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Topic: Comac Building 4,000 Acre 11 Building Factory...
Username: morrisond
Posted 2012-11-07 06:44:11 and read 1099 times.

Please see the attached article http://www.flightglobal.com/news/art...y-of-vision-for-comac-c919-378637/

That sounds like one very large factory - notice the mention of twin aisle capability as well.

Who thinks that after 2025'ish Boeing and Airbus will sell more 50% of what they were projecting to the Chineese and many others in the world?

It's going to be pretty hard to compete with a country who most likely will not only sell at barely a profit to maintain jobs - they will most likely sell at substantial losses to to take share and given they are pretty good at figuring out how to build things with substantially lower labor costs - there costs will be much lower anyways.

If Boeing and Airbus want to compete in that space in the future they are going to have to spend the next decade figuring out how to slash there production costs by an order of magnitude.

Time to figure out automated production of non-autoclave frames.....

Topic: RE: Comac Building 4,000 Acre 11 Building Factory...
Username: tdscanuck
Posted 2012-11-07 07:45:37 and read 1105 times.

Quoting morrisond (Thread starter):
Who thinks that after 2025'ish Boeing and Airbus will sell more 50% of what they were projecting to the Chineese and many others in the world?

Me. 13 years is too fast for even the Chinese to have a commercially competitive widebody or to have the narrowbody production capacity to satisfy their own demand (all the FAL's in the world don't help when you're pulling on the same supply chain). Give them 20-30 years, they'll probably have it.

Quoting morrisond (Thread starter):
It's going to be pretty hard to compete with a country who most likely will not only sell at barely a profit to maintain jobs - they will most likely sell at substantial losses to to take share and given they are pretty good at figuring out how to build things with substantially lower labor costs - there costs will be much lower anyways.

Labour costs are a relatively small piece of the overall cost. The Chinese certainly have a labour cost advantage but it's countered by a significant (today) technology and supply chain penalty. The supply chain issue will eventually go away but, at the same time, the labour advantage will erode to. They'll certainly be competitive but it's not the slam-dunk it's often portrayed to be.

Quoting morrisond (Thread starter):
If Boeing and Airbus want to compete in that space in the future they are going to have to spend the next decade figuring out how to slash there production costs by an order of magnitude.

Nope. For starters, China's cost advantage isn't an order of magnitude, so A & B don't need to cut by the that much. But, more importantly, they will compete on technology and performance, not price.

Tom.

Topic: RE: Comac Building 4,000 Acre 11 Building Factory...
Username: astuteman
Posted 2012-11-07 08:19:10 and read 1102 times.

Quoting morrisond (Thread starter):
If Boeing and Airbus want to compete in that space in the future they are going to have to spend the next decade figuring out how to slash there production costs by an order of magnitude

move portions of the assembly processes to China?

If you can't beat em .......

Rgds

Topic: RE: Comac Building 4,000 Acre 11 Building Factory...
Username: sweair
Posted 2012-11-07 08:25:34 and read 1102 times.

A+B can always play the safety card, CAAC having third world standards for safety regulations.

Topic: RE: Comac Building 4,000 Acre 11 Building Factory...
Username: Aesma
Posted 2012-11-07 08:55:35 and read 1105 times.

Brazil and even Russia are ahead of China and they don't really compete with A/B yet, so I'm not that worried. And that's for airframes, for engines and systems the west is the game. And as tdscanuck said, China's wages are increasing rapidly. As we saw with the high speed rail disaster and many other scandals, China's populace will not stand for subpar security forever either.

Topic: RE: Comac Building 4,000 Acre 11 Building Factory...
Username: MountainFlyer
Posted 2012-11-07 08:59:58 and read 1105 times.

IMHO, before China could feasibly market a major product like an airliner outside of China, they will have to overcome major stigma with production quality. China has this funny habit of flooding markets with sub-par products, often copies of similar non-Chinese products, in order to gain market share. Sure, it works just fine with consumer items sold at Wal Mart, but when was the last time you saw a Chinese car on the road?

