The question is will the bankruptcy of Airbus bring down the euro enonomy? This is not so far-fetched as it on first blush appears. It could bring governments down, and eventually the economies. France is vulnerable, it needs only a push.
Posted on 10/10/2006 9:29:49 AM PDT by lowbuck
Departing Airbus chief executive Christian Streiff has delivered a full explanation to French daily newspaper Le Figaro detailing why he is no longer in the job after just three months.
In a frank appraisal of what he found at the troubled Franco-German company, Streiff warns that he does not believe the dual management system can cope with the crisis facing it.
Interview : The former Airbus chief executive explains the reasons for his departure.
LE FIGARO: Why are you resigning?
Christian STREIFF. I have gradually come to the conclusion that the management style of Airbus did not allow for the success of my plan. The organisation and management of EADS have as their main objective the delicate balancing of people, of power and of positions. This formula could be efficient during a normal time. But it is no longer appropriate for a company that is going through a serious crisis. What Airbus needs to be successful today is unity of leadership, cohesion, rigorous values and willingness to act, speed of execution and simplicity. None of this is possible in a system of balancing forces that undermines itself with duplications and is cumbersome. I was proposing to move that situation on.
What did you propose in terms of reforms for the management of Airbus?
Three things. I wanted to limit as far as possible the duplications between the support functions of EADS and of Airbus in such a way as to allow the Airbus teams to concentrate completely on one objective alone: the success of the relaunch plan.
These duplications are linked to history. Today, the leadership of Airbus is on the third rung of the EADS hierarchy. I also wanted to simplify the company structure to put in place quick decision-making routes between the shareholders and the chief-executive of Airbus.
Finally, I wanted to have the necessary operational powers. As the days went by, when discussions proved to be difficult, I formed the conclusion that unless I left, I would not be able to progress the situation. In your opinion, why were these changes rejected?
More than a rejection, I noted a certain inability to discuss them.
Will your shocking resignation allow everything to start from scratch?
I hope it will be a wake-up call which will force them to rethink their management methods and to make Airbus progress in a positive manner. Airbus and its teams deserve it.
But you knew this system of management when you accepted the presidency of Airbus...
There is a huge difference between knowing something on paper and being presented with it every day. In fact, I was not aware of the extent of the crisis Airbus finds itself in. I gradually discovered it while getting to the bottom of the things with A380, by finding the operational truth which enabled us to understand the true challenges of the company for the years which come. I then understood that you need the right means of action and modes of decisions adapted to the depth of this crisis. When I arrived at the beginning of July, my vision was far from being as critical as it is today. In June, I thought that it was not impossible to continue with the mode of current governance. Today, I believe it impossible because of the size of the challenge. Is the solution that one of the two executive co-presidents of EADS – Louis Gallois or Thomas Enders – combines that role with the presidency of Airbus?
That is already a positive step but it is not the only subject. It is not a problem of personnel - there wasn't any between Thomas Enders and me - but rather a problem of structure, of duplication, because of the particular position of the co-presidents who dictate the hierarchic roles in the subsidiary companies. What amounts to a de facto double head for Airbus.
But wouldn't that mark the start of simplification?
It would be a beginning, a step in the right direction indeed. But the job of Airbus co-president is not easy: to keep up his responsibilities to EADS while at the same time motivate his team to focus on Airbus objectives. I proposed simplifying things by separating the governance of Airbus of that of EADS.
In other wor Are your shareholders in agreement, be they public or private, French or German?
I do not want to take an nationlty-based view. As you know, I am a Germanophile and a German speaker. I am close to the German shareholders in EADS. The matter is much more complex than a clash of nationalities even if that has not, obviously, simplified things. It is above all a problem of the organisation of the company. But did they support you?
The Power8 rescue plan had the agreement of the board of directors and all of the parties involved. But in terms of organisation, I did not sense a true acceptance, because it is difficult for certain shareholders to give up the principles that governed the creation of Airbus and EADS.
It needed two boards of directors for your plan to be validated. Did you have the support of the shareholders?
The plan had to deal with three aspects. First, the delay of the A380 and the advance by Boeing in terms of product-competition on the evolution of our range. Then, the cashflow hole caused by the accumulated delay to the A380. Finally, our problem with competitiveness regarding the US dollar, which means that Boeing has lower costs than us. So even if some of our orders contained a hedge of around one euro to one dollar, the rest will still have to come in without that hedge.
The first meeting was difficult. There was a debate on the whole of the plan, its ambition as well as the capacity of the teams to mobilise. But I never had any doubt about that mobilisation.
Did the French government instruct you not to make redundancies?
For us this question needs to be treated carefully, so as not to cause unwarranted alarm. The reduction in employees had already started to be discussed as a group, along with our social partners from and with the two sides of industry. We have the good fortune to have some time in front of us. The financial crisis at Airbus and the fall to come in the financial results will be spread over the next four years. We need to take time to reflect before announcing any restructuring that will require a company reorganisation, in order to end duplications and produce productivity gains, in particular with our suppliers.
What is Airbus’s priority today?
Airbus must become a true European integrated company. It is still partly a juxtaposition of four companies and it is necessary for it to become a true European company. We must create a single management structure, making it possible to react quickly. The work of integration started five years ago at the time of the end of the Groupement d'Intérêt Economique (GIE) French joint venture legal entity, but it has not progressed in recent years. In my opinion, one should try to carry out the integration of Airbus and its fusion with EADS at the same time. The prime objective needs to be achieved first. The second priority is to leave behind the trappings of nationalism from which EADS was founded. If the management of Airbus is not reformed as per your recommendations, will Airbus be in danger? You have said that the European manufacturer was fifteen years behind Boeing.
