Lumberton
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Airbus May Set Up Assembly Line In China

Mon Dec 05, 2005 2:14 am

From Bloomberg:

Airbus to Expand in China; May Set Up Assembly Line (Update1)

This adds a whole new dimension to the outsourcing issue. Part of Airbus' new globalization strategy? I realize that the A320 is selling like crazy and Airbus can hardly keep up with the demand, but this is the first time that I've head of either Airbus or Boeing outsourcing the actual assembly of the airframe. I'd love to see Boeing set up a parallel assembly line in Japan for the 787 to "strike proof" this aircraft the next time the machinists contract comes up for negotiation.

Quote:
Airbus SAS, the world's largest commercial aircraft maker, said it may open a factory in China for assembling its single-aisle, A320 series of planes as part of a plan to expand operations in the country.
"When all is said and done, more will be said than done".
 
airfrnt
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RE: Airbus May Set Up Assembly Line In China

Mon Dec 05, 2005 2:18 am

This should be good for 50 A380s.
 
Lumberton
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RE: Airbus May Set Up Assembly Line In China

Mon Dec 05, 2005 2:37 am

Perhaps this is what Noel Forgeard really meant by a "chinese copy"?  Yeah sure
"When all is said and done, more will be said than done".
 
HS748
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RE: Airbus May Set Up Assembly Line In China

Mon Dec 05, 2005 2:52 am

A sound plan for ensuring the Chinese buy many more aircraft from Airbus. Good on them!
 
MarshalN
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RE: Airbus May Set Up Assembly Line In China

Mon Dec 05, 2005 2:53 am

Didn't MD, back in the day, set up a line in China too?

Yeah, there's certainly politics involved, but when it's a market this big, I'm sure Airbus (or Boeing) will be happy to do what they can do make it work.
 
Lumberton
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RE: Airbus May Set Up Assembly Line In China

Mon Dec 05, 2005 2:58 am

Quoting HS748 (Reply 3):
Good on them!

Indeed. I wonder where the wings will be made? Wink

Speculation. Do you think there will be a side agreement to this deal that says Airbus won't develop a successor to the A320 for x number of years, to allow a significant production run in China? Could be an incentive for Boeing to accelerate the replacement for the 737NG....
"When all is said and done, more will be said than done".
 
A319XFW
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RE: Airbus May Set Up Assembly Line In China

Mon Dec 05, 2005 2:59 am

Quoting Lumberton (Reply 5):
Indeed. I wonder where the wings will be made?

Airbus has already signed a deal to make 4 wingsets a month in Xian, so if you can add 2 and 2 together, there's your answer!
 
gigneil
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RE: Airbus May Set Up Assembly Line In China

Mon Dec 05, 2005 3:00 am

Quoting Lumberton (Thread starter):
Part of Airbus' new globalization strategy?

It isn't "new". Airbus has been a global company for quite a while now, to a greater extent than Boeing.

The 787 is Boeing's first "global" product.

Quoting Lumberton (Thread starter):
I realize that the A320 is selling like crazy and Airbus can hardly keep up with the demand, but this is the first time that I've head of either Airbus or Boeing outsourcing the actual assembly of the airframe.

They haven't, but MacDac made MD-80s in China and Embraer has also made ERJs there.

N
 
Lufthansa
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RE: Airbus May Set Up Assembly Line In China

Mon Dec 05, 2005 3:04 am

If i remember right the MD problem came down to some tricky technology transfer laws.

There was some equipment that was developed of military use that ended up being transfered to the chinese plant and the US government apparently had a major problem with it.

I also recall a problem with some sort of guidence chip used in some 738s or something, which was also used by the USAF...and therefore there was another big issue.... so it could be tricky... but from a business point of view, if they can get the quality right (and my, it is a nightmare in China... sure you can do it, and achieve it but it is no small feat) it could work really well.

