leelaw
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UK Seeks Airbus Jobs Pledge

Sun Apr 09, 2006 9:45 pm

Britain is scrambling to secure guarantees from EADS, the Franco-German aerospace and defence group, which is in talks to buy BAE Systems' 20 per cent stake in Airbus, to protect the jobs of 13,000 UK workers.

http://news.ft.com/cms/s/29a69394-c69c-11da-99fa-0000779e2340.html
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bullpitt
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RE: UK Seeks Airbus Jobs Pledge

Sun Apr 09, 2006 10:15 pm

Well I can tell you now that if BAe pulls out they can kiss those jobs goodbye in the long run. It will depend very much who will take over the stake.
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NAV20
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RE: UK Seeks Airbus Jobs Pledge

Sun Apr 09, 2006 10:28 pm

Bullpitt, EADS will have to buy BAE's stake under the terms of BAE's put option.

On the one hand I wouldn't expect EADS to be in a position to guarantee any jobs longterm at the moment. However, given the complications of transferring work (especially wing work on the A380, for example) to France or Germany or Spain, I'd have thought that the UK jobs are quite safe in the medium term.
"Once you have flown, you will walk the earth with your eyes turned skywards.." - Leonardo da Vinci
 
A319XFW
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RE: UK Seeks Airbus Jobs Pledge

Sun Apr 09, 2006 10:41 pm

One thing to remember in all this is that Airbus UK is not owned by BAE but by Airbus. And BAE holds 20% of Airbus.

Like the article says, it won't be a case of what BAE does, but what the British goverment does.

And like NAV20 says, it's not as if you can suddenly transport all the manufacturing and engineering of wings or engineering of fuel systems and landing gears away.
For this you will need manpower elsewhere, which is already hard to find.
 
norcal
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RE: UK Seeks Airbus Jobs Pledge

Sun Apr 09, 2006 10:48 pm

Quoting NAV20 (Reply 2):
On the one hand I wouldn't expect EADS to be in a position to guarantee any jobs longterm at the moment. However, given the complications of transferring work (especially wing work on the A380, for example) to France or Germany or Spain, I'd have thought that the UK jobs are quite safe in the medium term.

They should be pretty safe until the next new program for Airbus (The A350 wings are definitely being built in the UK right?). I think it would be way too cost prohibitive to move the production to another country. Not only the machinery but also the issue of training new workers. I would be bold enough to guess that wing production should remain in the UK until the A380 program ends, that has got to be like 25-30 years from now. It would be a greatly reduced staff if they moved the new program (A360, A370 etc) wing production to the continent. I also wouldn't be surprised to see the UK government offer substantial tax incentives to Airbus in order to keep those jobs (better to lose tax revenue that way then through welfare).
 
bullpitt
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RE: UK Seeks Airbus Jobs Pledge

Sun Apr 09, 2006 10:52 pm

Hi NAV20

Sorry to disagree with you but european politics have a lot to say about this and believe me those jobs in the long run will go. Also the jobs that belong to all those little firms who work around the big boys will go. New EEC members such as Poland will be quick to try and get them. If BAe pull out it will be a bad move for the UK.
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NAV20
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RE: UK Seeks Airbus Jobs Pledge

Sun Apr 09, 2006 11:27 pm

Quoting Bullpitt (Reply 5):
Sorry to disagree with you but european politics have a lot to say about this and believe me those jobs in the long run will go.

Inclined to agree with you about the long term, BullPitt. Especially if the likes of Chirac go on running the show.

But much as he might like to pull the jobs out, the logistics of transferring the plant etc. (not to mention the expertise) would be huge. Apart from anything else, they couldn't build 'parallel plants', complete with those monster jigs - they'd have to strip the equipment out of the existing plants and set it all up in brand-new ones. The costs would be enormous - and the production delays would be an even bigger problem.
"Once you have flown, you will walk the earth with your eyes turned skywards.." - Leonardo da Vinci
 
bullpitt
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RE: UK Seeks Airbus Jobs Pledge

Sun Apr 09, 2006 11:34 pm

Hi NAV20

I agree with you that it would be costly but then again a Polish worker earns a lot less that one in the UK, Poland has a great number of qualified workers which have a very high reputation in Europe. ECC funding can also find its way into the deal. Believe me if a country like Poland (and I'm using them as an example) can get it's foot in this industry they will try to do so.
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glacote
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RE: UK Seeks Airbus Jobs Pledge

Mon Apr 10, 2006 2:16 am

Quoting NAV20 (Reply 2):
Bullpitt, EADS will have to buy BAE's stake under the terms of BAE's put option.