One small example was in 2008 when gas prices spiked, scooter sales in the US skyrocketed. Chinese companies took advantage of this and flooded the US with cheap, junky scooters that had about as much reliability as Power Wheels cars with absolutely no customer service. In some cases, resellers are still trying to offload 2008 inventory of these things, many of which can barely eek out a few hundred miles of use before major failure. After many hard learned lessons, the market for these scooters largely shifted back to high quality Japanese, European, and even Taiwanese products that often cost at least two or three times as much as the Chinese products. Many people decided the up-front savings was not even close to worth it.

Granted, scooters can hardly be compared to airliners, but I think the same principle applies. We have all seen how China's high speed rail systems have come under scrutiny do to some high profile accidents in the last couple of years. China will need to prove their ability to increase quality control and reliability before they can expect to become major players in the world airliner market IMHO. It will probably happen, but it is going to take time.

On a side note, foreign companies with production in China seem to have a better stigma seeing as their quality control oversight seems to be better than that of native Chinese companies.

Topic: RE: Comac Building 4,000 Acre 11 Building Factory...
Username: Aither
Posted 2012-11-07 09:25:55 and read 1102 times.

Airbus & Boeing have both so much subcontracted the work to big suppliers they can now provide fully integrated systems. It has not became so difficult to build an airplane anymore : just sign contracts with Thales, Honeywell, Rolls Royce etc. and you get almost an entire aircraft done.

[Edited 2012-11-07 09:27:39]

Topic: RE: Comac Building 4,000 Acre 11 Building Factory...
Username: morrisond
Posted 2012-11-07 09:36:24 and read 1102 times.

I wasn't thinking of China selling it's first Gen Single aisle and twin aisle outside China - I was more referencing the fact that China will compel it's airlines to buy Local and China will put pressure on places like Africa to buy it's product as well.

The Chineese market especially figures large in Airbus and Boeing sales for the next 20 years - neither forecast assumes a Chineese widebody or significant Chineese narrowbodies - you don't a factory as big as they are to build 10 per year....

Topic: RE: Comac Building 4,000 Acre 11 Building Factory...
Username: KiwiRob
Posted 2012-11-07 10:10:35 and read 1101 times.

Quoting tdscanuck (Reply 1):
Me. 13 years is too fast for even the Chinese to have a commercially competitive widebody or to have the narrowbody production capacity to satisfy their own demand (all the FAL's in the world don't help when you're pulling on the same supply chain). Give them 20-30 years, they'll probably have it.

Look at how quickly the Chinese overtook first the Japanese and then the Korean shipbuilding industry, when they set their minds to something they can achieve a lot in a very short space of time. I don't see it being a lot different in the aerospace industry.

Topic: RE: Comac Building 4,000 Acre 11 Building Factory...
Username: morrisond
Posted 2012-11-07 11:37:21 and read 1102 times.

Quoting KiwiRob (Reply 8):
Look at how quickly the Chinese overtook first the Japanese and then the Korean shipbuilding industry, when they set their minds to something they can achieve a lot in a very short space of time. I don't see it being a lot different in the aerospace industry

Agreed - I would bet they annouce a Twin Aisle aircraft in 2015 (Once they have had time to reverse engineer the 787) for early 2020's intro and will be making 50-100 per year by 2025 - the one thing they know how is to build on very large scales.

Boeing and Airbus ignore this threat at there own peril.

Topic: RE: Comac Building 4,000 Acre 11 Building Factory...
Username: airbazar
Posted 2012-11-07 12:44:37 and read 1103 times.

Quoting KiwiRob (Reply 8):
Look at how quickly the Chinese overtook first the Japanese and then the Korean shipbuilding industry, when they set their minds to something they can achieve a lot in a very short space of time. I don't see it being a lot different in the aerospace industry.

Ships don't carry thousands upon thousands of families every day to go visit grandma and grandpa   You're comparing apples and oranges.

Quoting morrisond (Reply 7):
I wasn't thinking of China selling it's first Gen Single aisle and twin aisle outside China - I was more referencing the fact that China will compel it's airlines to buy Local and China will put pressure on places like Africa to buy it's product as well.

That's a more relevant point but they've tried that before and failed. Russia and Brazil are far ahead of China and they still haven't made a big dent into the NB market. My first visit to China was in 1992 and back then the argument was exactly the same. It's been 20 years and still nothing.