We may end up seeing airbus set up plants all over the globe. Can you imagine seeing A350s roll out in Seattle, A319s in Shanghai and A380s in france? Throw in a few government contracts and it could happen yet.
 
A319XFW
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RE: Airbus May Set Up Assembly Line In China

Mon Dec 05, 2005 3:07 am

Quoting Lufthansa (Reply 8):
Can you imagine seeing A350s roll out in Seattle,

You mean a KC-30 roll out in Mobile.... But that is up to the Pentagon.
 
Lumberton
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RE: Airbus May Set Up Assembly Line In China

Mon Dec 05, 2005 3:08 am

Quoting Lufthansa (Reply 8):
We may end up seeing airbus set up plants all over the globe. Can you imagine seeing A350s roll out in Seattle, A319s in Shanghai and A380s in france? Throw in a few government contracts and it could happen yet.

I agree with your point, Lufthansa. However, didn't Airbus select a site in Alabama for their U.S. production site--if it ever materializes? This is the reality of manufacturing today, especially in an industry as fiercly competitive as this. Offsets have been part of the equation for years, but if the size of the market can justify it, assembly makes sense. Might cause some political fallout in the country (ies) of origin, though.
"When all is said and done, more will be said than done".
 
Lumberton
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RE: Airbus May Set Up Assembly Line In China

Mon Dec 05, 2005 7:53 am

More info on this topic from this article:

Airbus eyes China factory

Quote:
n Beijing, the official People's Daily has quoted Airbus officials as saying the company will shift all production of high-technology wings for the A320 narrow-body jet to China from Britain within seven years.

Noel Forgeard, a co-president of the European Aeronautic Defence and Space Company (EADS) which controls 80 per cent of Airbus, said recently that EADS did not rule out building a complete assembly line in China.

Mr Humbert said at the Dubai air show recently that technology transfer was necessary to achieve industrial cooperation. "The question is, how much of the latest technology are you able to transfer?" he asked.

"You have to make sure that you are the master of the newest technology and not give away technology which might work against you tomorrow, with competitors copying you later."

The MD-80 production in China has been referenced in previous posts on this thread, but I believe those aircraft were destined solely for the Chinese domestic market. This article, with its reference to all wing production for the A320 being shifted to China in 7 years, seems to indicate that the contemplated A320 assembly in China will be for export as well.
"When all is said and done, more will be said than done".
 
atmx2000
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RE: Airbus May Set Up Assembly Line In China

Mon Dec 05, 2005 7:59 am

Quoting Lumberton (Reply 11):
The MD-80 production in China has been referenced in previous posts on this thread, but I believe those aircraft were destined solely for the Chinese domestic market. This article, with its reference to all wing production for the A320 being shifted to China in 7 years, seems to indicate that the contemplated A320 assembly in China will be for export as well.

I can't help but feel that this an indication of the time frame for an A320 successor launch. 7 years from now is 2011, a long time from now. I would expect the succesor to be in market a few years of that. Otherwise, I can't see the UK being particularly happy about the loss of wing manufacturing.
ConcordeBoy is a twin supremacist!! He supports quadicide!!
 
Lumberton
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RE: Airbus May Set Up Assembly Line In China

Mon Dec 05, 2005 8:03 am

Quoting Atmx2000 (Reply 12):
Otherwise, I can't see the UK being particularly happy about the loss of wing manufacturing.

You and me both. I speculated earlier that there may be a side agreement though, that would allow the Chinese to produce this aircraft for awhile and that Airbus won't produce a successor to the A320 (Reply#5). Otherwise, wouldn't the Chinese look kind of foolish? I still think this deal will force Boeing's hand to develop the follow on to the 737NG.

[Edited 2005-12-05 00:13:57]
"When all is said and done, more will be said than done".
 
leelaw
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RE: Airbus May Set Up Assembly Line In China

Mon Dec 05, 2005 8:25 am

Quoting Lumberton (Reply 11):
Mr Humbert said at the Dubai air show recently that technology transfer was necessary to achieve industrial cooperation. "The question is, how much of the latest technology are you able to transfer?" he asked.