I want to correct that last point. What I said is that Boeing had taken small lead of around three years on a part of the aircraft range and that it would be necessary for Airbus over the next 10-15 to catch up. But I do not want to say that Airbus is delayed by fifteen years behind its only rival.
On the other point, I believe that if my successor is not going to tell it like it is and if the management of Airbus does not evolve or shift, then yes, the future of the company is alarming. However, independently of the governance structure, Airbus is a fabulous company, full of passion and know-how. There is enormous pool of creative talent and just because the A380 highlighted a weak link, it does not mean that this has all disappeared.
Is the German site in Hamburg the weak link?
The Hamburg team is responsible, inter alia, for two pieces of the fuselage. It is indeed there where we have had problems and where the weak link can be found. But the problem is not because it was Hamburg or Toulouse, it could have happened at either site.
Are the rats leaving the sinking ship?.............
He got a good look at Airbus, didn't like what he found, discovered that they weren't willing to even look at the basic problems, and decided to bail out fast before his name was associated with anything further from that quarter - and thus saved his good name and career. Guy's got a lot of courage to take on the unions and the government interests; Airbus really is a European jobs program, not an airplane maker.
They're screwed big time and this guy is jumping ship.
The socialists in France and Germany have doen an excellent job of creating a worker's paradise, where there is not going to be any work, soon!
Is he French? I think so because he blames the Germans.
"In your opinion, why were these changes rejected?
More than a rejection, I noted a certain inability to discuss them."
This is one of the major differences between Europe and America. If you want to know what is wrong with the US, read our papers, listen to the radio or just go to a cafe and listen. In Europe everyone knows things are going the wrong way, but, no one will discuss the matter.
The question is will the bankruptcy of Airbus bring down the euro enonomy? This is not so far-fetched as it on first blush appears. It could bring governments down, and eventually the economies. France is vulnerable, it needs only a push.
That's just it. He's French, true, but he's very close to the movers and shakers in Germany. And if you read between the lines, he's blaming both Paris and Berlin.
He does blame the Hamburg plant, but that's because they're the ones that actually screwed up a *lot*.
Note also that this was an interview with Le Figaro, a *French* paper - so anything anti-French would be edited out (they're notorious for doing that).
It is instructive to note the following from Wikipedia:
As of 2004, Le Figaro is controlled by Serge Dassault, a conservative businessman and politician best known for running the aircraft manufacturer Dassault Aviation. The ownership of a major national newspaper by a person who also controls a major military supplier, as well as being a mayor and senator from the ruling UMP party, and whose son Olivier Dassault is a member of the French National Assembly for the same party, was highly controversial inside and outside the newspaper.
***
So, naturally, they're going to edit out *anything* that might offend Dassault (whose company is closely tied to EADS and Airbus).
Exactly so. The problem with making a company into a "symbol of national (read EU) prowess" through government intervention is that if the company fails, so does your country.
He has a reputation as a very smart player. Probably a good move to bail early. His comments reveal a truly mangled corporate structure.
that is exactly why they get attacked by some tyrant every 30 or 40 years or so.
But the problems of that flying barge are systemic. Boeing will be doing them a favor by forcing them into receivership.
......Then, the cashflow hole .....
Ho ho ho..... what an admission. What implications it has. Imagine being a European citizen and proudly manning a shovel to fill that ever enlarging hole.
Well, I am not a "proud European citizen" but living here I have been "invited" to lend a bit of my paycheck to the XCESXCE government. I imagine that this will be shoveled into the hole on my behalf.
Sigh, some nights I have a dream that I am back in America. Hanging out at the KFC or getting up at midnight to go to the Kroger or Wal-Mart. But then I awake and find these four grey wall around me. . . Oh excuse me, Johnny Cash already didn't this. LOL
That's just it. The Europeans can't afford for their "crowning glory and symbol of European prowess" to die, even if it wasn't just a thinly disguised jobs project.
What *will* happen is Airbus will continue to receive "loans" that they don't have to pay back from the respective governments, and they'll sell airplanes to national flag carriers. (National flag carriers in Europe are typically owned and run by their respective governments.) Nobody else will buy their airplanes; essentially it'll be like Concorde - only those countries involved will buy them "as a matter of national pride".
Now, that said, it's going to be *really* interesting to see what the GE/Pratt&Whitney Engine Alliance does. Rolls Royce has put the Trent 900 on hiatus for at least a year, which means that the primary engine for the A380 is currently out of production. That leaves the EA engine as the only engine currently available to power the A380. And if they kill the program, I think we can officially call the A380 "dead in the water".
Just days ago, Airbus denied that Streiff was leaving. Not surprising, Airbus has gotten good at denying reality. The way things are going, if Airbus is denying it, there's an even chance of it being true.
Translation:
AirBus needs CAPITALISM and an elimination of socialist influences if it is to survive as a legitimate producer.
SOME VERY WRONG PREDICTIONS IN HISTORY
"Heavier-than-air flying machines are impossible." Lord Kelvin, President, Royal Society, 1895.
"Everything that can be invented has been invented." Charles Duell, Director of U.S. Patent Office, 1899.
"Sensible and responsible women do not want to vote." Grover Cleveland, 1905.
"There is no likelihood man can ever tap the power of the atom." Robert Millikan, Nobel Prize in Physics, 1923.
"Who the hell wants to hear actors talk anyway?" Harry M. Warner, Warner Bros. Pictures, 1927.
"Babe Ruth made a big mistake when he gave up pitching." Tris Speaker, 1921.
And finally the newest addition:
"I'm sure we'll have the top position for years and years to come." Jean-Luc Lagardere, chairman of EADS, Airbus A380 launch' 2001
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.