No.

The contractual conditions for this to happen are not met. This is a proposal by BAE that may be accepted by EADS.

That being said there is no reason Airbus would cut staff among their top-of-the-line wing manufacturing engineers.
 
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mariner
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RE: UK Seeks Airbus Jobs Pledge

Mon Apr 10, 2006 3:03 am

This interesting article seems to think that the A380 and A350 work will stay, but that the A320 replacement could easily go elsewhere.

(If there is a redesign of the A350, that could change, of course.)

And eventually it will mean the end of British manufacturing's long association with civil aviation:

http://www.timesonline.co.uk/article/0,,2095-2124890,00.html

The writer seems to take the view - with which I agree - that you can't eat your cake and have it too.

mariner
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Lumberton
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RE: UK Seeks Airbus Jobs Pledge

Mon Apr 10, 2006 3:17 am

Quoting Glacote (Reply 8):
The contractual conditions for this to happen are not met. This is a proposal by BAE that may be accepted by EADS.

Glacote, could EADS veto the share sale? Is BAE free to pursue other takers if EADS either declines or doesn't want to pay the price?
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atmx2000
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RE: UK Seeks Airbus Jobs Pledge

Mon Apr 10, 2006 3:56 am

Quoting Mariner (Reply 9):

http://www.timesonline.co.uk/article/0,,2095-2124890,00.html

The writer seems to take the view - with which I agree - that you can't eat your cake and have it too.

mariner

If they cause EADS to have to spend cash needed to otherwise fund R&D in Airbus, sure.

Maybe they will arrange a partial stock deal with BAE getting a stake in EADS. Or all stock, but with BAE selling at least part of the EADS stake to some other UK company who will get membership on its board. Doesn't have to be defense or aerospace related, considering EADS ownership includes a French media company.

I would thing it would be best for the UK to get membership on the EADS board anyway, to ensure that politicos from France, Germany, and Spain don't screw them over.
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mariner
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RE: UK Seeks Airbus Jobs Pledge

Mon Apr 10, 2006 4:03 am

Quoting Atmx2000 (Reply 11):
Maybe they will arrange a partial stock deal with BAE getting a stake in EADS.

I'm confused. BAE has a stake in EADS, which they are intending to sell.

Quoting Atmx2000 (Reply 11):
I would thing it would be best for the UK to get membership on the EADS board anyway, to ensure that politicos from France, Germany, and Spain don't screw them over.

What screwing over?

If no British company has a financial stake in EADS, why should they have a seat on the board?

Board seats are usually reserved for representatives of the owners.

mariner
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atmx2000
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RE: UK Seeks Airbus Jobs Pledge

Mon Apr 10, 2006 4:38 am

Quoting Mariner (Reply 12):
I'm confused. BAE has a stake in EADS, which they are intending to sell.

BAE has no stake in EADS. BAE and EADS are coowners of Airbus, with EADS owning 80% of Airbus.

Quoting Mariner (Reply 12):
What screwing over?

If no British company has a financial stake in EADS, why should they have a seat on the board?

Board seats are usually reserved for representatives of the owners.

Which is why they should get a stake in EADS and representation on its board.

BAE's problem is that they don't want to be so directly on the line for funding of Airbus and they want at least some cash for acquisitions. EADS's problem is they don't necessarily have the cash to do fund Airbus if they own it completely and buyout BAE (and perhaps the other EU companies who want to cut down their investment). So perhaps BAE will exchange Airbus ownership for an EADS stake which they can then turn around and sell all or part of to another UK company or companies, to get cash they can use to pursue whatever acquisition they have in mind. In the process, UK gets board membership on EADS to fight for its interests. EADS doesn't have to spend money on a cash buyout of BAE.
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mariner
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RE: UK Seeks Airbus Jobs Pledge

Mon Apr 10, 2006 4:50 am

Quoting Atmx2000 (Reply 13):
BAE has no stake in EADS. BAE and EADS are coowners of Airbus, with EADS owning 80% of Airbus.