"You have to make sure that you are the master of the newest technology and not give away technology which might work against you tomorrow, with competitors copying you later."

Gustav, relationships based on trust are a beautiful thing!  Wink
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abba
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RE: Airbus May Set Up Assembly Line In China

Mon Dec 05, 2005 8:35 am

Quoting Lumberton (Reply 13):
You and me both. I speculated earlier that there may be a side agreement though, that would allow the Chinese to produce this aircraft for awhile and that Airbus won't produce a successor to the A320 (Reply#5). Otherwise, wouldn't the Chinese look kind of foolish? I still think this would force Boeing's hand to develop the follow on to the 737NG.

You seem to presume that if Airbus is going to develop an aircraft to succeed the 320 then that aircraft will not be produced in China. I think that Airbus' idea of having production in China is simply in order to save money. Everybody move production to China - so why not aircrafts? I don't know what an assembly line worker will get in French or Germany (or the US), but in China a good guess is that the monthly salary will be around US$ 250 - and then I have added a huge premium compared to what is usually offered to more ordinary workers. As the production of the 320 class aircraft is rather low margin business it certainly would make good sense to look for cheaper production so as (at least for some time) get that margin up.

Abba
 
Lumberton
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RE: Airbus May Set Up Assembly Line In China

Mon Dec 05, 2005 8:39 am

Quoting Abba (Reply 15):
As the production of the 320 class aircraft is rather low margin business it certainly would make good sense to look for cheaper production so as (at least for some time) get that margin up.

You bet it would, Abba. But the workers in Germany, France, and the UK probably have a different take on this. When Boeing was negotiating offsets in the 80's and 90's, the unions howled. Why would this situation be any different?
"When all is said and done, more will be said than done".
 
georgiabill
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RE: Airbus May Set Up Assembly Line In China

Mon Dec 05, 2005 8:40 am

I thought it was MD90's that were assembled in China! This didnot bring additional business to the company except for China Eastern no other Chinese airline purchased the MD11 or MD90. This mat help airbus,but certainly will help the Chinese to further develop their own aircraft.
 
atmx2000
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RE: Airbus May Set Up Assembly Line In China

Mon Dec 05, 2005 8:44 am

Quoting Abba (Reply 15):
You seem to presume that if Airbus is going to develop an aircraft to succeed the 320 then that aircraft will not be produced in China.

Apparently you missed the part Humbert was saying about not transferring the newest technology to potential competitors. The A320 wing is primarily metal. The A320 successor's wing is likely to be mostly composite. Composite winged commercial airliners are new technologies, and I don't see Airbus transferring that technology to China.
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mymorningsong
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RE: Airbus May Set Up Assembly Line In China

Mon Dec 05, 2005 9:24 am

http://news.yahoo.com/s/afp/20051204...oDMTBjMHVqMTQ4BHNlYwN5bnN1YmNhdA--

Interesting article. China about make an order for about 100 A320's right after Airbus agrees to move production to China. You scratch my back...

[Edited 2005-12-05 01:29:48]
 
abba
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RE: Airbus May Set Up Assembly Line In China

Mon Dec 05, 2005 11:06 am

Quoting Lumberton (Reply 16):

You bet it would, Abba. But the workers in Germany, France, and the UK probably have a different take on this. When Boeing was negotiating offsets in the 80's and 90's, the unions howled. Why would this situation be any different?

Valid point! However, I do believe that the unions is Europe do not have the power they used to have - in particular not in the UK after the Iron Lady. So even if this in the past would have been a major issue, it might not be such a big problem today.

Quoting Georgiabill (Reply 17):
I thought it was MD90's that were assembled in China! This didnot bring additional business to the company except for China Eastern no other Chinese airline purchased the MD11 or MD90. This mat help airbus,but certainly will help the Chinese to further develop their own aircraft.

