Wednesday, February 28, 2007

Airbus –

Given the sorry state of the A-350 project, as well as worrisome order trends, this is about the last thing they needed:

“Unions have made plain that protests and work stoppages could hit Airbus production lines if management closes plants or insists on forced job cuts.

‘We totally oppose the closure of any site and we won't accept any firings,’ said European Metalworkers Federation head Peter Scherrer after a gathering of Airbus unions on Tuesday.

French union Force Ouvriere said selling St. Nazaire or Meaulte would be tantamount to a declaration of war.

The CGT announcement confirmed St. Nazaire-villes is to be sold and outside investors brought in to partly own Meaulte.”
Long term, you have to wonder if a high tech manufacturing company on the scale of Airbus is sustainable in Europe. In return for ‘development loans’ from EU governments, Airbus is stuck with endless political wrangling over which jobs get sourced to which countries. The union situation appears intractable. Not only are there wage and benefit payments issues, but there’s probably not much flexibility in work rules.

As the global economy creates competitors with lower cost structures, how long could Airbus hold out without subsidy? And how much risk are the EU governments going to assume to keep Airbus out of hot water? And what’s the hidden cost to their economies by staking so much on one company in one industry?

Update: (02 March 07): Coming soon, the European taxpayer will be asked for cash to bail out Airbus. Now that there are no, zero, nada, nothing, zip, zilch orders for A380 freighters, something has to give.

One wonders what’s going to happen when the unions contest the restructuring with planned and “spontaneous” work stoppages, slowdowns, etc. That’s going to translate into more schedule delays and cost overruns. More headaches, more problems, more cancelled orders.

The EU elites have too much pride invested in Airbus to allow it to fail, (and at this point, they are probably a long way from failing). But if things continue to slide, the taxpayer will be putting out more cash to keep the lights on.