Topic: RE: Comac Building 4,000 Acre 11 Building Factory...
Username: cosmofly
Posted 2012-11-07 13:19:10 and read 1101 times.

Quoting Aesma (Reply 4):
Brazil and even Russia are ahead of China and they don't really compete with A/B yet, so I'm not that worried.

Only the paranoid survive
Posted 2012-11-07 13:24:56 and read 1105 times.

The A.net filter does not like the name of the book so it deletes my link.   It is by Intel CEO Andy Grove

[Edited 2012-11-07 13:26:29]

Topic: RE: Comac Building 4,000 Acre 11 Building Factory...
Username: Aither
Posted 2012-11-07 15:44:28 and read 1099 times.

I'm sure A&B have identified the threat but they are owned by short sighted investors. Instead of keeping innovation within their walls they are subcontracting for profitability. It just makes innovation available for new competitors as the know how is now subcontracted outside these companies.

Meantime in China :
"Comac's research center requested most of its 2,000 employees work from 8:30 am to 8:30 pm Monday to Friday, and eight and a half hours on Saturdays for the rest of the year, according to one of the people, who asked not to be identified because they aren't authorized to release the details. Workers previously did overtime only for specific projects, the person said. "

Topic: RE: Comac Building 4,000 Acre 11 Building Factory...
Username: GSPSPOT
Posted 2012-11-07 15:48:01 and read 1103 times.

Quoting morrisond (Reply 9):
Agreed - I would bet they annouce a Twin Aisle aircraft in 2015 (Once they have had time to reverse engineer the 787) for early 2020's intro and will be making 50-100 per year by 2025 - the one thing they know how is to build on very large scales.

I think they will be able sell these proposed airframes to their own captive airlines just fine, but international carriers (and the pax they need to be willing to fly on them) will be a completely different story. Most folks, especially in the West, want to see a proven track record and some kind of proven competence & reliability before even CONSIDERING a move to a new manufacturer.

Topic: RE: Comac Building 4,000 Acre 11 Building Factory...
Username: RyanairGuru
Posted 2012-11-07 16:07:47 and read 1099 times.

Quoting MountainFlyer (Reply 5):
before China could feasibly market a major product like an airliner outside of China, they will have to overcome major stigma with production quality

Before Japan could ever sell a car in the West...

I totally realise that there is nothing in common between a car and a plane other than that they both move, but if they put their mind to it these countries can - with patience - shift peoples' mentality,

(see also: the rise of Skoda in Europe over the past 20 years)

Quoting MountainFlyer (Reply 5):
when was the last time you saw a Chinese car on the road?

Actually they are now exporting cars to Australia. Admittedly, though, the only people who are buying them are those that want a new car but can't afford anything else. I genuinely believe that they are simply trying to prove that they work, a loss is inconsequential to them. It's something of a long term investment.

http://www.cherymotors.com.au/
http://www.greatwallmotors.com.au/

Quoting morrisond (Reply 7):
China will put pressure on places like Africa to buy it's product as well.

Good point. China can be quite "persuasive" in trade negotiations...

[Edited 2012-11-07 16:14:08]

[Edited 2012-11-07 16:16:07]

Topic: RE: Comac Building 4,000 Acre 11 Building Factory...
Username: morrisond
Posted 2012-11-07 16:10:18 and read 1099 times.

GPSPOT see my reply No 7, I made that exact point -sales outside of China will be pretty small but we have to remember just how big the Chineese air market could be by Mid 2020's - a place where B & A are expecting to sell 100's of wide bodies. I would hazard a guess that India or the former Soviet states won't have much of an issue either - that's only about 50% of the World's population.

Besides if they use western engines, avionics and mostly systems I wouldn't have that much of an issue flying in a Chineese frame and most of the public won't care either.

I would also guess that the time between generations for the Chineese will be much shorter as well, they should be onto second gen single aisle by early 2020's and second gen twin aisle before the end of the 2020's.

Topic: RE: Comac Building 4,000 Acre 11 Building Factory...
Username: tdscanuck
Posted 2012-11-07 17:42:37 and read 1099 times.