But wasn't the MD90 not already on its way out when (some of) its production was moved to China? I do not think that you can save a product by moving the production of it to China!

Quoting Atmx2000 (Reply 18):
Apparently you missed the part Humbert was saying about not transferring the newest technology to potential competitors. The A320 wing is primarily metal. The A320 successor's wing is likely to be mostly composite. Composite winged commercial airliners are new technologies, and I don't see Airbus transferring that technology to China.

I saw that. However, when the production is moved (seven years from now) and a successor for the 320 is developed (I don't believe that this is going to be in the very near future), I wonder if these productuion techniques which today are all new will be considdered that new any longer? There might then be "new things" in parts (and in how they are designed) that will remain outside of China (and for Boeing's case Japan).

You could also well imagine that aircrafts at that time is build even more in elements than the 787 will be and that the final assembly will be kept in Europe but the production of big and labour intensive units will take place in China?

Finally there is also the point that Airbus by including China is also changing the rules of the game so that production techniques that will be appropriate in the West because they save labor will be much less interesting when production is taking place in places where labor costs are very low.

I think that this is a very complicated matter! Like to hear your comments!

Abba
 
N79969
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RE: Airbus May Set Up Assembly Line In China

Mon Dec 05, 2005 1:13 pm

Quoting Atmx2000 (Reply 12):
I can't help but feel that this an indication of the time frame for an A320 successor launch. 7 years from now is 2011, a long time from now. I would expect the succesor to be in market a few years of that. Otherwise, I can't see the UK being particularly happy about the loss of wing manufacturing.

I agree with this idea. Airbus is not going to move any cutting edge production to China and nor can they afford to offshore jobs from EU countries without some sort of protections. There is also a problem of intellectual property protection if they were to transfer the latest and greatest to China. This could be a good move for Airbus. I wonder what the labor unions will say though.

Who knows...20 years from now A320s could be rolling out of Chinese factories the way the VW bug kept rolling out of Mexican factories for many years...
 
grantcv
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RE: Airbus May Set Up Assembly Line In China

Mon Dec 05, 2005 1:49 pm

If production of airliners moves to China, then what will China buy from the west to try and even out the balance of trade? I sometimes wonder how this is all going to wind up eventually - all manufacturing in China, all service jobs in India. Maybe we should look into outsourcing CEO's to China.
 
abba
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RE: Airbus May Set Up Assembly Line In China

Mon Dec 05, 2005 2:42 pm

Quoting Grantcv (Reply 22):
If production of airliners moves to China, then what will China buy from the west to try and even out the balance of trade? I sometimes wonder how this is all going to wind up eventually - all manufacturing in China, all service jobs in India. Maybe we should look into outsourcing CEO's to China.

Many of the luxury products sold in China in its new and glittering shopping malls is produced cheeply in China and sold very expensively in China after having been a short trip abroad.

China dosn't need to do the final assembly as new techniqies are introduced (the 787). Let them do big labor intensive units that now can be engineered with more of a view to efficiency than to ease of production.

ABBA
 
planemaker
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RE: Airbus May Set Up Assembly Line In China

Mon Dec 05, 2005 3:46 pm

FYI, Bombardier is trying very hard to get Chinese government approval to have AVIC II as a risk sharing partner on the C-Series. AVIC II would be responsible for the fuselage.
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astuteman
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RE: Airbus May Set Up Assembly Line In China

Mon Dec 05, 2005 7:35 pm

Quoting AirFrnt (Reply 1):
This should be good for 50 A380s.

The "worked example" of building sections of 787 in Japan seems to indicate that you may well be right, AirFrnt.
Obviously the idea will go against the grain for the rabid A380 haters on A-net, for sure, but in the real world it would appear to be sound business sense.  checkmark 

Quoting Atmx2000 (Reply 12):
Otherwise, I can't see the UK being particularly happy about the loss of wing manufacturing.



Quoting N79969 (Reply 21):
This could be a good move for Airbus. I wonder what the labor unions will say though.

