000 all under consideration. "Acceptability to the market, especially performance, reliability and reputation, he will be the first consideration," claims Tang, but adds in the same breath that manufacturers "-should consider industrial co-operation with China".
AVIC estimates that there is a world market for upwards of 3,000 aircraft of a similar size to the AE-100 by the year 2015, and it is confident of capturing one-third of this. Its future success to a large extent is going to hinge on the development of a regional-aircraft market in China. It is boldly predicting a local need for 400 aircraft. All the evidence to date, however, suggests that Chinese airlines are more interested in jet-powered aircraft with at least 150 seats.
The existence of a market alone is not going to guarantee sales. While AVIC controls China's aerospace industry past practice suggest that, it has little or no say over what local airlines purchase. MDC won the TrunkLiner battle, but Boeing won the war by outselling MDC. Chinese carriers bought more 737s and 757s than MDC MD-80/90s.
Source: Flight International