DESPITE bulging order books, the mood at Airbus and Boeing is far from celebratory. Both aviation giants are moaning loudly that their production systems and supply chains are flawed, albeit for ostensibly different reasons. This week Louis Gallois, the boss of EADS, the Franco-German aerospace consortium that owns Airbus, added substance to warnings a week earlier by the planemaker's chief executive, Tom Enders, that the dollar's decline was "life-threatening" for the firm. Mr Gallois said it was no longer just a possibility that Airbus would have to move a large part of its production to "the dollar zone" or low-cost countries, but a certainty.
Airbus is already in the middle of Power8, a big restructuring plan that involves the loss of 10,000 jobs and the sale of several plants, which is meant to offset the losses caused by the delays in delivering the A380 superjumbo. But Power8 assumed that a euro was worth $1.35, not today's $1.47. Mr Gallois estimates that each 10-cent rise in the euro costs Airbus ?1 billion. At present, Airbus makes 76% of its purchases within Europe, but generates over 60% of its sales elsewhere. It must now shift some production abroad?known in French as délocalisation.
Until now, Airbus has mainly used délocalisation as a means of drumming up orders or investment. Next year it will open an assembly line for the single-aisle A320 in China, which will be followed by a second site for making composite components. The conversion of A320 passenger aircraft into a cargo variant will take place in Russia, which will also get 5% of the work on the new A350. And on November 30th Airbus, which has yet to penetrate the Japanese market, revealed that it was in talks with Japanese companies to take on more than 5% of the A350 programme.
Airbus ...