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Posted on 02/17/2007 2:45:11 PM PST by lowbuck
I understand that this week there was a general board meeting of Airbus Industries. At that meeting the executives were presented with a plan to save the troubled European National Champion. These plans, called Power8, should be made public on Tuesday next week. I also understand they won’t be.
Airbus needs to save over 1 billion Euro a year.
The plan was, I was told, to lay off all contract staff, which would mean thousands of job losses across the EU, in particular in France, Germany, Spain and the UK. Of course if this was a business in the normal fashion the executives would have hummed and haahed about the severity of the measure, then looked at the hatchet face of the CFO, gritted their teeth and accepted this as the only way to save the company.
But Airbus is not a normal industry. It is industrio-political. It is the EU’s champion in the great joust with the US and Boeing.
So the suggestion was taken off the table. Essentially the four Governments had made it clear that they wouldn’t complete any orders with Airbus if their own contract workers were sacked.
Economics Minister Glos said before the talks that he wanted to ensure that Germany was not hit disproportionately by any job cuts, and repeated his warning that German defence orders for Airbus parent company EADS could be cancelled.
Now what? Well as far as I can gather the Board is in a tight spot. It knows that they have to do this, but politically they cannot. The upshot is probably that they will just slowly sink into the sand.
The other possibility is that we will witness a round of governmental chicken, with the first to blink to see redundancies. Any betting that Bristol is doomed?
Yes, even in highly technical forms.
Appoint a committee to study the matter.
While I don't like their product, the consumers would ultimately suffer if there's no competition for Boeing. Companies rarely innovate unless there's a compelling business reason to do so.
Does the UN have any leftover "Oil-for-Food" cash they could chip in to save this fine socialist experiment?
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Screw them. Bunch of socialist.
The market would fill the void. With Boeing and a subsidized Airbus, there isn't room for a new, competitive, profit generating manufacture, but there would be if the assembler, Airbus, left the stage. Then everyone would truly win, as you would have two hyper competitors. Right now Airbus is becoming a oxygen thief and a problem child for decades. Not good.
If they lay off those workers, those workers will no longer be paying that huge portion of their incomes in taxes, and will instead rely on the welfare programs of those governments.
The end result is that laying off workers doesn't provide much of a net savings from the point of view of the governments that make up Airbus. If may improve the bottom line of the company, but doesn't improve the overall bottom line for the governments that own the company.
Should Airbus ultimately fail, I think Brazilian Embraer could potentially take its place by starting to make intercontinental-range widebodies.
Where were you when Boeing was "merging" on top of McDonnell-Douglas?
Ever audited a european company?
They DON'T lay off workers, they idle them and pay 'redundancy' wages.
Airbust cannot save money on idled plants without huge concessions - which they won't get because not only the governments but the unions - and laws - come into play.
They'll go for more tax euros and they'll get at least enough to keep the doors open.
Then the entire debate goes back to politics and how deeply the various governments can subsidize sales below their cost to produce the product.
Of course, welfare, vacations, and wage levels cannot be reduced - so look for more taxation, less defense, less aid to the crumbling third world, and more demands for the US to 'give a hand'.
Correct you are; and, only this "technical" type of welfare can blame it's death spiral on ... wiring issues.
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I'm quite sorry MD and Lockheed aren't in the passenger market anymore (and that MD was absorbed at all).
Look I don't like Airbus but I also dislike monopolies.
Competition spurs innovation; that's capitalism.
At the present time, with economies of scale and numerous barriers to entry, there's not a lot of real competition in that market. Unfortunately I think the next competitor is coming from China and that won't help the west at all.
LOL! Cool photo.
Don't count out Brazil.
So true, once a private company surrenders to the Socialist Bureaucracy, it becomes incapable of making the necessary business decisions and even less capable of executing the decisions that do get made.
They become beasts of burden of the state, taking up the slack of becoming a jobs program for the state, basically an extension of it's unemployment plan.
And they also become unable to remove poor employees, finding themselves enslaved by unions and the bureaucracy that feeds upon their lifeblood. The state becomes a parasite, leeching away all will to succeed.
The drain is such that eventually, Airbus will become simply a name brand, but be unable to truly compete from within the confines of the socialist state.
Their only escape will be the avenues that they take to work around the restraints that the state has created for them.
Airbus may be a European company, but it's future is outside of the state.
I don't understand how airbus can be in such bad shape, they've had great sales for over 5 years, yea the production delay for the 380 hurt, but from all accounts the 380 problems are solved and production will begin soon. How can things be so terrible that Airbus might go under. Makes no sense.
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