I don't believe for one moment that the loss of ALL wing manufacturing from the UK is currently on the cards. I see this rather as a combined trade-offset and capacity expansion move (i.e. a win-win). I don't suppose Broughton would have expected to build 450-500 wingsets per year up until this year.

Quoting Atmx2000 (Reply 18):
The A320 successor's wing is likely to be mostly composite. Composite winged commercial airliners are new technologies, and I don't see Airbus transferring that technology to China.

.

Good point. It will be interesting to see how this one pans out.
A
 
Lumberton
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RE: Airbus May Set Up Assembly Line In China

Mon Dec 05, 2005 7:53 pm

One point that seems to have been missed in the discussion, IF Airbus transfers ALL 320 wing production to China in seven years, and launches the next generation successor, then what would the benefit to China be? Why would they want to produce the "second best" airliner? For their domestic market only? Will the price of fuel get cheaper so that there is a market for an aircraft that doesn't have the latest operating efficiencies? I seriously doubt it. So what would the Chinese gain, unless Airbus plans on keeping this aircraft in production long after (assuming that this all happens, of course) if transfers the wing production? Boeing could have an opening here and launch the next generation narrow body while all this quid pro quo between the EU and Chinese are taking place.

This is all speculation, of course, but isn't that what we do here?

I am keenly interested in seeing the reaction from the domestic newspapers in the UK on the possible outsourcing of wing production, especially from Wales.
"When all is said and done, more will be said than done".
 
HiJazzey
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RE: Airbus May Set Up Assembly Line In China

Mon Dec 05, 2005 7:56 pm

I don't know, it might well be the end of UK manufactured wings for Airbus. Didn't BAe want out of Airbus so they can enter the American military market? It might well be the opportunity to do it.
 
Lumberton
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RE: Airbus May Set Up Assembly Line In China

Mon Dec 05, 2005 7:59 pm

Hello, HiJazzey. I see your point, but if that were to happen the volume of work lost couldn't be made up by military work. However, if they were to cooperate with Boeing on the next generation of narrow body aircraft....  scratchchin 
"When all is said and done, more will be said than done".
 
A319XFW
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RE: Airbus May Set Up Assembly Line In China

Mon Dec 05, 2005 8:03 pm

As part of the restructuring, BAE owns 20% of the total Airbus company, not just airbus UK it used to. Part of the deal that if BAE wants out is that EADS has first refusal of the 20% share.
I don't think this is the end of wing manufacturing in Broughton, as it takes some time to get all the right things into place. But that said, Japan seems to be managing to do it for the 787 in a short timeframe.
 
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scbriml
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RE: Airbus May Set Up Assembly Line In China

Mon Dec 05, 2005 8:06 pm

Quoting Lumberton (Reply 5):
Do you think there will be a side agreement to this deal that says Airbus won't develop a successor to the A320 for x number of years, to allow a significant production run in China?

I doubt Airbus would paint themselves in to that corner. Unless, of course, China were to purchase a ridiculous number of A320s. Say 1,000+?  scratchchin 
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Lumberton
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RE: Airbus May Set Up Assembly Line In China

Mon Dec 05, 2005 8:24 pm

Quoting A319XFW (Reply 29):
But that said, Japan seems to be managing to do it for the 787 in a short timeframe.

Yes they are. Apparently this outsourcing is catching on, huh? I've always been taught that imitation is the highest form of flattery; undoubtedly, Airbus perceives a competitive advantage in this move. Hard to disagree given the potential size of the Chinese market.
"When all is said and done, more will be said than done".
 
bigsmile
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RE: Airbus May Set Up Assembly Line In China

Mon Dec 05, 2005 8:53 pm

This is interesting. I have been in many briefs at Airbus Broughton, and the only work going to Xian in china is the wingbox and various detail parts. Also I have spoken to the union and they with the government will strongly oppose any major works leaving the UK.
 