Yes, indeed. It's early here.

Quoting Atmx2000 (Reply 13):
perhaps BAE will exchange Airbus ownership for an EADS stake which they can then turn around and sell all or part of to another UK company or companies,

Perhaps. But in everything I've read, they seem to want to divest themselves of their association in order to be "more open" to US defense work.

mariner
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atmx2000
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RE: UK Seeks Airbus Jobs Pledge

Mon Apr 10, 2006 5:01 am

Quoting Mariner (Reply 14):

Perhaps. But in everything I've read, they seem to want to divest themselves of their association in order to be "more open" to US defense work.

I've seen suggestions that this is a way to eliminate conflicts of interest to get more US defense work. I don't think a stake in EADS where they have no role in operations or research of that organization would cause a problem. But if their goal is complete disengagement, they could sell all of the stake in EADS.
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Pihero
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RE: UK Seeks Airbus Jobs Pledge

Mon Apr 10, 2006 6:02 am

This is no argument of mine, but I found this article while researching British newspapers.
The writer's views seem to imply that the deal can still be blocked by HM's government.
Anyway, it's an interesting read :
http://observer.guardian.co.uk/comment/story/0,,1750110,00.html

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Dougloid
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RE: UK Seeks Airbus Jobs Pledge

Mon Apr 10, 2006 6:10 am

Quoting NAV20 (Reply 6):
But much as he might like to pull the jobs out, the logistics of transferring the plant etc. (not to mention the expertise) would be huge. Apart from anything else, they couldn't build 'parallel plants', complete with those monster jigs - they'd have to strip the equipment out of the existing plants and set it all up in brand-new ones. The costs would be enormous - and the production delays would be an even bigger problem.

Why does anyone think the work would stay in Europe if it got stripped out of the UK?
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mariner
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RE: UK Seeks Airbus Jobs Pledge

Mon Apr 10, 2006 6:20 am

Quoting Dougloid (Reply 17):
Why does anyone think the work would stay in Europe if it got stripped out of the UK?

I think it is reasonable to assume that a European consortium would probably arange for a fair amount of the work to be done in Europe.

See reply #5:

Quoting Bullpitt (Reply 5):
New EEC members such as Poland will be quick to try and get them.

Most of the new eastern EU members would be thrilled to bid for the work, and their wages are lower, by far, than western Europe.

Then again, we're talking some years down the track, and if Turkey is given even provisional EU membership, the work could easily there.

That would really bring the wage costs down.  Smile

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eatmybologna
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RE: UK Seeks Airbus Jobs Pledge

Mon Apr 10, 2006 11:00 am

Any chance that BAE could develop and build wings for one of Boeing's future offerings after selling off their Airbus share?

e-m-b
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atmx2000
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RE: UK Seeks Airbus Jobs Pledge

Mon Apr 10, 2006 11:40 am

Quoting Eatmybologna (Reply 19):
Any chance that BAE could develop and build wings for one of Boeing's future offerings after selling off their Airbus share?

They don't control the large jet wing plant. It is part of Airbus. Does BAE have any significant large jet wing expertise outside of that embedded in Airbus UK?
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NAV20
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RE: UK Seeks Airbus Jobs Pledge

Mon Apr 10, 2006 11:42 am

Quoting Lumberton (Reply 10):
Glacote, could EADS veto the share sale? Is BAE free to pursue other takers if EADS either declines or doesn't want to pay the price?

No, Lumberton, the 'put option' is exercisable at any time at BAE's discretion. The terms of the option will lay down provisions for independent valuation in the event of disagreement.

Interestingly, though, EADS' press release on the subject is at pains to point out that the put option has not been exercised yet:-

"EADS confirms it is entering into the very early stages of a discussion on the potential disposal of BAE Systems' 20 percent stake in Airbus. BAE Systems' management called EADS' management Thursday evening to initiate the talks.