Quoting Aither (Reply 6):
It has not became so difficult to build an airplane anymore : just sign contracts with Thales, Honeywell, Rolls Royce etc. and you get almost an entire aircraft done.

With the tiny minor detail of structure, aerodynamics, flight controls, testing, and support...something only the OEM's know how to do at the moment (at least at commercial scale). And they're not sharing.

Quoting KiwiRob (Reply 8):
Look at how quickly the Chinese overtook first the Japanese and then the Korean shipbuilding industry, when they set their minds to something they can achieve a lot in a very short space of time. I don't see it being a lot different in the aerospace industry.

The *huge* difference is that China has the internal supply chain to build ships. The few bits they can't do internally are coming from non-saturated supply-chains. In stark contrast, the major airframe Tier 1 suppliers don't have enough capacity to support much excess production right now. They will ramp up, to be sure, but that takes time and money and cannot be done as quickly because they're not under Chinese control.

Quoting morrisond (Reply 9):
Boeing and Airbus ignore this threat at there own peril.

In what fantasyland are Boeing and Airbus ignoring this threat?

Quoting Aither (Reply 13):
Instead of keeping innovation within their walls they are subcontracting for profitability.

Who figured out all composite primary structure? Chevrons? Brake-to-vacate? Cockpit commonality? Drooped spoilers? Streamwise flaps? All-electric architecture? FBW? The OEM's. Don't confuse subcontracting construction with subcontracting innovation.

Tom.

Topic: RE: Comac Building 4,000 Acre 11 Building Factory...
Username: JoeCanuck
Posted 2012-11-07 20:35:30 and read 1099 times.

China is one day going to be able to compete but it's probably going to take a couple of decades. First, it's a moving target. China has yet to be able to produce an airliner from 2 generations back...this when they had the entire template to work off of.

Next, their next gen aircraft still hasn't made it off of the CAD screen...this when they are assembling the very plane they are basically copying.

It took the better part of a decade to get the 787 into service and Boeing is pretty experienced building twin aisle aircraft.

So l reckon it will be at least double that, AFTER they decide to build a twin aisle.

It's not that they aren't capable of learning how to do it...it's just that there is a whole lot to learn...and it takes a long time to learn it.

Topic: RE: Comac Building 4,000 Acre 11 Building Factory...
Username: PHX787
Posted 2012-11-07 20:42:54 and read 1099 times.

China is in a HUGE bubble right now, and this whole aviation venture is only adding more air to the bubble. Any day now, this bubble is going to pop, unless China does something to actually build upon what they are creating. I'm just sitting here waiting.

Topic: RE: Comac Building 4,000 Acre 11 Building Factory...
Username: KiwiRob
Posted 2012-11-08 00:07:07 and read 1098 times.

Quoting MountainFlyer (Reply 5):
but when was the last time you saw a Chinese car on the road?

They are gaining in popularity in Russia and Eastern Europe; as the products get better they will do like the Japanese and Koreans before them produce excellent products at prices other companies can't match.

Quoting airbazar (Reply 10):
Ships don't carry thousands upon thousands of families every day to go visit grandma and grandpa You're comparing apples and oranges.

No they are just the backbone of world trade. The Chinese will soon entre the cruise ship market where they will produce a product which will carry thousands of families.

Quoting tdscanuck (Reply 17):
The *huge* difference is that China has the internal supply chain to build ships. The few bits they can't do internally are coming from non-saturated supply-chains. In stark contrast, the major airframe Tier 1 suppliers don't have enough capacity to support much excess production right now.

Most of the major suppliers to the maine industry in China have sent up manufacturing plants in China, just like they did in Korea, I don't see any reason why component suppliers to the aero industry couldn't do the same, it is after all in there best interests to do so.

Topic: RE: Comac Building 4,000 Acre 11 Building Factory...
Username: MountainFlyer
Posted 2012-11-08 06:11:23 and read 1098 times.

Quoting RyanairGuru (Reply 15):
Before Japan could ever sell a car in the West...