B707321C
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RE: Airbus May Set Up Assembly Line In China

Mon Dec 05, 2005 9:06 pm

Quoting Lumberton (Reply 5):
Speculation. Do you think there will be a side agreement to this deal that says Airbus won't develop a successor to the A320 for x number of years, to allow a significant production run in China? Could be an incentive for Boeing to accelerate the replacement for the 737NG....

Why should this delay the development of a successor to the A320? The auto industry are having old model production in China and other places, while they are producing and selling the new models to other markets. I guess for a big market like China, an "old" A320 could be sold cheap, while producing a more expensive "new A320" to the rest of the world.
 
A319XFW
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RE: Airbus May Set Up Assembly Line In China

Mon Dec 05, 2005 9:14 pm

Quoting Bigsmile (Reply 32):
This is interesting. I have been in many briefs at Airbus Broughton, and the only work going to Xian in china is the wingbox and various detail parts. Also I have spoken to the union and they with the government will strongly oppose any major works leaving the UK.

From what I hear is that the quality had to be such that they could fit the wings to any aircraft and not only ones going to China. But I guess that's why they are getting around 40 people out there to make sure!
 
barbarian
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RE: Airbus May Set Up Assembly Line In China

Mon Dec 05, 2005 9:18 pm

This does seem like old news warmed up. AUK has been working with China for some years to transfer Single Aisle wing boxes (not equipped) to Xian upto rate 4 per month.
This serves two purposes, firstly it enables the higher rates without further investment at Broughton at a time when A380 and A350 are ramping up/kicking in, and secondly brings China into the fold, thus increasing orders.
It would not surprise me at all if the rate from China was increased above 4 per month in the years to come, this would seem to be a necessity if Broughton is to be in a position to produce the Single Aisle successor.
 
A319XFW
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RE: Airbus May Set Up Assembly Line In China

Mon Dec 05, 2005 9:21 pm

I'd say they would probably be equipped wings now, as it would be foolish to getthem back to Broughton to be equipped and then back to China to be assembled onto aircraft.
Then again, the fuselage, empennage etc will still be coming from Europe.
 
PEK18R36L
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RE: Airbus May Set Up Assembly Line In China

Tue Dec 06, 2005 12:29 am

This has been a great discussion. Just a few more tidbits to throw in from my seat here in the Middle Kingdom:

1. IIRC Boeing has been manufacturing tail assemblies for the 737 in Shenyang for some time now, even predating the NG. Everything I hear from not only Boeing but also the executives and tech reps of rival manufacturers suggests that quality has been fully satisfactory. This has, of course, been taking place under some heavy supervision from production executives from overseas. Certainly, a wing box is a step up from a tail assembly, but arguably it's one the Chinese are probably technically ready for.

2. Around 39 MD-82s were assembled by the McDD joint venture in China, the first one taking flight in 1987. The largest operator of the type was China Northern Airlines, now part of the China Southern group. Two, and only two, MD-90s were manufactured before the partnership that was supposed to produce MD-90s and, eventually, MD-95s under the "Trunkliner" program was dissolved by the Chinese government as a fiasco.

3. While assembly is easier than full manufacture, China has also faced quality challenges with locally produced aircraft assembled from kits. Rumors persist of such serious challenges with locally-assembled Su-27SK fighters, for example, that China continues to purchase the more expensive assembled planes from Russia.

Airbus will face challenges building wing assemblies in China, to be sure. Assembling complete aircraft still appears to stretch local capabilities. On the other hand, amazing things do happen here...

David

PS: First post on a.net.
In China, everything is possible - but nothing is easy.
 
airfrnt
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RE: Airbus May Set Up Assembly Line In China

Tue Dec 06, 2005 12:36 am

What a lot of people fail to forget is that Airbus is still at least partially owned by the governments of Europe. I would expect them to scream bloody murder about jobs being moved to China.
 
leelaw
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RE: Airbus May Set Up Assembly Line In China

Tue Dec 06, 2005 12:38 am

Quoting PEK18R36L (Reply 37):
First post on a.net.

