In its drive to become a balanced, integrated company, EADS need look no further than 100% subsidiary Eurocopter for the ideal model
Eurocopter is a model EADS business. Rooted in France and Germany, and expanding into Spain, the helicopter manufacturer has a strong North American presence and a balanced civil and military business that is growing healthily. Eurocopter is also helping globalise EADS by establishing assembly operations in Australia, China, Romania and the USA.
Eurocopter's revenues have been rising steadily, growing 4% last year to $2.61 billion - almost 70% of the total revenues of EADS's Aeronautics division. Sales in 2003 were split 49% civil to 51% military, with 57% for export. "2004 will be better than 2003," says chief executive Fabrice Brègier. "We expect an increase in sales of 10%, and in profit of closer to 15-20%."
Military growth
There is good reason for the bullish forecast, as the civil helicopter market is recovering as Eurocopter's military business takes off. While Eurocopter expects to maintain its share of the civil market at around 50% just as sales recover, the real growth will come from deliveries of the Tiger and NH90 military helicopters. Deliveries of Tiger combat helicopters have begun to France, with Germany receiving aircraft soon, and the first two Australian Tigers are due by year-end. NH90 deliveries begin in 2005, and will help take Eurocopter's military-civil balance to around 55:45 next year.
Eurocopter booked orders for 293 helicopters last year, which it calculates represents 45% of the world market in numbers and 25% in value. Brègier believes Eurocopter can maintain its leadership of the civil market "not just by increasing market share, but by finding new applications". He cites the potential for passenger transport, and points to the company's development work on the all-weather helicopter.
Brègier came to Eurocopter from missile manufacturer MBDA. Eurocopter was already integrated when he arrived, but he sees the potential to go further. The company was formed in 1992 by Aerospatiale and MBB, but its integration really began after the creation of EADS in 2000. "Once we had one shareholder, we could move towards optimisation rather than strict workshare," he says. "We have one chief executive; half French, half German management; and streamlined development and production. Eurocopter is EADS's most integrated company."
Instead of separate French and German companies, there are centres of excellence. "Eurocopter Deutschland is very strong in composites, while Eurocopter France is very strong in dynamics," says Brègier. "There is one design office and technical directorate with a presence in both countries." The company is also expanding into Spain, as a result of the Spanish government's 2003 selection of the Tiger combat helicopter.
Existing Eurocopter and EADS Casa subsidiaries have been merged to create a Eurocopter Espana with "critical size", says Brègier. EADS Casa is now a shareholder in Eurocopter, with 5%, and the intent is for Spain to become a partner in the Tiger programme alongside France and Germany. "Spain is clearly the third pillar of the overall Eurocopter group," says Brègier.
The USA, and subsidiary American Eurocopter, could also be said to be a pillar of the company. The Grand Prairie, Texas-based sales and support arm is expanding by establishing an assembly and completion site in Columbus, Mississippi. The site, which will formally open in September, is targeted at the emerging US homeland security market and will begin assembling AS350 light turbine helicopters next year. Brègier says the plant could also play a role in the re-engining of Eurocopter HH-65 Dolphin helicopters operated by the US Coast Guard.
Outsourcing
Eurocopter has been active in establishing assembly operations outside its home countries, taking a 51% stake in the Eurocopter Romania joint venture to assemble EC135s and upgrade Pumas locally. It bought 100% of Australian Aerospace to support local assembly of the Tiger. In June, Eurocopter signed an agreement covering assembly of its EC120 light helicopter in China by Harbin-based Hafei Aviation Industry. China has previously built the AS365 Dauphin under licence.
Eurocopter is also looking at outsourcing as a way to cut costs and offset the weak US dollar. "We need to reduce our cost base and provide more natural hedging against the US dollar," says Brègier. The plan for what can be outsourced, and to where, "is in line with overall EADS strategy", he says.
GRAHAM WARWICK / WASHINGTON DC
Source: Flight International