I totally realize that there is nothing in common between a car and a plane other than that they both move, but if they put their mind to it these countries can - with patience - shift peoples' mentality,

...and Japan is really only now, a good 40 years after they broke into the western auto market, starting to make inroads into the airliner market with the MRJ. I am not saying China can't, I am simply stating what must be overcome before they can.

I realize it is not totally accurate to compare Japan and China, but all the same, there are some similarities. Japan took a couple decades to truly break into the western auto market, and that was with an arguably superior product. China is a good 40 years behind Japan in that respect, and they have an arguably inferior product at this point. Also, a good chunk of Japan's success in the auto market could appropriately be attributed to the U.S. auto companies being complacent and believing their product was "good enough." I would argue that at least in the airliner world, while Boeing and Airbus are perhaps shortsighted as someone mentioned above, they still produce an excellent and superior product. If anything, A & B's products have gotten even better over the last 30 years. Let's hope it remains that way.

Quoting PHX787 (Reply 19):
China is in a HUGE bubble right now, and this whole aviation venture is only adding more air to the bubble. Any day now, this bubble is going to pop, unless China does something to actually build upon what they are creating. I'm just sitting here waiting.

   What he said. This could be a huge monkey wrench in everything China in the coming decade.

Quoting KiwiRob (Reply 20):
They are gaining in popularity in Russia and Eastern Europe; as the products get better they will do like the Japanese and Koreans before them produce excellent products at prices other companies can't match.

This is where I don't believe you can compare China to Japan. Others may disagree, but I believe Japan is different in the fact that they came to the market with a product that was arguably superior from an early stage, and they broke directly into western markets. Japan took advantage of western complacency did an excellent job of creating quality products at competitive prices. China is more or less using their pricing power and economic power to break into markets wherever they can, and quality, while improving, has been more or less of an secondary priority.

Topic: RE: Comac Building 4,000 Acre 11 Building Factory...
Username: morrisond
Posted 2012-11-08 06:59:57 and read 1098 times.

Was someone saying something about China 40 years to get up to Developed Country standards in Cars?

http://wot.motortrend.com/new-chines...41.html#13523863270681&188,shopper

Basically, the article is talking about a new Higher end Chineese car brand much like the Japaneese did with Lexus and Infiniti back in the 80's.

With the right partners anything is possible - Magna has the technology to essentially build a car for a manufacturer. You would also be surprised about how many modules in Modern Cars are not built by the OEM's and in fact do come from China - especially for North America Domestic Manufacturers.

Someone else pointed out that Aviation Suppliers don't have the capacity to suppy the Chineese with Engines and components for several hundred new aircraft and thousands over time - My point is that this won't be additional capacity - it will replace frames made by B&A who will no longer need those components.

It may not be by 2025 but by 2030 the Chineese will be a force to be reckoned with in large scale aircraft production.

Topic: RE: Comac Building 4,000 Acre 11 Building Factory...
Username: MountainFlyer
Posted 2012-11-08 07:42:39 and read 1098 times.

Quoting morrisond (Reply 22):
Was someone saying something about China 40 years to get up to Developed Country standards in Cars?

No, that is not what anyone said, at least not in terms of technology. Nowhere in any of my posts did I say China was behind on technology. That is what you are referring to by posting this article.

The 40 years reference refers to markets. Japan really started breaking into the western markets approx 40 years ago. Technology aside. China is only now beginning to break into markets outside of its own in the same markets. I'm not saying it is linear and that China will follow the same timeline, I'm simply saying China is nowhere near Japan in breaking into western markets...yet.

Also, I know you haven't said this, but technology is not synonymous with quality. US car manufacturers learned this the hard way in the 90's when they filled their vehicles with gadgets to try and impress buyers. Buyers preferred Japanese relative reliability vs gadgets and technology with relatively poor quality. The Chinese may have the technology, but I would still argue that quality is not up to standards...yet. Will it get there? Maybe...someday. That remains to be seen. Nothing is certain. Thirty or forty years ago we would not even be having this conversation since China was just another third-world country with a lot of people. Thirty years from now, who knows what will change. Maybe we'll all be flying in Russian planes by then.