"EADS welcomes the opportunity to increase its stake in Airbus, which holds the potential of simplifying Airbus governance. EADS was anticipating the possibility of such a move and is fully prepared to move ahead constructively.

"The initiation of these discussions does not represent an exercise of the put option held by BAE Systems in relation to this stake. EADS intend to work diligently together with BAE Systems towards a value that is fair to both parties. The schedule of the discussions cannot be anticipated and there can be no certainty as to their outcome. Meanwhile, there will be no further comments by EADS until discussions are closed or it considers it is appropriate to do so."


The phrasing of this release seems oddly defensive - "...entering into the very early stages of a discussion......does not represent an exercise of the put option there can be no certainty as to their outcome.....Meanwhile, there will be no further comments by EADS....." Gives the impression that EADS would like to buy BAE out in principle - but that, as Atmx2000 suggests above, this year at least, they'd rather spend the E3.5B. or so the buyout is going to cost on other things.

My guess is that the negotiations will, among other things, cover the possibility of spreading the purchase price out over a period of years.
http://www.eads.com/web/lang/en/1024...F00000040950509/2/84/41316842.html
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slz396
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RE: UK Seeks Airbus Jobs Pledge

Mon Apr 10, 2006 8:31 pm

I don't read the press release as defensive in any way...

In fact, if it were, it probably wouldn't mention the fact there is a put option forseen in the Airbus agreement between BAe and EADS all together, don't you think?

Sorry to say, but here you are just reading too much into it just to please your own wishes.
 
sprout5199
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RE: UK Seeks Airbus Jobs Pledge

Mon Apr 10, 2006 9:17 pm

Quoting NorCal (Reply 4):
I also wouldn't be surprised to see the UK government offer substantial tax incentives to Airbus in order to keep those jobs (better to lose tax revenue that way then through welfare).

Wouldn't this shoot down the Airbus WTO case against Boeing?

Dan in Jupiter
 
rigo
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RE: UK Seeks Airbus Jobs Pledge

Mon Apr 10, 2006 9:20 pm

Just a question: as has been pointed out, the facility belongs to Airbus, not BAE, so why should Airbus move it out of the UK just because BAE sell their shares? Lest A decides to go move production to India or China, there is little reason for them to abandon an existing infrastructure and skilled workers and rebuild a similar site in France or Germany?

Regards
Rigo
 
A319XFW
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RE: UK Seeks Airbus Jobs Pledge

Mon Apr 10, 2006 10:39 pm

Quoting Mariner (Reply 9):
And eventually it will mean the end of British manufacturing's long association with civil aviation:

http://www.timesonline.co.uk/article/0,,2095-2124890,00.html

The writer seems to take the view - with which I agree - that you can't eat your cake and have it too.

Odd article, some bits are well researched, others not. Take this for example:

Quote:
Airbus's Hamburg factory will make the upper skin of the A350 wing, the first time the Germans have made part of an Airbus wing.

It won't be Hamburg making the covers - it'll be Stade (or was it Varel or Nodenhamm? - but definately not Hamburg), where they already make covers for the A400M. Adding to the "first time the Germans have made parts for the wings" bit, Bremen already makes the flaps for the aircraft.

But has always been said that if Airbus UK doesn't make the wings, Airbus Germany will be quite willing to do so.
 
Dougloid
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RE: UK Seeks Airbus Jobs Pledge

Mon Apr 10, 2006 10:44 pm

Quoting Mariner (Reply 18):
Quoting Dougloid (Reply 17):
Why does anyone think the work would stay in Europe if it got stripped out of the UK?

I think it is reasonable to assume that a European consortium would probably arange for a fair amount of the work to be done in Europe.

Well, don't go whistling past the graveyard is all I'm saying. It's a big wide world out there, and there are people with the technology to build wings all over the world at a lower cost/higher efficiency than Europe.
If you believe in coincidence, you haven't looked close enough-Joe Leaphorn
 
leelaw
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RE: UK Seeks Airbus Jobs Pledge

Tue Apr 11, 2006 3:13 am

EADS vows UK Airbus jobs secure

Sale of 20% shareholding in European airframer will not affect country’s status as wing centre of excellence

http://www.flightglobal.com/Articles...S+vows+UK+Airbus+jobs+secure+.html
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