EADS co-chief executive Louis Gallois, has given his fullest yet public view of the situation at Airbus in an exclusive interview with south-western French daily newspaper La Dépêche du Midi - published on the airframer's doorstep in Toulouse.
In a wide-ranging discussion Gallois declares that the Power 8 recovery plan is aimed at securing the very future of Airbus, and he says no measures have so far been excluded.
The full text of the original interview in French can be found at La Dépêche du Midi here, and an English translation is provided below.
La Dépêche: What is the scope of the Power 8 plan for Toulouse and for Airbus France?
Gallois: The Power 8 plan concerns the whole of Airbus’ activities. Five of the factory sites that it includes have already started on this course, namely; the acceleration of development programmes; supplier relationships, structural cost savings (a reduction of 30% until 2010), productivity gains to be achieved throughout the industrial process and finally, cash flow generation.
The three following elements are at the preliminary study stage; these concern Airbus sites and the division of workshare, the allocation of final assembly lines between Toulouse and Hamburg and the “make or buy” initiative to decide on what we manufacture ourselves internally and what we can outsource. In these three areas, any rumours currently going around are pure speculation. I have not received any report on this yet and so therefore I have yet to make any decision.
Your self restraint on making any announcement on the impact on jobs, has it been forced on you by French presidential election concerns?
Absolutely not. On the contrary, the [Airbus] governments, very like Airbus’ “historic” shareholders have supported this action plan which I now have to carry out. But it serves nobody’s purpose to make premature announcements which only panic and put people in the firing line. Each issue must be dealt with on an individual basis, taking its own time, with haste but without dragging on too long.
Is this the “Gallois method”?
I do not have any particular method but because I am a mature person, I also have a certain fund of experience….And I know that it is fundamental to respond to concerns, making sure that employees, suppliers and community bodies know exactly how we are going to put this plan into action. I have said it before and I’ll keep on repeating it: all will be conducted in the spirit of dialogue and consultation. We will not abandon anyone.
Was it his relationship with parent company EADS which led to the departure of Christian Streiff?
I regret his departure because he did some very good work. There was, furthermore, no difference of opinion between us, neither on a basic level nor on the proposed method to adopt. Even without the A380 problems, it would have been necessary to deploy the Power 8 plan anyway simply to tackle the weakness of the dollar. While 100% of our aircraft sales are billed in dollars, only 50% of our costs are paid in this currency. Because of the weakening of the dollar, we have lost 20% of our competitiveness to Boeing since the launch of the A380 programme in 2000. We cannot allow this situation to remain! Without Power 8 we would not be able to launch the A350 programme. It is the very future of Airbus which is in the balance.
What is the extent of this reduction?
I have some figures in my head, but I am keeping them to myself…We are talking with some sub-contractors with the aim of examining the conditions in which they themselves could produce in the dollar zone to lower their production costs and to weaken this much-talked about dollar effect. A fairly extensive [supply] chain reorganisation is necessary, but we must take account of local problems that this poses such as in terms of jobs and the fabric of activities, at the same time we cannot take everything into account.
How are you going to redefine the industrial partnership between Toulouse and Hamburg?
The Power8 plan cannot be applied in an equity context between the four origin countries of Airbus. The efforts must be balanced.
It is not a very industrial approach…
Industry is not done in the abstract! We must take account of the historical, political and geographic realities which made Airbus. The communities have given their agreement to important investments: for example Hamburg, with the runway extension, and Toulouse with their route-widening programme. The sites at Toulouse and Hamburg are not, of course, called into question by our plan but one can ask oneself if it is not possible to envisage a better division of functions between them.
From this perspective, is it possible to foresee the transfer of factory sites?
We will study all options without blinkers including the solutions used by Boeing which has sold some of its sites. Of course, everyone prefers to be in the arms of their parent company but with this dossier I do not have preconceived ideas and we will be pragmatic.
Don’t the political constraints limit your room for manoeuvre?
The political authorities are completely aware of the necessity for in-depth reform. It is vital for the future of Airbus. The politicians know this and will follow us. But we also know that we must communicate with them.
Will this pragmatic approach lead you to increase production rates in China or to open a factory in the USA?
The assembly lines that we envisage creating in China or the USA [for refuelling aircraft for the US Air Force] are above all related to market access rather than economic reasons. Moreover there is a discussion with the Chinese on the economic conditions regarding this factory. We can also imagine calling on engineering capacity outside our country of origin to handle our strong growth. India, Russia or Brazil can be solutions.
How can you succeed in delivering 450 aircraft in 2007 while limiting the number of contract workers and temporary staff on the line?
The blue collar staff are not the first people aimed at by the Power 8 plan taking into account the requirements dictated by the delivery rates. We will still have recourse to the contract-workers and temporary staff next year. I don’t see how we could do otherwise, even if their number is, by their nature, variable.
Where are you with the plan to absorb the A380 delays?
We don’t have any choice but to stick with it! My information, currently, is encouraging. I have the feeling that the manner in which Mario Heinen, the new programme manager, has put in place the teams and working methods is good. This is as true for the first 25 aircraft which will be built according to the ‘traditional’ method as for the subsequent ones which will be the subject of a total integration of information tools. The process is better and better controlled. So I have confidence in the success of the plan.
What is the situation with the A350?
It is very important for Airbus. But we have to be able to quickly convince the EADS board of our capacity to mobilise the engineering and financial resources to launch the aircraft.
Will Airbus be able to continue to benefit from the reimbursable loans approved by Europe?
This is a subject about which we are in continuing contact with Brussels and the relevant authorities. All the possibilities are being studied. The decisions to be taken are not related, regarding deadlines, to the launch of the A350 because the financing requirements of the A350 are still limited.
You left Aerospatiale in 1995. What kind of Airbus do you find now?
Airbus has completely changed and taken on another dimension but, even after seven or eight years, it is not yet totally integrated, which is one of the major difficulties of the A380. The integration of Airbus is a priority requirement. You can’t have a functioning system with hidden national hierarchies in parallel with the Airbus chain of command. That relates to everyone. No country has exclusivity in this area.
You are looking for a number two. There is talk of Fabrice Brégier, the current head of Eurocopter?
People talk, people talk, but I don’t talk! The leaks are not coming from me. The appointment will be made as soon as possible. Each day brings it closer.
Does EADS’ shareholding have to evolve with the increasing aspirations of the Russians, Germans and Spanish?
The managers don’t comment on the shareholders. We benefit from the confidence and the support of the board and its co-presidents Arnaud Lagardère and Manfred Bischoff. We also need calm and serenity to carry our heavy workloads. We need calm and serenity to regain the confidence of our clients. They have been a little abused lately. And that is the reason why I created a ninth module in Power 8 – to satisfy the customer!”
Source: FlightGlobal.com