Quoting morrisond (Reply 22):
Basically, the article is talking about a new Higher end Chineese car brand much like the Japaneese did with Lexus and Infiniti back in the 80's.

Exactly. The 80's were 30 years ago. Maybe my 40 years is a little too far.

Quoting morrisond (Reply 22):
You would also be surprised about how many modules in Modern Cars are not built by the OEM's and in fact do come from China - especially for North America Domestic Manufacturers.

I would not be surprised at all, but this proves nothing. In my first post I spoke explicitly about the difference between foreign companies with Chinese sourced suppliers. Many companies, including US and Japanese, have Chinese sourced suppliers, but those suppliers are generally subject to higher levels of quality control. The companies that I am referring to seem to be the ones you are saying are going to take over the world; the Chinese domestic manufacturers. They have no outside forces pushing quality control to the same levels as suppliers for foreign companies. That's one argument against a state run (or at least manipulated) economy. They don't have to answer to customers for quality. If the government provides the market (by pushing Chinese airlines to buy Chinese planes regardless of quality), they build.

Quoting morrisond (Reply 22):

It may not be by 2025 but by 2030 the Chineese will be a force to be reckoned with in large scale aircraft production.

I don't doubt that you're right, at least partially, but I also don't believe it is going to be the bloodbath you seem to think it might be.

[Edited 2012-11-08 07:43:05]

Topic: RE: Comac Building 4,000 Acre 11 Building Factory...
Username: tdscanuck
Posted 2012-11-08 08:59:36 and read 1101 times.

Quoting KiwiRob (Reply 20):
Most of the major suppliers to the maine industry in China have sent up manufacturing plants in China, just like they did in Korea, I don't see any reason why component suppliers to the aero industry couldn't do the same, it is after all in there best interests to do so.

They can, and in most cases they will, but it will take a lot longer than the purported 2025 timeframe. Also, for several key suppliers, it is *not* in their best interest to expose themselves to that level of technology transfer (for both strategic and legal reasons)...they will have to retain some key capabilities outside China.

Quoting morrisond (Reply 22):
Someone else pointed out that Aviation Suppliers don't have the capacity to suppy the Chineese with Engines and components for several hundred new aircraft and thousands over time - My point is that this won't be additional capacity - it will replace frames made by B&A who will no longer need those components.

It has to be additional capacity; the worldwide airliner demand is going up faster than the OEM's can keep up. If they're just re-allocating market share of existing capacity then the entire industry will fall on its face.

Tom.

Topic: RE: Comac Building 4,000 Acre 11 Building Factory...
Username: Aesma
Posted 2012-11-08 09:41:01 and read 1172 times.

Quoting cosmofly (Reply 11):
Only the paranoid survive

Well, what should A/B do they're not doing ? Seems to me their customers are already pushing them quite hard to come up with better airplanes.

Topic: RE: Comac Building 4,000 Acre 11 Building Factory...
Username: JoeCanuck
Posted 2012-11-08 12:38:59 and read 1188 times.

Quoting morrisond (Reply 22):

One of the most desirable and prestigious car brands in China is Buick. Their popularity in China is why GM never killed the brand when they axed Pontiac, Olds and Saturn.

They got to start in the middle by building western cars. They have also been very good at making exact copies under their own brand. The Chery QQ is an exact copy of the Daewoo Matiz, though they insist it was developed independently. There story fell apart when it was revealed that the doors of the QQ fit the Matiz exactly.

Even though they build the originals under license, they are still having trouble producing their own plane. The ARJ-21 is an MD-80 clone and it still isn't in service. The first plane was supposed to be delivered in 2005. The latest delivery date is sometime in 2013.

They have the a320 to copy and/'or emulate to develop the C919 and nobody really believes they'll make the 2014 first flight deadline.

They are struggling to develop planes a generation old, and if they really want to go toe to toe with Airbus and Boeing, they will be competing, not against the state of the art now, but the next generation state of the art.

There is no doubt they will eventually be able to match what A and B are doing, but it's an uphill climb...and it's a big hill.

Topic: RE: Comac Building 4,000 Acre 11 Building Factory...
Username: morrisond
Posted 2012-11-08 13:29:37 and read 1222 times.