Welcome, a fine first effort.

Quoting PEK18R36L (Reply 37):
Assembling complete aircraft still appears to stretch local capabilities.

Interesting, perhaps you could elaborate on this point?
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N328KF
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RE: Airbus May Set Up Assembly Line In China

Tue Dec 06, 2005 12:47 am

Quoting AirFrnt (Reply 38):
What a lot of people fail to forget is that Airbus is still at least partially owned by the governments of Europe. I would expect them to scream bloody murder about jobs being moved to China.

Airbus' direct ownership structure is:

  • EADS: 80%
  • BAe: 20%

However, EADS' ownership structure is:

  • DCX: 30.17%
  • SOGEADE: 30.17%
  • Public: 29.69%
  • SEPI (Spanish government): 5.51%
  • EADS employees: 3.55%
  • Treasury stock: 0.78%
  • French Republic: 0.06%

SOGEADE's ownership structure is:

  • French Republic: 50%
  • Lagardère: 50%

This works out to 16.524% stakeholding by EU governments.

[Edited 2005-12-05 16:48:36]
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Stitch
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RE: Airbus May Set Up Assembly Line In China

Tue Dec 06, 2005 12:47 am

The Seattle Times did a three-part series on Boeing, Airbus and China a few months back. The third and final piece talked about offshoring/outsourcing to China:

http://seattletimes.nwsource.com/htm...logy/2002319842_boeingchina07.html
 
PEK18R36L
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RE: Airbus May Set Up Assembly Line In China

Tue Dec 06, 2005 1:41 am

Leelaw, my point is not that Chinese manufacturers cannot assemble aircraft. Of course they can - they've been doing that for years with fighters, turboprop transports, and helicopters for the various parts of the PLA.

When building a weapon system for national defense, many countries place any "commercial" considerations second, and sometimes third, choosing to tolerate time and cost overruns in the name of procuring weapons that will improve frontline capability as well as manufacturing capability. Those Su-27SK's unsatisfactory? Okay - take them apart and try again.

It is impractical to write such blank checks when it comes to the assembly of civil airliners, which are in the end commercial products. Even with the full power of the government behind an assembly venture, China lacks the resources to underwrite inefficient local production of aircraft for their own market or for export. Beijing's cancellation of AVIC's Trunkliner program and it's sister "Asian Express" aircraft are, at least in part, evidence that the government is ready to kill such high-profile projects if they are destined to be moneypits.

The MD-82 program in particular was apparently a vortex of cost overruns because of shortfalls in local capability. McDonnell-Douglas had to assign far more expatriate engineers than expected, and breakages alone ran into millions of dollars. The Trunkliner program was similarly bedeviled. China Economic Quarterly Managing Editor Joe Studwell (who recounts the McDonnell-Douglas China saga thoroughly and entertainingly in his book The China Dream) suggests that the Chinese government and McDD together may have lost as much as $2 billion trying to start a program to build MD-90s before closing it down. Remember - this was the third generation of a fully-developed aircraft that sold for around $30 million.

In essence, China has proven that it can build planes, but also that it still cannot make a business out of it. If either A or B want to assemble aircraft here as a means of lowering costs on a per-airframe basis as was suggested earlier, there is more work to be done.

David
In China, everything is possible - but nothing is easy.
 
eha
Posts: 209
Joined: Fri May 06, 2005 6:35 pm

RE: Airbus May Set Up Assembly Line In China

Tue Dec 06, 2005 2:11 am

Quoting AirFrnt (Reply 38):
What a lot of people fail to forget is that Airbus is still at least partially owned by the governments of Europe. I would expect them to scream bloody murder about jobs being moved to China.

In all cases, it will never be presented as a transfer of production capabilities but rather additional capabilities, which makes sense given the trend today on single aisle airbus FALs. Not a single politician would be suicidal enough to present this as "yes, we will create a FAL in China to eventuallu shut down the one in TLS or XFW"...Even if it might be proven true later.