I don't doubt that have a very big hill to climb - but the point I continually try to make - albeit I guess unsuccessfully is that whatever they end up producing will take directly out of B & A's projected sales to China, which are very significant.

They are building that factory to be able to produce at Western Scale - Hundred's of frames per year and they will make the chineese Carriers take the frames.

It's hard to compete with the threat of execution if you don't buy the Home Team's products

Topic: RE: Comac Building 4,000 Acre 11 Building Factory...
Username: Revelation
Posted 2012-11-08 14:07:55 and read 1216 times.

Quoting morrisond (Reply 27):
It's hard to compete with the threat of execution if you don't buy the Home Team's products

See http://en.wikipedia.org/wiki/Huawei for a textbook example.

Topic: RE: Comac Building 4,000 Acre 11 Building Factory...
Username: tdscanuck
Posted 2012-11-08 15:02:41 and read 1214 times.

Quoting morrisond (Reply 27):

I don't doubt that have a very big hill to climb - but the point I continually try to make - albeit I guess unsuccessfully is that whatever they end up producing will take directly out of B & A's projected sales to China, which are very significant.

As far as I know, A & B don't forecast individual sales to China. They forecast *demand* in China and then, separately, forecast what market share they expect to achieve in each segment. Neither Airbus nor Boeing are dumb enough to assume they'll have 100% market share between them for the next 20 years in China. So, yes, A & B will "lose" some potential sales to Chinese airframers. But all three of them will sell lots of airplanes in China.

As an economics professor put it, "If you make $1 billion and the other guy makes $2 billion, you didn't lose...you made $1 billion!".

Tom.

Topic: RE: Comac Building 4,000 Acre 11 Building Factory...
Username: redzeppelin
Posted 2012-11-08 15:24:47 and read 1222 times.

Quoting tdscanuck (Reply 1):
For starters, China's cost advantage isn't an order of magnitude, so A & B don't need to cut by the that much.

  
A friend of mine is a college economics professor. He told me recently that current trends indicate we are only 3-5 years from reaching the inflection point where it will no longer be cheaper for American companies to manufacture their goods in China. Of course, the general manufacturing industry doesn't necessarily follow the same economics of the aircraft industry. Their are different proportions of costs allocated to raw materials and shipping and the supply chains are different for every product. But they do have one thing in common: The labor costs are a relatively small piece of the pie.

Topic: RE: Comac Building 4,000 Acre 11 Building Factory...
Username: travelhound
Posted 2012-11-08 15:41:14 and read 1207 times.

Quoting KiwiRob (Reply 8):

Ship building is relatively basic when compared to manufacturing in the aerospace industry, compliance requirements are also relatively low in comparison.

I think one of the major advantages of manufacturing in China is the low cost of doing business and how this relates back to profit margins and ROI's.

To give you an example in Australia I had a small engineering business that employed thirteen people. Our wages bill was approx. $85,000-00/month. I am currently consulting for ship builders in Vietnam. For $85,000.00 / month they can employ 250 workers. My business turned over approx. $2.5 million/year where the Vietnamese business turns over approximately $45 million / year.

The Vietnamese business has effective margins approximately 10% higher and its working capital requirements / employee are negligible in comparison to my little business in Australia.

The main issues I am finding is that of compliance and more importantly the discipline associated with compliance. I'm not sure low cost / available workforce is going to simply overcome this factor. This will take time.

Topic: RE: Comac Building 4,000 Acre 11 Building Factory...
Username: morrisond
Posted 2012-11-08 16:12:01 and read 1212 times.

If you understand the Chinese model at all its not about making money it's about employing people, even if B&A have the same production cost Comac will undercut on price enough to make sure they sell enough to keep people employed - even if it means losing billions - which is typical for chineese companies

Topic: RE: Comac Building 4,000 Acre 11 Building Factory...
Username: aklrno
Posted 2012-11-08 22:50:06 and read 1200 times.

Quoting redzeppelin (Reply 30):

A friend of mine is a college economics professor. He told me recently that current trends indicate we are only 3-5 years from reaching the inflection point where it will no longer be cheaper for American companies to manufacture their goods in China. Of course, the general manufacturing industry doesn't necessarily follow the same economics of the aircraft industry. Their are different proportions of costs allocated to raw materials and shipping and the supply chains are different for every product. But they do have one thing in common: The labor costs are a relatively small piece of the pie.

I was about to make the same point, but I think for some products it is fewer than 3 years away.

30 years ago people were complaining that Japan and Europe (but mostly Japan) had an unfair cost advantage over US car makers. Now Japanese and European car companies have many US car plants because costs are lower. Airbus is going to build planes in Alabama because costs will be lower than Europe.

Labor costs are increasing rapidly in China. Long before 2025 the issue will be productivity as much (or more) than the labor costs. China will be a competitor, but far from invulnerable.

Topic: RE: Comac Building 4,000 Acre 11 Building Factory...
Username: B2443
Posted 2012-11-09 10:26:15 and read 1193 times.

I think the Chinese are doing ARJ/C9X9's for themselves, regardless of foreign orders. They need to modernize the entire industry inside out, not so much really to compete with A&B, which in short term, perhaps need to adjust their forecast as Chinese high speed rail is taking shape quickly. The high speed rail network so far has posed real threat to short haul flights in China already. They will double their tracks in a matter of years, thus further reducing demands in flights less than 4 hours.

Topic: RE: Comac Building 4,000 Acre 11 Building Factory...
Username: planemaker
Posted 2012-11-10 13:41:16 and read 1162 times.

Quoting morrisond (Reply 32):
- even if it means losing billions - which is typical for chineese companies

Increasingly there is little that is "typical" about Chinese companies, or China for that matter. And, certainly, nor is losing billions "typical".

So let's not over blow reality. The C919, almost entirely reliant on western technology in critical areas, will eventually be competitive with the NEO and MAX. When? No one really knows but judging from the ARJ21 it could very well be after NEOs are already coming off the Tianjin line.

Topic: RE: Comac Building 4,000 Acre 11 Building Factory...
Username: tdscanuck
Posted 2012-11-10 17:48:48 and read 1159 times.

Quoting planemaker (Reply 35):
The C919, almost entirely reliant on western technology in critical areas, will eventually be competitive with the NEO and MAX.

The C919 will never be competitive with the NEO or MAX. It's starting from so far behind that they can't catch up that fast...by the time they hit where the NEO and MAX are, the NEO and MAX will have moved ahead again. Whatever comes after the C919 might be, although I'd bet on one generation more than that.

Tom.

Topic: RE: Comac Building 4,000 Acre 11 Building Factory...
Username: CPHFF
Posted 2012-11-11 06:50:14 and read 1143 times.

They can't even get the ARJ21 Certified and delivered to customers. They've been at it for 8 years, and that aircraft is essentially a MD95 with new wing and engines.

I belive that the C919 will be aa complete failure, and i pity the Chinese Airlines who will be "bullied" in to flying them.

Topic: RE: Comac Building 4,000 Acre 11 Building Factory...
Username: planemaker
Posted 2012-11-11 12:03:51 and read 1124 times.

Quoting tdscanuck (Reply 36):

The C919 will never be competitive with the NEO or MAX. It's starting from so far behind that they can't catch up that fast...by the time they hit where the NEO and MAX are, the NEO and MAX will have moved ahead again.

To clarify, I was not referring to market share competitiveness, even within China... and that should be for fairly obvious reasons - from delayed EIS to the very low rate of projected production, just for example. However, as a "platform", claiming "never" is a bit too definitive considering that the A320 and 737 are already fairly "long in the tooth" and that the enabling tech for their "life extensions" is principally due to the engine technology... which COMAC is using.

As for the NEO and MAX "moving ahead again", there isn't really any area left for those platforms to "move ahead" on which the C919 wouldn't also move ahead on. As pointed out above, the engines are the key drivers for the NEO and MAX improvements. I agree that COMAC will be playing catch up... but not with the NEO or MAX but with the all-new A & B NB's.

Quoting CPHFF (Reply 37):
I belive that the C919 will be aa complete failure,

The C919 is a "strategic" program, much more so than a "commercial" program... so it is not going to be a "complete failure".


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