I have at least 4 questions, for which answers would help refining the "China FAL" scenario...

1/ When would the FAL be up and running ?
2/ production rate objectives ? if we talk about 4 A/C a month or 40 this does not mean the same future for FAL in Europe.
3/ Future of the A320 ?
4/ FAL to build only current A320 ?

As long as I do not get answers for this, it is tough to unmask the plot....

My feeling is :

Current A32X FAL are nearing max capacity or will be in the next couple of years, despite all optimization efforts.

It could make sense to have additional capacity around 2009 if the production rates remain constant or even increase.

I would imagine the FAL would produce marginal numbers of A/C to start with.

The FAL thing has been in the boxes the past ten years or so. You do not get business for free in China. On the other hand, I could see it as a means to outsource part of the production, but prefer for now to view it as a mandatory step to make in order to have a fair share of the cake plus needed additional capacity in the short term...So all in one, not a bad move, even if we still have to discover the real intents behind this...
 
N79969
Posts: 6605
Joined: Tue Jan 29, 2002 1:43 am

RE: Airbus May Set Up Assembly Line In China

Tue Dec 06, 2005 2:31 am

Quoting PEK18R36L (Reply 42):
In essence, China has proven that it can build planes, but also that it still cannot make a business out of it. If either A or B want to assemble aircraft here as a means of lowering costs on a per-airframe basis as was suggested earlier, there is more work to be done.

Very interesting and thoughful posts. Nice work.

I think Airbus has been doing their homework and studied the situation including the MDD experience in China. My sense is that this is less about mfg efficiencies and more about strategic sourcing.

The other impression that I have about China is that things have changed drastically since MDD's foray in that country and that technically and economically viable assembly of A320 assembly plants is something in reach.

I think the Chinese will require Airbus and the EU to bring the cash and other resources to make it work rather than subsidizing it on their own.
 
YULWinterSkies
Posts: 1266
Joined: Thu Jun 09, 2005 11:42 pm

RE: Airbus May Set Up Assembly Line In China

Tue Dec 06, 2005 2:47 am

Quoting Grantcv (Reply 22):
all manufacturing in China, all service jobs in India.

And all unemployment in the Western countries. Thanks to our patriotic CEOs and shareholders!!!!


However I do not think there is really too much to worry at that point in that precise case. The company is growing like crazy, keeps the highest technology manufacturing at home, and outsources the older technology one. Cars are often made in the same way actually.
When I doubt... go running!
 
PEK18R36L
Posts: 106
Joined: Mon Dec 05, 2005 11:37 pm

RE: Airbus May Set Up Assembly Line In China

Tue Dec 06, 2005 6:10 pm

Quoting N79969 (Reply 44):
The other impression that I have about China is that things have changed drastically since MDD's foray in that country and that technically and economically viable assembly of A320 assembly plants is something in reach.

Things do change drastically and quickly here, to be sure. I go away for a three-week vacation and notice the changes when I return.

In essence you and I are fundamentally saying the same thing, N79969, and that is "not yet, but soon to be sure."

In the coming 2-3 years, I expect that both Boeing and Airbus will be compelled by the government here to demonstrably, continuously expand the scope of their strategic sourcing in China. When it reaches the point where enough large sub-assemblies are fabricated in Asia, setting up an assembly line someplace in the region will make tremendous economic sense. Once that happens, both B and A will overcome the (still significant) hurdles to make the planes economically. Call it 2011-2013 time frame to be conservative.

In the end, if the predictions of other a.netters come true - that the innovations incorporated in the A380, 787, A350, and 747-800 will find their way into a new generation of single-aisle aircraft - China will probably end up extending the life of the A320 and the 737 series well into the early production of the newer jets. It may even (and this is a long shot, I agree) place some pressure back onto Bombardier and Embraer by making the A-318 and the 737-600 real competitors to RJs.

David
In China, everything is possible - but nothing is easy.